Daily Archives: August 10, 2011
One of the irritating things about being deeply in debt is dealing with your creditors. Happily, if your creditor is, say Wells Fargo, they tend to stay within strict legal bounds when dealing with you. If you’ve been unfortunate enough to seek credit from fellows whose last names end in vowels, they tend to be more…forceful in delivering their messages to you. As it happens one of the United States’ creditors also has a name that ends with a vowel: China.
And they have a message. The more or less official organ of the Chinese Communist Party—which is to say the Chinese Government—is the newspaper People’s Daily. So, it is with much interest that I read an op/ed piece in that fine journal with the title, "China must punish US for Taiwan arm sales with ‘financial weapon’". As messages go, this one’s pretty simple.
Now is the time for China to use its "financial weapon" to teach the United States a lesson if it moves forward with a plan to sale arms to Taiwan. In fact, China has never wanted to use its holdings of U.S. debt as a weapon. It is the United States that is forcing it to do so.
The U.S. House of Representatives just passed a debt ceiling bill on Aug. 1. On the next day, a total of 181 members of the House of Representatives signed a letter sent to U.S. President Barack Obama stating that the federal government should approve the sale of F-16 C/D fighter jets to Taiwan as soon as possible to help ensure peace and stability across the Taiwan Strait…
Despite knowing that major creditor countries, especially China, would be the main buyers of its new debt, certain arrogant and disrespectful U.S. Congress members have totally ignored China’s core interests by pressuring the president to sell advanced jets and even an arms upgrade package to Taiwan.
U.S. treasuries will lose value if China stops or reduces its purchases of them on a large scale, which will also affect the value of China’s U.S. treasury holdings. However,as the situation has gotten out of hand, allowing Washington politicians to continue their game might lead to more losses.
U.S. arms sales to Taiwan can only create more jobs for the United States but cannot improve the ability of Taiwan’s military force to compete with the Chinese mainland. The essence of the problem is that some U.S. Congress members hold a contemptuous attitude toward the core interests of China, which shows that they will never respect China. China-U.S. relations will always be constrained by these people and will continue along a roller coaster pattern if China does not beat them until they feel the pain.
I am mildly amused by the claim that such sales both threaten "China’s core interests", but "cannot improve the ability of Taiwan’s military force to compete with the Chinese mainland." Both of these arguments cannot simultaneously be true.
Less amusing is the common attitude of loan sharks to their creditors displayed here using much the same language that Tony "The Shark" would use: Namely, if creditors don’t do what they’re told, you have to "beat them until they feel the pain."
With the recent rise in bond prices and drop in yields, the Chinese have a number of options. The least damaging to the US would be to sit out a few bond auctions, which would force interest rates up. But they’ve also got the nuclear option of selling off as much paper as the market could bear. Yes, they’d forego some yield payments, but they’d probably make a nice tidy premium over the original purchase price to make up for it. Rising interest rates now, at a time when the economy is weak, and short-term rates are already effectively zero, would slow the US economy. At the same time, a massive repatriation of renminbi to China would cause a steep drop in the value of the dollar in foreign exchange markets. This would raise the price of imports equally steeply. This would cause something very similar to the oil price shocks of the 1970s, that plunged the US into stagflation.
Naturally, the Chinese would be hurt by the reduction in their export capability. The question then becomes, "Which of the two political systems, China or the US, is more concerned about democratic pressure to change policy in order to improve the economy?" Who is more responsive to public pressure: our government, or the government that initiated the Tiananmen Square massacre?
I don’t know about you, but I wouldn’t expect Hu "The Kommissar" Jintao to be the one that blinks first.
Of course, if we weren’t $14 trillion in debt, we wouldn’t be very vulnerable to this sort of thing.
I’m amazed at times by what I read in major daily newspapers. OK, not as much now as I would have been say 10 or 15 years ago. Maybe it’s just awareness on my part now, but as I get older I am confronted by what I see as half-baked opinion on the pages of such rags than I ever remember before.
Maybe it’s me. Maybe I’m the one that’s gotten sharper over the years and am able to spot nonsense more easily than before. Take for instance, Nina Power of the Guardian. Power is a senior lecturer in philosophy at Roehampton University, so she can be forgiven for being somewhat removed from reality. In her opinion, which the Guardian gladly publishes, the problem of the riots in London and elsewhere can be laid at the feet of government and austerity policies. Why? Well let her explain:
Since the coalition came to power just over a year ago, the country has seen multiple student protests, occupations of dozens of universities, several strikes, a half-a-million-strong trade union march and now unrest on the streets of the capital (preceded by clashes with Bristol police in Stokes Croft earlier in the year). Each of these events was sparked by a different cause, yet all take place against a backdrop of brutal cuts and enforced austerity measures. The government knows very well that it is taking a gamble, and that its policies run the risk of sparking mass unrest on a scale we haven’t seen since the early 1980s. With people taking to the streets of Tottenham, Edmonton, Brixton and elsewhere over the past few nights, we could be about to see the government enter a sustained and serious losing streak.
It’s the “brutal cuts” and the “enforced austerity measures”. Note she admits that “each of these events was sparked by a different cause”, however she then rejects that admission and claims that in reality they all come back to government cut backs.
Really? It couldn’t be good old technology aided criminality could it? Or something else completely? Or a combination of other things altogether?
For instance, in the next paragraph, she says:
The policies of the past year may have clarified the division between the entitled and the dispossessed in extreme terms, but the context for social unrest cuts much deeper. The fatal shooting of Mark Duggan last Thursday, where it appears, contrary to initial accounts, that only police bullets were fired, is another tragic event in a longer history of the Metropolitan police’s treatment of ordinary Londoners, especially those from black and minority ethnic backgrounds, and the singling out of specific areas and individuals for monitoring, stop and search and daily harassment.
One journalist wrote that he was surprised how many people in Tottenham knew of and were critical of the IPCC, but there should be nothing surprising about this. When you look at the figures for deaths in police custody (at least 333 since 1998 and not a single conviction of any police officer for any of them), then the IPCC and the courts are seen by many, quite reasonably, to be protecting the police rather than the people.
Oh, so it could be all about police harassment then and nothing to do with “brutal cuts” or austerity? It could be that the spark that lit this fire had to do with police treatment of minorities? It certainly seems that is what she’s saying. And of course the riots elsewhere could simply be copy-cat. Criminal gangs who learned the methods used in Tottenham and deploying them elsewhere to loot and avoid the police?
Well, yes, it could be. In fact, it could really have nothing at all to do with the “entitled and dispossessed”.
Combine understandable suspicion of and resentment towards the police based on experience and memory with high poverty and large unemployment and the reasons why people are taking to the streets become clear.
They do? What’s clear is she’s bound and determined to link them, that’s for sure. But clarity … yeah, not so much.
But that is necessary, even if not true, to conclude the following:
Those condemning the events of the past couple of nights in north London and elsewhere would do well to take a step back and consider the bigger picture: a country in which the richest 10% are now 100 times better off than the poorest, where consumerism predicated on personal debt has been pushed for years as the solution to a faltering economy, and where, according to the OECD, social mobility is worse than any other developed country.
As Richard Wilkinson and Kate Pickett point out in The Spirit Level: Why Equality is Better for Everyone, phenomena usually described as "social problems" (crime, ill-health, imprisonment rates, mental illness) are far more common in unequal societies than ones with better economic distribution and less gap between the richest and the poorest. Decades of individualism, competition and state-encouraged selfishness – combined with a systematic crushing of unions and the ever-increasing criminalisation of dissent – have made Britain one of the most unequal countries in the developed world.
All of that from a riot against police that one could conclude was a long time fermenting. Recall the LA riots – was that because of “brutal cuts” and “enforced austerity measures”? Was the looting that took place then a result of “decades of individualism, competition and state-encouraged selfishness” or mobs taking advantage of the lawlessness the riots brought to loot what they wanted?
And even if she’s half right – what’s the solution she’d desire? Well “equality” of course. She’d rather trample the rights of those who’ve won “life’s lottery” (even though they worked their rear ends off to do so) and redistribute it to the poor and disenfranchised than ask the poor and disenfranchised to do what is necessary to give themselves a chance in life and quit demanding others do it for them.
Collectivism, although she never comes out and says it, is her answer. And we’ve seen how well those equal societies did, didn’t we? Well at least those of us who had been born before the collapse of the USSR and objectively observed the outcome.
Yes, friends, a whole new generation of collectivists begin to rear their heads, some having never seen what the collectivism of the last century brought in terms of “equality” - Equality of misery, equality of oppression and equality of hopelessness.
The problem in the UK isn’t austerity, it’s the results of collectivism and the fact that the inevitable outcome has begun. It isn’t individualism that’s the fault. It’s a massive state which robs people of incentive through it’s supposed benign acts of state sponsored charity. Why strive if you will be taken care of whether you do or not? Why seek food if you’re not hungry or don’t care what you eat? Why take care of yourself if the state will do it for you? And if you start running out of money, tax the rich bastards who want better.
Uncle Jimbo, at Blackfive, puts the exclamation mark on the real reason London is burning:
Liberal social policies have brought western civilization to the breaking point. They had the best of intentions, just ask them. But they, and sadly we, are getting a heaping dose of the law of unintended consequences. If you train an entire cohort of society to believe that the government doesn’t just offer a safety net but a way of life, well you get this- gangs of scum who will take what they want if the free lunch stops showing up. The chattering class is doing their level best to paint this as a legitimate reaction to dire economic times, and for once I agree with them. This is what happens when you run out of other people’s money.
By the way, this isn’t just a one-off bit of nonsense from Ms. Power. She’s been quite active in the Guardian pages denouncing all sorts of things with titles such as “Don’t Assume the Police Are On Our Side”, which makes me wonder what “our side” might be, and “Happiness has been Consumed by Capitalism” which clarifies the sides.
Children are widely believed to be a blessing, and I suppose, in many ways, they are. But children are also a problem, in that each new generation of kids is a vertical invasion of barbarians. They have to be taught the details of how to behave in civilized society, to be instructed in its standards and norms. Moreover, those norms must be enforced, and violators must face the appropriate penalties for violating those norms. Doing all of this is an important charge, and you fail in it at your peril. Because, as the London riots show, the result of that failure is this:
The first line of defence against crime, the justice system, is not seen as sufficiently threatening to deter the youths. One of the group says this would be my first offence, "the prisons are over-crowded. What are they going to do? Give me an ASBO? I’ll live with that."
The government has failed to keep order, according to the group. They agree that their motivation is partially that "the government aren’t in control – because if they was we wouldn’t be able to do it could we?".
The low rate of arrest of looters is then also brought up as an incentive to loot, with one youth saying "they failed, innit? How many people have they arrested really, though? Ten." He then says "I’m not really bothered. I’ll keep doing this every day until I get caught."
The incentive to make money from their crime spree is clear: one of the youths says he has been looting because he didn’t want to "miss the opportunity to get free stuff that’s worth, like, loads of money".
Powerless families are also shown to be a major factor in allowing the looting to take place. One youth admits to warning his family he was going to be present at the riots, and then describes a subsequent telephone conversation with a family member: "He said ‘get home, you’re in trouble’ I said ‘no’ and just put the phone down. They can’t get into town, they can’t get me, and when I get home, nothing’s going to happen to me, I’m not going to get grounded or shouted at. I might get shouted at but that’s it, I’ll live with it and keep doing it."
These youths are not being irrational. Quite the opposite. They’ve quite fully absorbed the reality of modern life in the UK, a society that has largely abandoned the fundamental norms of civilization, giving them lip service, but without enforcing them.
Think of the very real shortcomings the attitudes above inculcate.
- The justice system is a farce, and no severe penalties need be feared.
- The government cannot effectively control lawlessness or protect property.
- The property of others can be taken without real fear of reprisal.
- Family discipline is toothless.
The larger society aids and abets these attitudes by defining self-defense as criminal vigilantism, and punishing the victims of crime for having the temerity to defend themselves, and perhaps injuring their assailants if attacked.
These youths in London and Manchester have learned their lessons well. Property owners cannot resist them, the police can’t control them, and if they are unlucky enough to get caught, sanctions will be minimal. These are not cultural attitudes that promote civilization. Quite the reverse, in fact. They are the attitudes of barbarism, in that they reduce all of society to victims—except for those that choose to be predators. The cultural message these youths have received is that predation pays and is relatively risk free.
They’re acting on that cultural message, in a perfectly understandable and rational manner, while authorities dither for days about whether the use of water cannons or rubber bullets are an appropriate response.
What these rioters need is the type of lesson that armed property owners convey with an immediacy that the police are unable or unwilling to provide. But, of course, in modern "civilized" Britain, that’s literally the last thing they have to fear.
As the great philosopher Monty Python once said, "Always look on the bright side of life". That’s what Democrats are doing today in response to the Wisconsin recall elections.
“The fact of the matter remains that, fighting on Republican turf, we have begun the work of stopping the Scott Walker agenda,” said state Democratic Party Chairman Mike Tate.
Phil Neuenfeldt, president of the Wisconsin State AFL-CIO, said voters sent a message that there is a growing movement to reclaim the middle class.
“Let’s be clear, anyway you slice it, this is an unprecedented victory,” he said.
Well, it certainly appears to have been a moral victory. Which is exactly like a real victory, except that it lacks, you know, victory. Republicans still control both houses of the legislature, as well as the governor’s mansion. And, with two Democrat senators coming up for recall votes next week, losing either of those two seats—or both of them—will make their moral victory somewhat less relevant than it already is.
At the moment, though, not only does this mean that all of Gov. Walker’s previous reforms will remain intact, the Democrats cannot—except by fleeing the state again, I suppose—prevent further fiscal reforms in the state. At the end of the day, the unions dumped something like $30 million into the recall elections, and they failed to wrest control of the state senate from republicans. The most expensive single effort, the $8 million effort against Alberta Darling, failed.
One of the Democrats "successes" was against a state senator that left his wife for a 25 year-old staffer, then moved out of his district. You really had to be politically sharp to win that one.
But, I have no problems with the unions and their allies enjoying their moral victory. Perhaps Markos Moulitsos said it best: "But let me just say, if tonight was a loss, I hope we have many more such "losses" in 2012."
Me, too, Kos. Me, too.
Even before this particular find, costs for the implementation of ObamaCare were shown to be higher than doing nothing. Now we learn that in addition to that, there’s an additional $50 billion a year cost that will come due:
Federal payments required by President Barack Obama’s health care law are being understated by as much as $50 billion per year because official budget forecasts ignore the cost of insuring many employees’ spouses and children, according to a new analysis. The result could cost the U.S. Treasury hundreds of billions of dollars during the first ten years of the new health care law’s implementation.
“The Congressional Budget Office has never done a cost-estimate of this [because] they were expressly told to do their modeling on single [person] coverage,” said Richard Burkhauser in a telephone interview Monday. Burkhauser is an economist who teaches in Cornell University’s department of policy analysis and management. On Monday the National Bureau of Economic Research published a working paper on the subject that Burkhauser co-authored with colleagues from Cornell and Indiana University.
Employees and employers can use the rules to their own advantage, he said. “A very large number of workers” will be able to apply for federal subsidies, “dramatically increasing the cost” of the law, he said.
I’m sure that will come as an “unexpected” surprise to those who preached the entire point of implementing ObamaCare was to “bend the cost curve down”. Now it appears it will not only fail to do that, but instead bend that curve upward.
In May a congressional committee set the accounting rules that determine who will qualify for federal health care subsidies under the 2010 Patient Protection and Affordable Care Act. When the committee handed down the rules to the Congressional Budget Office, its formula excluded the health care costs of millions of workers’ spouses and children. The result was a final estimate for 2010 that hides those costs.
“This is a very important paper,” Heritage Foundation health care expert Paul Winfree told TheDC. These hidden costs, he said, “will almost certainly add to the deficit, contrary to what the Congressional Budget Office and others have estimated.”
Your incompetent and clueless government at work.
And we wonder why we have such an outrageous deficit and debt problem?
4 of 6 Republicans on a recall ballot retained their seats in Wisconsin state recall elections. That retains the Republican majority by one seat.
By keeping a majority in the Senate, Republicans retained their monopoly on state government because they also hold the Assembly and governor’s office. Tuesday’s elections narrowed their majority – at least for now – from 19-14 to a razor-thin 17-16.
Republicans may be able to gain back some of the losses next week, when two Democrats face recall elections.
Democrats had hoped to block the Republican agenda by taking control of the Senate in the recall elections, but the GOP should be able to continue to advance its agenda.
"I think it’s a huge victory for us," said John Hogan, director of the Committee to Elect a Republican Senate. "Voters gave us a mandate last fall. . . . They backed us up again (Tuesday). Voters told us loud and clear, ‘Stay the course. Things are working.’"
But Democrats claimed victory for the two seats they captured from Republicans.
"We went on their turf and we won on Republican turf," said Mike Tate, chairman of the state Democratic Party. "We will not stop, we will not rest . . . until we recall (Gov.) Scott Walker."
Yeah, not so much, as Nate Silver explains in the NY Times:
All of these seats can be classified as being in swing districts, having voted for Mr. Walker, a Republican, in 2010 but for President Obama in 2008. Most are a couple of points more Republican than Wisconsin as a whole. The closest thing to an exception is the 32nd Senate District in the western corner of the state, served by the Republican incumbent Dan Kapanke. It is more liberal than the others, having given Mr. Walker only a narrow plurality in 2010 and Mr. Obama 61 percent of its vote in 2008.
The two GOP state senators that lost were Kapanke in what Silver describes as a “more liberal” district, and State Senator Randy Hopper. Bottom line, the Democrat goal of wrestling the Senate away from the GOP and stopping the Governor’s agenda failed. All the spinning in the world doesn’t change that. You have to remember too, that the GOP Senators targeted were from what Democrats considered the most vulnerable districts.
And it can be considered even more of a failure because of the amount of outside effort and money spent by Democrats in the failed effort:
So far more than $35 million has been spent on the recall races, according to the Wisconsin Democracy Campaign, which tracks political money. The spending on the nine races dwarfs the $19.3 million spent in last year’s 115 legislative races, and approaches the $37.4 million spent in the race for governor.
The flow of money came as unions saw the recall elections as the best way to halt Walker’s agenda and to send a message to other states considering changing their collective bargaining laws. Political observers are watching Wisconsin to see what the results say about the mood of the electorate leading up to next year’s elections for president and Congress.
Unions played a huge role for Democrats by spending vast sums of money on advertising, and supplying manpower in all the Senate districts. Conservative groups have parried with their own influx of cash.
So all-in-all, one has to conclude that despite the Democratic cash and message, for the most part, voters rejected it.
The big question – will the Wisconsin GOP take these results as a validation of their agenda, or will they back off now and try to “compromise”?