Why is anyone surprised? Obama always said during the campaign that he believed more effort was required in Afghanistan.
This is what America voted for.
The progressive brand is being burnt to the ground by Obama, this Congress and apologists for both. Progressives have become the sort of people who believe in health care reform that isn’t, highlighted by a public option which is so non-robust it will cost more than equivalent private coverage. Watching progressives scurry to take credit for a disaster has been extremely enlightening. Lemmings over a cliff thinking the promised land is at the bottom.
Well since Numerian has written about it, I don’t have to, since he’s done a better job than I would have anyway.
Dubai gambled that it could turn itself into the Beverly Hills of the Persian Gulf now that it has no oil. It lost its gamble. The people who could afford a $10,000 purse have taken a big beating in the financial crisis and recession, and they are embracing a more moderate and discreet spending lifestyle. Dubai not only has half-finished buildings, it has many completed buildings uninhabited, like Miami and Las Vegas and other overbuilt desert mirages.
Couldn’t happen to a nicer city built on slave labor. While this is “bad”, well, if it had to happen to someone… Of course, who else might it happen to?
So here we have a country that used to have oil which has now run out of the same. It has turned to massive amounts of debt to sustain not only its existing lifestyle, but to build a fantasy land of McMansions, luxury malls, trophy office buildings and theme parks for the wealthy. It has nothing anyone wants to buy and consequently stocks the shelves of its stores with goods from other countries it buys on debt. It has done all this using impoverished labor that works under a modern form of indentured servitude, in which the typical worker incurs excessive debts of their own that can never truly be paid off by their earnings. It creates an enormous income disparity between its privileged few and the huddled masses kept out of sight.
Sound familiar? When do you think global investors will start connecting these dots and ask: exactly what is backing the debt of the United States that has flooded the markets in the past nine years under Bush and Obama? At least Dubai had a presumed rich uncle in Abu Dhabi that would come to the rescue, even though now everyone realizes that was a very costly mistaken assumption. In the case of the US, the United States was the rich uncle everybody else looked to in order to solve global problems. Now that rich uncle has gone crazy in its own orgy of gambling, whoring, and over-indebtedness.
Except there is no one – absolutely no one – who can come to the United States’ rescue.
Go read the entire thing. Of especial interest is the question Numerian raises, but doesn’t answer—why didn’t the other Emirates bail out Dubai? Are they running out of money? Oil? Or just fed up with Dubai’s profligacy?
Note also that this is another indication that the last 10 years, economically, did not happen. Much of the building that didn’t occur in the first world, happened in Dubai. And that was an illusion, same as banks profits were.
So, of course, the current plan is to try and reboot the Busheconomy. Get the land casino going again, reboot the financial casino, and party like it’s 2005.
Which is an even stupider plan than it was the first time since at least when Bush did it there was more of a real economy to cash out. Being stupider than Bush is an accomplishment. In fact, it’s an accomplishment that is literally mind boggling. My mind hurts every time I try and think like anyone stupid enough to do it.
This is some of the best news I’ve read in a long time:
So this enterprising young man, comedian Bob Kerr, started a Facebook group pithily entitled, “Bring Paul F. Tompkins to Toronto!” He asked for people to join the group if they were committed to seeing me perform. He asked that folks not join for “support,” that they not join just because they like joining groups, but that they only join if they were serious about wanting to come see me live in Toronto. Bob said, “You should only join if you’re actually going to be there.”
Within a few weeks, the group’s ranks had swelled to 305. I checked it out. It seemed legit! I booked a show.
A couple months later, I was in Toronto, performing two sold out shows on a Sunday night for two smart, respectful, appreciative audiences. These people didn’t come to “party.” They came to see a show. It was a magical night for me.
And it tasted like more.
I’ve become fed up with the comedy club system for reasons that would cause you to self-murder should I elaborate. I don’t want that to happen. I have long thought, There’s got to be a better way than this. But I had no idea what that way could be until my experience in Toronto.
So here it is: you provide the audience, I’ll provide the show.
This is the way the internet should work. Making it possible to do what you want to do, in ways which which couldn’t have occurred before the internet. Even if there were enough people in a local geographic cluster to support what you wanted to do, finding them was hard, often essentially impossible.
And while Tompkins needs a geographic cluster to give a show, the internet allows really thinly spread groups to connect: people who would never have been able to connect before.
One of my baseline “possible” models for the future is what I call the Mod Society or the Fab Society. A fabricator is a manufacturing unit which can manufacture almost anything. Get the plans, download into a fabricator, add raw materials to the fabricator, and it’ll make whatever the plans dictate.
Well, if they worked well, which they don’t. But that’s the idea, and there are folks working hard on making them work and making them small enough and cheap enough that you can have one in your home, with larger ones in the equivalent of corner manufacturing stores.
Imagine you want a new toaster. Go online, find one you like, download the specs to your fabricator, insert the necessary plastics and metals, let it churn for a while, and voila: new toaster! Transportation of manufactured goods drops significantly, but more importantly, design opens up. Think you can make a better toaster? Great, upload it! Add a payment system, and voila—the Fab Society. Which is, more importantly, a design society where people make things.
At the beginning of the industrial revolution, up through the 50’s and 60’s, you could make a lot of things yourself, and if you couldn’t make them yourself, you could at least repair them. The mindset of people who do that is miles different from people who are pure consumers. And, I would argue, far more healthy.
This can be extended to large goods. I would love to see very basic cars manufactured which are designed explicitly with user modification in mind. Make everything in a fashion that people can pull it out and install something new. Sell the chasis, but in effect, let people create modules for it just like applications created for the iPhone.
But all of this requires not just technological change, but a world in which you can find your customers. If there are only a 1,000 people in the entire world who want your design, your application, your mod, well, in old style industrial production, that’s worthless. But in a Mod society backed up with the internet, that might well be enough.
This has been coming for a long time. I grew up in BC, used to work as deckhand for an uncle on his salmon troller occasionally. Even back in the 80s it was obvious stocks were in massive decline. Friend of another Uncle is a marine biologist, in his 60s, he says he expects to see the effective end of BC salmon in his lifetime.
A MYSTERIOUS decline in the numbers of spawning salmon has become one of the rites of autumn in British Columbia, bringing worries of financial and job losses, threats of extinction and a perplexing lack of answers. This season only 1.7m of the 10.4m sockeye salmon that were forecast to return to the Fraser river in fact made it—a 50-year low
The response? Another inquiry…
That prompted Stephen Harper, Canada’s prime minister, to ask Bruce Cohen, a justice of British Columbia’s Supreme Court, to hold an inquiry into the causes of the sockeye’s decline. Applause was muted. Four other federal inquiries held over the past three decades have failed to halt the decline.
The economist then goes on to suggest overfishing, destruction of spawning habitat, “first nation” overfishing, parasites from farm fish, and climate change. The answer, of course, is probably “all of the above”.
I remember the period prior to the collapse and essential extinction of the cod fishery off the east coast of Canada, the Grand Banks. Commission after commission, study after study, and nothing was done. In large part because in order to stop it would have required unilaterally extending territorial waters and stopping both Canadians and Europeans from overfishing (ideally Americans too, but that wouldn’t be possible due to disparity of armed forces). The Feds weren’t willing to do that, since it would have caused a huge diplomatic snafu and might have even caused a war and they were willing to trade away the fish stocks for good relations with Europe and America.
Same thing will happen out West. No one will do what is necessary, and the fishery will be destroyed. And the same thing will happen to all major commercial fishing stocks in the world, as we continue to overfish all of them and destroy the habitat of all of them. The only solution would be to create an armed navy whose job is to enforce internationally declared fishing limits, and enforce various environmental laws, such as not allowing dragnet ships which pick up everything on the sea bottom, destroying the ecosystem. Ships found engaging in such activities would be impounded.
But, of course, that’s not going to happen. So enjoy fish while you can. Within most of our lifetimes the only fish most of us will be able to eat will be parasite ridden farm fish. The rest will be gone, and the seas will be dead.
Barack Obama came back from China and immediately announced that he was worried that about high deficits causing a double dip recession. Notice the chronology. Trip to China: announcement that deficits are a problem. In other words, the Chinese told him to get the US deficit under control, or else, and he responded.
Why? Because Barack Obama’s play, under Geithner, Summers and Bernanke’s controlling hands has been all about getting the financial play going again. Instead of saying “financialization of our economy caused the crash so we should de-financialize” the lesson he learned was “don’t let the financial play fail” and the strategy is to reboot the system.
The Chinese own an awful lot of US assets. If they were to decide to diversify out of those assets faster, well, that would be the end of the US financial play reboot. There’s still a fair bit of appetite for US assets, but it’s far from infinite and there’s a lot of uneasiness about the value of US assets in the long run. Any time it pleases China can remove as much value as it desires, simply by selling various assets. And since the Chinese are convinced they’re never getting that money back anyway, the primary value of those assets to them is now the leverage over US policy which it enables.
So why wouldn’t the Chinese want the US to keep spending massive deficits? After all, stimulus in the US equals Americans buying Chinese goods, and the Chinese need that, right?
Right. But stimulus in the US also means increased US use of oil, which increases the price of oil. And oil is hovering just under $80/barrel. Oil is the bottleneck resource. Every country’s growth is constrained by oil. East Asia is seeing a recovery, without the US recovering. The conclusion they have likely drawn from that is that they don’t need the US to recover fully, and that in marginal terms, it’s better to have cheap oil than some marginal American consumption which will drive oil up so high that the economy crashes out under the weight of it.
In the past the US has been able to pretty much unilaterally weaken or strengthen the dollar. But right now the US does not have that ability. On the one hand, if the US strengthens the dollar, the oilarchies will just increase the price of oil faster than the dollar rises, on the other hand, China can make the dollar worth whatever it wants relative to the Yuan any time it feels like by reducing its purchases of US assets, or even dumping part of its huge US dollar reserves.
The end result, then, would be more expensive oil and a Yuan that hasn’t moved any more than the Chinese want it to. Even if the Yuan did rise relative to the dollar, contrary to what the weak dollar mavens think, it’s unclear that would help the US much. The increase in the price of oil and other commodities would offset much or all of the value. In addition, many of the things the US exports most of are items it has an absolute rather than comparative advantage in. US military goods are simply better than anything comparable, for example. People buy American entertainment, software and so on because there are no comparable goods available elsewhere A weaker dollar just means the US gets less money for them.
In order for devaluation to work one of the key things the US has to do is break the ability of the oilarchies to tax the US with oil price increases. That means it has to reduce the US dependence on oil significantly, turning energy into a capital good. Unfortunately, the two areas making the largest commitment to alternative energy are China and Europe, not the US.
In addition, the US has to take control of its own spending needs, which means reducing dependence on foreign capital. That’s easy enough to do, with some modest currency controls and taxes after having increased marginal taxation significantly (90% on all income over a million, say). Once this has been done, with the majority of investment in the US coming from the US, it will matter a great deal less if the US dollar is crashed, in fact, it will have the good effects that low dollar evangelists think it should have now and which failed to materialize over Bush’s reign when the dollar dropped steadily.
But, since there is no significant move to do any of those things, and since there is no political possibility of any of these things happening before 2016 at the very earliest, get used to the fact that the late Clinton economy is the best economy most Americans have ever seen, or will ever see.
*(My guess is that the Chinese are going to increase the value of the Yuan somewhat in 2010. Because that will generate internal growth for them. Obama and co will be surprised by how little US growth it generates.)
