Ted Auch

There is now very serious talk about a European Central Fund, which would largely be supported by the profligate ways of Eastern and Southern Europe (http://baselinescenario.com/2010/03/08/european-monetary-fund-arriving-soon/#more-6715; http://www.economist.com/business-finance/economics-focus/displaystory.cfm?story_id=15544302).

I wonder how this EMF would be funded? Would it be as its supporters claim a function of a 1% tax on all money a given EU country has about the Maastricht Treaty Debt and Deficit to GDP requirements? How long would a country have to be above the 60 and 3% thresholds, respectively. I feel as though countries with stout track records would be given substantial temporal leashes while the PIIGS would be put on a spit and roasted within months and prayed upon by speculators. Look if you go ahead with this EMF and the Lisbon Treaty you are opening yourself up to a common currency aggregate that has no ceiling (i.e., a global currency). Talk about too big to fail! Or is it too interconnected to fail?

“The EMF could be run along similar governance lines to the IMF, by having a professional staff remote from direct political influence and a board with representatives from euro-area countries. Just as the existing fund does, the EMF would conduct regular and broad economic surveillance of member countries. But its main role would be to design, monitor and fund assistance programmes for euro-area countries in difficulties, just as the IMF does on a global scale.”

No way does the highlighted part of the above quote from The Economist article happen! We have reached a point as Steven Roach of Morgan Stanley noted in “Stephen Roach on the Next Asia: Opportunities and Challenges for a New Globalization” (http://www.amazon.com/Stephen-Roach-Next-Asia-Opportunities/dp/0470446994) where the line between fiscal policy, monetary policy, and politics is imperceptible. It is as if we are redressing the church v. state debate even though we know there is not such thing.

“Countries could, for instance, be charged an annual contribution of 1% of their “excess debt”, the difference between their actual level of public debt and the limit of 60% of GDP agreed on as one of the Maastricht criteria for euro entry. A similar charge could be levied on governments’ excess deficits, the amount exceeding the Maastricht limit of 3% of GDP. Under these parameters the EMF would have accumulated about €120 billion ($163 billion) over the past decade, enough to cover the likely costs of rescuing Greece. These levies are not so big that they make it impossible for offenders to get to grips with their finances. Under this scheme the Greek contribution to an EMF would have been 0.65% of GDP in 2009.”

Another canard. We are being guided by captains that would like to steer the ship towards a single global currency, which as I said would be the ultimate paradox given everyone’s fascination with Too Big To…..(Fill in the blank!).

Just another great map from The Economist (http://www.economist.com/world/middle-east/displaystory.cfm?story_id=15549365). Refer back to the map in a previous post regarding The Trigger Line as it is called in Iraq. Here it is essentially the line separating the Two Shades of Iraq.

This is truely an informative and needed reminder of the nuanced divisions in Iraq. It is from The Economist (http://www.economist.com/world/middle-east/displaystory.cfm?story_id=15502375). The article basically is discussing the issues surrounding NE Kurdistan and the rest of the nation. The author discusses how the Kurdish v. Arab tussle may be of more long-term importance than Sunni v. Shiite, which is the classic struggle we hear about in the west. The Shiites being the party of El-Maliki. However, the Kurds in the NEastern section of the country guard what they call “The Trigger Line”, because they were burned by Saddam Hussein and feel as though with their oil riches Hallibur…Oops I mean Exxo…Kidding I meant El-Maliki wants desperately to divide and conquer the region. The article makes the point that with General Odierno et al leaving at the end of this summer it will be worth keeping an eye on “The Trigger Line”.

GOOD

“The United Nations received today the 30th instrument of ratification for the Convention on Cluster Munition,” said a statement from Secretary General Ban Ki-moon’s press office.

“The Convention on Cluster Munitions was opened for signature in December 2008, and it has taken only 15 months to attain the 30 ratifications necessary for it to become binding international law.”

“The Obama administration has not yet made its views on the convention known, but President Obama signed a law on March 11, 2009, banning the export of all but a very tiny fraction of the cluster munitions in the US arsenal.”

BAD

“Unfortunately, albeit unsurprisingly, the US, Russia, China, Israel, India and Pakistan - a group that includes the biggest makers and users of the weapon…” attended negotiations or showed any interest of signing an agreement.

“It’s also no surprise that the US, Israel, but also Russia refuse to ratify the 1997 Ottawa Treaty, signed by 158 countries - as of 2007 - which prohibits the production, transfer or use of landmines.”

UGLY

“According to the group Handicap International, one-third of cluster-bomb victims are children. Equally alarming, 98 percent of the weapon’s overall victims are civilians. The group estimates that about 100,000 people have been maimed or killed by cluster bombs around the world since 1965.”

This is architecture on viagra.

I can’t help but wonder if something more long-lasting or as the U.K.’s Adair Turner (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKeO6gsaeQ_M#) would most likely say “socially useful” could have been done with the materials used to build these phallic symbols of excess and upper 1-2% decoupling from the rest of society? I am sure the folks in Malaysia could think of a couple of things and those that have been displaced from the lower 9th Ward of New Orleans would most assuredly have some ideas for what could be done with the $3.2 billion being spent on NYC’s rising symbol of patriotism 1 Word Trade Center.

Given the recent announcement by President Obama that he will be upping the ante by 30,000 troops in Afghanistan I was left to ponder for what seemed to me a logical question: Mr. President what in your portfolio of beliefs and objectives is worth losing an election for? Do you not have any ideologies that you feel so passionate about that you are willing to sacrifice all or most of your political capital to steward such beliefs across the finish line? I voted for you sir and I am not sure at this point whether you have any convictions you feel so strongly about that you would put your political neck on the line for. That is quite disheartening to me because when I saw you speak on the steps of the Ira Allen Chapel here in Burlington, Vermont in March of 2006 I was convinced that you were a man with a spine, conscience, and an intellect unsurpassed in modern day politics. I still believe that the latter is true but as for your spine and to a lesser degree your conscience I am left wondering what you stand for and what you will fight for to the very end, whether it means political suicide or not.

Show us some fight sir! Show us that the issues you campaigned on are part of your very fiber and not simply the populist rhetoric you knew would get the vote of people like myself. It is beginning to feel like you are ashamed that the left supported you and your “progressive” agenda. That is not the man I saw speak in 2006. That is not the man I promptly told my friend Dennis Ailor would win the presidency in 2008. And that is most assuredly not the man I thought was capable of thinking through some of the most complex issues ever to face an incoming president. Sure you were handed a mess but are you going to continue to compare your administration to the one that preceded you? I would caution against such comparisons given that the bar could not have been set any lower.

Sir you know that the right would gladly fall on their sword for issues like abortion, the sanctity of marriage, gun rights, and the military industrial complex. That is a given and that for better or worse is one thing I respect about the neoclassical and neoconservative movement. When they give speeches in Portland or Corpus Christi you know what you’re gonna get and they make absolutely no apologies for their beliefs. It is time you get a little neocon in you Mr. Obama and by that I mean pick an issue any issue, whether it be health care, climate change, FISA, bank reform, or torture and go to the wall for it. Own the issue sir. Take back any one of these issues from those in your party that are self-hating Democrats. Just like Iraq and Katrina will define George W Bush (and no one else!!) one of these issues will define you and it would be a shame if you let the spineless wing of your party co-opt your presidency.

I and many like me – and I would hasten to guess those on the right – are anxiously or should I say nervously waiting and wondering if you will ever stand up and be accounted for with respect to some of the aforementioned issues. I would suggest firing Geithner, Summers, et al as a start. The left rightly sees them as an extension of the Greenspan-Rubin virus that has infected the nation’s financial services regulations for far too long now and the right won’t support them because….well who cares they just won’t because you do and that is reason enough for them.

Apologizing for our hegemonic history and bowing to Emperor Akihito shows that you are sensitive to our fragile status as a global power and more importantly the proper way in which you interact with others when on their turf. However, tacitly apologizing for being liberal or in any way concerned with the appalling trend in wealth, health, and education distribution in this country makes those of us on the left wonder if we were sold a bill of goods and those on the right question your leadership capabilities, both from a foreign and domestic perspective.

You may be wondering at this point why we don’t have your back on some of these crucial issues? Well all is not lost and believe me if we see fight emanating from 1600 Pennsylvania Avenue we will most assuredly get in the ring with you but until then you’ll have to rely on the likes of the Blue Dog Democrats. BTW how’s that working out so far?

The amazingly phony nature of the tribute to Ted Kennedy in the media and New England writ large. If you or I had been in his position we would be in jail for Chappaquiddick. I wonder how Mary Jo Kopechne’s family feels about the ‘Lion of the Senate? I can only guess their opinion of the man is diametrically opposed to that presented by the talking heads on network television and unfortunately my beloved NPR.

Also his family’s opposition to Cape Wind is indicative of the phony liberalism of the New England I love so much? We proselytize on our Green Soap Box, but as soon as we are asked to do more than talk and actually do we hide behind our NIMBY bullshit! Kennedy and his kind are the neoliberals Naomi Klein so effectively and efficiently exposed.

I for one do not? Does that make me an advocate of Big Brother type big government advocate? Nope. I don’t want government to be looking in our bedrooms or bookshelves or email or tapping our phones. Rather I want them to do with our precious tax dollars what they should be doing…..fixing stuff, supporting those in need, and fueling innovation. You may ask what does it mean to starve the beast? (bartlett_starve-the-beast)

Well “starving the beast” is a term originally coined in a WSJ article by Paul Blustein (http://www.wordspy.com/words/starvethebeast.asp) and adamantly preached by the neoconservative wunderkind. This theory reduces taxes on the upper 2% via reduced capital gains, estate, and income taxes, primarily by allowing the elite to declare income as capital gains, which reduces taxable income from 34-38% to 15%. A classic example of this is Warren Buffet noting his personal assistant coughs up a greater percentage of her annual income in taxes than he does, because most of his income is declared as capital gains.

The starve the beast argument foments outright hatred of government by conflating taxes with socialism and the near and dear gun rights of this nations many cowboys. Of course this plays to the underlying fears of an already petrified nation. The last thing this country needs is another thing to be afraid of as we now have climate change, Iran, the Taliban, North Korea, China, Russia, lawyers, unemployment, diabetes, etc. Yet, given all this neocons feel the best remedy is adding to rather than ameliorating these fears. What a bunch of great folks? They must be true patriots.

However, I ask of those interested in an anorexic beast: Do you drive a car or better yet do you like smooth drivable roads? You do? Of course you do we all enjoy our asphalt alleys winding their way through urban centers and rural outposts alike. Well there is a price associated with that privilege and it is a privilege when compared to developed and undeveloped nations alike. Congress has been forced to bailout the fund that pays for the various interstate transportation projects this country takes on every year. Don’t worry its just $7 billion which pales in comparison to things like defense spending (http://www.nytimes.com/2009/07/31/us/31brfs-TRANSPORTATI_BRF.html?ref=todayspaper).

Starving the beast is a convenient and short-term method of consolidating wealth, is completely counter intuitive, and a theory that we should hope is entering the twilight of its relevance.

This is a quote used more now than everything sans “Green Shoots” right now and it is purported to have been spoken by former Illinois Senator Everett Dirksen, although there is no question as to whether he ever said or wrote such words. Regardless of whether Mr. Dirksen did or did not construct this phase it seems an interesting thought given that the Obama administration is now discussing upping US food and agricultural aid to nations around the world to $5 billion annually.  Under the Bush administration this figure was about $2.3-2.7 billion. Now given the quote attributed to the late senator from Illinois this sum should ≈ real $$.

I and others contend that no where is this statement more false than with respect to international aid. Should we look to solve all the developing world’s problems, whether they be health or technology? Absolutely not these folks need to stand on their own 2 feet and it is time to clip their wings with respect to funding for weapons and war related infrastructure. However, the figures mentioned above account for 0.0181-0.0335% of our GDP ($14.93 Trillion FY 2008). At the ultra-macro level the US donates about 0.2-0.4% of GDP in toto (http://www.globalissues.org/article/35/us-and-foreign-aid-assistance#ForeignAidNumbersinChartsandGraphs).This is markedly less than the 0.7% of GDP agreed to by rich nations at the UN General Assembly……..in 1970! Yes it is true we donated $25 billion in 2008 as Official Development Assistance (ODA), which is ≥ Germany and the UK combined and realistically dwarfing every nation on an absolute scale. However, as any economist or pragmatic person would admit absolute values don’t say much, while relative figures say a ton.  The US ranks dead last among the 22 rich nations as a % of GDP. Pekka Hirvonen called this Stingy Samaritanism. The only nations that exceed the 0.7% target are Sweden, Luxembourg, Norway, Denmark, and the Netherlands (0.8-0.99% of GDP)……………..Damn Socialists!

Lets just quickly contrast this with Defense spending, which was 4.7% of GDP last year and has a 45yr average of 5.3% ($702-792 billion annually) (http://www.heritage.org/research/features/budgetchartbook/obama-budget-would-return-defense-spending-to-pre-911-levels.aspx). So, why don’t we just take 0.4% of defense and transfer it to international aid. This would still leave 3.73-4.33% of GDP for making tons of bombs, guns, missiles, tanks, etc. allowing us to continue to engage in mismanaged, ill-conceived, spineless, and pointless wars. How can you argue with that Bush, Cheney, et al?

Further folks like Peter Orzag the Director of President Obama’s Office of Management and Budget has noted that if we don’t get healthcare under control it will mushroom from 5% in 1960 to 20% of GDP sometime between 2020 and 2040. If we were to actually shear some of the fat from this beast we could give more generously, but that might actually require a national healthcare option that would apparantly run private industry out of business. However, this is hard to reconcile given that most in the private sector feel the US government would do a horrible job if they got in the business of healthcare. If this is so than what’s the problem?

We have a TRUE Axis of Evil in this country  Defense, Banks, and Healthcare/Big Pharmaceutical. Cutting these folks down to size even if that meant a 5-10% decrease in their nefarious profits, would permit the US government to cut taxes for Joe the Plumber (ie The Common Man and Woman!) and permit more giving to those around the world in desperate need of real aid. Not food in boxes or finished product but rather the tools and knowledge to make their own stuff and feed themselves by themselves.

I must admit rather reluctantly that I did a rough calculation of how much I gave in aid/donations last year and it came out to approximately 1-2% of my income. That is a figure that I really don’t know how to square with others as the data for individual households in this country is scant with respect to charitable donations.

So, it seems to me that a billion here, a billion there does not equal real money when it comes to international aid. This country owes it to the world to stop exporting so much defense related technology and get going on the stuff that makes countries function in the interim. That includes alternative NRG, agriculture, smart-growth, etc. and the myriad skill-sets they need to stop relying on external aid. Its the least we could do.

Well I just finished reading a couple of disturbing articles on the drug industry in this country (ie The illegal portion!) (http://www.nytimes.com/2009/06/14/opinion/14kristof.html?scp=2&sq=Kristof%20marijuana&st=cse; http://www.nytimes.com/2009/06/12/us/12pot.html?scp=1&sq=marijuana%20prison&st=cse). It got me thinking about the age old question (at least here in Burlington and on Phish tour!!) about whether to legalize marijuana and I thought it would be good to do some quick back of the envelopes as to what else could be done with the money used to enforce the War on Marijuana!

It turns out of the 2.31 million in prison here in the US - a number 4-6 times the world average depending on state - 485,306 are in for various drug related crimes. Of those approximately 47.4% (230,036) could be estimated as Marijuana related. Before I go further it is worth noting, according the National Council on Crime and Delinquency (NCCD) (2006nov_factsheet_incarceration), the “US has less than 5% of the world’s population but over 23% of the world’s incarcerated people.” Why is this notable? Well this 5:1 ratio is the same one attributed to our use of the world’s 83.4 million barrels of oil daily and it also happens to be our consumption:production of goods ratio. What is it with 5:1 and the US? According to the NCCD if the rest of the world followed our lead the global prison population would jump from 9.2 to 47.6 million people. According to Mauer (2003; inc_comparative_intl) the 3-fold increase in our prison population from 1980-1996 was largely (88%) a function of changes in sentencing policy , with changes in crime explaining on 12%. This is scary because like regressive taxation the minorities and women are paying a disproportionate toll. Blumstein and Beck (1999; http://www.jstor.org/pss/1147683) demonstrated that incarceration rose 364% for women between 1980 and 1996, 184 and 235 for African Americans and Hispanics, respectively, while male incarceration rose 195% and that of whites grew 164%. Overlay the increasing privatization of our prison system (http://www.nytimes.com/interactive/2008/12/26/us/1227_DETAIN.html) and all the negatives associated with that and you have a trend that needs immediate reversal. Otherwise we will have Wall Street’s “best and brightest” sticking their noses where they don’t belong, unless of course we were to prosecute them for the myriad offenses they have perpetrated in the past 20 years.

Anyway getting back my point if we assume it costs about $23,876 per year to house these dangerous criminals than we are spending $5.49 trillion annually to keep these vermin locked up. Now what if instead of locking up petty marijuana users and distributors we put that money towards something worthwhile…something like Oh I don’t know healthcare? Well the Medical Industrial Complex (MIC) currently accounts for 15.2% of GDP or $2.10 trillion and is projected to rise to 20.9% by 2020 an astounding $3.35 trillion right? Well actually wrong if we used this “marijuana war” money we would still conservatively have a surplus of 3.39 currently or 2.14 in 2020 to do other stuff. Like what? Well this surplus as it were would pay for about 4% of all college student transportation or book and supply costs presumably lowering student loan amounts by a similar amount. Oh yeah or we could say sayonara to China and their $1.2 trillion in foreign exchange AND their 25% ownership of our national debt. Sounds like a plan to me.

Okay so your not into protectionism, nationalism, recidivism, any other -ism, or education? That is totally cool. How about the electricity you use to turn on your lights, watch your flatscreen, or make a milkshake? Ah I see I got your attention now.

Was it the flatscreen or the milkshake?

Makes no difference if we take the surplus “marijuana war” cash and invest it in alternative energy, lets use for example wind as it is one of my favorites (I hear the cows love it as well!) we could buy outright or subsidize the purchase of 790,310 2 Mega Watt (MW) turbines, which translates to, now hold onto your hat……….. 1,580,621 MW! Alright so what does this mean in terms of capacity? Well the DOE estimates there are 330,000 MW along the Mid-Atlantic Bight, the region of coastline stretching from Massachusetts to North Carolina. Now if that doesn’t get your mouth watering more than the thought of that milkshake how bout the fact that the DOE estimates there are 900,000 MW of wind capacity nationwide, which roughly translates to $2.34 trillion in revenue annually. So, we would have about 680,621 MW worth of spare turbines to dump into the global market.

Is that such a bad thing? I think not and it would all flow from the decriminalization of a weed that gives people the munchies and causes them to have a prediliction for really long songs!