Sunday, December 16, 2007

US - NATO Regroup on Afghan War

Concerns about the state of affairs in Afghanistan have prompted the US and NATO to regroup and reconsider how that war is being prosecuted. The Kabul government is in serious danger of failing, thanks to a resurgence of Taliban and al Qaeda influence in the region, bolstered by intense opium production and drug trafficking. (International Herald Tribune: White House and NATO set thorough review of Afghan mission.)

While the Taliban and al Qaeda were routed within months after the 9/11 attacks, the leadership and the bulk of their militants went underground. For the most part, they were neither killed nor taken prisoner, although al Qaeda leadership was decimated. Over time, however, both have reestablished a foothold in Afghanistan and in the lawless mountainous region in Pakistan. In the past year, the Taliban has made some major inroads in retaking pockets of Afghanistan.

The new tact being taken by the US and NATO appears to center around better international coordination in the military effort. Color me cynical, but one would think that lesson was learned over a millennium ago. I'm not sure why the concept of troop coordination has suddenly come up now. Additionally, the US is pressing NATO to supply more troops since US forces are occupied elsewhere and there simply aren't any US troops to spare for Afghanistan.

There's the second lesson we need to relearn, myself included. During the build-up leading to the Iraq War, I was as gung-ho as the other 70% of the nation supporting the invasion. I fully supported the need to invade Iraq, and - based on Iraq's non-compliance with UN Resolution 1441 - believed then and still believe that the use of force was justified. What I neglected to take into consideration then, and what none of our military commanders seemed to consider is the prospect of fighting a two-front war. Neither did any of us consider that both wars would quickly degrade into a battle against insurgencies, something that our conventional force is ill-equipped to fight.

The US and NATO were fully equipped to take on both Iraq and the Taliban in Afghanistan simultaneously. In fact, there really is no conventional force on the planet that can stand up to the US and NATO in open combat. Unfortunately, neither the US nor NATO are equipped to battle insurgents in two separate theaters for an extended period of time, and that's what we're doing now. The economic drain alone is devastating, and time is on the side of the insurgents.

So this begs the question, where do we go from here? When we look at the two theaters currently in play, what strategies do we employ to turn the current debacle into victory? Well, first and foremost, I think it necessary to choose our front. We cannot continue to battle in both theaters. We're losing ground in Afghanistan, and the gains we're making in Iraq are coming too slowly.

Perhaps the best course of action is to turn Afghanistan entirely over to NATO and focus our attention on finishing the job in Iraq. Simply walking away from Iraq right now makes no sense at all given the gains that we've made. The economic drain in Iraq has also hit Iran, and that's having a rather interesting positive effect on US and Iranian relations. Iran has even proposed discussing the terrorist groups in Iraq and finding ways to quell the violence there. It's actually in their best interests to do so now, too, since they can no longer afford to finance the insurgency. (Reuters: Iran says to discuss Iraq "terrorist groups" with U.S..)

Ultimately, we need to learn, or should I say "relearn", the lessons from the last 6 years. We can't afford to start a second campaign before the first campaign is won. We also need to relearn what President Bush (41) taught us in the first Gulf War. Before going into combat, know what your objective is, how you're going to meet that objective, and most importantly, how you are going to get out when it's done. We failed to do that in both Afghanistan and Iraq and we're paying the price today.

Saturday, December 15, 2007

Bush Seeks to Control JAGs

The White House has floated a proposed regulation that would require consultation with politically appointed Pentagon lawyers before the promotion of any member of the Judge Advocate General (JAG) Corp. This would effectively eliminate the independence and impartiality of the 4000 military lawyers comprising JAG by forcing them to adhere to a political agenda. (International Herald Tribune: Bush seeks to limit military lawyers' independence.)

Technically, as members of the military the individual members of JAG report through the chain of command to the President. In practice, however, JAG enjoys a tremendous amount of independence; an independence that caught the attention of the White House when military lawyers started to question the legality of certain interrogation methods or the detention of enemy combatants under the Geneva Convention.

Should the proposal be adopted, that independence would be lost. Those officers that did not adhere to the political doctrine would find themselves ineligible for promotion and their careers effectively crippled. The devastating side effect would be a similar crippling of the legitimacy and credibility of the military court system.

Said Major General Thomas Romig (RET), "(It) would certainly have a chilling effect on the JAGs' advice to commanders. The implication is clear: without approval the officer will not be promoted." Romig served as the US Army's top JAG from 2001 to 2005.

At the heart of the dispute is the President's position that the White House has the authority to bypass the Geneva Convention. Enforcing that position is Presidential appointee William Haynes, the Pentagon's top council. It is Haynes that involves himself in disputes with any JAG lawyers that dispute that claim. Under the new proposal, Haynes would be in a position to deny promotions to any JAG officer that disagreed with his (or the President's) political agenda. Those are very dangerous implications for the independence of the military court.

It can certainly be argued that the military court system and the JAG lawyers that service the military should follow the president's lead and adhere to the presidents policy. That's an argument fraught with danger, however. With regards to the Geneva Convention, a series of treaties lawfully ratified by the US Senate, the White House does not have the authority to circumvent or ignore the provisions of the treaty. Part of the provisions in the Fourth Geneva Convention call for a military tribunal to establish the legal status of prisoners held as a result of conflict. It is therefore imperative that the legal branch of the military maintain credibility in the eyes of both the US public and the world.

Using the military in any fashion to circumvent US law or ratified treaties is a most dangerous path. It's a path perilously close to that followed in a number of third-world regimes where the person in power is the one that controls the military. That is a path I would much prefer to see us avoid. The President has a responsibility to enforce the law and the treaties we sign, not find ways to circumvent them.

There's a very popular misconception with regards to the President as Commander in Chief of the armed forces. That title does not grant the President unconditional control over the military. Rather, use of the military and the ability to go to war is reserved for Congress. Granted, that's been usurped since 1945 - the last time Congress issued a declaration of war - however the Constitution is quite clear on the matter. Likewise, funding for the military, and the authorization to even have a military is granted to Congress, not the President. It was quite clear that the founding fathers intended the military to be in the hands of the people, not the President.

What is clear with regards to this JAG proposal is that Congress must keep close watch over the developments. This is not a reporting structure that should ever make its way into practice. Congress, with its oversight authority, must ensure that our military courts remain impartial. The only way to do that is to keep JAG out of the hands of political appointees.

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200,000 Turn Out To Support Hamas

An estimated 200,000 people gathered in Gaza to celebrate the 20th anniversary of the founding of Hamas, the terrorist organization that gained control of the region six months ago. (New York Times: Gazans Show Allegiance for Hamas.) The terrorist group was created by Sheik Ahmed Yassin, and the Hamas charter written in 1988 still calls for the destruction of Israel and its replacement with a Palestinian Islamic State. The region Hamas seeks to control is comprised of Israel, the West Bank, and Gaza.

The rally, intended to demonstrate public support for the terrorist group, also shows why a peace accord between Israel and the various Palestinian groups is simply not possible. Hamas gained control in the Palestinian government through free elections and is still extremely popular in the region due in no small part to their anti-Israeli agenda. The slogan displayed in Central Gaza City read, "We will not recognize Israel" but Hamas actually seeks much more. They seek, as previously stated, the complete destruction of Israel.

The same sentiment is prevalent in other nations throughout the Middle East. Saudi Arabia won't even refer to Israel by name, referring only to "that Zionist entity." At the recent Middle East summit hosted by the United States, Saudi Arabia only agreed to attend after stating emphatically that they will not publicly shake hands with any Israeli official. Iran's President, Mahmoud Ahmadinejad, has openly called for the destruction of Israel on many occasions.

As long as there are regional anti-Israeli terrorist groups that have the full backing of nations such as Iran and Syria peace in the region is not possible. This is especially the case when those same terrorist groups also enjoy wide public support as is true with both Hamas and Hezbollah.

For some unfortunate reason, brokering a peace between Israel and the Palestinian Authority has become a bell weather issue in American politics. Every administration since Carter has sought to broker a peace in the region and all of them have come up empty. Perhaps now is the time to rethink the entire concept. Hedging our political bets on peace in a region that has had none for the last 3000 years is folly at best.

It's time to walk away from the process. There are fundamental issues between even the rational elements in Israel and the Palestinians that will prohibit any long-term peace. When you factor in the radical elements of Hamas, Hezbollah, and some of the more extreme elements in Israel, it quickly becomes obvious that no treaty will ever work. At least, not so long as those elements exist.

There comes a time when you must recognize that the only solution is to allow two diametrically opposed groups to fight it out. When it comes to Israel and the Palestinians we've reached that point. It's time for us to step out of the ring and allow them to hold the no-holds-barred match that has been simmering since the late 1960s. Whichever side emerges victorious is the one we'll recognize and deal with. At this point, however, I'm no longer willing to waste good American tax dollars trying to broker a peace that isn't possible. Let's step aside, let them fight it out, and the treat with the winner. This one is no longer worth our attention.

Friday, December 14, 2007

CPI Report Confirms Rising Inflation

The economic reports released today are pretty hard to ignore, and no political spin imaginable can downplay the inflationary numbers consumers experienced in November. The Consumer Price Index (CPI) was up 0.8% in November and now stands at 4.3% yearly. Core CPI (which excludes food and energy costs) was up 0.3% in November and is 2.3% yearly. (International Herald Tribune: New figures show prices rising on both side of Atlantic.)

The yearly numbers only tell part of the story, however. The CPI in August was only 2% yearly. Energy costs in the fourth quarter soared, however, with oil hitting $100 per barrel and actual gas prices at the pump topping $3.00 per gallon with no sign of backing down. In just one quarter, the rate of inflation effectively doubled.

The housing and credit problems have placed FOMC (Federal Open Markets Commission) in a rather difficult bind. In the last quarter, FOMC has clearly adopted a policy aimed at calming credit fears and softening the blow to the nation's largest banks. This policy has manifested in several interest rate cuts, the most recent of which came on December 11th. Unfortunately, that policy is diametrically opposed to combating inflation. An increase in interest rates is required for inflationary control, and it does not appear that FOMC is prepared to do that anytime soon.

One must wonder if we have forgotten the lessons of the late 1970s and early '80s. Have we forgotten the "misery index" popularized in the Reagan - Carter Presidential campaign in 1980? Lest we forget, the nation was faced with double-digit inflation and double-digit unemployment; something virtually all economist thought was all but impossible to achieve. We could be headed in that direction again, for the economic situation is frighteningly similar.

Today we have numerous economists predicting an economic slow-down leading to recession. A recession always implies lay-offs, leading to higher unemployment. At the same time, we have a brewing banking crisis lead by the housing market collapse (also seen in the late 1970s) and the imminent collapse of the credit card industry. These pressures are preventing the Fed from implementing measures to control inflation. At the current rate of inflationary growth, double-digit inflation could be less than a year away.

The real question is which way FOMC should lean. Should the monetary policy be geared at easing the credit crisis or easing inflation? Either path could easily lead to a recession. It would appear that FOMC is concerned that controlling inflation would be the faster route to that recession since it is automatically designed to slow economic growth. A rise in interest rates coupled with the credit collapse could be enough to move growth into the negative column. But allowing inflation to spiral out of control could force the same thing. When consumers no longer have enough discretionary cash to make major purchases, the economy essentially grinds to a halt. We're either at or past that breaking point right now.

At the very least, FOMC needs to adopt a policy that halts further interest rate cuts. There will be a short-term hit on the stock market, especially considering the disappointment investors displayed over a 25 basis point cut on Tuesday. Holding firm on rates would not help lenders reeling from the housing and credit crisis, but it will at least not exacerbate inflationary pressures already fueled by the price of energy. It may buy enough time to allow a controlled increase in interest rates in an attempt to get inflation back on the short leash.

What FOMC cannot do is continue down the self-destructive path that has brought us to this point. The next couple of years look pretty grim from an economic viewpoint. We really don't need FOMC to reenact the economic debacle of the late 1970s. I remember it well enough from the first time around. I'm pretty sure we can all live without the sequel.

Wednesday, December 12, 2007

Morgan Stanley Issues Recession Warning

Traditionally bullish Dick Berner of Morgan Stanley has issued a scathing appraisal of the state of the US economy. In the extremely bearish report released today, the analyst warns that it may already be too late to prevent a recession given the rapidly expanding credit problems and the collapse of the housing market. (Telegraph: Morgan Stanley issues full US recession alert.)

Citing a third quarter foreclosure rate of 5.59%, Berner stated, "As delinquencies and defaults soar, lenders are tightening credit for commercial, credit card and auto lending, as well as for all mortgage borrowers."

That one sentence pretty much sums up both the current state of affairs and the cause of the current state of affairs. Lenders are struggling with the number of foreclosures in the housing market yet they have yet to acknowledge that they created the problem in the first place. There was a time where mortgage lenders required an applicant to earn their entire mortgage payment in one week after taxes. That requirement fell by the wayside years ago as the housing market rose to new heights, guaranteeing the lender a profit even in the event of foreclosure.

Right up until the collapse, mortgage lenders were handing out sub-prime loans with no money down like they were candy. Now these same lenders, faced with billions of dollars in write-downs are crying poverty and warning of a recession that they themselves created. The housing market is only the tip of the credit iceberg, however. This same lending crunch is about to hit the credit card industry. Business practices by credit card companies such as Bank of America and Discover are such that they virtually force people into default through the highly unethical manipulation of interest rates on even good credit accounts. Congress has taken up that challenge, not that I hold out any hope for something worthwhile coming out of that body.

The Morgan Stanley report, written prior to yesterday's FOMC announcement but released today, predicted a 25 basis point cut in rates this week (which did happen yesterday) and also predicts at least three more cuts in 2008. In so forecasting, Berner stated, "We expect the Fed to insure against the worst outcome."

Perhaps if you make the wrong move often enough, it will become the right move. It hasn't worked yet, but there's always next time. Continuing to lower interest rates in this fashion is counter productive. Not only do the lower interest rates add to inflationary pressures, but they continue to weaken the value of the US dollar against foreign currencies, they continue to exacerbate the credit problem, and they put increased financial pressure on banks already suffering from an inverted yield curve. Somehow, this does not sound like a good strategy to me.

What the report doesn't say is the impact the price of energy will have on the overall economy or what fourth quarter retail sales are going to look like. Anyone that has glanced at their November utility bills can answer the first question. The average consumer is going to be squeezed pretty hard this winter, especially if the current weather pattern continues. While oil may have retreated below $90 per barrel, utility costs are still skyrocketing. That's coming directly out of the household budget and will have an extremely negative effect on discretionary spending.

Likewise, anyone that has been Christmas shopping over the last couple of weeks can tell you what retail sales will look like for December. If you haven't noticed, the stores are empty this year. That's not surprising given the cost of actually driving to the store with gas prices holding firm above the $3 per gallon mark. Online sales will likely be up this year, but as a whole people will be spending significantly less on Christmas gifts thanks in no small part to the soaring fuel costs.

So are we headed for a recession? Absolutely. Growth may appear strong in the most recent reports, but the reports are deceptive and are currently a trailing indicator. Even new housing starts were up in the last report which surprised an awful lot of analysts. But this growth is not sustainable give energy and credit pressures. The average consumer is already being hit very hard by an inflation rate that everyone except the federal government seems to acknowledge as climbing significantly.

While banks have not caused the rising energy costs, they have certainly caused the credit collapse and the housing collapse. What's missing is accountability. The very real result of their unethical business practices goes far beyond lower profits at the larger institutions. The real effect is the toll it takes on the average family that was just scraping by. The number of real families that are losing their homes or going into bankruptcy because of corrupt corporate business practices is staggering, and that is something for which corporate executives need to be held accountable.

Tuesday, December 11, 2007

Christmas and Other Things Forgotten

We have now entered a time of year that, like everything else in our society, has become over dramatized and over politicized. We've entered The Christmas Season. Yes, I'm afraid the capitals are required in this case for that is what we've done to this time of year. Now, let me preface this entry by telling you that I am a devout Roman Catholic. My friends will tell you that I'm one of the most religious people you are likely to encounter, although you will never hear me preach religion nor will you ever see me attempt to convert one who is not Christian. With that in mind, allow me to begin.

I have come to dislike all that has become of this season. Now, I'm not at all afraid of "atheists trying to wipe out Christmas" as some have professed. I am not concerned about the ACLU attempting to separate Church from State. I really don't care about pink flamingos next to a Santa Claus in front of the city hall in one corner of Rhode Island. (True story, actually, but that's a different topic.) No, what worries me most is that we Christians destroyed Christmas years ago. So today's post is a bit of a history lesson. It is an attempt to remind us of why the Feast of the Nativity of Jesus exists in the first place.

The word "consensus" hardly describes anything that took place in the early Christian Church. Put three Church leaders together and you had three differing views. The squabbles started days after the Crucifixion and they continue through to the present day. By the beginning of the 4th century, one major debate in the Church centered around the divinity of Jesus. There were those that held to the notion of Jesus as Divine Savior, the Son of God. Other equally prominent members of the Church held to the strict humanity of Jesus without a shred of Divinity. This debate became one of the 8 major topics discussed at the world's first ecumenical council, The First Council of Nicaea, convened by the Emperor Constantine in 325 AD.

The findings of this Council are still recited in Catholic and Episcopal Churches today. If you've attended either of these masses, you may recognize the words "God from God, Light from Light, True God from True God, Begotten not made." With those words, the Council of Nicaea affirmed and proclaimed the divinity of Jesus, and that has been the official teaching of Christian Churches for the last 1682 years. I've often wondered how many people sitting in church each Sunday understand those words or know why they were written in the first place. The Nicaean Creed, as it is known, is not a prayer - it is a profession of the fundamental beliefs of the early Christian Church, and it is the first written profession to officially proclaim the divinity of Jesus.

The problem, though, is the Church started to focus entirely on the Divinity and not on the humanity of Jesus. For Him to atone for the sins of mankind, His humanity is theologically just as necessary as His divinity. It is for this reason that by 350 AD, Churches around the world started to celebrate the Feast of the Nativity of Jesus - what we today call Christmas. It was to serve as a reminder of the human birth, and therefore the humanity, of the Divine savior. Note that the date of the celebration varied from May 20, to March 25, to December 25 depending on where you were, but the actual date is irrelevant. The importance was on the birth itself, not the date of birth.

This is what we have forgotten today. All of the trappings you see around you - Christmas trees, lights, snowmen, wreaths, candles, plastic Santa Clauses complete with reindeer, etc. - have absolutely nothing to do with the reason for our celebration of Christmas. In fact, all of those are deeply rooted in pagan symbolism more in tune with other festivals celebrated at the same time of the year, but rest assured that none of them are Christian symbols. Even the giving of gifts has turned into a capitalistic fiasco, an exercise in greed and commercialism that has absolutely no place at all in the celebration of any religious holy day.

What we have done is taken the celebration of the most humblest of births, the symbol of the poorest of the poor, and turned it into the most obscene commercial circus imaginable. What offends me as a Christian far more than any "Happy Holidays" political correctness drivel, or the removal of creches from city halls is what we Christians have done to this celebration. Rather than a remembrance day for the humble birth of Christ Divine, we have turned this holy day into a day of gluttony, a day of greed, a day that is diametrically opposed to all that Jesus and early Christianity stood for. We do not need to reclaim Christmas from atheists, we need to reclaim it from ourselves.

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Monday, December 10, 2007

France Announces Arms Accord With Libya

France became the first Western nation to extend a welcome to Libyan leader Moammar Gadhafi, once a pariah in international circles. As part of the diplomatic exchange, France announced an agreement to provide $14.7 billion in contracts for armaments, a civilian nuclear reactor, and a desalination plant. The move was met with mixed reactions among French politicians including protests from Rama Yade, the French Human Rights minister. (USA Today: France, Libya sign deals on armaments, nuclear reactor.)

Gadhafi is one of the great success stories in the Middle East, showing just how powerful international isolation coupled with strategic military strikes can be. Throughout the late 1970s and 80s, Libya was an open sponsor of international terrorism and was implicated in the bombing of a 1989 French UTA passenger jet and the more famous 1988 bombing of a Pan Am flight over Lockerbie, Scotland.

The 1986 US raid on Libya, international isolation, and the overwhelming success of the US-lead Gulf War forced Gadhafi to have a change of heart, however. The ease with which the US and allies drove Iraq out of Kuwait and effectively destroyed the Iraqi air force and most of its tank divisions were enough to convince Gadhafi that he was headed down the wrong path. Since then, the Libyan leader has completely reversed course. Libya has paid retribution for both aircraft bombings, has dismantled its nuclear program under voluntary UN inspection, and has publicly renounced any further support for terrorism.

This is a clear example of what the world community can accomplish provided there is sufficient threat of military force with which to back up the non-violent diplomatic measures. Without the Gulf War, there was no incentive for Libya to change course. The isolation alone was not sufficient. Certainly, the 1991 collapse of the Soviet Union was another major factor in Libya's about-face, but when Gadhafi ran the numbers both economically and militarily he clearly saw which side of the world community he needed to join.

Today we face the same opportunity with Iran. As the west continues to increase economic and political pressure on Iran, also a major sponsor of state-run terrorism, it is imperative that we do not ease up on the veiled threat of force. Without that threat always looming over them, the other measures have no teeth and will not stand a chance of success.

Iran today is very similar to Libya in the 1980s. They are open supporters of both Hamas and Hezbollah, terrorist organizations primarily focused on the elimination of Israel. They are clandestine supporters of the insurgency in Iraq, providing both funding and arms to the insurgents. Like Libya in the 80s, Iran finds itself isolated from the world community, and currently under economic interdiction by the UN. The undercurrent, though, is always the threat of military action either by the US or Israel.

That, as it happens, is the key. That threat must remain if non-military means will be successful. Iran is ripe for a Libyan style conversion. An Iran that abandons support for terrorism, that eliminates Hamas and Hezbollah, that ends arms shipments to the Iraq insurgency, and welcomes in UN nuclear inspectors would also find the same support in the west as does Libya. The choice is certainly theirs. But to help them make that choice, the west must keep up the pressure. It's imperative that we not back down on any of the initiatives with which Iran is confronted. We, and the rest of the world, need to learn from the lessons of Libya.

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Sunday, December 09, 2007

Bush Poised to Veto Spending Bill

A pork-ridden spending bill that far exceeds what the President requested is facing a veto if it makes its way to the Oval Office. The White House labeled the bill a "budget-buster", pointing to the $11 billion price tag over and above the original request. (Washington Post: Bush Threatens Veto Of New Spending Bill.)

House and Senate leaders cited the need to fund more border security and more police on the streets as the reasons behind the hefty price tag. As presented, the new budget stands at $500 Billion but Senate Minority Leader Mitch McConnell (R-KY)charges that the burden is "too much to ask of the American taxpayer."

This is a civics lesson that the general public must learn and remember as we head to the polls in 2008. Leftist critics are fond of pointing to President Bush whenever they talk about our national debt, or out of control spending. What these same critics conveniently choose to forget is that the budget is not in the hands of the President. Congress has the sole responsibility for establishing the national budget. It is interesting to note that in the period where the debt increased dramatically (the 1980s) we had a Democratic controlled congress. When the budget was brought under control and we started moving towards paying off the debt during the Clinton years we had a Republican controlled congress. Neither Reagan nor Clinton had any control over the budget, so they should share neither the blame nor the credit with regards to the debt during their tenure.

True, the post-9/11 Bush years saw a huge increase in debt, and that congress was Republican. We fiscal conservatives on the right point to that as a primary reason why we lost control of congress - that congress abandoned the conservative values that put them there. They diverged too far from the principles that govern the party and the electorate rightly tossed them out. Now that congress is back under Democratic control, however, we are seeing a return to the tax and spend mantra that plagued us for years. It never worked in the past and it won't work now.

Whenever you hear someone complain about the national debt or how much we're spending, be mindful of exactly what the US Constitution has to say about it:

Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States;

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
The powers of the President with regards to the federal budget are extremely limited. His only option is to request funding from Congress, and it is congressional responsibility to respond yes or no to that funding request. Most in Congress today would prefer to deflect the debt issue onto the President, but there is no valid argument for doing so. There is certainly no constitutional argument, that's for certain. Congress controls the purse strings, pure and simple. Remember that in 2008.

Saturday, December 08, 2007

Indonesia Pushing Tighter Emissions Pact

Indonesia, in conjunction with Australia and South Africa, issued a draft proposal on climate change reforms at UN talks aimed at curbing greenhouse emissions. The draft places the burden of drastically cutting emissions squarely on the shoulders of the wealthiest nations, while glossing over the global impact of the world's most populated and most polluted nations. (Reuters: All nations must join climate fight: Bali draft.)

The draft proposal claims that there is "unequivocal scientific evidence that preventing the worst impacts of climate change will require (developed nations) to reduce emissions in a range of 25-40 percent below 1990 levels by 2020."

It's an interesting concept, however there is no such "unequivocal scientific evidence" that climate change - which started at the end of the last ice age some 14,000 years ago - can be reversed at all. Neither is there "unequivocal scientific evidence" that climate change has anything to do with emissions caused by human industry. The implication that there is universal agreement in the scientific community to that effect is both misleading and completely false. The fact is, this is the third such warming period our planet has undergone in the last 250,000 years, and it's safe to say that the last two had nothing to do with human technology. Why, then, do we automatically assume - through the arrogance of human hubris - that we are the cause of this one or that we can do anything at all to stop it?

The US came under a great deal of criticism for refusing to sign the Kyoto protocol due to the exemption of India and China, two of the world's greatest polluters. It should be obvious to anyone that the US cannot agree to economic constraints that exclude the two most rapidly developing nations on Earth, especially when there's no evidence that such constraints will have any impact on the issue at hand.

It's time to come to grips with the fact that the planet's climate is indeed changing as part of a much broader natural cycle. Regardless of what we attempt to change, the polar ice will continue to melt, the average temperature will continue to increase, and the sea levels will continue to rise. It is part of the natural cycle of the planet and it is inevitable. We can no more prevent that from happening than we can prevent the sun from rising in the east.

This does not mean we should do nothing to curb pollution. On the contrary, the issue of waste and the effects of pollution do have to be addressed and should be addressed. Our water supply is in grave danger world-wide, and the quality of the air we breathe is well below the most generous of health standards. Where the conditions are worst, though, is China and India, not the US. You may recognize those two as the countries exempted from anti-pollution agreements.

The bottom line is that the US must continue to resist these efforts to further cripple American industry and manufacturing presented to the world as a heart-wrenching attempt to reverse the natural effects of the planet's climate cycle. If you want the US to participate in this exercise in futility, then the developing nations - especially China and India - must be under the same constraints. Until that happens, and I do not expect it ever will happen, the US must continue to respectfully decline the invitations to cripple our economy. Thanks for the offer, folks, but we'll pass.

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Friday, December 07, 2007

Iran Puzzle Needs Fresh Approach

Iran continues to dominate the headlines in international politics this week amid a recently released intelligence report that concludes the theocratic regime halted its nuclear weapons program in 2003. Despite that report, the US continues to push for increased UN sanctions against Iran and continues to paint Iran as a rogue state with strong ties to international terror. (Washington Post: Gates to Gulf nations: Stand against Iran.)

Certainly the latest intelligence report takes a fair amount of wind out of the anti-Iranian sails, although there is still a great deal of NATO support for the official US position. While Iran may have put their weapons program on hold four years ago, they do continue to enrich uranium and still have the ability to restart that program on a moment's notice. NATO agrees with that assessment and supports additional sanctions.

Not surprisingly, the major hold-out continues to be Russia. Not only is Iran a major economic ally of the once and future Soviet state but Iran offers Russian President Vladimir Putin with a fresh battlefield for a cold war style confrontation with the US. Putin, already emboldened by a strengthening Russian economy in the face of a falling US dollar, appears poised to seize any opportunity to thwart US goals in the region.

Perhaps now the time is right to change the game. Sanctions have a long history of failure. Rarely - if ever - do sanctions have the desired effect on the nation so interdicted. Certainly, time is on Iran's side in this case, and there's no reason to believe that sanctions will have any impact at all. So perhaps now is the time to change course.

Rather than impose sanctions and attempt to economically contain Iran, I propose just the opposite. Overwhelm the Ayatollah's personal playground with capitalism. Open and expand trade with Iran and target the mass marketing campaign at the student body and middle class. Prior to the Iranian lead Islamic Revolution, Iran was one of the most westernized nations in the Middle East. Even today there is a very strong undercurrent of western materialism, especially among the younger generation.

Iran is ripe for revolution. Their rate of inflation is already taking its toll and there is already a strong anti-fundamentalist sentiment in the general population. By opening trade with Iran and exposing them to much-desired western goods, we may provide the final catalyst needed to topple the oppressive regime, all without US or Israeli military intervention.

There comes a point where we must recognize that certain tactics have not been effective and that we must change our approach. Isolation did not work in Cuba, it has not worked with North Korea, and there's no reason to believe it will work with Iran. Perhaps now is the right time to unleash our greatest weapon - capitalism. Remind the Iranian people of what they could have and let nature take its course. It's certainly worth a try.

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Sunday, December 02, 2007

Democrats Reach Energy Deal in House

House Democrats announced yesterday that they have reached a compromise deal on an energy bill that may be sufficient to both hurdle a threatened Republican filibuster and also avoid a potential Bush veto. The deal extends certain fuel efficiency requirements for SUVs and pickup trucks out to 2020 while requiring non-public electric utilities to produce some 15% of their energy from renewable sources. As part of the compromise, the deal appears to drop plans to impose $16 billion in taxes on the oil industry. The revenue from those taxes would have been earmarked for research into renewable energy sources and improved conservation. (H. JOSEF HEBERT, AP: Deal Reached to Boost Gas Mileage.)

While I disagree with the solutions proposed in this energy bill compromise, I do give the Democrats credit for at least attempting to address the problem. Solutions are somewhat lacking in Congress these days, so any legislation that attempts to solve the energy issue should be welcome for debate on the floor. My disagreement with this particular piece of legislation has to do, not with any plans to impose restrictions on the auto industry, but with my opposition to agriculture based energy sources (e.g. ethanol) due to the potential impact on our food supply and food costs.

The legislation does correctly target SUVs and pickup trucks. Thanks in no small part to auto industry marketing campaigns over the last decade, Americans have been brainwashed to believe that bigger means safer. As a result, parking lots are filled with SUVs and mini-vans now being used by people in their daily commute to work. With the bigger is safer mentality has come the need for more horsepower. My last two cars (a Toyota Camry and a Hyundai Sonata respectively) have been 6-cylinder cars, and neither of them would win any gas mileage competitions. My Sonata is the worst of the bunch, getting less than 18 MPG in stop-and-go driving.

So first and foremost, I believe we need to address that problem. The solution really isn't improving the gas mileage for those guzzlers, the solution is to get the beasts off the road entirely. Owners of SUVs, mini-vans, and 6-cylinder cars (such as myself) should be penalized for it. A tax credit for owning a fuel efficient car coupled with a tax penalty for not owning one would go much further towards promoting energy conservation than mere legislation will. This is especially true when you consider the wording in that legislation that ties fuel efficiency to an entire fleet average, and not to the individual car.

What we must also address is our overall transportation infrastructure. Simply put, there are too many cars on the road in and around our major cities. Virtually all of that 4-wheel transportation is unnecessary, or at least would be unnecessary if we had a viable inexpensive and timely mass transportation system. Rather than improve the number of ways commuters can get into and out of our cities by car, we should be looking at methods for making it unnecessary to drive into those cities in the first place. I would envision numerous outlying parking areas with continuous electric monorail services and electric shuttles throughout the currently congested cities. The same would apply to areas in many cities and towns that are bottleneck roads. (In Rhode Island, Route 2 in Warwick comes to mind, as does Mineral Spring Avenue in North Providence.)

Of course what I propose sounds radical and would generate a great deal of argument. But just how practical is it to continue down our present course? In Rhode Island we are nearing the completion of a new stretch of I-195 in a futile attempt to decrease the rush hour congestion heading through Providence. While it may offer temporary respite, it is a solution that will last no more than five years given the current rate of traffic growth. When you consider that the project itself has taken over ten years to initiate, execute, and complete, that five year solution doesn't sound quite so appealing.

Radical thought and innovative solutions that will thrust us into the 21st century are precisely what is needed right now. We don't need to simply improve the gas efficiencies of our cars, we need to get them off the road entirely. So where is the innovation? Where is the forward thinking that drove this nation into the industrial revolution, lead the world through the space race, and built the world-wide information network that we enjoy today?

In 1962, President Kennedy set before us an extremely aggressive, nearly impossible goal. One that, with a sense of nationalism that is woefully absent today, we achieved in July, 1969. Kennedy's words in reference to that quest for the moon could well be applied to our energy crisis today:

"Those who came before us made certain that this country rode the first waves of the industrial revolution, the first waves of modern invention, and the first wave of nuclear power, and this generation does not intend to founder in the backwash of the coming age of space. We mean to be a part of it--we mean to lead it."

Should we not tackle the quest for a 21st century energy solution and infrastructure redesign with the same attitude, with the same zeal? What we need today is leadership, not political rhetoric. We have the talent in this nation to tackle the energy problem if only we are given the right direction, the right focus, and the right funding. So to our national leaders, I pose this challenge. For once in your careers, lead. Set the initiative and lead us into the future.

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Saturday, December 01, 2007

Dollar Woes Signal Global Problems

The US Dollar continues to nosedive against European currencies, reaching new and troubling levels against both the British Pound and the Euro. While the decline in the dollar is being regaled by our adversaries in Iran and Venezuela, the implications of the weakening currency are global in reach. (Speigel Online: Why America's Currency Is the World's Problem.)

While it is popular among the left in the US to point to the war debt from our involvement in Iraq as the reason for the dollar's decline, the actual situation is far more complex and troubling. Truth is, we're now seeing an economic upheaval in the US similar to that which plagued the late Carter and early Reagan years. Gold topped $800 an ounce last week before retreating to $783 by Friday's close. Many economists are now pointing towards a recession that may be all but inevitable. The national debt has grown at a rate not seen since the early to mid 1980s. Capping it all, however, is the collapse of the housing market in the US.

The housing collapse certainly appears to be the catalyst, however that collapse is truly the inevitable result of long-term unscrupulous business practices primarily in the mortgage and banking industries. The relaxation of credit worthiness requirements and the ability to obtain sub-prime mortgages with no money down has lead to record numbers of foreclosures this year, and threatens to lead the nation into recession. Almost 40% of new home sales over the past two years were for second homes or vacation homes, with buyer exuberance fueled by the bait and switch tactics of a variable rate mortgage with a sub-prime entry.

We are now seeing the next ripple in the housing collapse as the world's top banks begin a massive debt write off due to the record number of bad loans on their books. The write offs are already taking their toll in Europe, and we are starting to see the wave crest over the largest banks in the US. Given the way they've handled the entire mortgage issue, I would find it hard to be sympathetic were it not for the toll the collapse will take on the American worker.

The collapse of the dollar is not entirely due to the mortgage issue, however. The average American has managed to run up a credit debt to rival the one our elected officials have managed to incur at the national level. Now, deficit spending has never hurt the US in the past, but this time around we have major foreign investors questioning our credit worthiness. As our national debt piles up, the value of our dollar continues to fall. With the decline in the dollar, we have energy prices rising astronomically, and that always translates into rising inflation. Deficit spending is now a luxury we can no longer afford.

To counter this wave, it appears the Federal Reserve is poised to lower interest rates again on December 11th, although it will be about as effective as handing someone a bucket to stop a tsunami. Lowering interest rates will do nothing to halt the rising energy prices, the rising rate of inflation, the collapse of the housing market, or the collapse of the value of the dollar. In fact, it could actually add to the problem by temporarily raising the overall value of the already over-inflated stock market.

About the only aspect of our economy benefiting from the dollar's decline is our ability to export goods and services. Unfortunately, we don't exactly manufacture goods the way we used to and are far more dependent on imports than we are on exports. A declining dollar doesn't do the American consumer much good when those items are imported from nations with a stronger currency.

There are some in Europe that believe the dollar's decline is intentional, and there may be some merit to that charge. French President Nicolas Sarkozy came right out and said as much, charging that the US is attempting to boost American exports while weakening Europe's ability to compete in the global market. He may be right. We certainly did just that in the early 1970s, and with our foreign debt at all time highs there is a perverse logic to weakening the dollar in the short-term.

What remains to be answered though, is what solutions to put forth. Sadly, the first solution we will need to accept is that the correction that is coming in the stock market must play itself out. There is very little substance maintaining a DOW average over 13,000. Corporate earnings certainly don't warrant that level, and the projected slowdown in economic growth does not justify the rapid rise in stock prices. Maintaining an artificially inflated market is only going to make the resulting crash much worse.

Secondly, we must hold the line on interest rate cuts. Attempting to stimulate the economy in that fashion does not address the heart of the problem and will be ultimately detrimental to the economy as a whole. In fact, what is needed to stimulate the economy is a reduction in the price of oil, and the only way that will be achieved is through strengthening the value of the US dollar. Interest rate cuts, and the cheaper credit implied by those cuts, is tantamount to giving someone a shot of whiskey to cure a hangover. It is going to add to the problem, not fix it.

Third, we must make the tax cuts implemented a couple of years ago permanent. While that will sound contrary to my next point, it's necessary. The American consumer cannot survive both a tax increase and a rising cost of energy, so like it or not, the tax cuts must be made permanent. Americans are already taking huge pay cuts just through their daily commute to work. With gas now topping $3.05 per gallon compared to $2.29 per gallon this time last year, the last thing the American worker needs is a rise in their income tax burden.

Finally, we must establish a positive budget, not even a balanced budget. We are no longer in a position to engage in the level of deficit spending that has worked well for the last 40 years. Our credit rating no longer permits it. The amount of glut in our national budget is staggering, and it's high time we put people in office that are willing to trim that fat. Now, before anyone here starts beating the "it's Bush's fault" drums, let me remind you that the budget is the sole responsibility of Congress. Remember that when you walk into the polls in November.

What goes without saying in all this is that we must hold our corporations accountable for the unscrupulous business practices that have caused at least part of this mess. There is a reason the banking industry was heavily regulated following the Great Depression. Unfortunately, we seem to have forgotten that history and we're once again allowing banks to do as they will. We saw once before that corporate executives were not responsible enough or ethical enough to be left to their own devices, and with the banking regulations being relaxed or eliminated now, we see once again that they have not changed. We need to put them back on a tight leash.

In the meantime, settle in for a rocky ride. The turbulence we are about to experience economically will be global, and it will take several years to work itself out. The remainder of this decade will be rough indeed.

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