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Friday, December 5, 2008

Befuddled by the Big 3 dilemma

Studies show people are unlikely to buy cars from a bankrupt company. And at the end of the day, there is no guarantee that bankruptcy will protect jobs. So, I don't think bankruptcy is an option and personally, I cannot understand the way the auto companies are being treated. Here's why:
  • The US economy is in recession. Record unemployment. 533,000 jobs lost in November alone. Close to 2 million jobs lost since the beginning of this year. To make matters worse, these numbers do not include those who have given up looking. I don't want to sound alarmist, but this is very very serious - for economic AND social reasons.
  • The Congress and the President (43) has a chance to save, yes save, millions of jobs by providing assistance to the auto industry. This money is to save jobs.
  • Did I say the US is in a recession? So, if the auto industry collapses, these employed people who become unemployed have few options for employment. There is much supply of labor, and little demand. A recession is a very inopportune time to take a hard line of "let them fail" - the broader ramifications for all Americans will be too severe
  • Now, lets look at some of these ramifications. Unemployed people do not have the resources to consume or pay debts in the way that they could when they were employed. Some may not pay debts at all. So who suffers other than the unemployed people? As it turns out, all the companies and their employees that rely on that consumption are affected. Therefore, greater potential for further unemployment and poor company performance. If these companies that produces consumables are publicly traded, then investors will batter the stock price. Battered stocks depress markets, and therefore affecting investment portfolios. Investment portfolios are managed by companies in the financial sector. Who else is affected? All the companies to whom debts are owed are affected. Those companies are also members of the financial sector.
  • Ah, the financial sector. Remember the financial sector? Well, let's revisit that sector for a bit. The sector got itself into a crisis. Note, the auto-makers did not cause the financial sector crisis. And then, the financial sector needed a bailout which they got of $700B. All of this has not been used, but the President won't touch those funds to help the auto sector because its saved for the financial sector. Now, did I mention that despite the bailout, there have been record job cuts in the financial sector? But of course, because saving jobs - unlike the objective of the auto manufacturers - was not the objective. The objective was to stabilize the system, provide confidence in the sector and strengthen institutions. And then, it was HOPED, yes HOPED, that ordinary people would feel the benefits of that by banks doing what they exist to do - provide loans etc. But that never happened, and subsequent interventions and speeches by Secretary Paulson have tried to provide greater consumer benefit. But alas, banks that are not owned by the State cannot be forced to do what they does not believe is in their interest. Private institutions have a responsibility to shareholders, and logically, they sat on the funds they have received. So now, the irony of this situation is that if unemployed people don't pay debts, banks will need more government funds. Unemployed people consume significantly less, so those companies that produce consumables bring in less revenues and have a harder time paying debts, so banks will need more government funds. And then if the auto industry fails, there will be no new business from millions of consumers who need credit to buy cars, so banks will need more government funds. So now, the banks' current and future prospects look pretty dim. So, you'd think they'd encourage the government to give $34B to the auto industry. The auto industry is asking for a loan.
  • Now, here's the best part. The financial sector started this crisis. And had it not been for the crisis, the auto industry would not be at the precipice at this point in time. Yet, its having a much harder time getting approval (even with all the strings and concessions) for a smaller amount of funds for direct consumer and economic benefit when the financial sector received multiples more (much of which is unaccounted for). So, when the sector gets in trouble again what will happen? Well, the financial sector will get more money of course. And it will argue that there was no problem with the auto industry at the time of the approval of the $700B, so therefore this need is unforeseen and therefore the sector needs money in addition to the $700B. Yet, because the sector has been hit badly the sector will have to engage in more layoffs (did that the first time). And then because the companies in the financial sector are private, the Government will beg them to lend to ordinary people etc., and they will refuse.
  • And through it all, millions of people would have lost their jobs as a result of the collapse of the auto industry, and maybe millions more in the financial sector and other industries as a result. More companies are unlikely to survive, and those who do survive and do not perform satisfactorily and are publicly traded will get a battering from investors. The stock market may be depressed further, taking with it confidence. And the bailout costs will just rise way above $34B now being refused to the auto industry now. More cost, less jobs. Does this make sense to anyone?

No doubt the auto sector needs reform. No doubt the political protection has hurt them and has not forced them to become competitive. No doubt that taxpayers money should never be wasted.

But, the cost of this unemployment will be far greater than $34B. And there seems to be sufficient foundation to base the new manufacturing for the new America. If these auto companies do not make green cars, they can be retooled to make green machinery ( wind turbines etc). Allowing skilled workers to lose their skills and allowing machinery to become rusted is not the answer to this problem.

The auto industry needs a transition plan. And it needs transition funds to tide it over. Otherwise, the cost of starting over - for it and the rest of the country - is just far too great to contemplate.

Wednesday, December 3, 2008

The Richardson Promotion

No, I did not mistype - I really think Bill Richardson just got tapped for a major promotion. I don't understand why the view persists that he's been passed over for Secretary of State, and that given that as well as his impressive credentials, that he has somehow been demoted by being named as the nominee for Secretary of Commerce. In my humble view, nothing could be further from the truth.

So why is the Richardson appointment a promotion? Because he has one of the most important jobs in the Cabinet. Look at what he is expected to achieve (from the Commerce Department's website):

"The historic mission of the Department is "to foster, promote, and develop the foreign and domestic commerce" of the United States. This has evolved, as a result of legislative and administrative additions, to encompass broadly the responsibility to foster, serve, and promote the Nation's economic development and technological advancement. The Department fulfills this mission by:

a. Participating with other Government agencies in the creation of national policy, through the President's Cabinet and its subdivisions.

b. Promoting and assisting international trade.

c. Strengthening the international economic position of the United States.

d. Promoting progressive domestic business policies and growth.

e. Improving comprehension and uses of the physical environment and its oceanic life.

f. Ensuring effective use and growth of the Nation's scientific and technical resources.

g. Acquiring, analyzing, and disseminating information regarding the Nation and the economy to help achieve increased social and economic benefit.

h. Assisting states, communities, and individuals with economic progress."

What's the reality?
  • The US has been in a recession for a year and faces the real possibility of depression. The world is in a global slump
  • For the ten months of this year, 1.2 million jobs have been lost. An unconfirmed estimated 250,000 additional were lost in November
  • Much global hostility towards the US does actually stem from the way other countries were "encouraged" to adopt globalization.
  • All the states are in dire need of budgetary support as a result of the economic and financial crisis.
  • One of the major industries in the US - the automobile industry - is on the brink of collapse and is seeking budgetary support from the Government
  • The Government has significant involvement in the private sector (the banks, for example) and I expect this will increase in the short run out of necessity.
This situation is dire for the US. The economy must recover - that is not optional. Global interdependence means that the rest of the world also needs the US to recover.

Why is Bill Richardson uniquely suited to this post?
  • He is a former congressman - a useful experience to persuade Congress to adopt groundbreaking legislation related to a green economy and green jobs
  • He will be a former Governor - a useful experience to bridge the understanding between the States and Federal Government to achieve progress where real cooperation is needed for policies that are efficient and produce results
  • He has held portfolio responsibility for Energy - a useful experience to find that required balance for sustainable development; to understand the complexities and nuances that must be overcome with respect to global political and commercial interests to advance and achieve progress on an affordable green agenda.
  • He has held responsibility as a UN Ambassador - a useful experience for that much needed diplomacy in trade negotiations which if effective can reduce tensions between the US and the rest of the world, improve the image of the US, and importantly evolve a more sustainable globalization model
  • His Latino background provides an innate understanding of some of the more challenging economy related governance aspects in US history (as it relates to immigration reform, for example); and will be - in my opinion - particularly useful in finding a new path for small business development which has historically been the source of job growth in the US
At this time in history where the US economy must recover but with employment (I once said that jobless growth is a hollow victory), must grow but only sustainably, and must lead without dominating, it is my considered view that the role of the Secretary of Commerce will take on a significance it has not before. How could it not if the Obama agenda calls for a fundamental change in domestic economic policy? Obama ran on a platform of a new America - and so "business as usual" will not do. (It wasn't anyway which is why we are in the global mess we are in).

Bill Richardson, in my view, has not been demoted. If he achieves a green agenda, win-win trade reform, and a sustainable growth path with sustainable jobs for a sustainable planet, Bill Richardson will be one of the most important people in this Administration, and the world.

Tuesday, November 25, 2008

Building back confidence one day at a time......

Don't know about you, but I'm feeling more confident everyday. I look forward to hearing from President-elect Obama. Let me tell you why:
  • Consistency in tone. He consistenly sounds the same. Same tone. Same unpanicked demeanor. Same balance between a sober tone and an optimistic one.
  • Consistency in message. He sounds like candidate Obama and that's good. Priorities then are priorities now. Jobs, jobs jobs and people first. Tweaking here and there as details emerge through the transition sharing of information; but the objectives remain the same.
  • Consistency in approach. He's practical. He's people oriented. He's solving problems. He actually said today that the American people are not interested in ideology; they want solutions. Well, I for one am not interested in ideology, and I for one want solutions. All these ideologies need review since none of them seem to be working (or we would not be in this global mess). So, while people philosophize, let's look at the real problems and come up with real solutions. Who knows, we may even invent a new ideology in the process.
  • Consistency in personality. This one requires some explanation. Over time, I watched him speak at events and he has the ability to "feel the pulse of the people". That is a rare gift that manifests itself in many ways. For example, on the campaign trail, it is the gift that allowed him to go off script, and connect with people while being himself. President-elect Obama is showing that consistency in personality in his appointments. He's "reading the pulse of the people". For reasons too numerous to mention here, the selection of the economic team and, more importantly, the positions for which they were selected speaks volume - to me personally - of a deep understanding of multiple issues beyond confirmation hearings.
Confidence is a key - not the only key, but a key - factor to recovery. Recovery won't happen overnight; but it won't happen ever without confidence.

So far, I'm getting the impression the President-elect knows what he's doing: he's got a vision for a plan to get things done, and he's got a team whose mandate is to get those details for the plan to achieve that vision...to get things done. Things for the people. Things to solve problems. And that's making me pretty confident.

Tuesday, November 18, 2008

In search of the intellectual President with a practical Presidency

I find this transition period very....well, interesting.
  • I understand the need for unity. Please do show everyone how magnanimous you are, Mr. President-elect, to look beyond all the comments made about you on the campaign trail. Never mind that those who made the comments are highly unlikely to be as supportive of you even after all this "forgiveness". Problem with this? Unity is a nice concept; but a real challenge to achieve. Alienating your base is a real risk in wooing those who have not warmed up to you. History is full of examples of people who have ended up with nothing by ignoring those who loved them because they spent all their time trying, and failing, to make those who didn't love them do so. Try convincing your base to woo them too, because there are those who will have a harder time with forgetting comments about race, experience (or proposed lack thereof), and generally dismissive and condescending tones. Recognize that that takes time - not everyone is you.
  • I understand the search for experience. I recognize the magnitude and variety of challenges - so many balls in the air all at once. But no change can happen without people and people will become disengaged if promises are not kept, if the authenticity of the leader is doubted. Hope and change are what the winning team ran on. If there was a yearning desire in the country for a complete return of any Administration, then would that candidate not have been selected from the very beginning? There is still time to balance the experience and familiarity that seems to be so critical to "hit the ground running" with those fresh revolutionary ideas to get the country out of the deep ditch quickly; those fresh revolutionary ideas without which there would be no President-elect Obama . Age and experience have no monopoly on solutions. Let's have a healthy mix of perspectives - old and new; experience and youth.
  • I understand the intellectual appeal of "the team of rivals". What a statesman and leader you are if you can pull it off; if you can get a team of rivals formed. Does the team get anything constructive done though after they have agreed to serve? Or do they just look nice and give historians lots to write about? That is the real test. We need some realism about the personality types. Leopards (note the plural) never change their spots. Qualifications are not the issue. Ability to work in a team is; to not act in a parallel, and opposing manner that introduces divisiveness. Has that test been passed? I'm not so sure.
Frankly, the President-elect has made some great choices, and like all choices there are positive and negative aspects to each one. In net, the country needs a team that works; a team characterized by personal dynamics where members exhibit respect for each other and can work together to find creative practical solutions - for all people - that can be implemented in the fastest and most cost-effective manner.

Thursday, November 13, 2008

The first 100 days...

Respectfully, I have to agree with Chris Matthews who seems to have dedicated every Hardball show on MSNBC to lobbying for a package of jobs, infrastructure development and immediate relief to the American people.

Why he has to lobby though is truly fascinating but puzzling.

In this environment of record unemployment and severe financial hardship due to a man made shock to the financial system, I am trying to understand the viewpoint of those who support "small" changes that don't cost money, but don't solve the pressing problems either. It is amazing to watch fiscal conservatives argue against spending to save the economy from irreparable damage because of cost when they have presided over this monumental deficit and debt.

I'm not calling for immediate energy independence or health care reform, BUT is it that "big" things cannot be done, and only "small" things (that are not small but called "small" because they don't come with a big price tag) can be done. Why is there not space for some of both? So:
  • I love the environment, but how does an environmental proclamation put food on the table for hundreds of thousands of people?
  • I support all and every efforts for human rights, but how does closing Guantanamo Bay create jobs for hundreds of thousands of people?
Why is it either or?

Why is there a debate about mandate when the President-elect won so convincingly?

My two cents? Obama was elected to do what he promised.....so now he should do it without apology because those practical people-oriented solutions he promised are more urgently needed with every day that goes by.

Holding on to hope.......

For those of you who have been following my blog, please forgive me if I sound like a broken record but there's just something I must say.......again.

The global financial system is broken.....badly broken. It is not serving domestic economies, or the global economy. It is not serving the people. It is not serving even itself.

The global financial system needs fixing......urgently. But we need...and here I go again...not just a "new global financial architecture" but a stronger, more stable, more equitable and more sustainable global financial and economic system.

How do we achieve that? Well, as it turns out we were, yes were, off to a great start. Governments managed to talk, agree and act in a coordinated manner. Developing and Developed countries will come to the table in the first of several summits as the G20 meets this weekend in Washington. China, in a major move, stated it would be an active participant.

So why have I used "were"? Because I am becoming doubtful that we are heading in the right direction:

First, I still hear some world leaders and their surrogates talking about blame and responsibility. I really think we do not have the time or luxury to squander this precious opportunity to achieve real meaningful change to the entire global landscape. Use history to understand the problems and guide solutions, but long speeches about who did what to whom is really not helpful. There are very constructive ways to spend time at this weekend's G20 meeting, and pointing fingers respectfully, is not it.

Second, this cementing consensus of the absolute need for an expanded role for the IMF is troubling, frankly. There are well documented problems with the IMF. Increasing funds to the IMF and expanding its powers before reforms are even agreed upon seems like a recipe for further problems - sooner rather than later. I recognize that there are so many issues that are complex that it will take time, but I hope this weekend's meeting realizes that the emergency measures must not cause more problems.

Third, I have struggled with the best way to say this one so here goes:
  • I understand there is only one President at a time, and I agree. So I understand that the President-elect does not either want to or feel that it is appropriate to be at this weekend's meeting.
  • I understand the need for the President-elect to have representatives who do not necessarily participate, but listen.
But, with the greatest of respect to the representatives that the President-elect has chosen, may I ask why - given the significance and complexity of these specific issues - has he not included as an additional representative someone familiar with these issues - like for example, Governor Corzine? Great to have a bi-partisan duo, but a former Secretary of State and a pro-deregulation former member of the House of Representatives when the genesis of this problem is so highly technical and due in part to lax and absent regulation? I think that the criticism being leveled at the transition team is fair - the selection of representatives does seem to indicate disinterest in this meeting.

I am so incredibly disappointed if that is the case.
  • It is no small accomplishment that the G20 is willing to meet.
  • It is no small opportunity to reshape the global financial and economy system so that it works better for all in a sustainable way.
  • It is no small task to achieve consensus on very technical issues where I am sure that Heads of State will come fully prepared from their respective Finance Ministers who meet just before this meeting.
  • Finally, it is a huge underestimation of the global will to move on - and do so urgently. This state of limbo just will not do while the US waits for a new American president. Other countries are more than happy to be the financial center of the world. And no matter what, some countries will not allow this to happen to them again ever - Obama or no Obama.
So, I'll watch this weekend and yes, I recognize this is the first of many summits to deal with these issues. But most importantly, I remain hopeful because after all, that is what my candidate and now President-elect told me for so long to be.

Sunday, November 9, 2008

Making the case for sustainable and responsible capitalism

If you have missed it, this is a very worthwhile read "Yes Business Can" written by the Chairman and CEO of Starbucks, Howard Schultz

Why China gets it, and the US has not

No matter what, China has an ability to remain focused on what matters - and that's China, China's interest and the Chinese people.

The announcement of the $583B stimulus plan is just further evidence of this.

See here for Huffington post article.

See here for the 10 areas designated for spending

Economic growth and the welfare of the people will not be jeopardized, ladies and gentlemen.

So while the USA whose damaged economy lies on the verge of extended recession and even depression, and the powers that be even debate the merit of a stimulus package before an amount can be agreed upon, China comes out with an aggressive broad based plan to revitalize the economy, keep and generate employment, stimulate domestic demand, and provide assistance to those in need.

No matter what the critics may say, China is using this time of unprecedented uncertainty to bring certainty to its economy - to strengthen the fundamentals of its economy, so when the global economy gets back into gear, China is more than ready - China will be ahead.

And for every day that goes by in the US without a stimulus package, the US deepens its economic problems and falls further behind in preparation for global competition.

Sadly, ideology is the reason for this unfortunate US position - some strange objection to spending in order to provide relief to the people, and stabilize the economy. The government is not replacing the private sector; but the economy cannot come to a standstill while the private sector undergoes unprecedented change through a man-made shock largely generated by an element of the private sector itself. Something must happen to make the private sector the engine of growth again - and a stimulus plan can help with short term measures.

It is not either government or private sector. It is necessarily both.

And this is why China gets it, and the US has not.

Thankfully, the President-elect has called for a strategic stimulus package now, and will make it so immediately upon taking office if necessary. Let's hope that the American people and the economy do not have to wait until then because I'm not quite sure that they can.

Friday, November 7, 2008

President-elect Obama sounds like Candidate Obama.......and that's good!

Throughout time, voters have voted for candidates on the promises. Unfortunately, right after they are successful, candidates either forget or decide not to bother with the promises made. Those who voted for them become disillusioned, disappointed and lose even more faith in governance and government. National development becomes even more difficult because people just become detached.

Not so today.

President-elect Obama had his first press conference today. Yes, short but sweet. Yes, thoughtful answers to questions. But most importantly, he has remained on message. President-elect Obama sounds just like Candidate Obama and that's good!

In summary, he reiterated 5 priorities:
  • getting a fiscal stimulus package in place - as previously mentioned and still urgently needed
  • containment of the financial sector crisis to minimize the spread to other industries and globally
  • special initiatives for long-term competitiveness of the auto industry
  • an assessment of the bailout plan initiatives, and whether or not they are true to agreed bipartisan objectives
  • getting started on the long term key priorities identified in the campaign
Importantly, he stressed what I will call "realism" and "practicality"
  • Practical solutions are needed for meeting the challenges which are difficult.
  • Recovery will take time but the American people are resilient and more than capable
  • The election cycle was long and its time to put that behind us and focus even more on the needs of the people. It must be remembered that the American people need help.
  • It's time to put aside partisanship and politics

The President-elect mentioned that a President can do much to restore confidence - a critical function in an era where crisis of confidence, perhaps more than anything else, nearly brought the economy to a grinding halt and will dictate to a large extent the speed of the recovery. When the President-elect has chosen in his first press conference to stay completely on message - to say all the things he no longer must say to appeal to voters but he does say because he means what he had been saying all along, this is perhaps the most tangible way to be credible, and to lead that restoration of confidence.

Well done, Mr. President-elect.

Thursday, November 6, 2008

The Treasury Secretary

OK - I cannot resist. I have two cents on this topic.

First, check this link to see the names supposedly in consideration so far.

My two cents for President-elect Obama?
  • Please don't rush - we already have a Treasury Secretary and the new one cannot even go through confirmation hearings until after you are sworn-in in January. Please let's not make the markets skittish unnecessarily. Please let's not make matters worse.
  • Please don't pick people for the wrong reason - like "they have already been vetted"
  • Please don't pick people so it looks like the return of any previous administration, and that does include a complete return of the Clinton administration - Bush43 did that and people did not like it. People expect new and fresh - that's why they voted for you. Experience yes, of course.
  • Please, if you must consider controversial people, please have anyone who may have said controversial things like "women aren't smart enough for math and science" deal with that issue.
Finally, please pick somebody who can do the job with credibility with the people AND the private sector.

Wednesday, November 5, 2008

The President-elect goes for gold in the Olympics of the Superpowers

Tonight, I just want to record that I saw it for myself.



A new President has been elected to be the 44th President of the United States of America. Congratulations to President-elect Barack Hussein Obama.

A President-elect with a platform that is decisively inclusive and built solidly on hope, unity and change.

A President who embodies a new dawn - in his style, in his temperament, in his approach to organization, in his beliefs, and yes, of course, in his ethnically diverse background.

The baton has been passed. The American people executed that smooth and successful baton change placing the last runner of the USA team in the 4x100 relay in the Olympics of the Superpowers in a real position to go for gold.

America, your President-elect has told us all who runs the last leg. It is each and every one of us.

Let's get to work.

Saturday, November 1, 2008

Great spot from NBC - 5 ways to make sure your vote counts!

In a spot called Making your vote count (click here) see 5 things to do before you go to the polls. Very important!

It's not over 'til it's over

With all due respect to pollsters, I must admit that polls give me no comfort.
  • First, they are - albeit scientific - just an indication of the outcome. Methodology could be flawed, or imperfect. Unprecedented registration, changing demographic....too many unknowns to have any kind of certainty. Maybe I'm just overly cautious.
  • Second, polls are not clearly marked ballots. Polls cannot be physically counted to elect a President.
  • Third, voters are busy and voters like convenience. Too often people either cannot or decide not to bother with long lines, extreme heat or cold, or any form of voter intimidation. Polls that indicate that their candidate is ahead provide a false - I repeat - false sense of security.
This may seem obvious but I feel like it must be stated.

How does one get elected? Frankly, as it turns out, it has less to do with eight years of claimed dissatisfaction, or 20 months of evaluating the options for the new President. No matter how much money is spent up to the day of elections, it can all come to naught on the day itself. Yes, it can. So, what is important? The VOTE of each and every person. The actual VOTE.

What must not be taken for granted? People can change their minds for the strangest reasons up to the very last minute. They can have second thoughts because of something they heard or saw on the way to the polling station. Yes, they can.

Election day itself requires supreme preparation for any possible contingency. No complacency allowed. Details. Details. Details.

My two cents? Organizers must put themselves in the mind of the voter. The key to elections is the degree of organization on the ground. Simple. Know your people. Know your voters. Know the issues. Be proactive. Keep focused on the bottom line - clearly marked ballots that are considered legally cast. So, voters wake up and decide when to go to the polls. How do they get there? Do they drive? Public transportation? What do they see and hear? What is the weather like? Do they have unforeseen needs? Can the organization help them get back and forth? Do they need to be continually convinced to stay in the line no matter what? What about when they get into voting booth? Have they been properly educated about how to vote SO IT COUNTS? Did I say - have they been properly educated about how to vote SO IT COUNTS no matter what "special" circumstances may arise in the booth such as technological difficulties? Does the machinery have laser-like focus on getting people in and out of the voting booth having voted SO IT COUNTS - no matter what?

Last word? A poll is a very useful tool that can promote complacency. There are never enough votes. NEVER. Every singe one counts. A poll is not a clearly marked ballot that is legally cast. Only legal votes can be counted to elect a President. So let's get those legally cast votes going!

Saturday, October 25, 2008

When elephants are fighting.....

One morning many years ago, I recall hearing a former Prime Minister/Finance Minister in a heated debate with his counterpart on one of the radio talk shows. The moderator tried to interrupt several times and finally, the former Prime Minister/Finance Minister said "When elephants are fighting, grass must not get involved". I must admit, it was a very effective statement - albeit that some may say that is harsh - because the moderator said nothing further while the two "elephants" went at it until the program ran out of time.

Now, the mascot for the Republican party is the elephant. Like true grass - not getting involved - I have watched in utter amazement the biggest fight of elephants that not even nature could parallel.
  • First, it was the internal revolution of the House Republicans as they opposed the Republican Administration's proposed solution to the crisis. Remember, after the hearings they refused to go to talks with the Democrats to find a middle ground and proposed a solution that no one said could work, including the Republican traders and the Republican administration. Oh yes, this was all in real time broadcast all over the world. and did I mention the Republicans are the ruling party?
  • Second, it was yet another internal revolution of the House Republicans who after the Republican leadership of Congress essentially promised that they had reached an agreement to vote in favor of the legislation, the world watched in real-time as the overwhelming majority of Republicans voted against the bill when it came to the floor
  • Third, the mass exodus from the current President's coattails is eye-popping. Everyone seems to be dissociating themselves from him and his policies although they acted differently for the last eight years. I mean, they did re-elect him and vote for his policies
  • Fourth, not to be outdone, now there are reports that White House "aides" have criticized the McCain campaign and expressing concern for the campaign's lack of interest in stemming what the polls suggest may be an Obama landslide. These "aides" it is reported, believe that McCain needs to show more interest in the loss of key Republican seats.
  • Fifth, conservative pundits and even former McCain supporters are coming out in droves against the selection of Governor Palin and the tone of the McCain campaign. Many of these people now report that they are being treated as outcasts by their own party.
  • Sixth, the McCain campaign is well, imploding is the only word I can think of. The two "mavericks" seem to be like oil and water - they just don't blend. It was always dangerous when the person who never went through the primary process - that is the VP pick - generated far more excitement from the base than the Presidential candidate. But now, after it has been obvious - at least to me - that Governor Palin appeared to believe that she was running for President, there are now actual reports that Governor Palin is just doing her own thing.

Well, I do believe that when elephants are fighting grass must not get involved. But the size of this fighting is extraordinary.

This is not just the ruling party having an internal revolution in front of the whole world.

This is not just the presidential and vice presidential "team" imploding in front of the whole world.

It's the type of fighting that really has me concerned:
  • refusing to talk which is unheard of in a democracy
  • rescinding promises threatening credibility in governance
  • fighting against your own President in such a visible way in front of the whole world threatening democracy, order and national security
  • a Presidential campaign with heated and unproven accusations about "socialism" "communism" "associations with terrorists" which is dangerously divisive and polarizing
  • the treatment of those who would speak their own opinions - so treasured in a democracy - which makes one believe that if it were possible to censor that people would be censored. Thank goodness for freedom of the press.
  • mutiny in a Presidential campaign which is unheard of for so many reasons, not least of which is that unity and support is the very reason there is a ticket, a "team"

Normally, I am happy to be grass. And I'm definitely not getting involved. But should all grass - meaning all non-elephants such as all people everywhere regardless of political affiliation or residence - really just allow themselves to be trampled into oblivion by this fight of mammoth proportions?

Friday, October 24, 2008

Does she not know? Or does she not care to know?

Today, I must confess I was really eager to hear Governor Palin's speech on how she would address the special needs of children.

When I started watching her first policy speech, I thought my comment would be related to what seemed to be a change in her dressing, and the visible new spectacles, changes made perhaps after the outrage over her $150,000 wardrobe (see article here), then her admission that that kind of dressing is not her style as she is "frugal" (see article here) and now today news that the most highly paid person on the entire McCain-Palin campaign is her makeup artist, not a policy advisor (see article here). Confused? I am. Isn't the country facing a contraction, recession, depression or some version thereof? Aren't people really hurting - losing homes, jobs, savings? This is odd and insensitive.

But alas, it got worse.

Then I listened some more, and I thought that my criticism would be the obvious inconsistency with previous speeches. Two previously announced spending freeze promises by the McCain campaign, and resistance to the fiscal stimulus in the face of the dire need of emergency funds for people, and here was promises for "full funding". Great, if she can find the money. But she's supporting causes that Senator McCain has not by his vote many times in his many years of service in the US Senate. Confused again? I am.

But alas, it got even worse.

Then I listened some more, and I read this article - Memo to Palin: Fruit Fly Research Has Led to Advances in Understanding Autism and listened to the clip therein:

She said:

"Where does a lot of that earmark money end up anyway? […] You’ve heard about some of these pet projects they really don’t make a whole lot of sense and sometimes these dollars go to projects that have little or nothing to do with the public good. Things like fruit fly research in Paris, France. I kid you not."

Is it me, or has Governor Palin mocked scientific research and then called for diversion of funds from scientific research? Now that always gets me worried.

In an earlier post (such as Can Governor Palin please clarify?) and elsewhere I have expressed concern for Governor Palin's dismissive stance on science as it relates to the environment.
  • My concern was not a pro-academia position, although I am pro-academia and pro-research.
  • My concern was not a "tree-hugging" position; although I do admit significant genuine affection for nature.
  • My concern was and is a survival stance. People should not be digesting life threatening toxins quite prevalent in Alaska (which can flow elsewhere). The Governor has not seemed to take any steps to either stem the inflow or clean up the messes. As VP, what would be her position on these toxins on a national and global basis?
But here's the real shocker.

Today, the research she objects to is directly related to assisting in finding out the causes of the special needs that was the subject of her policy speech; the special needs she's fully funding. Confused? I am.

From the article:

"[S]cientists at the University of North Carolina at Chapel Hill School of Medicine have shown that a protein called neurexin is required for..nerve cell connections to form and function correctly.

The discovery, made in Drosophila fruit flies may lead to advances in understanding autism spectrum disorders, as recently, human neurexins have been identified as a genetic risk factor for autism."

Now, is it that the Governor is so anti-science that she does not believe in finding out what causes these special needs so that they can be addressed in a thoughtful, structured and strategic manner? Because that is quite disturbing to me. Or, is it that the Governor is just uniformed? Because that is also quite disturbing to me.

Can someone ask Governor Palin what she thinks about funding for research in general? In anything - psychology, water, biology, religion, anything, any subject whatsoever. What about funding for life threatening diseases? Wait a minute, what does she think about health care providers? Should we even have those? They use science to do their work. What about science in schools? The leading countries in the world have significant numbers of their citizens excelling in science and engineering. Or has she missed that bit of news? Does Governor Palin know how many people are employed because of science whether as scientists, or because of the innovations science allowed to facilitate employment?

Respectfully, she is running for Vice President of the USA. 9 times in history, the VP has had to step up to the top job because of circumstances. This is a job with immense responsibility, not to the US but to the world.

Respectfully, can someone please inform Governor Palin that science and research is ALL about the public good.

Thursday, October 23, 2008

Bigger than Dr. Greenspan's briefcase

When Dr. Greenspan was the Chairman of the Federal Reserve, the mere size of his briefcase could send markets into jitters. Remember those days? Speculation would be rife about what he would say. And then he did say "it" - whatever "it" was - and every word and even inflection was interpreted and analyzed. Talk about pressure. Suppose he just woke up with a sore throat one morning? Unreal.

Anyway, the world rocked today and it wasn't the briefcase. It was Dr. Greenspan's admission of "shock" about a "flawed" market. Yes, it is on CSPAN. And it is well worth watching the hearings on the Hill where he appeared with Christopher Cox and John Snow who both had some gems too. But if you are pressed for time and you want one article to read, here's one from the International Herald Tribune: Greenspan 'shocked' that free markets are flawed

So where do we go from here?

The markets are flawed and operating in a way that is unsustainable to themselves. As I said, problems cannot be solved overnight. But we could do with some "cease and desist" orders right about now just to help things stabilize and minimize further damage. Oh, for the days when a Federal Reserve Chairman could just give a "look" to the markets and they would quake - in a good way. Now, we have had so much damage that we have some way to go to get back to that kind of necessary authority from the regulators.

Until then, in my humble view, the markets and all of us would be better served, if the markets and the players would be a little more discerning in what sways them. And then maybe they will stop the seemingly never-ending roller-coaster ride at every word from anybody. We are all exhausted.

Wednesday, October 22, 2008

Hold Up, Wait a Minute

If you have been following my posts, you know I want a certain kind of "new global financial architecture". The world needs a stronger, more stable, more equitable and more sustainable global financial and economic system.

I talked quite a bit of the need for the inclusion of the developing world
(and not just those developing countries in the G20, thank you very much President Bush) in the dialogues to create that system I have described in this post in particular: Oui, Oui, Oui.....BUT BUT BUT

President Bush said he wanted ideas. So here's another idea.
  • Please do not assume that people who have studied developing countries and hold fancy titles understand how to solve the problems of the developing world. Frankly, that has been half the problem we have had - people who have not lived with the issues so they really do not understand the significant nuances that make or break all the never-ending proposals from time immemorial to "save the world". The developing world has been studied - almost literally to death. And no, they don't just need money. They do need money, but they need a new approach.
  • EQUALLY, please do not assume that people who have lived in developing countries and have held fancy titles also understand how to solve the problems of the developing world, yes the developing world or even their own countries. Frankly, that has been the OTHER half of the problem we have had - people who have lived in developing countries can have a tendency to believe they know everything and therefore are unwilling to learn from others.
So, here's who should carefully be questioned before they are allowed to pontificate about how to "save the world":
  • People who have made questionable decisions previously that have resulted in the utter destruction of economies. Yes, some of those names have been floated
  • People that make a living from the study of the developing world. Therefore, if there is no developing world then there is nothing left to study. Yes, some of those names have been floated.
Generally speaking, foreigners do not understand others. Generally speaking, countries don't understand other countries. This is not about country size. This is not about language. It does not matter how much you are alike or have in common. The fact is that serious cultural differences do exist. And they exist not just between countries; they exist within countries. To me, all of that makes the world a wonderful place. Others have not shared that view.

So before we come up with a litany of "things to do" to "save the world" let's check history because there have been tons of "missteps" that have resulted in serious "consequences". (I'm overloading on the diplomacy tonight) We need a holistic view of our problems as a collection of peoples on a single planet; as an interconnected world of peoples.

We have to get to solutions for the common good; not for the good one of one country. That was in effect what President Sarkozy has said. Respect for man; respect for the planet; respect for generations - the words of President Sarkozy. If we keep talking like this, and walking like this, we may just be on our way to meaningful progress. Certainly in Jamaica's view, because the one thing that this incredibly diverse country agrees on is the supremacy of respect.

Rating the Ratings Agencies

Yesterday, I called for immediate action with regard to CDSs.

Today, I believe the case has been more than made for immediate action with regard to ratings agencies. I have previously expressed my concerns about how ratings agencies function; and further how they should be allowed to function in a crisis, especially a man-made crisis of confidence in the global financial system in which they played no small role.

Yes, it takes a while to fix problems. But it's quite straightforward to stem losses and prevent further problems. Whether you have the 4+ hours to watch the hearings today on the Hill on the Ratings Agencies (see CSPAN. I think these hearings should be required viewing, personally), or you just want to read a few news articles (see example from MarketWatch here: Ratings agencies 'put system at risk,' CEO says), the analysis takes you to the same simple conclusions:
  • Rating agencies were not helping prior to the crisis
  • Rating agencies - by their own admission - were making the problems worse
  • Rating agencies are not helping now
If we accept that:
  • there is still a liquidity crunch (crisis averted by extreme government intervention),
  • there is a credit crisis (although thawing solely because of extreme government intervention),
  • from now on credit will be difficult to come by,
  • people are expected to remain risk averse for some time given the crisis of confidence,
  • the impact of the crisis has seriously impacted current and future expected earnings as we see reported
  • the world is facing "contraction", "recession" or "depression" or whatever term you are most comfortable with,
then, which instrument, entity, country is going to get a favourable rating? If you have 10 ratings issued by a day - on anything - how many positive ratings can one reasonably expect on anything? If you expect one, even one, then you are extremely optimistic.

I've said before, if ratings agencies were not helpful before, and if they were not even accurate before, why do people believe that somehow allowing rating agencies to continue to "rate" in this environment is somehow constructive? This just further accerelates a downward spiral of the financial system.
  • Do people have faith in the ratings? No. But if a rating is negative, it creates panic and in the case of countries, just makes it more difficult for countries to recover.
  • Do people have faith in the ratings agencies? No. But the agencies are still there, so people feel like maybe they should listen
  • Do the ratings agencies believe they were right? No. They have said they were wrong. They have said why they were wrong - and many of these are serious systemic problems that cannot be solved overnight.
So, can somebody please explain to me the value of any body - and this includes the former Investment Banks - rating any body or anything right now?

Respectfully, the only way to prevent a complete collapse of the financial architecture is to inject some common sense into the process.

In principle, ratings agencies are a critical part of a functional market. In my humble view, they are an indispensable part of a functional market. But they must be credible. And that only comes with reform. If you live in a glass house, you really just cannot throw stones.

Besides, if they continue like this, the ratings agencies are just putting themselves out of business since they would have accelerated the complete unraveling of the financial system. So what would they have to rate?

Tuesday, October 21, 2008

The Role of the VP?

In an earlier post, Democracy or Dictatorship, I mentioned my discomfort with Governor Palin's answer to this question about the role of the VP in the debate. It made my top 10 list of things I wish I had never heard her say.

Well, watch this video - another Special Comment from MSNBC's Keith Olbermann

I must be missing something. Really. Because she keeps saying the same answer or some variation thereof, although she has been corrected over and over.

This is a serious matter. The Constitution is not convenient.

Talking's great, but it's time to walk

Did anyone catch that Op-Ed by Christopher Cox? You know him, the Chairman of the SEC, the former congressman. Well my two cents tonight is please read it. Here it is: Swapping Secrecy for Transparency

And if you don't find this really odd, please drop me a line because I am just shocked by this entire op-ed. Although the whole article is really, well just unbelievable in my view, let me zero in on a few things:
  • Where on earth were all the regulators when a market of instruments - yes, Credit Default Swaps (CDSs) - could be developed to the size that it exceeds the gross domestic product - that is the value of goods and services - of the entire totality of every single solitary country in the world? Did you catch that part? The CDS market is bigger that the value of the entire output of the whole world.
  • And if that doesn't disturb you, this market is not even regulated. Even countries have regulation - it's called "governments" because without them there would be anarchy. Didn't the people issuing and trading these things think that an unregulated situation would result in "anarchy" in the CDS market that would come back to bite them too?
  • And if that doesn't disturb you, the great AIG that was too big to fail, only - yes only - has 0.8% of these lovely instruments. Only 0.8% that got the whole world into such a crisis. Where are the other 99.2%? We have had every type of man-made disaster; I am really beyond thinking what else we can go through.
  • And if none of the above disturbs you, brace yourself for this one. There is no ban on CDSs - new or old. So, for those of us who study environmental pollution, normally the first thing to do is to contain the problem, you know - stop the inflow. Right now, there is no such thing.

Let me summarize where we are:
  • Global agreement on a set of principles. Excellent
  • Global agreement on need for some kind of reform - not sure what. Great start.
  • Agreement on a series of summits thanks largely to the efforts of Prime Minister Gordon Brown, President Sarkozy and President Barroso. President Bush agreed. Excellent.
  • Offer by the UN Secretary General Ban Ki-moon to host reform talks. Excellent
  • Ongoing hearings by Congress on Financial Regulation Reform. Excellent.
  • Appointment by United Nations General Assembly President Miguel d'Escoto Brockmann of A Panel to examine Global Finance Reform. Panel to be Chaired By Professor Joseph Stiglitz (who I suggested have a leadership role in an earlier post). Excellent. (See article here)
This is major progress. But respectfully, as much as they are important talks for incredibly complicated matters, they are some matters that need urgent ACTION

Without belittling in any way the need for comprehensive change, does anyone not think that the CDS market needs urgent attention?

As in yesterday.

It is not rocket science to 1) give a regulatory body or bodies jurisdiction over the CDS market and 2) devise with some basic rules. A market larger than the combined GDP of the whole world? Please, this seems very straightforward to me.

My vote is for quick and moderate ACTIONS. Let's not stifle innovation, but innovation must be responsible. And let's not go on witch hunts: people created CDSs, people traded CDSs, people presided over a market in which they were allowed to thrive - so this is no one person's fault. And the CDSs are just one small part of the comprehensive reform needed.

We have unprecedented global agreement for change. Can we deal with one very serious problem that all nations must have a vested interest in solving as priority? And maybe, just maybe, we can head off further crisis while we can.

Monday, October 20, 2008

A house divided against itself really cannot stand

Earlier this month, I wrote a post entitled: If I could say one thing to Governor Palin? Read Matthew 12:25. In this post, I expressed grave concern for the tone of the McCain-Palin campaign.

Well, the tone has intensified and spread in depth and breadth. The McCain-Palin campaign has robocalls, more rallies, more representatives with seriously divisive, negative and yes, erroneous information. It just has not stopped. Newspapers, General Colin Powell and even conservatives and one-time McCain supporters have called for it to end. And yet, the divisiveness and negativity not only remain; its getting worse - dangerously worse.

Well, Keith Olbermann has an excellent Special Comment on just this topic tonight on Countdown with Keith Olbermann on MSNBC. I think it is well worth your time to watch this video (click here).

Why teams matter

Senator Obama is QUITE RIGHTLY taking time off to spend with his ailing grandmother - a woman with whom he remains very close, a woman who raised him and gave him his values. (See article here)

So what does that mean for the campaign? Does this mean that the campaign should fold its hands and wait for him to come back? Absolutely not!

Senator Obama represents a change. He has built a well-oiled organization machinery built on change with many supporters of that change. He speaks passionately about what he will do for others and importantly, what others have to do for themselves. So, he is going to spend time with his grandmother:
  • Does that change the message? No.
  • Does that change the machinery? No.
  • Does that make him have less supporters? No.
What should it do is make more people come out. Speak stronger, Speak lounder.

My father believes strongly in teamwork - everything was about the value of teams when I was growing up. He always taught me that when a man is down, the rest of the team must take up the slack. Well, Senator Obama is not down, but he does need to be absent from the campaign trail for a while. And to me that means that the rest of the team must step up. And this is not just because of his absence. It is precisely because that is the very premise of his campaign of change - that it is all of the people who have to do something to realize that change.

Allow Senator Obama this time. It speaks volume for his character. I'll take a President who values his family - who are people too - this much any day over one that values other "things" that really have no comparable value.

So the campaign must go on. And it must go on strategically. The team owes itself and its leader the very best it has got.

Can Governor Palin please clarify?

Here on this blog and elsewhere I have posted articles and comments voicing my concern for many aspects of Governor Palin's beliefs.

To be clear: I do not expect that I will agree completely with anyone seeking public office - I have said before that I am an independent thinker. That "thinking" comes from a deep rooting in several years of study of science and business, as well as experience and socialization.

Tonight, let me express the number one issue that bothers me about Governor Palin's beliefs because it goes to the heart of the basic human instinct of survival. I have specifically referenced her very notable record as anti-environment. Well, this is not just being "anti-polar bears"; it is "anti-people". Read this article in the Telegraph: Sarah Palin: Pointing a loaded gun at the environment?

Blue is the quotation from the article, and bold is my emphasis

"As governor of Alaska, she presides over a breathtakingly beautiful wilderness - but it also happens to be a repository of toxic chemicals, including arsenic, mercury, lead and Polychlorinated Biphenyls (BCBs).

Clearly, this is not her fault.

She doesn't run the mining, energy development, oil, and other industries that cause the pollution.

But as governor it is within her power to do something about it. Only she hasn't. All too often she has either done very little, or made matters worse.

Palin's administration, for example, opposed legislation, put forward earlier this year, that would have banned the flame retardant Polybrominated Diphenyl Ethers (PBDEs), which affects brain development in young children, including memory and learning functions.

The toxic compound also causes thyroid problems, slow sexual maturation and significantly reduced sperm counts in adults.

Democratic state representative, Andrea Doll, from Juneau (Alaska's capital), tried to get Palin interested in her bill early on. "I told her about the bill," she says. "But she was totally not interested in any way, shape or form. It was that look on her face - that 'don't even go there' look."

Pollutants affect all of us. But in Alaska they are taking their toll. The birth defect rate in the state is twice the US national average; and on North Slope, the area that produces most of Alaska's oil, it's nearly four times the national average."

Does Governor Palin realize she needs people to govern? Who or what is she planning to be Vice President of? Since Governor Palin does not appear to be supportive of science, can someone explain to me what she thinks of years of proven research of the effect of the toxins mentioned? Can someone find out what she believes has caused the unusually high birth defect rate? Does Governor Palin have advisors who explain how toxins flow and spread and what they do and how difficult it is to remove them from the environment? Can Governor Palin just assure us that "We the People" are of paramount importance because her record here would not support that claim.

Now, is this my only concern with Governor Palin's beliefs? Absolutely not. But do I need to look much further than this? Hardly, people have to stay alive to have a opinion about her other beliefs. Personally, I have no intention of becoming an endangered species because keep reading the article - she doesn't appear to believe in protecting those either.

Ideology vs Terminology

Since the beginning of this crisis, I have noticed few - very few - consistencies. One of them is the obsession with terminology. People claim to be concerned with ideology when it is terminology that offends.

So today, Chairman Bernanke has endorsed the idea of a "fiscal package" and in a matter of seconds, the opposition was vocal and loudly so. The naysayers are opposed to an "economic stimulus".

Let's look at exactly what Chairman Bernanke's said in the hearings on Capitol Hill. His words are in blue, mine are in black. Words were made bold by me for emphasis.
  • "I understand that the Congress is evaluating the desirability of a second fiscal package." True
  • "Any fiscal action inevitably involves tradeoffs, not only among current needs and objectives but also--because commitments of resources today can burden future generations and constrain future policy options--between the present and the future." True, hence why "fiscal actions" are taken after much consideration and hesitation, and usually considered appropriate when the options are unacceptable.
  • "Such tradeoffs inevitably involve value judgments that can properly be made only by our elected officials." Absolutely true - "value judgments that can properly be made only by our elected officials". Only people that represent the people, who listen to people, who understand the real not theoretical problems can make this value judgment. So all the naysayers should consult those who are now unemployed because of the crisis, or fear unemployment because of the crisis, or have lost their homes because of the crisis or fear losing their homes because of the crisis, or have lost significant savings and investments because of the crisis. Respectfully, only those who have a credible voice in this debate at this time are those who understand the suffering that exists, and more importantly, the long term consequences and costs of inaction.
  • "Moreover, with the outlook exceptionally uncertain, the optimal timing, scale, and composition of any fiscal package are unclear." True. It is a consensus - we are in an unprecedented time, how can anyone know with absolute certainty the solutions. Yet, inaction is clearly not it.
  • "All that being said, with the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate." True. My question - given that weakness and protracted slowdown are universal beliefs, what is a reasonable alternative to a fiscal package? Are people not to have money to survive? Are people not to have jobs? Are businesses not to remain open?
  • "Should the Congress choose to undertake fiscal action, certain design principles may be helpful. To best achieve its goals, any fiscal package should be structured so that its peak effects on aggregate spending and economic activity are felt when they are most needed, namely, during the period in which economic activity would otherwise be expected to be weak." True. in other words: Let's be selective and constructive in the design and only employ such measures when the situation warrants it. He already said the situation warrants it.
  • "Any fiscal package should be well-targeted, in the sense of attempting to maximize the beneficial effects on spending and activity per dollar of increased federal expenditure or lost revenue; at the same time, it should go without saying that the Congress must be vigilant in ensuring that any allocated funds are used effectively and responsibly." True. In other words, get the most bang for the buck and do not waste precious resources
  • "Any program should be designed, to the extent possible, to limit longer-term effects on the federal government's structural budget deficit." True - as small as possible to be sufficiently effective to head off a longer term expensive problem of extensive dependency of major portions of the population on the state.
  • "Finally, in the ideal case, a fiscal package would not only boost overall spending and economic activity but would also be aimed at redressing specific factors that have the potential to extend or deepen the economic slowdown". Absolutely true. So, not just money to deal with critical existing needs, but measures for employment are critical to keep people occupied and businesses in business so we can get back to wealth generation in addition to one-off measures that are immediately necessary but insufficient. To be clear: To delay immediate relief to argue over taxation ideology would be a colossal mistake. Immediate relief is absolutely necessary. Further, given that small businesses provide the majority of jobs, it is logical that they should have relief. However, select interest groups delaying immediate and targeted relief in order to get assistance that cannot produce a broad based impact is counterproductive at this time. Time is of the essence.
  • "As I discussed earlier, the extraordinary tightening in credit conditions has played a central role in the slowdown thus far and could be an important factor delaying the recovery." Yes, again, consensus here.
  • "If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, homebuyers, businesses, and other borrowers." Absolutely. The intervention in the banking system was to protect depositors and restart the flow of credit. More measures to encourage the restoration of flow of credit are quite logical and in keeping with the agreed principles that the world leaders have endorsed.
  • "Such actions might be particularly effective at promoting economic growth and job creation." His final words and there it is: at the end of the day it is all about people. The measures taken thus far were designed for the banking system 1) to protect depositors and 2) restart the flow of credit. The measures recognize that the banking system serve a critical function for the real economy. But the measures were not direct intervention for the real economy where severe damage has been done - damage to the real economy, damage to companies, damage to employment, and damage to people. Until there are direct interventions to repair the damage, and restart the real economy itself there are serious social and economic implications that will just result in a longer term cost.
No matter how you look at it, a temporary intervention is far less costly - in dollars and in permanent damage to ideology.

So my solution to this problem? Rename "economic stimulus" as "economic survival" and rename "fiscal package" as "measures to save ideology". Because if anyone believes inaction is an option, then I think its quite likely that he or she may have to face the real possibility that "ideology" and "terminology" become luxuries - because in most of the world, they are just that.

Sunday, October 19, 2008

Why General Colin Powell is right

The news has been buzzing about a possible endorsement for Senator Obama by General Colin Powell. Well today it came on Meet the Press followed up by some additional comments in an impromptu interview with reporters. I think this article "Colin Powell endorses Obama" in the Huffington Post and especially the two videos are well worth watching.

To me, it is not the endorsement that makes General Powell right. Whether or not I agree with General Powell's choice for President is frankly irrelevant. He, like everyone else can vote for whomever he chooses. What makes him right is that people have a right to a choice based on fact, not fiction or worse, fear rooted in fiction. That is the fundamental belief of democracy - it is not a Republican way or a Democratic way, it is supposed to be the American way.

In explaining his endorsement, General Powell - one of the most respected voices in the US and the world - makes it clear that the nonsense just has to stop and has articulated his opinion based on fact. Some of these facts have been obscured in this process, so take the time to listen to him. General Powell has been more than clear - the American people not only deserve better; not only do they need better; they must have better.

Moderation or Extremism?

Generally speaking, things have been looking up since Friday:
  • I am indeed heartened by the offer by the Secretary General of the UN to host meetings to design the new global financal architecture.
  • Presidents Bush (US), Sarkozy (France and rotating President of the EU) and Barroso (EC) have all agreed on not just one summit to redesign the global financial architecture, they have agreed on a series of summits.
  • In particularly delightful news to me, President Bush has specifically called for the inclusion of developing countries (although he did not say which ones), and has called for some ideas.
Since President Bush has solicited ideas, here's my first idea:

Let's be very realistic about the world we live in because only then can we find sustainable solutions.

One such reality? Lawlessness is rampant - it is convenient and it is creative. It is aided by technology. But the lawless elements have a vested interest in remaining underground and not in the mainstream They do so to survive and thrive.

So that's the reality, but what does it have to do with the current financial situation? Everything. Because although it is not possible to eliminate crime completely, I am somewhat befuddled about what lawless elements are thinking since they are driving the reforms from moderate to extreme.

So let's take a example:

This weekend it is reported that President Sarkozy's personal bank account was broken into via the Internet. See AP report here. Now, President Sarkozy has said over and over and over that he is determined to reform the banking system and the global financial and economic architecture. Do the thieves believe he will be deterred from this determination? They should not believe that because President Sarkozy is not alone in his belief and there is unprecedented global - yes, global - government support and coordination to do whatever it takes to protect their peoples. That's not one person, those are not some people, those are whole systems working together.

Does anyone - leaders or citizens or even criminals - want a system that allows for their funds to be stolen via the Internet? Absolutely not.

Here's what I think criminals must have missed: Governments - not just world leaders - have the power to take extreme measures to prevent this.
  • Governments can decide the Internet "is not in the national interest" - that would get rid of the convenience of stealing.
  • Governments can decide that the existing currencies are "not in the national interest" rendering whatever is stolen absolutely useless.
So breaking into President Sarkozy's bank account via Internet will only strengthen resolve and support for sweeping - and yes, extreme - reforms. Does the rest of the world want extreme reforms? Not necessarily, we agree that we do not want to go back and that we want to go forward building on the successes of the past, and even learning from the failures of the past. But will we understand that we must have extreme measures if those measures protect funds and wealth? Without a doubt! The option of mainstream lawlessness and anarchy is unacceptable and unsustainable; the lawless know that too.

We had a very progressive weekend. We get the message loud and clear: Something has to change; it has to get better; global governments are going to get it done. Anyone willing to bet me that eliminating the possibility of stealing people's funds - especially world leader's funds - is not going to be on the agenda? Well, I bet that it will be because if it was not before, it is now. Look at the principles agreed to by the world governments to deal with this crisis, and we need not look further than the first one:
  • "Take decisive action and use all available tools to support systemically important financial institutions and prevent their failure." In other words, stealing funds via Internet will not be tolerated.
Whether in the statement of principles, or statements in public, world leaders and government officials have shown no problem with terminology like "all necessary steps". And they are not just talking, they are walking.

My two cents? I support Canada's view: meaningful change with restraint and pragmatism so we do not create a system that is worse than what we had before. Since Canada has a keen understanding of sensitive socio-economic matters, let's have Canada speak up and speak loudly in this process.

Saturday, October 18, 2008

Doesn't the US have poor people too?

I must admit I am somewhat befuddled by Senator McCain's strategy. He is now using the word "socialist" in reference to Senator Obama's plan (which it is not). Here's one article in the Wall Street Journal McCain Suggests Obama Plan is Socialist

""That's the key to Barack Obama's whole plan," Sen. McCain said. "Since you can't reduce taxes on those who pay zero, the government will write them all checks called a tax credit. And the Treasury will have to cover those checks by taxing other people, including a lot of folks just like Joe. In other words, Barack Obama's plan to raise taxes on some in order to give checks to others it isn't a tax cut; it's just another government giveaway.""

I do not understand this. I must be missing something. Yes, the Government must facilitate the private sector, but the markets are dysfunctional. What happens to the people when the markets and the free market system do not work? And even if markets and the free market system did work, they do not work for everyone. What happens to those people? Senator McCain has already said more than once he believes in freezing spending. So I was wondering how the US Government was going to do some of the things it had an obligation to do - you know, the welfare and protection of people. How is it going to pay for those things? Governments use taxes, and when taxes are insufficient they borrow. Is Senator McCain saying he prefers to borrow? Or is he planning to just not do some of the things the US government is obligated to do - such as protect the people - because now, he seems to be opposed to helping people who are poor.

So I looked up poverty on the US Census bureau website. Here are the highlights:
  • "The official poverty rate in 2007 was 12.5 percent..." In other words, that's a lot of people - 12.5% of the population
  • "In 2007, 37.3 million people were in poverty, up from 36.5 million in 2006." In other words, not only are there a lot of poor people, that number is growing
Now, is there an expectation of a sharp increase in poverty? But of course if the US is headed for a recession, and worse for a depression and even worse for an extended period of either of these two scenarios.

Now, here's what I want to know:
  • When the US Constitution says "We the People", the word "people" does not include the poor? Because if I listen to Senator McCain, it appears that it does not. Not only is that wrong, it is uncaring. Governments have a responsibility to ALL people, especially the most vulnerable.
  • As much as Senator McCain does have international national security credentials having valiantly fought overseas for his country, does Senator McCain have domestic national security expertise? Does he have advisers who may have some experience with how people who are starving and without state assistance have to find means to survive? There are lots of countries around the world with internal strife. Lacking the basic necessities of life contributes significantly to this problem. Governments have a responsibility to keep the order and need resources to do it.
  • Is there anyone on the McCain campaign with public health experience? When people live in poverty, they focus on the basics for survival. Those basics do not always include the best hygienic measures which are somewhat luxurious because of cost. They also cannot afford basic medication. So does the McCain campaign have a way to recognize potential public health problems and quarantine them because public health threats do not respect words or artificial borders. These travel by air and water. Governments have a responsibility to mitigate risks and need resources to do so.
Can Senator McCain clarify whether or not he has a problem helping the poor in the US?

Can someone ask Senator McCain if he understands the difference between "government giveaway" and "finding necessary resources for the survival of the American people and the American Way".

Can someone ask Senator McCain what he expects to happen to the people who traditionally have not, or now temporarily because of the dire economic circumstance do not have the means to provide for themselves? Does he believe that they do not need assistance from the state? Does he believe that a stable country can exist without concern and spending of resources for the most vulnerable? Because if anyone - whether Senator McCain or any of his supporters - believes the poor are not his or her concern, they are sadly mistaken.

Friday, October 17, 2008

Mais oui

In an earlier post, entitled "Oui, Oui, Oui....BUT BUT BUT", I commended President Sarkozy but continued my lobby for the developing world. Today, I read this nice bit of news from edmontonsun.com Francophone countries urged to show leadership in economic crisis:

Three critical pieces of this:
  • Diverse Representation: "“La Francophonie must shoulder the need for change,” he [President Sarkozy] told the gathering which brings together representatives from 55 countries and 13 observer nations of the International Organization of la Francophonie." See Wikipedia link here for the countries. Note the wide representation by continent, size, wealth (or lack thereof), and importantly island nations that have special environmental needs. Jamaica may not be a member, but we do have a lot in common with some of these countries.
  • Concern: "Prime Minister Stephen Harper expressed his concerns about the effects of the financial crisis on developing countries, which make up the bulk of la Francophonie." Did I see "concern about the effects of the financial crisis on developing countries"? Yes!! Let's keep up those comments about concerns for developing countries. And then let's do more than be concerned, let's give them a voice in the reform.
  • What is the opportunity and what must be avoided: "“The crisis should be an opportunity, the opportunity to shake off old habits,” said Sarkozy, arguing for a new-style capitalism that is based on entrepreneurs and not speculators who brought “the world to the brink of the abyss.” As something that spans a large geographical region, la Francophonie has the duty to take its place on the chessboard of international politics and not let one country “impose its solutions on the world,” said the French president ..."" "Not let one country "impose its solutions on the world"" - music to my ears. This goes to the very heart of the failures of globalization - imposition of the will of any one country on others.
And, then I picked this nice piece up from AFP: Sarkozy pushes for Africa, South America on Security Council. We already know President Sarkozy understands the gravity of the problem, and the need for reform and the urgency attached to this situation. But, here's what shocked me:
  • "But, "how can we imagine solving the huge problems of the world when our Security Council does not have a permanent member from Africa ... or from South America," he [President Sarkozy] said." WOW! Now that's more like it!

So my response: "Mais oui!" Mais means but; oui means yes. However, placed together, "Mais oui" actually means "Of course!"

When we see the outcome of this weekend's Camp David Meeting, I think I may have a "Dear President" post to President Sarkozy. He is on a roll.

Thank you China! ......And please do, Canada

I just could not wait to post this article: News Analysis: Interests of developing countries need to be taken into account in new global financial system in ChinaView online. Is China talking about itself? No it's talking about developing countries in general.

Thank you China!

Since the developed world cannot ignore you, China, please do place these issues on the table.

Jamaica is a unique country in that it really has no enemies. Jamaica has more than allies; Jamaica has friends. And China is one of them. Jamaica's relationship with China is an exceptional, longstanding relationship based on respect and understanding:
  • China does not want Jamaica to be China. Jamaica does not want China to be Jamaica. China is China. Jamaica is Jamaica. Each country is respectful of the other country's right to have its own culture and beliefs.
  • Relative to the existing International Financial Institutions (the ones I keep lobbying for reform), China's terms and conditions for assistance are concessionary. China's terms and conditions have neither impoverished nor increased dependency
  • When developing or poor countries go to the US for aid - even for necessities- the US says that funds are limited because of budget cuts since wars have to be financed. Do the people in these countries that need aid go unaided? No, because China will ask those same countries, for example: "Do you still need water pipes to distribute the basic necessity of life - water - to your people? We will help"
  • When Jamaica has a need, China does not tell Jamaica "Do not need that". International Financial Institutions are happy to tell Jamaica and other developing countries what they should want or need. On the other hand, China will help Jamaica if it can. So, here's an example. Even though China does not play cricket, China financed and built a world class stadium in Jamaica at the Government's request so that Jamaica could meet its obligations in the Caribbean's agreement to host the World Cup of Cricket. Did you hear that part: China does not even play cricket. Cricket is important to Jamaica, and therefore China did not judge; China helped. It is not a small matter. How do you think the American or the British people would feel if they were told by banks they could not host the Olympics because they did not have the infrastructure and should not want it? You see, the banks would not even do that to them.
So, please do carry on the lobby for the developing world, China!

Some may ask, is China our only friend? No, we have lots. So, let me tell you about another very close friend - and that is Canada.

Today, thanks to canada.com, I read of President Sarkozy's praise of Canada in this piece: An interview with Nicolas Sarkozy. President Sarkozy said: "With its international leverage and new socio-economic model, at the crossroads of the European and American systems, Canada can make a vital contribution to the discussions on this financial situation."

Did you hear that Canada? We all knew Canada was important to this process. At least President Sarkozy has recognized that on his own. So, Canada, you have always been our friend in need; and a friend indeed. Now, please, once again, be a friend in DEED and remember your fellow Commonwealth countries, especially the developing ones.

Thursday, October 16, 2008

New MUST be better for ALL

Aptly described "Out of the Ashes" given the "fire", "fire", "fire" that was called by the US officials that set off the global panic, Prime Minister Gordon Brown has written a nice piece in the Washington Post (online tonight for publication tomorrow). As someone who just last night pleaded for him to keep pleading the case for a "new financial architecture", I commend the Prime Minister on his pleas.

But, I am even more convinced that I have to redouble my lobbying because the silence remains deafening about what will happen to developing countries.

The Prime Minister writes: "The global problems we face require global solutions. At the end of World War II, American and European visionaries built a new international economic order and formed the International Monetary Fund, the World Bank and a world trade body. They acted because they knew that peace and prosperity were indivisible. They knew that for prosperity to be sustained, it had to be shared." Good intentions, perhaps. Achieved? Definitely not. Long before the crisis was felt in the developed world, the developing world cried tears and blood about the imperfections of these institutions. Respectfully, visionaries from other countries need to be in this reform dialogue.

The Prime Minister writes: "Today, the same sort of visionary internationalism is needed to resolve the crises and challenges of a different age. And the greatest of global challenges demands of us the boldest of global cooperation." Agreed, but if the Prime Minister is serious about the reality of the crises and challenges, and the necessity of global cooperation, then we have to try NEW "visionary internationalism" . The "same sort" will not do.

The Prime Minister writes: "There are no Britain-only or Europe-only or America-only solutions to today's problems. We are all in this together, and we can only resolve this crisis together." Agreed. Does that "we" include the developing world? Because it MUST.

I look forward to the Prime Minister's next article, interview, statement and/or press conference. And remain hopeful that somewhere sometime very soon he will at least include some reference to how the needs and views of the developing countries of his fellow Commonwealth states that are developing countries would be included in this reform process. Because that would not only be a significant start, it would mark the difference between the beginning of the creation of "a new financial architecture" and that of a stronger, more stable, more equitable and more sustainable global financial and economic system.
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Reasoning The Reasons by Deika Morrison is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.