Sunday, May 20, 2012


Okay, stop selling all your worldly possessions; don't bother traveling across the country to say “good bye” to family and friends, the world isn't going to end (at least for another 8 billion years). Even though the Mayan Indians said 2012 was the year, before they said it wasn't, the latest discovery of their astronomical notes shows that their position on the apocalypse was “evolving”, or maybe they were just a bunch of “flip floppers”, anyway we can all rest easy and stop watching the skies at night and go back to the NBA playoffs, which seem to be measured in geologic time anyway.

Nonetheless, for die hard “end of worlders” who like to don white robes and sit on mountain tops there is still plenty of other evidence for “the end” to keep them up there a while. There's the Greek economy which is about to self destruct and which might even set off a chain reaction in the economies of Spain and Italy. That might even stimulate a celestial-like explosion of the entire seventeen nation common currency Eurozone and send seismic shock waves through the U.S. economy. Maybe not, but hey, any apocalypse will do for the dedicated ones.

Of course there is always the possibility that Mitt Romney might actually defeat Obama in November. This would be a valid representation of the “end of the world as they know it” for legions of liberal Democrats who might line up on the edges of the nation's cliffs and wait for the signal from the New York Times to start a lemming like exercise in political martyrdom.

If that doesn't happen there's always $5.00 per gallon gas or the continued drilling of those icky Canadian “tar sands”, (aka, oil). This, frenzied environmentalists who prefer early nineteenth century modes of transportation claim, will create a genuine doomsday scenario by pushing global warming past tanning bed levels and thus destroy agriculture, raise sea levels so there's tarpon fishing in downtown Dallas, and make the Democrat cliff jumpers seem to be on to something.

Even if none of that happens, what if the Supreme Court overturns the individual mandate in Obamacare, thus making the whole 2200 page enterprise even more financially impossible to carry out. And then what if the Court goes on to uphold the federal Defense of Marriage Act and Arizona's tough anti-illegal immigrant law? “Holy burrito grande Robin! Call Nancy Pelosi and tell her the  Batmobile doesn't meet environmental standards so we're flying to Rio to go to an “end of the world watch party” and she's on her own.”

Of course long term Al Goresque environmental predictions aside, political/legal doomsdays only apply to those on the losing sides of all the issues. Fortunately evolution has provided Homo sapiens with a strong instinct for self preservation which will help the distraught losers on the Left make the right choice between death by organic latte' overdose and Canadian citizenship applications. The fundamentalist religious Right are screwed since they don't believe in evolution. But maybe they could deal with their despair by listening to Jimmy Swaggart sermons on disc or joyfully preparing for the “real deal”.

Doomsday aside, in an election year it's hard to be optimistic about the future, as the two political parties in the Congress become part of the respective campaigns of their members and each party's presidential candidate, and their supporters in the media predict chaos and suffering if the others get elected. The pundits and web sites seem to be offering a choice between another Spanish Inquisition on the part of the religious Right and a 21st century Bolshevik revolution on the part of the Left.

But isn't there any cause for hope?

If a couple of college kids can make $16 billion selling the stock of a company that is essentially just the internet equivalent of 1950's high school note passing, isn't the American dream alive and well? Well sort of. And just wait until Zuckerberg and his partners start spending those billions. That will be an “economic stimulus” that Obama would be proud of and it won't come out of the taxpayer's pockets.

Worried about terrorists? Take heart: “The drone be with you.” Al Qaeda operatives in the Middle East can't even leave the house for a short ride in their Toyota pick-ups without one of these circling Obamabirds reading them their “rites”. And even as the terrorists come up with new types of airplane bombs, the latest being an explosive rectal implant, ( really! They've tried it.) Obama will once again be “leading from behind” and the TSA is ready to “serve and protect”. Of course if this technique becomes common place, the phrases “pat down” and “turn the other cheek” will take on whole new meanings but sales of rubber gloves will go way up, the price of tickets will go way down, and the flying public will remain safe. 

It gets even better. When Greece exits the Euro zone the drachma will be reintroduced and be essentially worthless on international exchange markets. That means even America's unemployed will be able to afford Greek Island cruises. And with Walmart and McDonald’s making big bucks things must be getting better. “Don't worry; be happy.” Every doomsday  has a silver lining. Doesn't it?

Monday, May 14, 2012


The events of September 11, 2001 forever changed air travel and the changes have come continuously and not without controversy. The creation of the Transportation Security Administration was a massive undertaking and the standards and procedures for screening millions of U.S. air passengers daily, has been an experiment in progress. Strangely, the failed attempt by Richard Reid to ignite explosive material in his shoes while on a flight inbound to the U.S in December, 2001, just three months after the World Trade Center disaster, may have resulted in causing more perceived inconvenience than fear, as the screening process was further complicated by requiring all passengers to put their shoes through the x-ray equipment. Initial, and understandable, fears associated with commercial flying diminished over time as new plane hijackings by terrorists failed to occur and passengers and passenger rights advocates came to view the new screening and restrictions on luggage contents as arbitrary, unnecessary and in some cases irrational. Numerous examples of inconsistent and nonsensical behavior on the part of screeners supported this mindset.

Still there has been a great deal of false hysteria as claims to “privacy rights” and “ unconstitutional and unreasonable search” were levied. Some individuals claimed that the ghost like figures appearing on early scanning screens were “virtual strip searches” and the object of leering groups of men in back rooms. These charges were demonstrably false but others, ignoring the fact of the voluntary nature of flying and the implied consent when purchasing a ticket, as well as the realities of the security threat, were offended by most of the screening process. It all seemed to come to a head with the 2010 “If you touch my junk” threat by self described libertarian John Tyner. While patting down octogenarian grandmothers in wheel chairs makes little sense, claims by some that security measures should be relaxed because “no bombs have been found” by these procedures, also makes no sense since the purpose of the system is both discovery and deterrence. That the tactics of the terrorists has shifted from hi-jacking, as cockpit doors have been secured and some pilots are now armed, to abandonment of shoe bombs as shoes were examined, to underwear bombs, and now to non-metallic bombs, is clear evidence that deterrence works.

The TSA has made adjustments to address some passenger complaints. “Backscatter” full body scan equipment is being replaced with Millimeter Wave units which create a facsimile outline of the human body without anatomically accurate features. Older “backscatter” equipment still in use is being outfitted with software to produce the same type images. As the owner of metal knees I get patted down more than scanned and I have found that pat downs are brief and if done properly are hardly objectionable, certainly not anything like the “sexual assaults” claimed by Tyner and others. Still, occasional dumbness and/or arrogance on the part of some of the TSA's 43,000 plus screeners is inevitable and frustration on the part of travelers is understandable. There is certainly room for improvement. Current pay scales for primary level TSA screeners range from $29,000 to $44,000 per year. This correlates with pre-employment qualifications of a high school diploma or General Educational Development (GED) certificate, “or” experience in the field of “security”. Such experience is very broad indeed and would not be much of a recommendation if the former “security” employee had neither a high school diploma nor a GED.

However, the terrorist threat to commercial aircraft has not diminished. This month's (May) defeat of a plot to have a suicide bomber blow up a plane en-route from from Yemen to the U.S. should make that clear. The geopolitical environment as described in the Gallup World Poll's “Who Speaks for Islam?”(2008) survey of tens of thousands of ordinary citizens in 35 nations with predominate or significant Muslim populations offers a reality check in terms of attitudes. The poll claims to represent the attitudes of 90% of the world's 1.3 billion Muslims. The “good news” is that only 7% of respondents fall into the arbitrarily defined “radical or extremist” category. Those falling into this group are also described as “potential sources for recruitment or support of terrorist groups.” Their answer to a specific question was that the 9/11 World Trade Center and Pentagon attacks were “completely justified”.

However percentages can be deceiving. Ninety percent of 1.3 billion Muslims is 1.17 billion individuals and a radical/extremist component of 7% equals 81,900,000. The highest concentrations of this group were found, unsurprisingly, in the hot spots of the Middle East and in Pakistan.
The poll certainly does not suggest an active terrorist cohort of this magnitude but it does suggest that a dedicated fringe in the thousands is entirely realistic, as well as a significant recruitment base for the foreseeable future. Even 60% of the large “non-radical”majority of those polled view the United States “unfavorably”.

As the private intelligence company Stratfor recently observed, terrorist attacks against commercial air travel are still a priority among some Al Qaeda operatives, and jihadists are taking notice of, and adjusting to, changing security procedures. Since the failed “shoe bomber” attempt in 2001, intelligence agencies have uncovered a 2006 plot to bomb as many as ten commercial aircraft in simultaneous attacks using liquid explosives; the 2009 “Christmas underwear bomber” whose bomb failed to detonate over Detroit; the 2010 discovery of printers with ink cartridges containing explosives being shipped to the U.S. via UPS and FedEx cargo planes, and the aforementioned May, 2012 attempt which a was an updated version of an “underwear bomb” made with no metallic parts. This bomb may not have been detected by electronic scanners but might have been detected by a pat down if the bomber had not been a double agent who turned the bomb over to U.S. and British intelligence operatives in Yemen.

Al Qaeda in Yemen's (AQY) top bomb maker, Hassan al-Asiri, remains at large. He is certain to be sharing his skills with others. Despite the objections of some passengers who apparently discount the threat, polls show that a majority of the American public (80%) support the scans and 50% support the use of pat downs. Still, as terrorists continue to develop bombs that might defeat the scans, manual screening may have to be reemphasized and travelers will have to make choices. 

Post Script:   On Friday, May 11, 2012, former Secretary of State and Nobel Peace Prize winner, 89 yr. old Henry Kissinger who was in a wheel chair, was "patted down" at NYC's La Guardia airport. Current and former senior federal govt. officials clearly should be provided with special identification to avoid this wasted time and effort.

Sunday, May 6, 2012


The French presidential election may prove a significant turning point in how France, and thus the rest of the Euro-zone's 17 governments which use the common currency, address their continuing economic crisis. The French economy has slipped back into recession after two consecutive quarters of negative growth in Gross's Domestic Product (GDP). Socialist candidate and France's next president, Francois Hollande, campaigned against the high unemployment rate(10.1%) and public anger over the Euro-zone wide policy of “austerity” which requires significant cuts in government spending to reduce sovereign debt. The logic of such cuts is to maintain or increase the confidence of bond markets to facilitate the financing of future government borrowing at reasonable interest rates, as well as too reduce the risk of inflation. However, the chorus of economists who support abandoning austerity in favor of stimulus i.e. government spending, even while increasing government debt, is growing louder. Public opinion is on their side as unemployment continues to rise and government benefits continue to decrease.

The French election will have a ripple effect throughout the Euro-zone and the wider 27 member European Union. Hollande has promised to discard the austerity program and increase government spending. He has also promised to renegotiate the Euro-zone's recently adopted agreement to reduce government deficit levels to 3.5% and maintain them at, or below, that level permanently. This program was lead by Germany, who has the only significant European economy not mired in crisis level debt. The debt/recession conundrum is currently being debated in the U.S. and could feel the impact of the November federal elections if either party were to gain control of both houses of Congress and the White House. If not, the current legislative grid lock will surely continue.

The fundamental problem is that cutting government spending takes money out of the economy, which in times of recession or just slow growth, goes against conventional Keynesian wisdom, and central bank history, because it contributes to declines in consumer spending and thus job creation and ultimately economic growth. However, the enormous government debt which profligate spending has created in several of the Euro-zone countries (Greece, France, Spain, Portugal, Ireland) demands attention before it reaches a “point of no return” where interest on the debt increases as confidence in each nation's ability to guarantee payment decreases, and demands for even higher interest rates based on risk assessments by investors create a spiral of cascading debt and possible insolvency. Such a scenario in the relatively small economy of Greece already threatens the Euro as a viable currency throughout the zone. The failure of the debt burdened Greek economy at the same time as an abandonment of French efforts to deal with it's own Euro denominated debt, and an attempt to restructure Euro-zone agreements for fiscal responsibility, would threaten the very continued existence of the Euro as a common currency.

The choices for dealing with both sides of the coin are limited. Attempts to deal with the multinational Euro-zone debt crisis have centered around austerity measures combined with “bailouts” of short term debt by loans from the European Central Bank, the International Monetary Fund (IMF) and contributions by the few healthier economies to an emergency fund. Germany, which has the largest and healthiest European economy, with cooperation from France, has led the effort. But the German people are tiring of bailing out lesser, mismanaged economies, and German Chancellor Angela Merkel has been insistent that bailouts be accompanied by harsh spending cuts in recipient countries.

Paul Krugman, an American Nobel prize winning economist turned liberal political writer, has been arguing for at least two years for the abandonment of efforts by Republicans to make large cuts in federal deficits and debt through spending cuts. He has advocated another “stimulus” and is supported by former Clinton Administration Secretary of Labor and University of California, Berkeley professor and liberal columnist, Robert Reich, as well as most of the public policy activists in the Democrat Party. It will take a long time for any change in French economic policy to produce results, good or bad, but it is also unlikely that the fiscal policy gridlock occurring in the U.S. Congress will change in the short term, so French policy changes and their related fall-out in the Euro-zone could bolster the arguments of either Democrats or Republicans in 2013 after the November elections.

Of course the debt/spending cut debate has a significantly different character in the U.S. if nothing else because of the enormous size of the U.S. economy and the size of the federal debt which exceeds U.S. GDP. While the U.S. central bank (Federal Reserve) had manipulated interest rates to historic lows, they have run out of room and further cuts are not possible. There are indications that some nations in the global trading system are changing from use of U.S. dollars exclusively for the payment of international debts which could diminish the role of the dollar as the major international reserve currency. While this is not likely to be a wholesale trend, it could decrease international demand for dollars, reduce foreign governments' dollar reserves and thus their need for U.S. government bonds as a “storehouse” investment. Efforts to cut U.S. debt thus become even more important before refinancing that debt runs into demand problems which would in turn create a need for higher yields which would stimulate the debt spiral described above.

Currently the U.S. economy is growing slowly and unemployment is very slowly decreasing but remains high at 8.1%, based on those workers still looking for employment (over 14% when dropouts are included). Thus, while the urge to speed up growth through spending remains important, especially in political terms for President Obama's reelection efforts, efforts to deal with federal debt seem to be more important in the long term.

Still, the problems of Europe, and the new wild card of a change in the French executive, will continue to be a factor in the U.S. recovery. A failure of the Euro system or even a return to recession in several more of the larger economies would have a significant negative effect on the U.S. economy. Thus U.S. markets will be on “France watch” after this elections.

As an interesting aside, the differences between French and even British political culture are on display with the candidacy of Socialist Party leader Francois Hollande. There is a subtle irony that this new president who will have so much influence in the European Union and possibly the U.S. economy for the next five years, would not even be a viable presidential candidate in either Great Britain or the U.S. He is not the most left wing candidate in France which has a Radical Left Party and a Communist Party but he has tapped into the social unrest of the electorate with a class warfare, anti-free market and anti-corporate rhetoric much like Obama has attempted to do with his “Buffett rule”, and frequent attacks on “millionaires and billionaires” and corporations not “paying their fair share” of taxes. But while Republican nominee to be, Mitt Romney, attempts to court the social conservatives who remain unenthusiastic about his commitment to their cause, and President Obama seeks to balance his support for the political Left while convincing more moderate Independents that he does not reside in the far Left ideological fever swamps populated by the likes of Katrina vanden Heuvel (“The Nation”); Nancy Pelosi, Barbara Boxer and the Daily Kos, the new French President has not even had to address the fact that he has fathered four children out of wedlock and has for several years lived with his new female “partner”. This is not a big deal in France where the press, unlike the media headhunters in the U.S., is discouraged from reporting on the personal lives of politicians, and obviously voters don't care. The difference is made even more emphatic by the fact that the mother of his four children, with whom he no longer has a relationship, Segolene Royal, was herself the 2007 Socialist Party nominee for the French presidency. She was defeated by current French President Nicholas Sarkozy, but not because of her unusual , by American standards, domestic circumstances. Of course, those circumstances, on the part of either her or Hollande, do not say anything about their qualifications to govern, but it does emphasize the cultural gulf that separates U.S. and French society which may help explain why a candidate in France can be successful with a far Left secular, populist appeal while in the U.S. even liberal candidates must meet a minimum standard of religiosity and avoid personal peccadilloes i.e. John Edwards.

In any case, no matter who is elected the next U.S. president, the next president of France may well have a serious impact on the U.S. economy.