Devalunistas and Germany

It has become standard faire to blame the United States' trade deficit on low wages in the developing world, and Asian currency manipulation. The argument then goes - the U.S. must find ways to devalue its currency.

But even with a devalued currency, a nation needs something to sell. It means an industrial policy, and government support for industry. This does not happen on a consistent basis in the United States, except in a few sectors. The most obvious sector of American global export dominance, backed by government support, is in military hardware and weaponry.

Germany's success as an exporter is a fairly strong refutation of the devalunista strategy of reviving U.S manufacturing. It's not all about wages; it's also about skill and making quality products. Germany managed to be the world's top exporter (though soon to be replaced by China) despite a steadily strengthening Euro from 2002-2008. In many industries, it is Germany that has the high-end niche brands ; for instance, in the highly visible automotive industry, no American product has the reputation of a BMW or Mercedes Benz.

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1 "Berlin's warning: only exports can save Germany" - The Economist
2 "NYT Gets U.S. Imbalances Wrong" - Dean Baker
3 "On the G-20 Agenda" - Economist's View

Venice, Holland, England, USA, ?

"Along with national debt there arose an international credit system, which often conceals one of the sources of primitive accumulation in this or that people.Thus the villanies of the Venetian system of robbery formed one of the secret foundations of Holland's wealth in capital, for Venice in her years of decadence lent large sums of money to Holland. There is a similar relationship between Holland and England. By the beginning of the eighteenth century, Holland's manufacturers had been far outstripped. It had ceased to become the nation preponderant in commerce and industry. One of its main lines of business , therefore, from 1701 to 1776, was lending out of enormous amounts of capital, especially to its great rival England. The same thing is going on today between England and the United States..." - Marx, Capital, p.920

One could place FDI in the developing world within the context of this described 'international credit system'. And China has been the largest nation-state recipient of FDI over the last 20 years. The point being, this story has been told before.

But there are good reasons to believe it will not end the same way. Greater amounts of accumulated capital require exponentially larger pools of labor in order to sustain profit. And there is simply not enough surplus labor, within a system of developed infrastruture, to continue on indefinitely. This was the importance of China to begin with. But there are no more China's left, if and when wages increase there to the point where they impinge on profitability. The end of cheap resource extraction will also put constraints on profit rates, and discourage the productive (rather than speculative) investment of capital.

The Pearl of the Orient

Leaving behind a path of destruction and 240 dead and climbing in the Philippines, hurricane Ketsana has now become a full-scale typhoon as it barrels down on central Vietnam, raising fears of another catastrophic downpour.

The storm is stronger now than when it ripped through the Philippines, with winds of more than 100 miles per hour. The eye of the storm, with even stronger winds of 126 miles per hour, was expected to touch down at 1 p.m. local time in Vietnam.

But authorities there appeared ready, with 100,000 people from flood prone villages already evacuated, and residents in Central Vietnam advised to stockpile food, water, and medicine. Vietnam is hoping to avoid the calamity that caught the Philippines largely off guard.

Few of the common people in the Metro Manila area even knew about this storm before it hit, or were aware of its potential for damage. There was apparently no concern within the government, no system of early warning, no system of evacuation, no system of relief. There has been no attempt over the years to build a decent municipal drainage system, which exacerbated the urban flooding. It really is appalling. The human toll that natural disasters inflict is, to a large extent, determined by the capability of the government.

1 "Storm that flooded Philippines gathers strength, heads to Vietnam" - Christian Science Monitor

2 "Relief efforts overwhelmed" - Phil Star

Maoists Gaining Influence Within China's Government ?

So says 'Market Wu' - Wu Jinglian, one of Deng Xiaoping's leading neo-liberal economic advisors:

"In interviews, Mr. Wu says he feels compelled to speak out because conservatives and “old-style Maoists” have been gaining influence in the government since 2004. These groups, he said, are pressing for a return to central planning and placing blame for corruption and social inequality on the very market reforms he championed."


A dispersal of political and economic power, particularly to the coastal regions, was an inevitable consequence of normalizing trade relations with the capitalist world. A reaction to this within the central government should also not be a surprise. "Old-style Maoists", or proponents of a strongly centralized state, will gain even more leverage if growth rates dwindle and China faces any type of banking crisis.

1 "China's Wu Jingliang Keeps Talking" - NYT

No 'Asian Century' Without an Asian Currency

As Forbes recently editorialized :

"With 90% of the world's reserve assets in euros and dollars, it is the monetary policy of a handful of central bankers in Europe and America that will ultimately matter most to the economy, despite the pledges of the (G20) leaders in Pittsburgh."

In the battle of global elites, Asia will remain second fiddle as long as the region is unable to mount a common currency. It already starts in a weak position due to the Western domination of world gold reserves; G7 lightweight Italy has 2.5 times the amount of gold reserves as China.

Incoming Japanese prime minister Yukio Hatoyama has recognized this, as well. In a recent magazine article, he wrote : "We should aim to unify currencies in the region and realise an Asian common currency".

The problem is, there are good reasons there is no common Asian currency. Income and development differences that exist and cause disruptions in Europe are much greater in Asia. Nearly every economy is still export-oriented, and manipulates their own currency in relation to the dollar. And there are unresolved nationalistic antagonisms in the region. Europe more or less blew itself up in World War 2, and the nationalistic impulses that fostered centuries of warfare were catastrophically discredited. This is less the case in Asia; a good portion of the Japanese population still thinks positively of the World War 2 leadership, for instance. No German leader could go to a shrine of Goebbels the way Japanese politicians visit the shrines of their war criminals. These visits inflame relations with the two other major economic powers in the region, China and South Korea.

It is much more likely that the yuan becomes the dominant currency within a Chinese sphere of influence, or trading bloc. This would leave Japan and Korea on the outside looking in, and it is perhaps to counter this possibility that sections of the Japanese elite are pushing for a pan-Asian currency.

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1 "G-20's Wishful Thinking" - Forbes
2 "Japan PM frontrunner calls for single Asian currency" - AFP
3 Related Post: "Asian Exporters Turf Battles"

Poland as the next South Korea

A formerly poor country, long dominated by powerful neighbors, that becomes a lynchpin of U.S. foreign policy. This gives it defense security, access to the highest level technology in the U.S. military arsenal, and the leverage to negotiate favorable trade relations. Thus laying the conditions for rapid growth.

Maybe in a generation, as with Koreans - it will be 'accepted wisdom' that Poles are smarter than most, and have naturally high IQ's.

1 "US planning missile bases in Poland: report" - AFP
2 "Lockheed Martin, Poland Air Force Celebrate Arrival of Most Advanced F-16 Multirole Fighters in Europe" - Lockheed Martin Press Release

Home Sales Flat

The housing crash was the most visible leading indicator of the slide into recession. Another leg down in the market would forecast the famed - and oft predicted - double dip.

1 "New Homes Sales Data Are Mixed" - LA Times

More Political Economy , less Economics

The main problem with Economics as a field is that it is about myth-making. If only we could have a free-market, think about how wonderful things would be. If only we could have pure free trade...etc.

The real world is shaped by political concerns, and different national and regional factions jockeying for power.

An economic analysis fails to grasp the reasoning and significance behind the recent tire tariffs against China. There are frets about Smoot-Hawley and union influence. Unions are always a good bogeyman for the neo-liberal economist and his dream of 'free markets'.

Political economy looks at other factors, and places the tariffs in the context of US-China geopolitical struggles. A large one at the moment being Iran. China has been the most reluctant national power to endorse sanctions against Iran, due to business ties, and a policy of non-interference. Any Western blockade of gasoline imports to Iran would be diminished by the fact that Iran imports about a third of that product from China.

U.S. tariffs on products made in China could be legally applied to a wide sweep of industries. And they would be pleasing to countries such as Mexico, Vietnam, Korea and the like.

They can best be understood as a direct threat to China - stand out of the way of American interests in Iran.

1 "Obama: Iran's secret nuke facility 'inconsistent with a peaceful program'" - USA Today
2 "China Firms Selling Fuel to Iran as U.S. Sanctions Loom" - NYT
3 "US "confident" tires action on China WTO legal-aide" - Reuters
4 "Is Iran gas ban a step toward war?" - Asia Times

Af-Pak Policy in Chaos

It's hard to put a pretty face on the type of brutal military force necessary to contain resistance in Afghanistan. This is one of the reasons for the current 'indecisiveness' in the White House. But since Obama was 'Marketer of the Year' in 2008, according to Advertising Age, the White House will probably come up with something to sell the public.

The generals want to escalate, and are getting restless at the delay:

Three officers at the Pentagon and in Kabul told McClatchy Newspapers that the McChrystal they know would resign before he would stand behind a faltering policy that he thought would endanger his forces or the strategy.

"Yes, he'll be a good soldier, but he will only go so far," a senior official in Kabul said. "He'll hold his ground. He's not going to bend to political pressure."

Time to 'Fact Check' Michael Moore

This is so ridiculous...

Why the Liberal Obsession with Sarah Palin ?

She is usually the most prominent butt of jokes at the typical liberal, creative-class (TM), house party.

I think it's a class thing. She's a redneck, country, and therefore 'stupid' - an easy target.

Meanwhile, people like Hank Paulson are 'smart', even if Big Finance is what drove the economy into the gutter. But he got good grades in high school, and therefore was able to go to a nice college with nice people.

The AFL-CIO Flirts With Insolvency

At the moment the AFL-CIO has more liabilities than debts. And a significant source of income - credit card royalties - has an uncertain future as the consumer retrenches. Consider that the organization earned $ 35 million from the so-called 'Union Plus Advantage', as compared to $ 74 million in dues, for the year ending June, 2008.

Meanwhile, the SEIU has liabilities that are 80 % of assets.

None of this would matter too much if the organizations were engines of dynamism. However, increased public sector membership has come through legislative fiat, in exchange for the tacit promise of weak contracts. The wages of SEIU California home health care workers are disgraceful. Their leader, Andy Stern, seems determined to bring this model into the private sector, where unions are pretty much in a death spiral in terms of organizing.

For instance, Boeing recently bought a major assembly plant in South Carolina, and promptly - and easily - got the IAM de-certified. This is high skilled domestic manufacturing following auto assembly to the South. It didn't go to the bogeyman of China.

1 "Unions in Debt" - WSJ
2 "Trumka Takes Over AFL-CIO" - Counterpunch
3 "Boeing buys half of South Carolina 787 assembly plant" - Seattle Times
4 "Boeing workers in South Carolina reject union" - Reuters

2010 Philippines Elections

Jockeying is beginning for the 2010 Philippines elections, as Gloria Macapagal-Arroyo's term is ending. One key candidate to watch is defense minister Gilberto Teodoro. He is Ivy League educated, like Arroyo, and is the most U.S.-establishment friendly candidate on the slate. He has built up close ties with the U.S. military during his tenure, and is a firm supporter of 'lily-pad' bases in the country. U.S. troops at these bases are training commandos in the Philippines army to fight against Muslim "terrorists" (i.e., other Filipinos) on Mindanao and Jolo. But in reality, they are also part of a strategy to counter China's influence on the island and in the Spratly's. For instance, two of the richest men in the Philippines - both billionaires - are of Chinese descent. And the Spratly Islands are thought to have significant amounts of untapped oil reserves; they are claimed by almost every country in South East Asia, most especially by China in their quest for energy resources.

Again, this is the case of the U.S. using its last bastion of dominance as a trump card to offset its economic decline. One could see a similar type of political figure emerge in a country like Pakistan, where U.S. special opps are training elite segments of the Pakistani army.

1 "Philippines' ruling party names Teodoro as presidential candidate" - AFP
2 "Group fears US bases return under Teodoro " - Philippine Daily Inquirer

And A Thousand Pravdas Are Born ?

The president said he is "happy to look at" bills before Congress that would give struggling news organizations tax breaks if they were to restructure as nonprofit businesses.

Newspapers are hardly agents of structural change anyhow, but this would certainly tighten their relationship with government and power.

1 "Obama open to newspaper bailout bill" - The Hill

Carter: U.S. Had Forewarning of Venezuelan Coup Attempt

The failed coup of Hugo Chavez in 2002 was a defining moment in the recent history of Latin America. It was supported by both the New York Times and the U.S. State Department in the hours when Chavez was out of power. It's failure opened the door to Morales' victory in Bolivia, and in general, broke American dominance over the region.

Jimmy Carter recently stated the obvious - that the U.S. was no innocent bystander:

"I think there is no doubt that in 2002, the United States had at the very least full knowledge about the coup, and could even have been directly involved," Carter said.

The Revolution Will Not Be Televised , filmed during the coup, is one of the great documentaries ever made.

China's Loan Spree

China remains the biggest bubble of them all. But bubbles can grow a long time before collapsing or deflatating.

1 "Chinese regulator warns on loan spree" - Financial Times

Lisbon in Trouble in Ireland

And so, Irish political figures are beginning their threats. The only problem is, they are not very popular.

Regardless of what happens with the Irish vote, however, the E.U. is going to find a way to continue political integration. Individual European countries simply do not have enough clout on the international stage without the E.U., and elites within each country are keenly aware of that.

The Police State DNA Database

Trial programs are underway to promote the use of mandatory blood tests on suspected drunken drivers. Of course, any form of poor driving can create the 'probable cause' to test for intoxication.

With blood tests come the ability to record DNA. And police departments have long been pushing for a nationwide DNA database to make it easier to solve open criminal cases.

There is a more ominous side to this, in that it gives the centralized state more surveillance power. Traces of DNA can be used to identify and monitor individuals, for whatever reason - criminal justice, political, or personal. As the ability to analyze DNA improves, the state will be able to obtain damaging personal and health information. Forget about the right to privacy or anonymity.

As for the courts: "Officers can't hold down a suspect and force them to breath into a tube ... but they can forcefully take blood — a practice that's been upheld by Idaho's Supreme Court and the U.S. Supreme Court."




So we should prepare to have the state forcefully take our blood, with the possibility it will be in a national DNA database ?

American economic inequality has surged to historic levels over the last 30 years. It's impossible to have a healthy Republic under these conditions - and even the current sclerotic form has a questionable future. The potential for political disruptions are too many, and the state is forced into the position of finding measure after measure to control the population.

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1 "Police say syringes will help stop drunk driving" - AP
2 "Identity Chips and State Power" - purple

More 'U.S. Bonds' Seized in Italy

The U.S. Secret Service is examining more than $100 billion of U.S. government bonds confiscated in northern Italy in August, just two months after $134 billion of allegedly fake securities were seized in a nearby town.

Currencies and bonds are becoming easier to counterfeit, and the barriers to entry lower. People can't counterfeit Gold yet, an advantage it has over the printing press. An inability to control counterfeiting might lead to a push for a non-currency economy, something Buiter has proposed for other reasons.

These particular incidents have Mafia laundering written all over them, but where the counterfeit is originating from is hard to tell. Could be organized crime, but could be the covert opps of an unknown government. The politics of destablization are more important now than ever, given the "peace bubble" of MAD.

1 "U.S. Authorities Probing $100 Billion of Bonds Seized in Italy" - Bloomberg

Digging the Trenching for Coming Resource Wars

New reports from the UN and analysts in India, Washington and London estimate that at least 30m hectares is being acquired to grow food for countries such as China and the Gulf states who cannot produce enough for their populations.

So-called emerging economies are buying up land and commodity sources in the undeveloped world to hedge against domestic resource collapse. Most of them, such as China, have already been shut out of the prime real estate because of their late development - the West and Japan have already claimed the best stuff. Consider the big prize in political relationships, that of the United States and Saudi Arabia.

Of course, investors in G7 countries are also involved, but more as private equity funds. Morgan Stanley has bought 40,000 hectacres in Ukraine as a way to profit from possible resource scarcities.

In order to preserve profit, class relations in capitalism must revert to a pyramid structure. World system theorists have called this the core, semi-periphery and periphery structure. For a few very wealthy to exist, there must be a exponentially larger pool of surplus labor available to exploit and profit from. As the so-called semi-periphery countries look to further develop, they are going to be forced to enlarge labor and resource exploitation from the very poorest countries in the world. Otherwise, the pyramid structure of world capitalism becomes top heavy, and much like US domestic nonfinancial profits collapsed in the 1970's due to high labor costs - so too will the world economy. To the extent this affects the 'core', they will present a note of alarm and concern . The subtext of the previously quoted UK Guardian article is "G8 leaders to discuss 'neo-colonialism'". Obviously, the G7/8 has not historically had qualms with imperialism. However, when emerging economies do it, then it threatens the established world power structure, and is reported as threatening.

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1 "Fears for the world's poor countries as the rich grab land to grow food" - UK Guardian

101,000 Excess U.S. Deaths Relative to France

I guess we're #1 in defense exports, but far from it in terms of health care. Emphasizing health care, as opposed to the misnomers of health insurance and cost control, which so fixate the bean counters of the U.S. Senate and their masters.

1 "France best, US worst in preventable death ranking" - Reuters

The Anarchy That is Mexico

Stereotypes , stereotypes ...

As the United States debates an overhaul of its health care system, thousands of American retirees in Mexico have quietly found a solution of their own, signing up for the health care plan run by the Mexican Social Security Institute...

"They take very good care of us," said Jessica Moyal, 59, of Hollywood, Fla., who now lives in San Miguel de Allende, Mexico, a popular retirement enclave for Americans.

1 "Mexico's health care lures Americans" - USA Today

Cheap Resources (and Cheap Labor)

The era of cheap resources is near an end. The natural world's easily accessible supplies are being exploited in about a destructive and short-term manner as possible.

1 "Wildlife populations 'plummeting' " - BBC News
2 "Warning: Oil supplies are running out fast" - The Independent
3 "Growing Asian middle class to propel oil use: study" - Reuters India
4 "As hybrid cars gobble rare metals, shortage looms" - Reuters

End Census Racial and Ethnic Categories

To start, consider a bit of statistical 'analysis', by way of reference:

Mexico has a per capita gdp/ppp of 13,500 a year and the Chinese speaking world is about $7500 a year. As we know from statistics there is a clear and undeniable relationship between income and IQ. Therefore, either Mexicans work harder, or are innately smarter.

---

Of course few people would believe this in the United States today. In our corner of the world, our sample bias, Chinese-Americans make about twice what Mexican-Americans do. So we bring another set of stereotypes to the table. But from our worldwide income figures it might seem that ethnicity is masking class issues related to immigration patterns particular to the United States.

Critics of the bracketed analysis would point out the huge poverty in mainland China, the geographic problems in raising that population out of poverty, the legacy of imperialism , Mexico's proximity to the U.S, the weakness in IQ as a measure of innate anything. In short, people would point at other factors that complicate said analysis.

Unfortunately, we cannot do that when it comes to analyzing our own population.

Such is the intellectual weakness of our continuing obsession with ethnic categorization in an increasingly multi-layered American society. It is silly on one level, but deeply dangerous on another. From a left perspective, it deeply undermines working class solidarity. Go to any Cal campus in the Fall and see how many ethnic-oriented tables and student organizations there are versus labor organizations. Politically speaking for the United States in 2010, it's a complete dead end.

Second, it promotes racial antagonism and and the 'science' of ethnic differences in intelligence. This undercurrent exists in mainstream educational circles - again, based on our statistical reporting of issues solely along ethnic lines. And based upon a misunderstanding of how sample bias can skew perception.

Third, it is inaccurate and unscientific, which erodes logic and rationality in our broader discourse.

We cling to this way of viewing American society because it worked - 40 year ago - when there was little immigration and less flux in the statistical inputs of our society. The US today is characterized by multiple level of immigration - skilled , unskilled, from multiple areas of the world, and by ethnic mixing domestically on a scale rarely seen in human history. This tapestry is being thrust into an archaic and brittle system of categorization despite in many cases deep differences in class, culture and educational background. And behind it are political voices who like this way of breaking up society by skin color - most importantly the wealthy who of course are deeply in love with the idea of fracturing working class solidarity.

Time for a new model, most especially on the Left.

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The most obvious example of this is Obama. He is, of course Black but from a middle to upper class background - attending one of the most elite private high schools in the U.S. -and from a father who was in the political elite of Kenya, a highly educated and a smart guy himself.

Can Obama's success really tell us anything about the conditions and opportunity for a descendant from slavery who grows up in Detroit ? I don't think so.

Census BLS Ethnic Racial Categotes

To start, consider a bit of statistical 'analysis', by way of reference:

Mexico has a per capita gdp/ppp of 13,500 a year and the Chinese speaking world is about $7500 a year. As we know from statistics there is a clear and undeniable relationship between income and IQ. Therefore, either Mexicans work harder, or are innately smarter.

---

Of course few people would believe this in the United States today. In our corner of the world, our sample bias, Chinese-Americans make about twice what Mexican-Americans do. So we bring another set of stereotypes to the table. But from our worldwide income figures it might seem that ethnicity is masking class issues related to immigration patterns particular to the United States.

Critics of the bracketed analysis would point out the huge poverty in mainland China, the geographic problems in raising that population out of poverty, the legacy of imperialism , Mexico's proximity to the U.S, the weakness in IQ as a measure of innate anything. In short, people would point at other factors that complicate said analysis.

Unfortunately, we cannot do that when it comes to analyzing our own population.

Such is the intellectual weakness of our continuing obsession with ethnic categorization in an increasingly multi-layered American society. It is silly on one level, but deeply dangerous on another. From a left perspective, it deeply undermines working class solidarity. Go to any Cal campus in the Fall and see how many ethnic-oriented tables and student organizations there are versus labor organizations. Politically speaking for the United States in 2010, it's a complete dead end.

Second, it promotes racial antagonism and and the 'science' of ethnic differences in intelligence. This undercurrent exists in mainstream educational circles - again, based on our statistical reporting of issues solely along ethnic lines. And based upon a misunderstanding of how sample bias can skew perception.

Third, it is inaccurate and unscientific, which erodes logic and rationality in our broader discourse.

We cling to this way of viewing American society because it worked - 40 year ago - when there was little immigration and less flux in the statistical inputs of our society. The US today is characterized by multiple level of immigration - skilled , unskilled, from multiple areas of the world, and by ethnic mixing domestically on a scale rarely seen in human history. This tapestry is being thrust into an archaic and brittle system of categorization despite in many cases deep differences in class, culture and educational background. And behind it are political voices who like this way of breaking up society by skin color - most importantly the wealthy who of course are deeply in love with the idea of fracturing working class solidarity.

Time for a new model, most especially on the Left.

---
The most obvious example of this is Obama. He is, of course Black but from a middle to upper class background - attending one of the most elite private high schools in the U.S. -and from a father who was in the political elite of Kenya, a highly educated and a smart guy himself.

Can Obama's success really tell us anything about the conditions and opportunity for a descendant from slavery who grows up in Detroit ? I don't think so.

Mexicans Are Smarter Than Chinese

To start, consider a bit of statistical 'analysis', by way of reference:

Mexico has a per capita gdp/ppp of 13,500 a year and the Chinese speaking world is about $7500 a year. As we know from statistics there is a clear and undeniable relationship between income and IQ. Therefore, either Mexicans work harder, or are innately smarter.

---

Of course few people would believe this in the United States today. In our corner of the world, our sample bias, Chinese-Americans make about twice what Mexican-Americans do. So we bring another set of stereotypes to the table. But from our worldwide income figures it might seem that ethnicity is masking class issues related to immigration patterns particular to the United States.

Critics of the bracketed analysis would point out the huge poverty in mainland China, the geographic problems in raising that population out of poverty, the legacy of imperialism , Mexico's proximity to the U.S, the weakness in IQ as a measure of innate anything. In short, people would point at other factors that complicate said analysis.

Unfortunately, we cannot do that when it comes to analyzing our own population.

Such is the intellectual weakness of our continuing obsession with ethnic categorization in an increasingly multi-layered American society. It is silly on one level, but deeply dangerous on another. From a left perspective, it deeply undermines working class solidarity. Go to any Cal campus in the Fall and see how many ethnic-oriented tables and student organizations there are versus labor organizations. Politically speaking for the United States in 2010, it's a complete dead end.

Second, it promotes racial antagonism and and the 'science' of ethnic differences in intelligence. This undercurrent exists in mainstream educational circles - again, based on our statistical reporting of issues solely along ethnic lines. And based upon a misunderstanding of how sample bias can skew perception.

Third, it is inaccurate and unscientific, which erodes logic and rationality in our broader discourse.

We cling to this way of viewing American society because it worked - 40 year ago - when there was little immigration and less flux in the statistical inputs of our society. The US today is characterized by multiple level of immigration - skilled , unskilled, from multiple areas of the world, and by ethnic mixing domestically on a scale rarely seen in human history. This tapestry is being thrust into an archaic and brittle system of categorization despite in many cases deep differences in class, culture and educational background. And behind it are political voices who like this way of breaking up society by skin color - most importantly the wealthy who of course are deeply in love with the idea of fracturing working class solidarity.

Time for a new model, most especially on the Left.

---
The most obvious example of this is Obama. He is, of course Black but from a middle to upper class background - attending one of the most elite private high schools in the U.S. -and from a father who was in the political elite of Kenya, a highly educated and a smart guy himself.

Can Obama's success really tell us anything about the conditions and opportunity for a descendant from slavery who grows up in Detroit ? I don't think so.

China - India Border Disputes

The two fought a war back in the early 1960's, and the border is still under dispute. It looks like India is bolstering its defenses in the area, which is drawing a response from China. Proving once again what a farce BRIC is.

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1 "New N-E division with eye on China?" - The Times of India
2 "China refutes reports of border incursions for second time" - The Times of India
3 "Chinese essay sparks outcry in India" - Financial Times
4 "On the cold frontiers, silent struggle is on" - Hindustan Times

Are Cell Phones the Next Tobacco ?

A lot of research is coming out that links heavy cell phone use with cancer. Not surprising, since it's somewhat akin to sticking your head in a microwave.

Radiation rankings of different cell phones can be found here.

Elites Push for the End of Currency

Finance dislikes currency because it can't make money on transaction fees. Governments hate it is because it outside of the system, and hard to track and tax. Poor people live in this world of the grey market.

Buiter seems to dislike it because it prevents the implementation of negative interest rates. Which, it seems, is the next way to reinflate the consumer bubble.

Cheap Resources and Cheap Labor

Capitalism relies heavily on pools of cheap labor and cheap resources. That's why its components continually push for new quantities of both, to suck into the system.

Now the Filet-O-Fish is suffering after a long period of exploitation, and is on the verge of being tapped out.



On to the next fish.

The U.S. is very good at some things

Reuters Exclusive: "U.S. heads for record overseas arms sales in 2009"

The United States is close to a new peak in government-to-government arms sales, poised to top last year's record $36.4 billion, Pentagon figures showed.

70 % market share.

Hysteria About Tire Tariffs on China

Tire tariffs directed against China are not going to significantly raise prices in the low end market. It just means the production will go elsewhere, to a competitor of China. Vietnam or Mexico are two prime locations. There is virtually no chance production will return to the U.S. - wages are just 'too high', even in Alabama.

This was Obama's shot-across-the-bow to China, with whom the U.S. is negotiating on a wide range of issues. A big one right now is the attempt to cobble together a G2 solution on greenhouse gas emissions. It was a geopolitical move, not a protectionist one in the fullest sense.

The Fed Puts China Under Pressure

The Federal Reserve's quantitative easing policies, and medium-term endorsement of interest rates near zero, are contributing to an asset bubble in China. Ambrose-Pritchard of the UK Telegraph quotes Cheng-Lie, former vice-chairman of the Politboro Standing Committee:

Mr Cheng said the Fed's loose monetary policy was stoking an unstable asset boom in China. "If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.

"Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down."

But the Fed has made it quite clear that it will keep real interest rates at low levels for a very long time.

Ambrose-Pritchard also writes:

Of course, China cold end this problem by letting the yuan rise to its proper value, but China too is trapped. Wafer-thin profit margins on exports mean that vast chunks of Chinese industry would go bust if the yuan rose enough to close the trade surplus.

China's options are few, and their responses are magnified by what could almost be called Western hysteria. Consider China's recent announcement that it has doubled its gold reserves. Yet the United States has eight times the gold reserves of China. The Eurozone as a whole has ten times the reserves. Italy - the lightweight of the G7 - has two and half times the reserves of China. If one considers Gold to be the historic world currency, than the West is actually in a very powerful position. I would suggest that this is also why the United States feels it is able to be so reckless with its fiat currency.

Andy Xie writes of China's housing bubbles :

Absolute oversupply, i.e., there aren’t enough people for all the buildings, could happen quite soon. When it happens, the consequences are quite severe. Property prices could drop like Japan has experienced in the past two decades, which would destroy the banking system.

A destroyed Chinese banking system, brought under the control of the West, has been the dream of Wall Street for many years. This 'dream' has been a guide to U.S. policy on trade and international relations, and probably was a big factor in allowing China into the WTO. The bonanza would be as historic and lucrative for the West as it would be debilitating for China's central government.

Perhaps this is why Zhu Min, Bank of China's Vice President, was recently quoted as saying "the real economic crisis is just starting".

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Sources:
1 "China, Bernanke, And the Price of Gold" - UK Telegraph
2 "China Alarmed by U.S. Money Printing" - UK Telegraph
3 "The Real Economic Crisis is Just Starting" - Zero Hedge
4 "Zero Lower Bound Blogging" - Krugman
5 "China has Become a Giant Ponzi Scheme" - Andy Xie

Unemployment and Debt is Crushing a Generation

The surge in youth unemployment is making the more responsible and far-sighted mouthpieces of the ruling class nervous. Bob Herbert recently wrote "For those concerned with the economic viability of the American family going forward, the plight of young workers, especially young men, is particularly frightening. The percentage of young American men who are actually working is the lowest it has been in the 61 years of record-keeping, according to the Center for Labor Market Studies at Northeastern University in Boston."

He continues, "Only 65 of every 100 men aged 20 through 24 years old were working on any given day in the first six months of this year. In the age group 25 through 34 years old, traditionally a prime age range for getting married and starting a family, just 81 of 100 men were employed."

Now couple this with the mountains of student loan debt that accompany young people as they leave school. From the Wall Street Journal: "The new numbers highlight how debt has become commonplace in paying for higher education. Today, two-thirds of college students borrow to pay for college, and their average debt load is $23,186 by the time they graduate, according to an analysis of the government's National Postsecondary Student Aid Study, conducted by financial-aid expert Mark Kantrowitz. Only a dozen years earlier, according to the study, 58% of students borrowed to pay for college, and the average amount borrowed was $13,172."

Elite mouthpieces usually couch these articles in terms of worries about social stability, or weak profit margins because of reduced consumer spending. Frankly, we need a lot less social stability if it means changing the operation of the United States in a fundamental way. This doesn't necessarily mean smashing things or lining up in a voting booth. There are effective ways to force social change and the examples exist throughout history. But it requires solidarity among a disparate group of people, finding the sources of ruling class power, and developing strategies to weaken them.

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Sources:
1 "Students Borrow More Than Ever for College " - WSJ
2 "A Scary Reality" - NYT Op-Ed
3 "Americans Out of Work - Is Double Digit Unemployment Here to Stay ?" - Time
4 "Young Workers, A Lost Decade" - AFL-CIO
5 "One in six young people not in work or education" - Guardian UK
6 "College Tuition, Then and Now" - Blended Purple

Mexican-Americans and the SAT

The SAT has been a source of controversy for many years, because - not surprisingly - wealthy people do well on the test and poor people don't. Wealthy people set the rules in most societies about what is important to learn, and teach their children accordingly.

Bilingualism is mostly unimportant in the United States in judging whether a person is educated. In Europe, someone who speaks only one language is basically considered an idiot. And in Asia, every educated person is expected to know English, as well as their mother tongue. Even though most Asian languages are radically different than the Romance branch.

So we have a curious case of the most bilingual ethnic group in the United States, Mexicans, scoring some of the lowest test scores. This is because knowing multiple languages is not considered a sign of intelligence here - and because wealthy people in the United States have kids who are mostly not bilingual. And Mexican-Americans, as a sum, are concentrated in the poor and working class segments of the population. This reveals the SAT test to be what it is - a rather arbitrary measurement of a person's intellectual development.

Space Based Solar Power

It looks like the large portions of the U.S. Military-Industrial complex are getting behind this. The most likely trigger is the expense in dominating the earth's energy supply through warfare and occupation. Iraq and AfPak have not gone 'smoothly', and the Pentagon and any engaged observer can see these type of battles are just the beginning. As the 2007 report on Space Based Solar Power, from the National Security Space Office, summarized: "In addition to the emergence of global concerns over climate change, American and allied energy source security is now under threat from actors that seek to destabilize or control global energy markets as well as increased energy demand competition by emerging global economies." (Read : China and India)

The U.S., of course, has had a military-Keynesian style economy since the 2nd World War. Many major American inventions since that time, if not most, germinated first within military research. Generally, it's not a good bet to go against the research power and the ample budget of the Pentagon. Certainly, major players are getting involved, which means that they believe government backing is shortly to come. Consider PG & E's recent application to buy space based solar power from Solaren. Who is Solaren ? A "stealthy Southern California startup founded by veterans of key players in the military-industrial complex—Hughes Aircraft, Boeing, Lockheed Martin and the U.S. Air Force."

Some finding from the 2007 report:

- "The SBSP Study Group concluded that space‐based solar power does present a strategic opportunity that could significantly advance US and partner security, capability, and freedom of action and merits significant further attention on the part of both the US Government and the private sector."

- "The SBSP Study Group concluded that while significant technical challenges remain, Space‐Based Solar Power is more technically executable than ever before and current technological vectors promise to further improve its viability. A government‐led proof‐of‐concept demonstration could serve to catalyze commercial sector development."

The entire report is an interesting read.

1 "SBSP Interim Assessment" - From the National Security Space Office
2 "Space Solar Power: The Next Frontier ?" - PG & E
3 "California utility bets on space-based solar power" - Grist

Obama and Business International Corporation

I have hesitated on commenting on some of the rather odd and mysterious aspects to Obama's pre-public years. But John Pilger recently mentioned one of them, Obama's year spent with Business International Corporation. After graduating from Colombia in 1983, Obama describes in Dreams of My Father as being hired by a "consulting house to multinational corporations".

In profiling Obama during the campaign, print newspapers also had some rather benign things to say about Business International Corporation. The New York Times mentions it as "a small newsletter-publishing and research firm, with about 250 employees worldwide, that helped companies with foreign operations". The Boston Globe writes: "Founded in 1954 to publish a magazine targeted at an increasingly globalized managerial class, Business International covered a broad array of subjects, including reports on economic policy making and recommendations for executive insurance policies". NPR reports only that it was "a firm that catered to multinational corporations".

But back in 1977, the New York Times reported that Business International Corporation fronted CIA agents during the 1950's. It's unlikely that these type of activities ended with the Red Scare. It had a role in the 1987 Fijian coup, at least according to Lobster Magazine , the U.K. based publication described as "The Journal of Parapolitics". Interpreting their 1987 article on the coup, the BIC acted as a front for wealthy businessmen, who could thereupon funnel money to US-friendly political groups. (The same 1987 article in Lobster also notes Wolfowitz's involvement with the coup, which was instigated because Fiji's elected government was to declare the country a nuclear-free zone.)

Pilger mentions it as infiltrating labor groups in Australia. Note also that the CIA has been accused of having a role in toppling Australia's government in 1975.

Obama's time at BIC has been described in all public quarters as very mundane. For instance, the Boston Globe writes "Obama took charge of updating Financing Foreign Operations, a yearbook for which he edited manuscripts from correspondents in 40 countries. Obama also wrote for Business International Money Report, a newsletter covering currency issues and monetary policy." Other interviewees describe it as "high school with ashtrays" or "a company full of low-paid, hard-working, fun-loving young people".

So, as Pilger says, "there may be absolutely nothing sinister". What is most incongruent is how mainstream newspapers have memory loss regarding the firm's covert history, and how it belies Obama's campaign claim of being an outsider.
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Sources:
1 John Pilger Speaking at the Socialism 2009 Conference (BIC reference at 1:30)
2 "Obama’s Account of New York Years Often Differs From What Others Say" - NYT
3 "Obama's Early Brush With Financial Markets" - NPR
4 "Obama shows hints of his year in global finance" - Boston.com
5 Business International Corporation - Wikipedia
Lobster Magazine, Issue 14, 1987 - Author's Personal Collection
"CIA Established Many Links to Journalists in U.S. and Abroad" - NYT, December 27th, 1977

Update on Climate Change Talks

Copenhagen seems headed for either collapse, or a vague postponement of the issues, but there are a few scenarios that present brighter possibilities.

The overall goal of the conference is to agree on at least a 25 % cut in greenhouse gas emissions by 2020, with a long-term goal of 50 % by 2050 . Modeling has indicated that this is the type of cut necessary to prevent a rise beyond 2 degrees Celsius in global temperature. Such a rise might trigger chain events - i.e. a tipping point - that would lead to cataclysmic climate scenarios. Given what is going on in the Arctic, these models may already be outdated and conservative. UN chief Ban Ki-moon seems to think so.

There are rumors that the U.S. and China will enter into some kind of an climate change agreement when Obama travels to Beijing in November. This might involve technology transfers to China, so that they are not so dependent upon their coal fueled plants. I'm a bit dubious that this agreement will be followed through, if it begins - like the G20 meeting in the Spring - it might just be an occasion for a good press conference. Whether these kind of production restrictions get adhered to in a time of world recession seems unlikely, but of course, possible. Though this recession is not ending in a significant way any time soon.

In other countries: Japan's Chamber of Commerce came out against a 25 percent cut in emissions by 2020, putting pressure on the new government. Rudd's proposal in Australia faces similar opposition, and a cap and trade bill was defeated in their Senate last month. In the United States, the climate control legislation known as Waxman-Markey is being watered down and may not even face a vote. The E.U. seems more firmly committed, promising a 20 % cut regardless of what happens in Copenhagen, and a 30 % cut by 2020 if there is some agreement by other regions and nations. Obama apparently also has the option of doing an end-around Congress, and implementing policy through the EPA.

In general, the United Nations is the most respected and stable international governmental organization. These talks are really monumental, and difficult, but a failure would severely damage the credibility of this key foundation of the post-World War 2 world order.

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Sources
1 World heading for climate 'abyss': UN chief - Reuters
2 US-China climate deal likely at Obama visit: Senator - Reuters
3 Great Barrier Reef Said to Face Catastrophic Damage - Bloomberg
4 Japan business lobby to oppose climate target: Paper - Reuters
5 SCENARIOS: Fate of climate change bill in Congress - Reuters
6 Limiting Global Climate Change to 2 degrees Celsius - E.U.
7 Climate Change: Halving Carbon Dioxide Emissions By 2050 Could Stabilize Global Warming - Nature/Science Daily
8 U.N. Climate Change Homepage
9 Studies of the Arctic Suggest a Dire Situation - Time

Craigslist Ads During A Recession

An ad I placed for a $100-200 one-time gig got well over 75 responses in the space of 12 hours. I don't know how people sort through resumes for real jobs, where they get hundreds and hundreds of applicants. The job situation is really tough out there for a lot of people.



(the above image is from the first couple of hours)

Three Guys Lost at Sea

Three self-described country boys go ocean fishing, get lost at sea for a week and survive - a remarkable story. What no one has commented on - and what would have been unthinkable 50 years ago - is that two of the country boys are white, and one is black. Again, it shows the transformation of American society, and one that is rarely acknowledged in the centers of elite power and intellectual thought - whether liberal and conservative. Working class Americans are growing less prejudiced, not more, in every way. 50 years ago, black and white friendships were dangerous to have in many areas of the rural south. Now it's normal. And this type of social trend could eventually move on to issues such as the acceptance of gay equality. In fact, the legalization of gay marriage in Iowa earlier this year is probably a foreshadowing of that.

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Can a society in which income inequality is rising, and already at historically high levels, continue to improve on the issues of toleration and discrimination ? Historically, stratified and unequal societies have high degrees of racism and xenophobia. This is why I feel the two social trends of 1) lessening prejudice and 2) widening income inequality are incompatible with each other. Politically and socially, one or the other must give.

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1 "Lost at Sea" - Outdoor Life

Racism is Decreasing While Inequality is Increasing

The decrease in racism, and the increase of income inequality, are two of the most significant American social trends of the last quarter century. Yet historically, these two issues have been linked together, and have had sympathetic political constituencies. People who promote or believe in a society without racism are also generally interested in issues of economic justice.



This traditional marriage has been short-circuited by what is a comfortable political ideology for the very wealthy - one based around identity politics and multi-culturalism, but not a significant redistribution of economic power. This also dovetails nicely with the desire to expand into new markets - if a society is xenophobic there are tendencies against this, and that hurts business. In this type of constructed political movement, the meritocracy of various minority groups are given a share of the pie. For intellectuals this can mean professorships, for business minded people it can be a 'seat at the table' in corporate America.

Identity politics has reached its endpoint with the election of Obama. If working class conditions do not substantially improve, in due time, there could be sharper attention placed on the tremendous growth in economic inequality. This, as racism and the acceptance of discrimination wanes. Alternatively, societies with vast degrees of inequality are often hotbeds for racism, xenophobia, and the like - since something has to 'explain' the inequality.

The divergence in the political conditions of these two historic social causes is not tenable going into the future.

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Sources:
1 Emmanuel Saenz's Spreadsheet on U.S. Income Inequality. Data is From Table A3.
2 Gallup : Most Americans Approve of Interracial Marriages