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US debt ceiling parasitism

August 2, 2011

After the high drama and late night sittings and doomsday rhetoric and slap-stick performances in the US congress over the last few weeks, I can’t help feeling that Vladimir Putin has a point. The agreement reached last night could – and should – have been reached 2 months ago but the Congressmen and Senators could not resist trying to show how tirelessly they work for the nation’s benefit. Sometimes they remind me of the players in a cheap musical farce where the terrible music is only topped by the dreadful actors.

Wall Street Journal

Russian Prime Minister Vladimir Putin called the U.S. “a parasite” because of its huge debt load. ….. 

In a speech Monday, Mr. Putin said Russia and other countries should seek new reserve currencies to hedge against “a systemic malfunction” in the U.S. Both Russia and China in the past have questioned the dollar’s pre-eminence as a reserve currency and its role in international trade and investment. Russia keeps almost half its reserves in dollar assets. “The country is living in debt,” Mr. Putin told a pro-Kremlin youth rally in central Russia. “It is not living within its means, shifting the weight of responsibility on other countries and in a way acting as a parasite.”

Kipper Williams US debt crisis: 02.08.2011

Kipper Williams US debt crisis: The Guardian 02.08.2011

The U.S. government’s debt will hit 100% of gross domestic product this year, up from 62% in 2007, according to the International Monetary Fund. Russia has low sovereign debt compared with the U.S. and other countries, with its state debt representing just over 10% of GDP. Still, when all the debt of its state-controlled companies is taken into account, the state is on the hook for an amount equal to 20% of GDP, according to a Deutsche Bank report. Russia’s state debt is expected to rise to 30% of GDP by 2020, according to Deutsche Bank.

The deal to raise the U.S. debt limit announced Sunday by President Barack Obama was a relief, Mr. Putin said, “but it simply delayed a more systemic solution.”

Uncertainties about the U.S. economy already have pushed Russia to seek alternatives such as gold and other sovereign debt. Russia curtailed its purchase of Treasurys in the past year, down from $176 billion last October to $125 billion in April, according to Treasury Department data.

 

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Posted in Economics, Economy, Politics, US | Comments Off on US debt ceiling parasitism

DSK case collapsing: Was this just French politics to kill his Presidential aspirations?

July 1, 2011
French Finance Minister Christine Lagarde (L) ...

French Finance Minister Christine Lagarde (L) talks with International Monetary Fund's Managing Director Dominique Strauss-Kahn (R):Image via Wikipedia

The New York Times broke this story and it makes me wonder if the anti- DSK faction in France were behind all of this just to get him out of the running for French President and – incidentally – to replace him with a Sarkozy-friendly Christine Lagarde at the IMF. With the internecine nature of French politics  reality is often much more convoluted than the most fanciful conspiracy theories. Perhaps Sarkozy  – who loves devious political machinations – was behind all of this?

The sexual assault case against Dominique Strauss-Kahn is on the verge of collapse as investigators have uncovered major holes in the credibility of the housekeeper who charged that he attacked her in his Manhattan hotel suite in May, according to two well-placed law enforcement officials. …. 

Since her initial allegation on May 14, the accuser has repeatedly lied, one of the law enforcement officials said. Senior prosecutors met with lawyers for Mr. Strauss-Kahn on Thursday and provided details about their findings, and the parties are discussing whether to dismiss the felony charges. Among the discoveries, one of the officials said, are issues involving the asylum application of the 32-year-old housekeeper, who is Guinean, and possible links to people involved in criminal activities, including drug dealing and money laundering. …. 

The revelations are a stunning change of fortune for Mr. Strauss-Kahn, 62, who was considered a strong contender for the French presidency before being accused of sexually assaulting the woman who went to clean his luxury suite at the Sofitel New York.

Prosecutors from the office of the Manhattan district attorney, Cyrus R. Vance Jr., who initially were emphatic about the strength of the case and the account of the victim, plan to tell the judge on Friday that they “have problems with the case” based on what their investigators have discovered, and will disclose more of their findings to the defense. The woman still maintains that she was attacked, the officials said.

“It is a mess, a mess on both sides,” one official said.

According to the two officials, the woman had a phone conversation with an incarcerated man within a day of her encounter with Mr. Strauss-Kahn in which she discussed the possible benefits of pursuing the charges against him. The conversation was recorded.

That man, the investigators learned, had been arrested on charges of possessing 400 pounds of marijuana. He is among a number of individuals who made multiple cash deposits, totaling around $100,000, into the woman’s bank account over the last two years. The deposits were made in Arizona, Georgia, New York and Pennsylvania.

The investigators also learned that she was paying hundreds of dollars every month in phone charges to five companies. The woman had insisted she had only one phone and said she knew nothing about the deposits except that they were made by a man she described as her fiancé and his friends.

In addition, one of the officials said, she told investigators that her application for asylum included mention of a previous rape, but there was no such account in the application. She also told them that she had been subjected to genital mutilation, but her account to the investigators differed from what was contained in the asylum application.

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Posted in France, Politics, US | 3 Comments »

Iraq and Afghanistan wars have provided a $4 trillion stimulus package

June 30, 2011

The cost of wars in Afghanistan, Iraq, and Pakistan are estimated at 225,000 lives and up to $4 trillion in U.S. spending, in a new report  by scholars with the Eisenhower Research Project at Brown University’s Watson Institute for International Studies. 

Nearly 10 years after the declaration of the War on Terror, the wars in Afghanistan, Iraq, and Pakistan have killed at least 225,000 people, including men and women in uniform, contractors, and civilians. The wars will cost Americans between $3.2 and $4 trillion, including medical care and disability for current and future war veterans, according to a new report by the Eisenhower Research Project based at Brown University’s Watson Institute for International Studies. If the wars continue, they are on track to require at least another $450 billion in Pentagon spending by 2020.

The group’s “Costs of War” project, which involved more than 20 economists, anthropologists, lawyers, humanitarian personnel, and political scientists, provides new estimates of the total war cost as well as other direct and indirect human and economic costs of the U.S. military response to the 9/11 attacks. The project is the first comprehensive analysis of all U.S., coalition, and civilian casualties, including U.S. contractors. It also assesses many of the wars’ hidden costs, such as interest on war-related debt and veterans’ benefits.

The Costs of War has released its findings online, at www.costsofwar.org, to spur public discussion about America at war.

But the institution of war is vital to a modern economy and massive spending of taxpayer’s money – in whatever form – is nothing more than a stimulus package for any economy. Infrastructure spending , sometimes on little needed infrastructure, is a commonly used vehicle for injecting a stimulus. The building industry for example has a vested interest in promoting bridges and roads to nowhere and the car industry supports public schemes for scrapping old cars. That the weapons industry has a vested interest in promoting wars is obvious. And war is also a commonly used vehicle for propping up or revitalising a flagging economy.

Industrial economies are intimately connected with the production of military technology and military capacity. Because of this, the elimination of war would prove economically devastating as large sectors of society, both in technology and manufacturing, would be wiped out.

After the first gulf war in 1991, the New York Times assessed the economic benefits of the conflict

As a result of the war in the Persian Gulf and its aftermath, the United States is likely to borrow far less from abroad this year than last. Many forecasters expect the deficit in the current account — the broadest gauge of the nation’s imports and exports of goods and services — to shrink sharply in 1991. 

According to a report released by the Department of Commerce yesterday, the United States’ current account deficit amounted to $99.3 billion in 1990, down from $110 billion in 1989. The $99.3 billion figure is the smallest gap since 1984.

Here is how the gulf war could narrow the gap even more: For starters, the invasion of Kuwait helped touch off the recession, cooling the nation’s appetite for imports. Then, the allied victory caused crude prices to plunge, slashing the bill for imported oil.

In addition, America’s allies are contributing about $51 billion to the United States’ war kitty, money that otherwise would have had to have been borrowed from private investors overseas. 

Finally, postwar rebuilding in the Middle East will increase business for American construction companies and equipment producers. United States arms makers are also expected to benefit as countries restock their arsenals.

In fact, if the allies anted up the bulk of their share of war costs right away, analysts said, the United States could become a net foreign lender, at least for a month or two, for the first time in a decade.

 

But whether the economic, social and political benefits of the $4 trillion and 225,000 lives spent on the War on Terror have been worthwhile is a question that will not be properly answered except in the light of historical perspective. 

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Posted in Economics, Politics, US | 2 Comments »

2012 US Presidential elections: A visitor’s perceptions

May 31, 2011

After a 2 week visit to the US (New York and Boston) it is difficult to resist the temptation to believe that one has become an expert on all things US!!!

But perceptions are relevant and are probably based on much more than just the observations of the last 2 weeks. In simple terms my perceptions are:

  1. There is no credible opposition to Barack Obama within the Democrats even if he has not quite lived up to the expectations of “Yes we can”. But he has not done anything considered by Democrats to be drastically wrong. The Health Care Bill was passed though it has not (will not) deliver all that was hoped. And above all – even if he did not close Guantanamo – he got Osama!!! But he is less of a leader and more of a follower than I thought he would be.
  2. The economy is still floundering and jobs are still hard to come by. But it cannot get worse and in the two years till the Presidential election the inbuilt American resilience can only make it better (whatever Obama may or may not do).
  3. The Republican candidates – so far – are very unimpressive as potential Presidential candidates.
  4. In many cases they are quite bizarre. That Donald Trump, Sarah Palin, Michelle Malkin and their ilk could or can even be considered as serious contenders reveals that a large section of the Republican supporters are not merely anti-intellectual but also anti-thought and their world view only extends as far as sound-bites on Fox news takes them.
  5. The tea-party movement and the right-wing of the Republican party seem quite similar in nationalist aspirations and ideology and insularity to the National Socialist electorate Hitler appealed to. But Michelle Malkin is actually closer to Hitler than Sarah Palin.
  6. Some of Sarah Palin’s shenanigans over the weekend suggest she is more interested in promoting brand Palin and her future earnings than in anything else. Even any eventual candidacy would be to make money.
  7. Romney is the front runner and he would certainly not be less competent than George Bush and probably less susceptible to being a puppet in the hands of a Dick Cheney. But he may be too intellectual for the right-wing of the Republican party. Pawlenty seems to be a non-person but that is mainly image.
  8. What political issues would be relevant in 2012 will change but right now the Republicans are shooting themselves in the foot over Health Care. If they continue attacking Medicare they could lose this election already within the next few months.
  9. Energy policy is the Democratic Achilles heel. It is beginning to sink in even among the “do-gooders” that fossil fuels and nuclear energy are the main-stay which actually permits the fiddling around with and subsidising of solar and wind power. It is also beginning to be understood that “climate change” is a political ideology and not a science. I cannot see Energy policy alone winning the election for the Republicans but I can see the Democrats losing it if they allow the fungus of “going green” to spread too far.
But the next 12 months will be fascinating. If the Republicans have not found a credible candidate of substance by this time next year Obama will win his second term easily and will be back in 2012.

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Posted in Behaviour, Politics, US | 2 Comments »

First Observations

May 16, 2011

Visiting New York  after a break of 3 years.

  1. Changing planes at Munich far more effective and smooth than at Frankfurt. Huge line at JFK immigration but completed immigration and customs in less than 25 minutes. On-line ESTA registration together with machine readable passports actually works.  Entire process was quite painless.
  2. Warm but drizzling in Manhattan. Traffic was horrendous and almost gridlocked on a Sunday afternoon. Our taxi driver demonstrated the ability to accelerate to 70 mph and come to a screeching halt at the traffic lights at the end of every block. But he never managed to get more than one vehicle ahead of the sedate bus he was following for over 10 miles.
  3. All news channels are covering the arrest of the head of the IMF on rape charges. True or not, Dominique Strauss-Kahn’s aspirations in French politics would normally be ended. But one never knows. The macho image has not hurt Berlusconi! And Sarkozy clearly believes that a macho image helps him with the French voters!!
  4. Coverage of the Louisiana flooding was not as overwhelming that I expected it would be and I had to surf through many channels to find some coverage.

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Space shuttle Discovery sets of on her last mission

February 25, 2011

Shuttle Discovery sets out on last voyage

Space shuttle Discovery

Space shuttle Discovery lifts off from the Cape Canaveral. Photograph: Chris O'Meara/AP

The US shuttle Discovery has launched from the Kennedy Space Center for the last time. The orbiter roared into a bright blue Florida sky, leaving the pad at 1653 local time (2153 GMT).

Its 11-day mission will see it deliver a new store room and a sophisticated humanoid robot to the International Space Station (ISS). Only two further flights remain by Endeavour and Atlantis, which Nasa is trying to see concluded this year.

The orbiter fleet is then expected to retire to museums.

….. First launched in 1984, this is its 39th outing. When it lands back on Earth in nearly two weeks’ time it will have covered a cumulative career distance of 230 million km (143 million miles). That’s further than the distance from the Earth to the Sun (149 million km).

Once the shuttles are retired, the plan is for US astronauts to fly to the space station on Russian Soyuz rockets until perhaps the middle of the decade.

Related:

Space shuttle Discovery prepares for final mission

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Surprise! Boeing wins $35 billion tanker order

February 25, 2011

Airbus will no doubt protest but if they really expect to displace Boeing for the US Air Force  tankers they are living in a dream world. They should have seen the writing on the wall when the whole contract was re-tendered even after they had won the order for 179 aircraft in 2008. There is no US politician who would have the courage to place such an order outside of the US.

Bloomberg reports:

Boeing Co., the sole supplier of aerial refueling tankers to the U.S. Air Force since 1948, beat European Aeronautic, Defence & Space Co. for a $35 billion program to build 179 new tankers, the Pentagon said yesterday.

It was the Chicago-based company’s third try at the contract since Congress and the Air Force first proposed the tanker replacement program in late 2001 — a contest in which Boeing was viewed as an underdog, said an analyst.

“Boeing’s victory was a major upset, and not at all what the industry was expecting,” Richard Aboulafia, a military aircraft analyst with the Fairfax, Virginia-based Teal Group, said in an e-mail.

Boeing will manufacture basic 767-model aircraft in Everett, Washington, and convert them into tankers in Wichita, Kansas, during the first stage of a three-part Air Force program stretching decades to replace its tanker fleet.

The initial contract for the development phase was valued at $3.5 billion. The entire first phase covers 13 production lots through 2027. The Pratt & Whitney unit of United Technologies Corp. will provide the engines. Boeing says the win will create and sustain 50,000 jobs among 800 suppliers in 40 states.

Related:

$35 billion US tanker decision imminent: Boeing and Airbus prepare to protest a loss

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$35 billion US tanker decision imminent: Boeing and Airbus prepare to protest a loss

February 24, 2011

The much awaited winner of the order for 179 tanker aircraft for the US Air Force worth about $35 billion will be announced after markets close this evening (Thursday 24th February) reports Reuters (via the NYT):

KC-767-200ER/300ER is a credible replacement for the KC-135R: image ausairpower.net

The decision, expected after U.S. financial markets close, marks another pivotal point in the Air Force’s nearly decade-long struggle to begin replacing its 50-year-old KC-135 Stratotankers, which refuel fighter planes and other aircraft in mid-flight to extend the range of military operations.

But analysts say there is no guarantee an epic industry battle will end there. The losing bidder is likely to file a protest that could delay — or overturn — the contract.

The competition to supply 179 air-to-air tankers has sparked sporadic transatlantic tensions and clashes in Congress among lawmakers eager to bring jobs to their states. …. Now, the Pentagon is close to giving its decision on the third attempt to replace aging Eisenhower-era tanker planes and senior defense officials say the choice between Boeing and EADS could come on Thursday.

A330 MRTT tanker (EADS)

A330 MRTT tanker (EADS)

Both Boeing and EADS, through its North American subsidiary, are offering specially adapted versions of existing twin-engined wide-body passenger jets: the Boeing 767 and the Airbus A330.

Analysts widely expect the losing side to file a protest against the decision with the Government Accountability Office, the arm of Congress which rules on federal contract disputes.

The Air Force has been trying since 2001 to begin replacing its Boeing-built KC-135 tankers.

An initial $23.5 billion plan to lease and then buy 100 modified Boeing 767s as tankers, fell apart in 2004. …. EADS, partnered with Northrop Grumman Corp, won a 179-plane deal in February 2008, only to have it canceled after government auditors upheld parts of a protest by Boeing.

Northrop subsequently pulled out, leaving the European aerospace and defense company to bid alone.


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Posted in Aviation, Defense, US | 2 Comments »

Maryland and Washington begin to sound like Delhi

February 6, 2011

In India, planned blackouts are used commonly for the management of electricity load. Delhi is used to regular black-outs and there is is no likelihood in the near future that the availability and quality of electric power will be sufficient to eliminate this system of load management. There is no office or shopping mall or large home in Delhi which does not plan for this by installing diesel generators as back-up. Smaller households or those which cannot afford generators use inverters which are sufficient for lighting and perhaps a fridge during an outage but cannot supply enough power for long enough for any air-conditioners or any heating. Even when power is available, the voltage variation is so large that virtually all electrical equipment must be protected by voltage stabilisers.

The black-outs in Delhi occur most often at peak times (around breakfast or dinner) and commonly at night during low load when equipment is shut off for maintenance to be carried out. Unplanned outages are apt to occur at any time. It is on summer nights that the sounds of Delhi are drowned by those of generators cutting in to keep air-conditioners running. There is no possibility of sound regulations being implemented to limit this noise and for those who have difficulty to sleep there is no alternative but to sound-proof their bed-rooms or to use ear-plugs.

The quality and reliability and availability of electric power in the more developed countries (Europe, Japan, US) is often quoted as the target for the Indian power generation and distribution system to aspire to.

But it seems that the US grid is now so weak that parts of Maryland and Washington are beginning to sound like Delhi. The Wasington Post reports:

map

Blackouts 2010 in Maryland and Washington

In Pepco territory, blackouts mean more home generators, more noise complaints

For Arthur Bennett, blackouts now come with a soundtrack.When last month’s “thundersnow” knocked out power in Bennett’s Montgomery County neighborhood, the preindustrial hush inside his house – when even the refrigerator seemed to hold its breath – soon gave way to the two-stroke roar of engines up and down his block.

Bennett, like many residents of Pepco‘s service area in Maryland and the District, has concluded that blackouts are likely to get even louder as the utility’s fed-up customers turn increasingly to backup power. According to retailers and electricians, home generator sales are booming in the area Pepco serves, especially since the company has been plagued by repeated, prolonged outages
over the past few years. Portable generators sold out at several home stores after the latest storm, and installers report that sales of high-end whole-house units have skyrocketed.

Jim Holt of Gaithersburg’s Holt Electrical said his sales of home generators have been climbing steadily and reached a near “level of panic” after the last blackout – mainly on Pepco’s turf. …….

…………. One thing both generator owners and their juiceless neighbors can agree on is the frustration of having to debate this issue at all. “I really think it’s kind of scandalous that in the capital of the world, we’ve got third-world reliability for electric power,” said Larry Posner of Shepherd Park in Northwest.

Read the entire article.

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Wind Power capacity compromised in Texas: Rolling blackouts as Mexico supplies some back up

February 4, 2011

That wind power generating capacity is intermittent capacity and cannot be relied upon is obvious but sometimes escapes notice in the enthusiasm for “renewable energy”. That wind power must be backed up by other more reliable generating capacity for the periods when winds are too low or too high or when the weather is too cold is also often glossed over. That wind power must be used when the wind does blow irrespective of level of demand  and thereby displace more stable power (thus rendering it more expensive) is an inevitable consequence.

The following report comes as no surprise.

METEOROLOGICAL MUSINGS reports:

The Electric Reliability Council of Texas said 7,000 megawatts of generating capacity tripped [“tripped” means failed]Tuesday night, leaving the state without enough juice. That’s enough capacity to power about 1.4 million homes. By rotating outages, ERCOT said it prevented total blackouts.
“We have the double whammy of extremely high demand, given the lowest temperatures in 15 years, combined with generation that’s been compromised and is producing less than expected or needed,” said Oncor spokeswoman Catherine Cuellar. Oncor operates power lines in North Texas and facilitated the blackouts for ERCOT.
The article didn’t give a clue as to what generating capability failed, but I can make a pretty good guess: Wind energy…
For a time, Texas was bragging about being the #1 state for “wind power” (it still is) and we were bombarded with TV commercials and newspaper editorial touting the “Pickens Plan” for massive spending on wind energy. Pickens himself was building a huge wind farm in northwest Texas. He has now ceased construction.
Now, because of relying so much on wind power, the state is suffering blackouts.
Mexico is trying to help by shipping power to Texas, but it is not enough.

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Posted in Energy, Environment, Technology, US, Wind power | 5 Comments »

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