What to Believe...

Yesterday I wrote about the Iran-P-5+1 agreement and that I think/hope that it is a monumental event.  I say that because the alternative is military action which is always fraught with more risk than anyone thinks up to the point they start shooting.

It therefore made me extremely uncomfortable that the Iranian Foreign Ministry is now saying that the text published by the US is not the correct text.

It is not surprising.  Everyone around the table has different goals.   This doesn't mean they are all diametrically opposed to one another but it does mean that their respective willingness to compromise is predicated on different desires that might or might not be compatible.

The US is focused on ensuring that Iran is unable to produce a nuclear weapon. 

The Iranians are focused on ensuring that there is no regime change whether internally or externally driven.

One bargaining chip is sanctions- the other is nuclear development. 

I had hoped that the pressure on the Iranian leadership created by economic sanctions had reached the point that the general population was less concerned about Iran's place in the sun and was much more focused on their daily needs to the point that the government had no choice but to negotiate to remove the sanctions.

Fully realising that every politician has to play to both a foreign and a domestic audience I expected that there would be statements that play better in Peoria than they do in Tehran, and vice versa. 

But disagreeing on the text smells of prevarication, the twin sister of stalling.

We have been there before.  The case could be made that the US was guilty of it in our handling of the Syrian crisis.  And that is why despite my sincere hope that this was just playing to the domestic audience, that the US has made it crystal clear that sanctions would be reinstated without delay if there were even a whiff of noncompliance and that the military solution might not be on the table, but it is certainly in the drawer.

When The Unthinkable Happens

As a child of the post-war generation there were a number of certainties which were just accepted as the way things were.

One of these was the Cold War. 

My town did not become a public entity until 1959.  Until that time it was under the auspices of the US Government and even had military guards at the edge of town.

Every day at five o'clock the air raid sirens would go off and on TV/Radio a civil defence broadcast was made directing the viewer to do this or that in the event of an attack-by the Russians.

Another part of that certainty was the division of Germany into two parts: a democratic West Germany providing the largest number of standing troops in NATO, and a communist East Germany whose troops made up about a quarter to the Warsaw Pact.

That was the way it was and I knew no one who thought there would be a reunification in their lifetime.

And then in 1989, 44 years after a war that left deep scars across almost every geographical/political boundary, it happened.

Over the weekend a similarly monumental event happened.  An accord was signed between Iran and the P-5+1 which, 34 years after the Iranian Hostage Crisis, essentially gave Iran 6 months to demonstrate that they can and will abide by the terms of the agreement and then possibly an even broader set of terms could be agreed.

One of the important side issues in this is that the Americans designed it such that Obama doesn't have to take it to the Congress but rather can sign it as a Presidential Decree.

This is important as there are any number of Americans who are up in arms over this agreement-for a myriad of reasons-some good, some bad.

But what I wanted to highlight is how even circumstances seeming set in stone can change. 

This is a good thing.  We are not stuck in every situation for eternity.

Maybe we can actually address some things like the environment....

"The end of democracy… will occur when government falls into the hands of lending institutions and moneyed corporations.” Thomas Jefferson

Going back to the days of  the founding fathers of the United States there was a schism identified-correctly or not-between the quasi-agrarians under Thomas Jefferson and the banker/industrialists under Andrew Hamilton.

The gist of the division can be best described in the quotation in today's title.  Just for the record there are differences of opinion as to whether Jefferson every said or wrote that exact quote or if it is just an amalgamation of comments crafted together into a rather neat statement.

This is not just an American argument however.  It is part of a discussion which has been with us through the ages.  Without wishing to enter into a religious discussion it was present when Jesus chased the money-changers out of the temple, and when Martin Luther rebelled against the selling of indulgences.

It is an ideological argument however with zealots on either side generally not listening to one another and illogically in my opinion  apparently unable to step back and look at the relationship between the two.

For despite the epithets one hurls at money and the people who trade in it, money makes the (modern) world go round.  Harping on about the communal lifestyles of the Native Americans or the barter societies of pre-history might be an interesting anthropological study but really have little to do with our modern-day reality.

I had a taste of this argument over the weekend when I was at a dinner and I was sat next to an 80 year old former general manager of a major chemicals company who managed to launch into a diatribe against bankers before we had had are first glass of champagne. 

I must admit I find nothing more distasteful than successful industrialists who drone on about the "real" economy as opposed to the paper pushers of finance, and yet react as if you had insulted their mother when you suggest the need for regulation in all industries- regardless of sector.

So when I read the quote ascribed to Mr Jefferson as sort of an "if only we had listened to him" plea I get a little annoyed.

I agree wholeheartedly that the finance industry exercises an outrageous control over our publicly elected officials.  But I don't blame the finance industry.  Special interest groups, be they from the left or the right are essentially able to "buy" politicians through the campaign finance laws which were recently relaxed even more!

I think Mr Jefferson as well as Mr Hamilton would not be pleased by the power currently wielded by private financial muscle, much of which is from the financial industry.  But I think they would be even more disturbed by the way the government has allowed itself to be bought.

It would be very simple to put strict controls on campaign finance, and even more importantly on campaign expenditure. 

But that would require regulation....

The Beauty of Diplomacy

I just got an update from a news service I read stating: "Iran has the right to enrich uranium but does not insist that other states recognise its right, Iran's chief nuclear negotiator said Nov. 17, Reuters reported".

If they weren't Iranian I would say they had been studying the Talmud to come up with such a convoluted yet brilliant solution.

They are saying they could enrich uranium if they wanted to, but they are not going to require that their right be recognised.  They maintain their "honor".  Their national integrity has not been impinged upon and yet the rest of the world also is able to maintain its' "honor".

Now of course rest of the world includes Israel that might view things slightly differently, as well as an American population still seething over the injustices of the Iran Hostage affair.

But inch by inch the face of the Middle East is being redrawn.

One can only hope it is a prettier version than the one we have now.

Sensationalism Wins!

I was a little confounded by the way the conservative media has kept up a constant attack on the Affordable Care Act which they of course call Obamacare to make sure their message is to injure Obama rather than discuss anything rationally.

Is the American public that easily moved that if you bang on long enough about a topic with enough (mis)information then it becomes the only thing people think/talk about?

Unfortunately I believe that is the case.  Although I don't think the US is alone in this.  In other times in other countries the mantra was "The bigger the lie the more they (the masses) will believe it".

And given the power of Madison Avenue in modern American history a la "The Selling of the President" the real question is why it would take me so long to figure it out.

Granted the repeal of the Fairness Doctrine under the Reagan Administration made it even easier to sway the population, but the truth is people tend to only hear what they want to hear, so you may just as well narrow down their choices to improve your chance of getting them to believe what you want them to.

It seems to me that the Affordable Care Act delivered on most of its promises.

People can keep their kids on their family policies until the kids are 26.
People can't be denied insurance because of a pre-existing condition.
People can't have their insurance policies cancelled because they get sick.
People who can't afford health insurance will get tax credits to help them pay for it.
People will be able to compare policies between insurance companies at multiple levels of coverage and pay group rates.
Insurance companies will be required to put 80% of revenues toward health care. Any difference between the amount put toward health care and 80% will be returned to the customers.

Promises not kept:
Some people won't be able to keep their old policies as promised. However, most of the people in question will be able to get better insurance for less money.

So why focus on the promise they didn't keep?

Yes you are right.  It's the same tactic that focused on "Swift Boats", on "Death Panels" and the like.  Pick a theme.  Find a flaw.  Ride it to death and bingo-you drown out any rational discussion.

Income Inequality

I recently read an article essentially defending income inequality insofar that it ran through a number of explanations as to why it was not holding the economy back.

First to put some statistics out there to see what we are talking about.

Real incomes of the top 1% in the US have almost tripled since the mid-1980's.  The share of income going to the top 1% has doubled from 1980 to today to approximately 23%.

The article blamed globalisation as one of the reasons the lower earners earned even less.  It went on to discuss that the off-shoring of high-paying semiskilled jobs was being replaced "with new jobs requiring relatively few skills such as those in education, health care and leisure"-my italics. 

I am not a specialist in leisure so can't really speak to that part of the sentence but I am apalled to see education and health care being classified as jobs requiring relatively few skills.

They next blamed declining marginal tax rates as a cause for an increase in income inequality. 

You think?!?

The next cause was the rapid expansion of the financial sector.  They did suggest that there is less evidence that rapid growth in executive compensation has played a significant role.  Those same executives that make up the 1%. 

Hmmm.

But the killer was that it went on to explain that theoretically rising income inequality should slow economic growth if the top 1% have a higher propensity to save then those in lower income brackets.  Yet the savings rate has fallen since the 1980's.

Now my experience is you can't save what you don't have. That might explain a declining savings rate, especially when coupled with a (still)high unemployment rate.

If I had been watching Fox News I wouldn't have been surprised- unfortunately I wasn't. 

Financial Repression?

I recently read an economics article focusing on the current level of interest rates and how government/central bank policies will effect them in the future. 

The article  was titled "Market Implications of Financial Repression".  It began with an explanation of financial repression:  "official policies that lower artificially a government's cost of borrowing".

I didn't have any real disagreements with the article.  Essentially it highlighted the fact that the Federal Reserve's holdings of government bonds ballooned between 1942 and 1951, under pressure from the Treasury. 

Given the title of the article I am quite sure that the author has a strong "free-market" bias.  I also am sure that he therefore objects to whatever forces impact markets resulting in an outcome that doesn't adhere to his view of what the invisible hand of the market should be dictating.

Now I am reading a lot into the mind-set of this author given the title.

But he is suggesting that government intervention- by the Treasury and/or the Central Bank is "Repression"?  I could understand if he chose to use "guidance" or even "intervention", but "repression"?

I am scared to think what he thinks of regulation let alone taxes.

Anyway, despite his strange choice of adjective I do think that his analysis was interesting. 

The United States had been in the Great Depression and was still suffering from the after-effects of it when it entered World War II.  Given the need to raise funds to finance the war effort it is not strange that the government would endeavour to keep the cost of those funds under control.  It is only rational to me that if there were a mechanism to do so such as having the Federal Reserve purchase a significant portion of the issuance, capping long-term rates at around 2.5%, that they pursue it.

If I fast forward to the Great Recession and the introduction of a government policy intended to both stimulate the economy as well as keep long term rates under control- the "twist" factor in the Quantitative Easing (QE) policy-it seems that the current government is following in the footsteps of its forbears.

The good news is that as the Fed in the 50's started to decrease it's purchases in a well-managed fashion.  It took 8 years for yields to rise from 2.5% to 4%.  Tapering is no different then a managed retreat from QE, something the Fed has successfully done previously.

And the result?  A decreasing debt/GDP ratio, an economy on a stable road to recovery, and yields rising in a rational an orderly fashion.

Doesn't sound like repression to me.

It's Called Discussion

As I hope is obvious to readers of this blog I try to throw my data-gathering net as wide as possible to hear what differing views there might be on the same subject. I follow this approach in my private life as well. 

The other night for example I was at a dinner party with an eclectic group representing just about every segment of society from a  Kiwi wearing the actual and figurative accoutrement of an old-school upper class Brit to a conservative German Count to a couple of high profile architects, an interior designer, a relatively left wing academic, a stylist and an Oxford don sitting in a chair for engineering and medicine.

As one could imagine this group had a varied view of the world and no one was shy about voicing their opinion as fact.  With this or other groups with whom I socialize we tend to address political and social questions of the day as opposed to talk about golf and tennis or other forms of dinner party chit chat.

Unsurprisingly, the conversation sometimes got heated, especially as the evening wore on.  And yet it was never personal.   In many instances it was clear that there was no unity of opinion despite some long monologues, dialogues and free-for alls.

This group was somewhat of a microcosm for (European) society and so on occasion some nationalist  prejudices would make their way to the surface- only to be resolutely batted back into the depths.

What was happening was that there was a wide-ranging discussion in which people were required to think as well as speak and perhaps more importantly, listen.

No we did not solve the problems of the world.  But we did challenge one another's preconceived notions as to the interpretation of events.  Everyone was made to defend/attack various positions without cares or concerns of no-go zones or trumped up ideas of political correctness.

I could only hope the same of the august bodies pontificating in the various governmental chambers of our hallowed lawmakers, regardless of their country of origin.

Further Thoughts on Stroebele

In case anyone thinks I am a right-wing radical following my comments on Mr Stroebele yesterday I would like to state clearly for the record that I am a strong supporter of the idea of a Social Market economy within the framework of a democratic government.  Furthermore I am a strong believer in the need for government ordained regulations which despite sometimes creating red tape and the like are a far sight better than the useless concept of "self-regulation".

 

I make this statement as I realise that my negative opinion of Mr Stroebele could be construed to be an anti everything that he is for. This is not the case.  It is much more that I believe he is actually an amateur in a world of cold-hearted professionals which is why I felt that he was being  "used" in his Snowden adventure.

 

Today, admittedly in "Die Welt" which is anything but a liberal minded media organisation there was a discussion with an undisclosed member of the German Intelligence service.

 

In the article they alleged that the entire trip, down to the room in which Stroebele met with Snowden was organised by the Russian Security Organisation FSB.  They went on to explain that in their opinion this trip was an excellent opportunity for the Russians to keep the debate over the NSA on the front pages and in so doing try and drive a larger stake between the US and Germany.

 

To be fair the article goes too far and suggests that Stroebele intentionally allowed himself to be so manipulated. 

I personally doubt that Mr Stroebele was that strategic in his thinking.  It reeked much more of an ego which saw an opportunity to force its' way to the fore, regardless of any collateral damage it might create.

 

Lastly, just for the record, the idea that Snowden is completely controlled by the FSB and that they were orchestrating the meeting with Stroebele has also now been reported in the magazine "Focus" which is a much more liberal minded media organisation.

 

 

The Geopolitics of Spying

I am no fan of Hans-Christian Stroebele.  His approach to environmentalism is to assume that the democratic capitalist system is the root of all evil.  There is much that is evil in that system, but to only see the "dark" side of is is perhaps acceptable for a university professor but not what I expect from a member of Parliament.

But then again Mr Stroebele does come from a generation which is still stuck somewhat in the 60's and a priori is convinced that everything the US does is bad.

No.  I am not going to go all out and support the activities of the NSA.  That would be equally ideologically narrow-minded as to assume that everything they do is wrong.

I do wish however that people like Mr Stroebele had a weaker voice within he Green movement as I believe that for environmentalism to work a balance has to be struck that combines  economic prerogatives with environmental needs- and I don't believe he will ever be able to accept that premise.

Despite my view of Mr Stroeble I was still somewhat taken aback that he actually went to Moscow to meet with Edward Snowden.  Like it or not Snowden is wanted by the US and is essentially accused of treason.  For Stroeble, a member of Parliament to provide Snowden a platform is an international act pitting the US against Germany.  As if that weren't enough Stroeble came back waving a letter suggesting that the US drop its' case against Snowden so he could come to Germany and give (his) evidence in the NSA case. 

This would be amusing if it weren't so obvious that Mr Stroeble's ego has gotten ahead of him and allowed him to be manipulated into a geopolitical maelstrom that he will never appreciate.

I was therefore very pleased to see that both the CDU/CSU and the SPD both came out with statements highlighting the importance of the relationship with the US.  That was not to say that there were not some hard discussions to be had between the two nations, but they are not going to be orchestrated by an accused traitor on the run.

The plot did get a little thicker today as the British equivalent of the NSA, MI6 has now been accused of carrying out eavesdropping in Germany extremely similar to the activities of their American colleagues. 

It is the nature of intelligence agencies to snoop on everyone, everywhere.  They are data miners of the highest degree.  Everyone in the space knows this.  Even during wartime the sharing of information between agencies is anything but perfect so it should not be surprising that during peacetime the data gathers cast their nets as far and as wide as possible to see what they can find.

I think there will be some hand slapping and some agreements worked out as to what is and isn't acceptable between friends.....

And then they will all start doing it again- but this time a little more subtly.



The reason for my dislike is that he has managed to create a position which I think damages the constructive element of having a Green Party by combining it with an anti-democratic and indeed anti-capitalist agenda.

He also seems unable to appreciate the adage that politics is the art of the possible as opposed to thinking it is the realm of ivory tower thinking.

For that idealism can be the only reason that I conceive of to have motivated him to go and visit Edward Snowden in Moscow and come back brandishing a letter

Scary Stuff Part II

Despite the negative tone of yesterday's post, especially as regards the need to care for an ageing population and the need to feed ever larger numbers of people I didn't want to give the impression that I am a pessimist for the future of mankind and can only see a dystopian future.

Debt ratios and income inequality are financial constructs and can be dealt with either through the ballot box, rational government, or revolution.

An ageing population will require increased levels of care, regardless of the cost.  Feeding a growing population will require increased productivity, and dare I say it-managed population growth.

If there is one thing our history has shown so far is that we are not only able to be our own worst enemy with relation to one another and our planet, we are also incredibly resourceful.  I will admit that although the swings of the pendulum seem to take us closer and closer to self annihilation, we also always catch ourselves at the brink and come back to the middle.

Its called mean reversal.

It's a natural state. 

That doesn't mean that there won't be casualties along the way, that it will always be bright and sunny.  But it does mean that after trying everything else we will eventually hit upon the right path, until the next major fork in the road.