Questions and Observations

Free Markets, Free People

It’s Baaaaaaack! VRWC Cause For Obama’s Problems

Yes friends, after an apparent 8 year hiatus, the Vast Right Wing Conspiracy has again surfaced.  Apparently it has been evident since January 20th of this year.  We’re sure of that because we have the word of an expert:

Bill Clinton says a vast, right-wing conspiracy that once targeted him is now focusing on President Barack Obama.

The ex-president made the comment in a television interview when he was asked about one of the signature moments of the Monica Lewinsky affair over a decade ago. Back then, first lady Hillary Rodham Clinton used the term “vast, right-wing conspiracy” to describe how her husband’s political enemies were out to destroy his presidency.

No word on how the Vast Left Wing Conspiracy operated these past 8 years or what it’s goals were.

Bill Clinton was asked on NBC’s “Meet the Press” whether the conspiracy is still there. He replied: “You bet. Sure it is. It’s not as strong as it was because America has changed demographically. But it’s as virulent as it was.”

Tired old politicians coming up with the same old tired excuses. However, as you may have noticed, there is a little bit of a twist this time according to our expert:

Clinton said that this time around, the focus is on Obama and “their agenda seems to be wanting him to fail.”

Ah, the implication that being focused on Obama is what? Say it with me – raaacism. And “their” agenda seems to be “wanting him to fail”? Here’s a clue for the left – that’s the agenda of every opposition party or movement known to man. One has to wonder if those who stood against Iraq and Bush would have the balls to even attempt to claim they wanted him to succeed. The left never even tried to pretend they wanted Bush or his agenda to succeed. They wanted and worked tirelessly toward an “epic fail” for both Bush and his agenda.  It was personal for them.

Of course, previous to this president, dissent was the highest form of patriotism and the left celebrated every time Bush failed to achieve something he wanted. But that wasn’t at all wanting him to fail, was it? Nope, to hear the left spin it, they were trying to save the country (and if that meant Bush failed, so be it).

Now dissent is racism or some vast conspiracy of evil. This opposition couldn’t at all be motivated by anything other than hate (or race), right? It is like the last 8 years never happened. Is the left so ideologically addled that it doesn’t understand that they are facing honest and righteous dissent for the very same reasons they felt so patriotic about opposing Bush? The right genuinely believes that the left led by Obama, Pelosi and Reid have an agenda that will kill our economy and forever cripple our country. They are dissenting. The left needs to sack up, quit whining and casting aspersions and deal with it forthrightly and without all the drama.

This dissent isn’t some vast right wing conspiracy aimed at ego-maniacal politicians (who, like Clinton, can’t imagine it isn’t about them). It is movement just as patriotic as anything the left did for the past 8 years and yes, they want the left’s agenda to fail. In fact they want it to fail miserably. And if that means Obama, Pelosi and Reid don’t get what they want passed into law, then so freakin’ be it. That’s what “fail” means.

I’m tired of the whining and crying on the left. You dealt in this for 8 long years. Throwing crap’s a lot easier than having to actually govern isn’t it? Man up and deal with it now without sounding like a bunch of shrieking little girls. And quit sending tired old hacks like Clinton and Carter out there to excuse your failings and try to shift blame. It’s pathetic.

No amount of whining, blame shifting or crying about nonsense not in evidence is going to move your legislation for you. That requires persuasion and here’s a clue – calling those you have to persuade “un-American”, a “mob”, “brownshirts” and “astro-turf” isn’t a good way to go about it. You’re in the shape you’re in because of your own stupidity and inept actions. That’s not the fault of “dissent”. It’s not because of some VRWC. It’s because you on the left have been arrogant, condescending, and clueless. All the right can hope is you continue to do things precisely as you’ve managed them to this point. You’re your own worst enemy, your identity politics is coming home to roost and you are setting yourself up to fail.

And I wish you all the luck in the world in doing so.

~McQ

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Smaller Less Intrusive Government?

Here’s the story from CNN:

Lisa Snyder of Middleville, Mich., says she takes no money for watching the three children for 15-40 minutes each day so that the neighbors can get to work on time.

The Department of Human Services, acting on a complaint that Snyder was operating an illegal child care home, demanded she either get a license, stop watching the kids or face the consequences, WZZM says.

Snyder calls the whole thing “ridiculous” and tells the Grand Rapids TV station that “we are friends helping friends!”

A DHS spokesperson tells the station that it has no choice but to comply with state law, which is designed to protect Michigan children.

She’s doing a neighborly thing – she accepts no money. She helps her neighbors by watching the kids while they wait for the bus thereby allowing the parents to get to work on time. She doesn’t feed them. She provides them a warm place to stay out of the weather until the bus shows up.

For that, the state claims she needs a license? And the state hides behind the law, or at least their interpretation of it to do so.

But if you think about it, couldn’t the same claim be made if mom drops off the kids with granny? Mom gets to work and granny keeps the kids until the bus shows up. Other than the fact that granny’s a relative, what’s the difference?

David Boaz makes what should be the obvious point:

This is what people mean when they warn that an ever-expanding government threatens the values of neighborliness and community. When the government provides services for free, or when it erects obstacles to individuals’ providing those services, it reduces private provision and simultaneously increases the demand for government services. If you make it illegal for neighbors to watch one another’s kids, you weaken ties of neighborhood and community.

But the need remains. So it leaves parents with fewer options and, as Boaz points out, it makes neighbors less likely to reach out and help.

Is that government’s role?

~McQ

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The Republicans are lost

I just watched a video in which House Republican Whip Eric Cantor appeared with one of his Democratic colleagues from Virginia to discuss healthcare. You can watch it here if you like.

Though I can tell you right now that there’s not much point to it. It consists virtually 100% of empty, meaningless politician-speak from both congressmen. Despite some decent attempts on the part of the interviewer to get them to answer some tough questions, they both just dodged them and mumbled platitudes about “educating voters” and “the status quo is unsustainable”.

Educating voters isn’t going to do a damn thing. Voters are sick to death of Washington telling them what to do. Democrats in Congress (and many Republicans) insist that there be a mandate to buy health insurance, and I think they have vastly underestimated the pushback they are getting right now and how much worse it would be if they actually passed it. Any bill with a ghost of chance of passing also has new taxes and new spending, and voters are (1) not fooled by any shell games claiming otherwise, and (2) profoundly sick of both taxes and spending.

Saying “the status quo is unsustainable” is pointless because it says absolutely nothing about whether any of the current proposals would make the system any more sustainable. Given the $47 trillion Medicare and Social Security already has in liabilities, creating another entitlement to increase that amount looks like the silliest possible response.

I expected such empty blathering from the Democrat. Any Democratic member of Congress is caught right now between a hard-left leadership who want government control over when people go to the bathroom and the Blue Dogs who know they’ll be looking for another job if any healthcare bill with a lot of government interference is passed. Not to mention a president who can’t seem to make up his mind on what he’s willing to settle for on healthcare, and whose only strategy is to flap his gums.

But have the Republicans learned nothing from 2006-2009? Has the Tea Party movement made no impact on them? Do they not sense the rising anti-government attitude in voters? Are they so incredibly clueless that they can’t learn the lesson from Reagan’s landslide and the 1994 takeover of Congress?

Look, you idiots: You can win big when you strongly advocate smaller government principles. When you don’t, at best you tread water, and at worst you get your butts kicked.

Watching Cantor pour out the same old politician’s blather was painful. Based on that one video, I never expect to support this guy for anything. And he’s part of the GOP leadership, supposedly the best they’ve got. Well, if he’s one of the best, they’re still as lost as they were in 2006.

I see many signs that 2010 could be a landmark year. Two months ago, I summarized Obama’s failings to that point, and since then he’s racked up scandals with his czars, seen his buddies at ACORN exposed as the criminals many of us thought they were, and had his make-nice efforts toward Iran shown to be naive and pointless.

But absent any Republican leadership on a real change in direction, none of that will make a big difference. Oh, I think the Democrats will lose a fair number of seats in the House in any case, because of depressed turnout among Democrats in marginal districts. The Republicans may well pick up three or four Senate seats too. But without a clear message concerning their desire to trim the size, cost, and intrusiveness of government, they will gain no loyalty or long-term support from those people who have finally reached their agony threshold on big government.

They’ll just drift for two years, using the same strategy that got the Democrats in the White House, which is to hope voters are so sick of the other side they will vote for a change, any change. And, of course, even if that works, they won’t do anything about reducing the size and scope of government, hoping the whole debt mess doesn’t finally reach critical mass on their watch.

With a clear message, I believe the GOP could do a rerun of 1994. But I don’t know a single person among them capable of carrying the banner for that message. It sure as heck is *not* Eric Cantor.

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Iran Policy – What Is Going On?

National Review Online does a little review of the run up to the announcement by President Obama at the G20 summit concerning Iran and wonders what is going on. For instance, NRO points to Joe Biden 8 days ago. This was in answer to why the US was pulling its missile defense shield from Poland and the Czech Republic:

“[Biden said] Iran — a key concern for the United States — was not a threat.

“I think we are fully capable and secure dealing with any present or future potential Iranian threat,” he told CNN’s Chris Lawrence in Baghdad, where he is on a brief trip.

“The whole purpose of this exercise we are undertaking is to diminish the prospect of the Iranians destabilizing that region in the world. I am less concerned — much less concerned — about the Iranian potential. They have no potential at this moment, they have no capacity to launch a missile at the United States of America,” he said.

So 8 days ago, Iran was a diminished threat that was much less of a concern than previously.

Suddenly:

President Obama and the leaders of France and Britain blasted Iran’s construction of a previously unacknowledged uranium enrichment facility and demanded Friday that Tehran immediately fulfill its obligations under international law or risk the imposition of harsh new sanctions.

The new Iranian plant, the country’s second uranium enrichment facility, is believed by U.S. officials to be part of a broad effort by Iran’s leadership to pursue the ability to build nuclear weapons. Iran has repeatedly denied having any such goal, insisting that its nuclear program is aimed at generating electricity. U.S. officials said they believe the Qom plant is not yet operational but is intended to produce highly enriched uranium — suitable for nuclear weapons — and will be capable within months of producing enough material for at least one bomb per year.

Says NRO:

Boy, the Obama administration must have just been profoundly misguided and dangerously misinformed about Iran’s capabilities and intentions. Right?

Right – because, as pointed out 8 days ago, the reason the missile defense shield was pulled, per the VP of the US, was because the US considered Iran a much diminished threat. So obviously this is “new” information which has profoundly changed the game and required the US to completely rethink its policy since it has emerged.

Right?

@markknoller US officials say Obama first told of Iran secret nuclear plant during the transition — as President-elect. 9/25 10:28 A.M.

WTF? Mark Knoller of CBS says this was something the administration has known for almost a year? So what was all this nonsense about a diminished Iranian threat as a reason to pull the promised missile shield that the administration had promised the Poles and Czechs a mere 6 months before?

Asks NRO:

Astonishingly incompetent, perilously naive, or deliberately dishonest? Which is it?

I’d suggest all three. And I think that will become alarmingly apparent as this crisis continues to unfold.

I’ll also toss this out there as well – it was saved for a forum in which the President would have the attention of the world focus on him (a much tighter focus than the UN) and staged to maximize that. All politics all the time. He wanted the non-binding non-proliferation resolution from the security council before he took on Iran.  Meanwhile Joe Biden’s (and the DoD’s) credibility is left twisting in the wind.

So now the staging has been accomplished and the spotlight turned on the President. That’s the easy part. The usual talking the talk, something at which he’s quite good. Now comes the hard part – walking the walk – something he’s yet to demonstrate he’s capable of doing.

Oh – and where in the world is Hillary Clinton?

~McQ

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The Lure Of Price Controls

It is a dream all central planners have – the ability to change the laws of economics to the extent that the planner can decide on what a “fair price” might be and market dynamics will adjust themselves to the price and all will be unicorns and rainbows.

Of course we know from our experience with that application in various areas that the market doesn’t adjust to price and it is never unicorns and rainbows when price controls are applied. In fact price controls consistently spawn pretty predictable market reactions and, depending on how vast the price controls are, have the ability to bring down whole economies, or at least put them into a shambles. The latest price control paradise is Zimbabwe where a wheelbarrow full of Zimbabwean currency may be enough to buy an egg in the morning but not in the afternoon.

I bring this up because there’s a growing call for lawmakers to consider price controls for health care insurance, as demonstrated yesterday in the LA Times.

In the drive to bring health coverage to almost every American, lawmakers have largely rejected restrictions on how much insurers can charge, sparking fears that consumers will continue to face the skyrocketing premium increases of recent years.

The legislators’ reluctance to control premium costs comes despite the fact that they intend to require virtually all Americans to get health insurance, an unprecedented mandate — long sought by insurance companies — that would mark the first time the federal government has compelled consumers to buy a single industry’s product, effectively creating a captive market.

Nancy Pelosi has articulated the price control “dream” for health insurance – “a cap on what you pay and no limit on what you get back” if I recall correctly. Of course what she doesn’t say is not even Medicare does that and it has about 43 trillion in unfunded liabilities at this point. But understand that at the bottom of Pelosi’s statement is the reality of imposing price controls – you can’t have a “cap” on what you pay without them.

Thomas Sowell touches on the real intent that sort of Pelosi-talk:

Liberals especially tend to think up all sorts of good things we want — a “living wage,” “affordable housing,” “universal health care,” and an ever-expanding wish-list of things that everyone should receive as “rights” — with little or no awareness of the economic repercussions of turning that wish list into laws.

He then provides a little primer about price control:

Prices are perhaps the most misunderstood thing in economics. Whenever prices are “too high” — whether these are prices of medicines or of gasoline or all sorts of other things — many people think the answer is for the government to force those prices down.

[…]

Prices are not just arbitrary numbers plucked out of the air or numbers dependent on whether sellers are “greedy” or not. In the competition of the marketplace, prices are signals that convey underlying realities about relative scarcities and relative costs of production.

Those underlying realities are not changed in the slightest by price controls. You might as well try to deal with someone’s fever by putting the thermometer in cold water to lower the reading.

What most who believe they can thwart the laws of economics and use price controls never seem to understand is that economic law requires the price mechanism in order to properly allocate goods. Without it, some other mechanism must take its place. Those are usually found in forms of evasion. One evasion is deterioration of quality. The old saw “you get what you pay for” is never more true than under price controls. The time allocated to a doctor visit might get shorter and shorter in order for the doctor to see enough patients to meet his and his practice’s financial needs. That could also mean he can’t afford the newest equipment or diagnostic tools. Consider what price controls would mean to a pharmaceutical company and its incentive to create new and better drugs.  Or a medical implements company, etc.

Another evasion may be alternate markets – you pay a physician a yearly fee and don’t use the price controlled system in place – that has already begun in anticipation of this.  Doctor’s networks are springing up all over the country. Of course with a mandatory insurance requirement, you’d still have to pay into the price controlled system. But that sort of evasion takes doctors out of the price controlled market and creates another shortage with which that market has to contend.

And, of course, there’s queuing. If the price imposed is low, the tendency for those paying is to use it more frequently. There’s no penalty for doing so. That leads to a shortage (in the case of medicine, doctors still only have 24 hours in a day and can still see only a finite number of patients during that time) of available appointments and thus it extends the time before you can see a physician.

Some would call these “unintended consequences” of price controls. But they’re certainly not unknown consequences. They’re consequences on display all over the world in systems which do, in fact, impose such price controls.

Sowell concludes:

Costs don’t go away because you refuse to pay them, any more than gravity goes away if you refuse to acknowledge it. You usually pay more in different ways, through taxes as well as prices, and by deterioration in quality when political processes replace economic process.

But the lure of the free lunch goes on.

With the same disastrous results it has always had.  Yet our would-be central planners seem obvious to the fact.  That’s one reason government debt is at the horrendous level it is today and headed for even higher levels.

~McQ

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Solve the 43 Trillion Dollar Problem First

Of course, they can’t fix it except by drastically cutting spending or drastically raising taxes, or both – so this is not something that will be “fixed”. They run the program completely, determine the benefits and the rates they’ll pay and they blame private insurance for the growing cost problems in health care? Yeah, let’s give them the rest since they’ve done so well with this portion of it.

~McQ

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Criminalizing “Choice”

What were the twin goals President Obama’s reform given in his speech to a joint session of Congress?  Oh, yeah, he wanted there to be “competition” so the consumer had a “choice”.  That’s become a Democratic talking point now.

But choice, apparently, doesn’t extend beyond the faux choice of the public option.  If you choose not to buy insurance, your choice is then reduced to a fine or jail  or perhaps, both.

Sen. John Ensign (R-Nev.) had a question about what would happen if a person refused to pay the $1,900 IRS tax/fine levied for not doing so.

He received a hand written note from the Chief of the Joint Committee on Taxation, Thomas Barthold:

Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote on JCT letterhead. He signed it “Sincerely, Thomas A. Barthold.”

The banality of totalitarianism.

Hope and change in the land of the free.

~McQ

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Global Warming “Science” v. The Scientific Method (update)

Even the youngest student of science knows the foundation of scientific inquiry rests in the scientific method. It is by scrupulously following that method that the data and science behind it can be verified. In short:

Scientific method refers to a body of techniques for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge. To be termed scientific, a method of inquiry must be based on gathering observable, empirical and measurable evidence subject to specific principles of reasoning. A scientific method consists of the collection of data through observation and experimentation, and the formulation and testing of hypotheses.

It also requires that the data collected be made available to peers so the theories in question can be tested for their validity.

Among other facets shared by the various fields of inquiry is the conviction that the process be objective to reduce biased interpretations of the results. Another basic expectation is to document, archive and share all data and methodology so they are available for careful scrutiny by other scientists, thereby allowing other researchers the opportunity to verify results by attempting to reproduce them. This practice, called full disclosure, also allows statistical measures of the reliability of these data to be established.

The bold is my emphasis because I want to highlight a remarkable article at NRO by Patrick J. Michaels entitled “The Dog Ate Global Warming”. Obviously a little twist on “the dog ate my homework”, Michaels says that the “data needed to verify the gloom-and-doom warming forecasts have disappeared.”

Or, said another way, the findings are now unfalsifiable because those who did the original research say they no longer have the original data.

First some background about what’s being discussed:

In the early 1980s, with funding from the U.S. Department of Energy, scientists at the United Kingdom’s University of East Anglia established the Climate Research Unit (CRU) to produce the world’s first comprehensive history of surface temperature. It’s known in the trade as the “Jones and Wigley” record for its authors, Phil Jones and Tom Wigley, and it served as the primary reference standard for the U.N. Intergovernmental Panel on Climate Change (IPCC) until 2007. It was this record that prompted the IPCC to claim a “discernible human influence on global climate.”

Putting together such a record isn’t at all easy. Weather stations weren’t really designed to monitor global climate. Long-standing ones were usually established at points of commerce, which tend to grow into cities that induce spurious warming trends in their records. Trees grow up around thermometers and lower the afternoon temperature. Further, as documented by the University of Colorado’s Roger Pielke Sr., many of the stations themselves are placed in locations, such as in parking lots or near heat vents, where artificially high temperatures are bound to be recorded.

So the weather data that go into the historical climate records that are required to verify models of global warming aren’t the original records at all. Jones and Wigley, however, weren’t specific about what was done to which station in order to produce their record, which, according to the IPCC, showed a warming of 0.6° +/– 0.2°C in the 20th century.

So we’re talking about the findings which were used to make the IPCC’s dire warnings in its report. They are the basis for the entire global warming movement’s desire to do what is necessary globally to lower the amount of CO2 emissions.

But, others scientists ask, given their doubts about the accuracy of the data, should it be? Scientists interested in peer reviewing the theory, as the scientific method demands, found it impossible to do so. And therein lies the story:

Now begins the fun. Warwick Hughes, an Australian scientist, wondered where that “+/–” came from, so he politely wrote Phil Jones in early 2005, asking for the original data. Jones’s response to a fellow scientist attempting to replicate his work was, “We have 25 years or so invested in the work. Why should I make the data available to you, when your aim is to try and find something wrong with it?”

Reread that statement, for it is breathtaking in its anti-scientific thrust. In fact, the entire purpose of replication is to “try and find something wrong.” The ultimate objective of science is to do things so well that, indeed, nothing is wrong.

Michaels is stunned by he reaction. Anyone who reads that response should be stunned by it. As Michaels says, it is “breathtaking in its anti-scientific thrust”. Not unscientific. Anti-scientific. Jones is refusing a peer the data used to reach his conclusions in direct contravention of the scientific method. When you see a refusal like that, especially phrased the way it was phrased, all sorts of alarm bells should go off in the head of anyone who claims to be a scientist. And, of course, they have.

Over the years, requests have been made for the data and almost uniformly turned down for various reasons. Finally a request for the data made by Roger Pielke Jr., a professor of environmental studies at the University of Colorado solicited this response from Jones:

Since the 1980s, we have merged the data we have received into existing series or begun new ones, so it is impossible to say if all stations within a particular country or if all of an individual record should be freely available. Data storage availability in the 1980s meant that we were not able to keep the multiple sources for some sites, only the station series after adjustment for homogeneity issues. We, therefore, do not hold the original raw data but only the value-added (i.e., quality controlled and homogenized) data.

Michaels calls BS on this one:

The statement about “data storage” is balderdash. They got the records from somewhere. The files went onto a computer. All of the original data could easily fit on the 9-inch tape drives common in the mid-1980s. I had all of the world’s surface barometric pressure data on one such tape in 1979.

Anyone familiar with data storage throughout the short history of the computer age knows this is nonsense. Transfer of data from various systems to newer systems has been accomplished without real difficulty all thorough its development. What Jones is trying very hard to do is one of two things a) hide data that he’s pretty sure won’t support his conclusion or b) admitting to a damningly unscientific procedure which should, without his ability to produce and share the original data, call into serious question any findings he’s presented.

Why is this important – because based on this finding, the world is moving toward economy crippling treaties and legislation, like the pending cap-and-trade bill here in the US, based on totally unverified “science”. As Michaels says this story isn’t just “an academic spat” – it questions the very foundation of the premise which these economic crippling moves are based in.

Scientific consensus? Not even proven science, for heave sake – yet we’re moving on it like it was. Dangerous, foolish and costly. This is what rushing into things without making all of the inquiries necessary (and taking the time to do them) usually ends up with bad legislation.

And cap-and-trade promises to be no exception to that rule.

UPDATE: The Thinker provides a reminder of what I expect to see concerning Michael’s charges from the “Chicken Little” crowd:

As I described in my my model of belief, a faith-based belief is a belief in something for which there is no good evidence either for or against (e.g., the existence of God), whereas a delusional belief is a belief that is maintained in spite of evidence to the contrary (e.g., the efficacy of astrology). It is usually a delusional belief that requires an “appeal to other ways of knowing,” since a faith-based belief (strictly as I’ve defined it) can’t be challenged on scientific grounds.

The “appeal to other ways of knowing” is one of the strategies that a delusional person will use to cope with the cognitive dissonance that occurs when their beliefs bump up against reality. When questioned on this “other way of knowing” the person will then be forced to resort to other coping strategies (i.e., fallacies and biases).

Just a little helpful guide for those trying to evaluate the comments of those trying to defend the indefensible. Always handy to know if you’re dealing with someone grounded in a faith-based belief or a delusional belief, wouldn’t you say? If you’d like a local example of delusional belief, I’d steer you to the comment thread on Honduras where it is available in full flower.

~McQ

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Calling Out Iran (update)

Appearing before microphones at the G-20 conference, the Presidents of the US and France along with the PM of the UK made an announcement concerning Iran:

President Obama and leaders of Britain and France accused Iran on Friday of building a secret underground plant to manufacture nuclear fuel, saying the country has hidden the covert operation from international weapons inspectors for years.

Appearing before reporters in Pittsburgh, Mr. Obama said that the Iranian nuclear program “represents a direct challenge to the basic foundation of the nonproliferation regime.” French President Nicholas Sarkozy, appearing beside Mr. Obama, said that Iran had deadline of two months to comply with international demands or face increased sanctions.

Essentially the argument is the facility is too big for the manufacture of nuclear fuel for peaceful purposes and can only exist to enable the pursuit of nuclear weapons.

American officials said that they had been tracking the covert project for years, but that Mr. Obama decided to make public the American findings after Iran discovered, in recent weeks, that Western intelligence agencies had breached the secrecy surrounding the project. On Monday, Iran wrote a brief, cryptic letter to the International Atomic Energy Agency, saying that it now had a “pilot plant” under construction, whose existence it had never before revealed.

So now Iran has been called out. That’s the easy part. Increased sanctions are promised. That’s the hard part. Russia may possibly come on board (we’ll see if the unilateral decision to remove the missile defense shield from eastern Europe), but China is an unknown (although the Chinese foreign ministry recently said it was not in favor of increased sanctions). That’s assuming the Obama administration plans on working all of this through the UN.

One of the sanctions that the US and others are considering is one which would restrict the importation of gasoline. While Iran sits on a sea of oil, it has very limited refining capacity. It must import most of what it uses. Cutting those imports would seriously effect the country. However Venezuelan strong man Hugo Chavez, during a recent visit with Iran, promised to provide the regime with gasoline. That could set up a confrontation between the US (and others) and Venezuela. Hugo Chavez might finally get the confrontation with the US he’s been claiming was coming very soon.

This is about to get complicated and nasty. December is the date in which France has demanded compliance with international demands. In the interim, both sides are going to be scrambling to line up their allies. And then there’s the wild card – Israel.

This will be an interesting couple of months. But one question I have – why wasn’t this presented to the UN before the president of Iran spoke?

UPDATE: Dale sends me a link to this article by Simon Tisdale at the Guardian in reference to this story:

…Now it seems the Iranian regime has been caught red-handed, and clean out of trumps, by the forced disclosure that it is building, if not already operating, a second, secret uranium processing plant.

The revelation will bring a triumphal roar of “told you so!” from Bush era neoconservatives in the US to hawkish rightwingers in Israel. The likes of former vice-president Dick Cheney and UN envoy John Bolton, and the current Israeli leader, Binyamin Netanyahu, have long insisted that Tehran’s word could not be trusted.

Yet the argument about who was right and who was wrong about Iran is hardly important at this juncture…

As Dale sarcastically notes:

Yes. Whatever we do, let’s not try and keep track of who was right and who was wrong about Iran. We certainly wouldn’t want to have a track record of foreign policy reliability we could consult in the future.

Because this is about, uh what was it again, oh, yeah, change!

~McQ

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The Kangaroo is Still Hopping

Today was one of those days when a couple of trends came together that should be making us think seiously about changing our current fiscal and monetary policies.

The first thing I was was this debt chart from John B Taylor that shows how our current policy will effect the national debt.

Projected national nebt as a percentage of GDP

Projected national nebt as a percentage of GDP

This what you call your unsustainable debt path.

Then, there was this:

Since the crisis began, the Fed has pumped more than $800 billon into the banking system, kept the federal funds rate near zero and purchased so many Treasurys and mortgage-backed debt that the amount of assets on its balance sheets has now swollen to $2.14 trillion.

“If you think the Federal Reserve had it tough devising a strategy to rescue the U.S. economy from of the worst recession in 70 years, just wait,” wrote Bernard Baumohl, chief global economist, at the Economic Outlook Group. “We think it is going to be hellishly more complicated this time to come up with a plan that encourages growth and keeps inflation expectations well anchored.”

All of which leads directly to this:

Chinese central bank governor Zhou Xiaochuan, who supervises more than two trillion dollars worth of dollar reserves, the world’s largest, raised the stakes by calling for a new reserve currency in place of the dollar.

He wanted the new reserve unit to be based on the SDR, a “special drawing right” created by the International Monetary Fund, drawing immediate support from Russia, Brazil and several other nations.

“These countries realize that they would suffer losses if inflation eroded the value of the dollar securities they own,” said Richard Cooper, a professor of international economics at Harvard University.

Here’s the problem.  Because we are on an unsustainable debt path, we will eventually accrue more debt than we can possibly repay.  There are many people who think that–since our debt, coupled with Social Security and Medicare obligations currently outstanding, are greater than the entire capital stock of the United States–we’re there already.  We ill be unable to pay the debt, so our choices are to repudiate it outright, or to destroy the value of the currency and inflate it away, both of which amount to essentially the same thing.  In doing so, the government will destroy the life savings of everyone in the country, save those that are in hard assets

The Chinese, whatever else they may be, are not stupid.  they know this, and they want a new worldwide reserve currency now, before everyone realizes that the dollar is in very serious danger of becoming worthless.  They don’t want to be stuck holding dollars when that happens–although their holdings in bonds will probably have to be written off.

I’ve written previously that China moved their gold reserves into the BoC a few months ago.  Some international trade deals are already being denominated in gold, tool.  It looks very much like the dollar’s days as the world reserve currency are numbered.  In fact, the dollar’s days may very well be numbered.

Federal Reserve Monetary Base. Click to enlarge.

Federal Reserve Monetary Base. Click to enlarge.

And we’ve let it happen.  Over the past 80 years, we’ve sat by and watched as the Fed–whose primary mission was supposed to be the stability fo the currency–has presided over a tenfold reduction in the dollar’s value.  For the last 30 years, we’ve watched as the debt has mushroomed–yes, even during Bill Clinton’s presidency–and we’ve refused to either cut spending or to raise taxes to a level commensurate with our increased spending.  In short, we’ve looted the system, and the looting is nearly complete now.

And now, with all the trumpetings of a coming economic recovery, the Fed has to try and figure out how to re-call the more than doubling of the monetary base we’ve engaged in in the past year without completely crashing the economy.  Failure to do so, of course, means serious inflation–which will further degrade the value of the dollar.

Hop.  Hop.  Hop.

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