Best Quote of 2009

Surely it is the inalienable right of every citizen to go to hell in his own way.
- Michael Know Beran

Bush Third Term

We're Gonna Need Reagan Back Soon

This is a slightly disturbing group of statistics. Will we see the formation of another Soviet Union. Unlikely given the expansion of the European Union, but discontent breeds revolution. A quick end to the recession in the Eastern Bloc would help raise these numbers some, but the fact that the public's view of democracy and capitalism has fallen so drastically in several years indicates that there is a more deep-seeded problem than the current recession.

The G-20 Meeting - Archer Daniels Midland Report

The current economic crisis is endangering the American way of life. Following the bursting of the housing bubble, the credit crisis and the collapse of the investment banking industry, both the American and World economies have been left in turmoil. In order to alleviate the financial burden on the American population and specifically the American farmer, Archer Daniels Midland has developed a plan to calm the recession and restore the American economy to its pre-recession levels.
The most important thing for the American government to do currently is to allow the United States dollar to fall relative to other currencies. The current account deficit that we currently run with China and the overall trade deficit we run worldwide are detrimental to the American economy. By allowing the dollar to slide relative to foreign currencies, American exports will become more competitive with foreign goods, specifically, the American agricultural goods cultivated by the American farmer. As the backbone of the United States spirit and an important part of the economy, agricultural exports rising are beneficial to the economy on the whole.
In addition to allowing the dollar to slide, the United States government must lower corporate taxes. The current restraints on corporate profits such as the capital gains tax and other windfall profit taxes take money out of the economy that could be used in reinvestment in the United States economy. By lowering these and other corporate taxes, the American corporation would be free to invest in new technology, increase employment and generate more revenue. Coupled with a sliding dollar, the amount of American exports would skyrocket, putting the United States trade deficit in the past.
Increasing the amount of agricultural subsidies given to United States farmers and agricultural exporters would stimulate the economy and allow both consumer and corporate spending to increase. With increased capital flow, the American farmer can reinvest that money in ways beneficial to the United States economy. Whether it is the purchasing of a large investment such as a new combine or reaper, or something on a smaller scale such as supporting local businesses, increased subsidies for the American farmer would put money back in the economic circle. Similarly, increased subsidies for agricultural corporations such as Cargill and Archer Daniels Midland would reinvigorate the American economy. Investment in new agricultural procedures and equipment on a large scale would add capital back into the economy, and allow the business cycle to again grow.
The final step in improving the current economic situation is the Federal Reserve maintaining the current interest rates. Low interest rates promote economic investment and boost the amount of capital in the economic cycle. The money multiplier effect is utilized much more efficiently when money continues to flow in and out of banks. The amount of loans being offered currently could reinvigorate the American economy across the board, not only in the agricultural sector.

Krugman: What a dick. Smart, but a dick

Krugman: The Return of Depression Economics and Crying

Paul Krugman’s newest book, The Return of Depression Economics and the Crisis of 2008 offers historical accounts of previous 20th century international economic crises as well as a breakdown of the rudimentary causes of the current global financial crisis. While his breakdown of these calamities is wonderfully orated through language more in tune with the economic layman such as a wonderfully picturesque and simple baby-sitting cooperative model, in the end he offers no very specific cures for the current crisis.
The historical perspective offered on the previous financial crises is extensive, covering the Latin American, Japanese and Asian economic crashes of the 1990’s. The similarities between all of these crises and the current economic situation are readily apparent, whether it be the inability of current American monetary policy to make any significant dent in the recession much like the Japanese were unable to do in the 1990’s or the arrival of a currency crisis similar to the one that plagued Argentina in 2002. However apparent these may be, the pontifical manner in which Krugman continues to state that indicator signs were “generally ignored” gives this book a patronizing feel.
His arguments for the initial causes of the incident are the most relevant to understanding the current financial crisis, for without knowledge of the problem a solution cannot be reached. Krugman’s analysis that there are four distinct causes of the current crisis appears to be accurate. The bursting of the overvalued housing market, the lack of regulation in the shadow banking industry that led to 21st century bank runs, a monumental currency crisis and the lack of the Federal Reserve Bank to gain any hold on the recession through monetary policy all appear to be sound explanations for the current economic slump. However, the remedies for each of these problems that he offers are not only flawed in themselves to an extent, but also unrealistic.
Krugman’s main idea for an economic revival basically comes down to support for a massive bailout. However, the roughly $800 million dollar bailout that was the brainchild of the Obama administration appears to be not drastic enough for Krugman, as he would like a capital infusion more along the lines of $2 trillion dollars. In this book, he comments on the prevalence of economic corruption that can occur with government economic involvement, but apparently he believes that the United States is a corruption free zone. Naïve, to say the least. In addition to his stimulus endorsement, Krugman wants stringent fiscal regulations imposed on the shadow banking industry. What is already apparent to the observant is that the shadow banking industry is dead, and that regulation on the remaining shadow banks would kill they rest of them, as it would drive down profit margins. With firm regulations in place, an entire sector for economic growth would die.
Ultimately, Krugman gives every indication of being a pompous wretch, viewing himself as a beacon of intellectual light that was ignored. Rather than simply offering solutions to the current problem (he spends only 7 ½ pages on this in a 191 page book) he wags his proverbial finger at the economic elites that have in his mind contributed to this crisis, all the while claiming, “I told you so”.

Obama fails to see the ramifications

Last blog post for today, I'm kinda done.

Obama and Europe

This article from the London times chronicles the concerns of Obama's administration with the conservatives in England not to accept certain issues in the Lisbon Treaty. The treaty, aimed at a stronger centralization of Europe, would not necessarily be a bad thing for American's to oppose at this time. The coalition of the willing in Iraq and Afgahnistan is mainly made up of British forces. (Aside from our own) If Europe gets a longer seated President, and it happens to be one not favorable to American war interest, we could see our military assistance abroad diminish. Perhaps after the wars are over, a strong centralized Europe will be a good thing as it will ease communication between the United States and Europe, but right now with the liberal attitude demonstrated by much of Europe, we need all the help we can currently get.

Bush Third Term

More fuel to the fire

Europe needs the American muscle it needed during WWI and WWII

It seems like the Europeans agree with me that we need a strong dollar. While they say that a strong dollar will help the Americans, it is more than likely a ploy to help them. While we disagree on why we need a strong dollar (I am looking out for American interests while they look out for their own) the fact that we need a strong dollar is a sentiment we both agree on. While Brazil has raised taxes on foreign capital, and the Canadians have talked down their dollar, both have seen the strength of their currencies decline. This is good for them as both are reliant on exports for survival. As stated in class by I can't remember who, the United States as the most advanced nation in the world no longer is an export machine. We cannot assume that a devalued dollar will help us in the way that devalued foreign currencies help their respective nations.

Europe appears to be dreading and suffering from a weak US dollar. They fear a snowball effect of a declining dollar as much as I do. Sarkozy is bitching about falling French exports, but in terms of American economics, who cares?

Bush Third Term

Fuel for today's thought

This is why I want a strong dollar.

The discussion in class today made me feel like I was on an island. A desert island with only John Twomey. And lets face it, if it came down to it and we needed to eat one another to survive, I'd have a tough time taking down John. Anyway, if you take a glance at the article posted above, the reasons for the dollar staying strong are evident. There is no cause to assume that just because the economic thought indicates that our export levels would rise if the dollar fell. If it falls it gives the opposition to bolster their native industries rather than promoting ours. While I support rate rises in order to bolster the dollar, I don't want it to be an absolute necessity in order to offset inflation. It needs to happen on our own terms, and needs to be advertised as such in order to keep the world faith in the dollar. Like I said in class, a weak dollar lowers our purchasing power internationally, and that begets more weakness. We are, or were in a good position to stay ahead of the curve by having a strong dollar, but if we fall behind and rely on foreign investment to increase our exports, we have to play catch up to the rest of the world economies. This is to say that we need to rely on foreign countries bolstering our economy instead of the United States doing the same to other states.

Bush Third Term.

WWIII

A couple of links for you on the ongoing conflict escalations in Iran and Pakistan.

From the New York Times: Iran blames American's

From the Financial Times: Pakistan's escalation


Personally, I always thought we would need to be more concerned with the Chinese and Pakistanis fighting over Kashmir, instead now we need to be extremely concerned with a rouge nation attempting to obtain nuclear weapons getting into an armed conflict with an already unstable but established nuclear power.

Starting with the first article from the New York Times, what else would we expect. Since the statement from the Iranian government that claims they have documents linking both American and Pakistani involvement to the terrorist attacks that killed several high ranking Iranian military officials was aired on a STATE RUN newscast, how are we to know if this accusation is true? The American, British and Pakistani governments have all come out to deny this, and the Islamic extremist group Jundallah has claimed responsibility. While the American and British governments are capable of such an act, the likelihood that they were in slim. All of the facts point to a false claim by the Iranian government, but can we blame them for this. At a time when there is a full scale war about to erupt in neighboring Pakistan, and global pressure spearheaded by the United States to cease and desist in its quest for a nuclear arsenal, the full support of the Iranian people in their government is crucial. The rally around the flag anomaly that creates a massive wave of support for the government after an attack should be played out in full by the Iranian government. Given the already negative view of the United States in Iran, who else better to try to pin it on. The United States has done the same thing in the past. After 9/11, Bush's approval ratings soared due to a rallying around the flag. Using that tremendous support of the American public the invasion of Afghanistan was pushed through. Similarly, after the attack on Pearl Harbor sparking United States involvement in the WWII, the public support for war with both Japan and Germany was astoundingly high. The major difference between the United States and Iran? We don't lie about our intentions. (Open to interpretation). Propaganda was a tool of the Soviets, and it appears that it is a tool of Iran. (See previous post to see if the Soviets are making a comeback.)

The reality of this situation is if it is not contained quickly, an escalation of massive proportions could occur, and American involvement in Iran might not just be necessary, but rather intervention in Iran and Pakistan to preserve global order. (Looking at you China and Russia for some help here.)

Bush Third Term

If they want it back, I say I'm the new Joe McCarthy

Striking story from the New York Times. Normally, I wouldn't even glance at this paper given its liberal slants, but this article peaked my interest.

From Russia with suck

While it is a generally accepted world view that Putin still runs Russia with an iron fist, despite no longer being president. (Speaking of which, why do they need a president and a prime minister?) However, the recently stated views of high ranking Russian government officials (all members of United Russia) that they wish to learn from the Chinese communist party how to use the one party system to put a stranglehold on the economy and other areas. If this doesn't send alarm bells ringing in everyone's head, maybe when a new Soviet Union emerges people will listen. There already exists a powerful figurehead, a staple of the Soviet Union while it held significant power, and now with the goal of the powerful United Russia to tighten its grip on the economy even more, what is to stop it from reverting back to some of the Soviet ideals. While the article makes me nervous, it also makes me red with rage at the naivete of the author, a Clifford Levy, when he states, "In truth, the Russians express no desire to return to Communism as a far-reaching Marxist-Leninist ideology." How can he know this? There is only one person in the world who knows what view the Russian government will take, and that is Putin. This man obviously has no concept of the realist perspective of foreign policy relations. We need to act quickly on this, (not militarily in the classic realist sense, but more socially and economically) in order to secure our security and interests across the globe from a potential new Soviet World Order.

The best remedy for this would be a revival of McCarthyism. I'm the perfect one for the job. I would have thrived during the Cold War. Instilling fear in the hearts of Americans, yelling about Commies. Awesome.

Bush Third Term

I Been Saying It

Wow. Talk about a putting a big one in the win column for the conservatives. This just keeps getting better and better. From the outset, fiscal conservatives have bashed the stimulus and bailouts as being detrimental to the American economy overall. Yeah, it saved some defunct car manufacturers in Detroit, but what about the rest of the nation. Now, as the dollar loses its reserve status to the yen and the euro, we risk losing our foothold atop the proverbial fiscal food pyramid. Expectations shape the global economic scene more than anything, and with perception of the United States dollar and general economy as weak and potentially unstable, expectations could snowball sending into a deep spiral downward on the way to an economic flatline. However, Bernanke is in a tough spot, faced with rejuvenating the domestic American economy and losing major ground internationally. Sucks to be him. Since the stimulus money is already out there, I say stop the printing presses, raise some rates and let those with money spend it and save the dollar. I don't want to be a 21st century Zaire, with black lines over the face Clinton on the one million dollar bill. Actually, I'm alright with lines over Clinton, just not the two million dollar bill part.

Yay Obama

Hopefully the development of a more multilateral Fire Policy will be just the change in rhetoric from the Bush Administrations fight fire with fire policy.

Bush Third Term. (Seriously)

Appeasement be damned.

It's Not Going to Happen Anytime Soon...

In the spirit of brotherly love and admiration the our President has generated following his Nobel Peace Prize acceptance, or lack there of, fresh out of our Cold War adversaries comes this promising news.

Russian's Not helping Obama.

The Russian's maintaining that they reserve the right to make preemptive strikes publicly is a black eye on Obama's ambitious nuclear agenda. As the article states, the outdated Russian military is not reliable enough to ensure the Russian nations security. As a result they must rely on the hefty nuclear stockpile. What Obama apparently doesn't realize, is that with the exception of the United States, most other countries are in the same boat. Our military is the only one large enough and technologically equipped enough to ensure our safety without a large amount of nuclear weapons. If Russia, one of the largest military powers in the world is not willing to even take the option of preemptive nuclear strike off the table, how the hell will countries like Israel and the like be expected to reduce nuclear weapons. I realize that it must start with us, but a little help would be nice.

Uh Oh

This spells trouble.

The privilege of an American trade deficit could be ending. What I can't figure out is how you can end American dollar supremacy through speculation of a new currency arising in the unstable Middle East. For that matter, how can you end dollar supremacy for new oil deals. Oh wait, the new speculative currency, combined with the rising Yuan, and the oil existing in the states that are planning a new currency make expectations on the dollar increasingly dismal. We're screwed.

Bush third term
Ian Reid

China v. US - Steel Cage Match for the Heavyweight Title

The balance of power throughout civilized society acts similar to a pendulum, always moving back and forth. Whether it is the Greek or Roman Empire’s commanding vast land expanses whilst being the preeminent world power, or the bipolar world that existed during the Cold War, the balance of power is constantly shifting. However, unlike the past where separate dominant civilizations could coexist with little to no interaction, (East Asian dynasties and their contemporary counterparts in western civilization), globalization has made that impossible. Currently, as the first decade of the 21^st century comes to its twilight, the pendulum of power is swinging from the current unipolar world with the United States as the primary protagonist to a bipolar world where China will be as influential as the United States. The most challenging task facing the world’s leaders will be how to make the transition as seamless as possible.

The current level of global interdependency in economic markets allows for proper utilization of resources through specialization, resulting in cheaper goods globally, but also makes for delicate political situations. With the United States’ current ratio of imports to exports with China well above 1, and both private Chinese and the Chinese government buying American debt, the United States is dangerously close to being in the Chinese’ proverbially pocket. There are several options to alter the current situation so that the United States’ can level the economic disparity that currently exists. First, the American government could put tariffs and quotas in effect to limit the amount of Chinese goods that enter the United States. If this is the route that is taken, the global political ramifications could be disastrous. Due to globalization, this shift in policy would affect not only the United States and China but also all international trading partners with the two nations. Following the implementation of the tariffs and quotas, the Chinese would more than likely implement similar policies, thus driving up the cost of goods between the two nations and consequently with the entire global economic community. The economic interactions between the two nations are not the only facet of interaction that would suffer, as political tensions between the two nations would escalate exponentially. With deliberate attempts by both nations to undermine the other’s economy, other joint political endeavors would become increasingly less likely. For instance, a joint military operation into North Korea to prevent nuclear proliferation would be much more difficult to organize. Foreign aid to crisis zones or simply to impoverished areas would likely not come from both nations to the same location simply on principle.

While the aforementioned option of dealing with the widening trade deficit is clearly not ideal, it may be the only way to ensure that the status quo of a unipolar world is held on to for as long as possible. Eventually, the world will return to the bipolar world of the Cold War, and how that transition is made by world leaders, the United States and China in particular, will ultimately be the greatest challenge that the 21^st century will offer on a global political and economic scale.