Federal Tax Receipts and GDP

One wonders if we are seeing the growth of a grey market in U.S. economic activity, given the drop off in federal tax receipts in proportion to GDP. This could also be a measure of the weakness in personal earned incomes, which make up most of U.S. tax receipts. And, throw in the Bush tax cuts for good measure.

NPL's Soar in China

Non-performing loans in China have risen into the “trillions of renminbi” because of poor lending practices, an insolvency lawyer said.

“We work really closely with SASAC, the state-owned enterprise regulator in China, and there are literally trillions and trillions of renminbi of, frankly, defaulting loans already in China that no one is doing anything about,” Neil McDonald, a Hong Kong-based business restructuring and insolvency partner with Lovells LLP, said at an Asia-Pacific Loan Market Association conference yesterday. “At some point there’s going to be a reckoning for that.1

When this last happened, the government was able to bail out the state-managed banking system. But that was during a time of rising trade and trade surpluses. On the other hand, experts have been waiting for China's inefficient banking system to collapse for years, and it was the freewheeling West that went down first. In the meantime, living standards have risen for a good portion of China's population.

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1'China Defaulting Loans Soar, Insolvency Lawyer Says' - Bloomberg; Smith
2'Wen Says Chinese Concerned About Graft, Income Gaps, Housing' - Bloomberg

Capitalism Is About Making Money

Why are people surprised when capital seeks to do just that ?

My Favorite Things

Sri Lanka as a Pawn in the Grand Chessboard

Too often, the Left speaks in terms of conspiracy and intrigue as a way for 'the elite' to maintain power. But usually, ruling class arguments and objectives are out in the open.

Consider the recent US Senate report on Sri Lanka:

Sri Lanka’s geopolitical position has evolved considerably. As Western countries became increasingly critical of the Sri Lankan Government’s handling of the war and human rights record, the Rajapaksa leadership cultivated ties with such countries
as Burma, China, Iran, and Libya. The Chinese have invested billions of dollars in Sri Lanka through military loans, infrastructure loans, and port development, with none of the strings attached by Western nations. While the United States shares with the Indians and the Chinese a common interest in securing maritime trade routes through the Indian Ocean, the U.S. Government has invested relatively little in the economy or the security sector in Sri Lanka, instead focusing more on IDPs and civil society. As a result, Sri Lanka has grown politically and economically isolated from the West.

This strategic drift will have consequences for U.S. interests in the region. Along with our legitimate humanitarian and political concerns, U.S. policymakers have tended to underestimate Sri Lanka’s geostrategic importance for American interests. (page 2)

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The United States cannot afford to ‘‘lose’’ Sri Lanka...(page 3)

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Sri Lanka’s strategic importance to the United States, China, and India is viewed by some as a key piece in a larger geopolitical dynamic, what has been referred to as a new ‘‘Great Game.’’ While all three countries share an interest in securing maritime trade routes, the United States has invested relatively few economic and security resources in Sri Lanka, preferring to focus instead on the political environment. Sri Lanka’s geostrategic importance to American interests has been neglected as a result. (page 19)

1'SRI LANKA: RECHARTING U.S. STRATEGY AFTER THE WAR' - Committee on Foreign Relations, US Senate

Devaluation is for Weaklings

Apparently talk of devaluing the U.S. dollar, or revaluing the Yuan is gaining widespread acceptance ...but it's still the weakling's way to achieve export market share. It's better to have a superior product than a cheaper one.

The fact that every region of the world feels the political need to devalue is a sign of systemic crisis. That crisis is over-capacity, a crisis of overproduction in far too many crucial industries. And while the G7 was liquidating to an extent over the last two years, China increased bank lending by some 40 %.

It's beginning to looks like the 'savior' green industries of solar panels and wind turbines could be put in the over-capacity column, as well. As the world gets smarter and information flows more freely, I suspect market clutter will occur at a more rapid pace, even in new industries. This might suppress the motivation for productive private investment and relegate it more permanently to the speculative realm. In that case, government will have to step in.

1'Chinese Mercantilism' Krugman Blog - NYT

The Vatican Pushes for Pope Pius XII Sainthood

There is a lot of World War 2 amnesia going around. The Catholic Church is a highly political organization, and apparently they feel they can get away with making this Nazi abettor a Saint. After being declared one with 'heroic virtue', the step below sainthood, there is now - out of the blue !- a possible miracle attributed to him (a requirement for sainthood).

Like most good conservatives of the day, Pius tolerated fascism because he wanted to crush Bolshevism.

Pius' apparently ambiguous attitude towards the persecution of Europe's Jews also emerges from a meeting he had with the United States' diplomatic representative to the Vatican, Harold Tittmann, in October 1943. Pius XII had appeared indifferent to the fate of more than a thousand Jews rounded up in Rome and sent to Auschwitz. Pius XII had shown more concern over reports of "Communist gangs roaming in the environs of Rome", Tittmann said at the time. Cardinal Achille Silvestrini, a former Vatican official in charge of foreign affairs, who as a young priest served in Pope Pius’ private office, said the Pope had believed it would be "counterproductive" to speak out against Nazi atrocities, but dedicated himself to concrete actions.1

Resurrecting formerly disgraced World War 2 figures is a sign of increased reactionary tendencies amongst sections of the ruling class.

1'Documents suggest Pope Pius XII more concerned about Soviets than Nazis' - World Jewish Congress
2'Is Every Pontiff a Saint?' - NYT; Gibson
3'Vatican confirms existence of possible miracle attributed to Pius XII' - Catholic News Agency

Obama Budget Ends Constellation Moon Project

Done for possibly two reasons.

1) A simple political attack on the red-states where the Ares rocket program is mostly located.

2) China was probably going to beat 'us' back, so why even compete.

NASA is vital to improving science education in the public schools. Kids are just not inspired much by the thought of designing weapons systems, and NASA has traditionally offered that inspiration. Dismantling and privatizing it is at odds with the whole Science and Technology culture Obama portends to be creating.

1'Obama aims to ax moon mission' - Orlando Sentinal; Block and Mathews

Sliding Towards a Trade War ?

The Financial Times states the obvious:

With US unemployment in double-digits and a huge trade deficit with China, complaints about Chinese currency manipulation are getting a ready hearing in Washington. If China appears to be actively initiating a trade war, the American reaction may well be: “Bring it on.”

The US public never liked the end results of 'free trade' anyway, especially in key electoral states such as Michigan, Ohio and Pennsylvania. It wouldn't take much of a push to whip up a protectionist fervor.

I do wonder about China's recent hysterics. I suspect they are for domestic consumption, but that indicates a somewhat weak internal political situation.

1'China overplays its hand on Taiwan' - Financial Times

Why California's Decline May Be Long-Term

At the heart of California's rise was not Silicon Valley, but its ports and trade with Asia. All things being equal, areas with large trade volumes will be wealthier than areas without. Athens versus Sparta, etc.

With the widening of the Panama Canal, there will probably be a surge in Asian trade with the Eastern and South Eastern seaboards that will bypass the West Coast. In the long-term, this will weaken California's economy.

1'Cheapest Route to Walmart From China May Skip Buffett’s Railway' - Bloomberg; Sabo and Park

On Obama's Warmongering

Nicely summed up:

Even as progressives were savoring Barack Obama's "masterful" – indeed, "brain-searing" – performance at the House Republicans' retreat last Friday, their dazzling champion was busy applying himself with renewed and reckless vigor to that most un-progressive of occupations: saber-rattling around the world. The last few days have certainly seen a remarkable display of bellicosity by the Obama Administration, putting almost every tool in the militarist kit to use: nukes, ships, missiles, money, proxies and war-profiteering.

Obama is a weak person. And weak people can act in erratic ways as a matter of overcompensation.

Speaking of militarism:

The US military began its largest war games in the Pacific region Monday -- an annual training exercise with troops from Thailand, Japan, Indonesia and Singapore, now joined by South Korea.

I wonder why China was not invited ? After all, this is just fun and games.

1'Obama's Wild Weekend: A Worldwide Surge in Warmongering' - Chris Floyd
2'US launches largest Asian war games in Thailand' - AFP

Lancet Retracts Paper Linking Autism with Vaccines

Far too many have forgotten the life improvements childhood vaccines brought to the population.

1'Lancet formally retracts 1998 paper linking vaccine and autism' -AFP; Ingham