The Chinese announced that they are allowing their currency to be adjusted against the dollar. In part they are taking this step in advance of the G20 Summit to avoid being isolated from the other nations in attendance and thereby being pressured to yield to international pressure. But the Chinese are still rigidly controlling the ‘floating’ of the yuan within narrow limits that perpetuate the de facto pegging of the yuan to the dollar. So the question I have is: why do the leading world economies wait for a trading ‘partner’ to participate with them in a free-trade, level playing field, open markets system?
If I recall and understood correctly a principle of Milton Friedman’s economic theory or principles it was that if someone wanted to sell you something for less then it cost you to produce yourself or particularly if for less than it actually costs to produce that you should take advantage of their offer. Now the currency exchange problem is that if the US or any country keeps buying more and more from China and selling them less and less is that China will eventually hold an excessively large quantities of dollars (or other currency) which could render the value of that currency vulnerable to manipulation by China. This is part of the problem that the US has today, with the large trade imbalance with China.
So it would seem that what the G20 really needs is a way to deal with the yuan being controlled independent of the global markets and with passively permitting the Chinese to gain increasingly large leverage against their respective currencies. What then prevents these economic leaders for taking some pro-active policy or approach, although by now it would seem it would have to be considered re-active, that would limit their vulnerabilities from a non-cooperative global partner? The most likely answer is either being innovative enough to actually conceiving of one, or not having the “will” required of true leaders to face the responsibilities that they owe to their individual countries and to the global community as a whole.
And as the self-thought leader of the free world, what does America bring to the table? I really don’t know.
Tuesday, June 22, 2010
Thursday, June 10, 2010
Three Things Congress Can’t Do
We all know that there are many things that Congress can’t do. However, there are things that they can do, ought to do, and were elected to do; but it appears that the residents of the House and Senate are ill-prepared, ill-advised and ill-suited to do their jobs. Among their many inadequacies our Congressional leaders lack are the intellectual prowess to confront the issues of the day, lack the Yankee spirit & fortitude to persevere in tackling our country’s problems, and lack the American integrity for fulfilling their responsibility to their countrymen.
Congress shows no talent or ability in three areas where they should be able to step up to the challenge, and where they ought to be actively engaged in creating the legislative and policy directions to craft an American future that will be sufficiently strong to fulfill its fundamental promises and obligations to its citizens. And unfortunately for us, these areas have one vitally important consequence for us: Congress takes our money to subsidize the budget to cover for their deficiencies.
First, Congress continues to create programs that require increasing governmental spending. Now if these programs produced corresponding benefits to the country and/or growth in the private sector that outweighed the costs, then the costs might make sense. But they are not; most programs are fraught with mismanagement, waste & fraud. And it’s not that these Congressional stalwarts are unaware of the abuse of the budget, they are usually neck deep in the morass. The indications can be observed in obvious and visible ear-marks peppered throughout the mire of their bills.
Second, our members of Congress are addicted or subservient to numerous special interests that urge, prod and coerce them into forging bad laws and bad policy. The results of their pandering to their special interest masters is that the public is provided with the opportunity to fund not only their special friends but we get to pay for the interest on the monies that we likely borrowed to fund it. Now isn’t that special!
Third, Congress refuses to recognize or admit to the one problem that supersedes all other problems combined. They will do nothing to address the Public-debt, a mere $13 trillion dollar problem. To put this in prospective, think the USA’s GDP for this year. Essentially we owe as much as we produce in a year. And to make things more impressive, Congress lets us pick up for the tab on having borrowed the money to pay for this excess. Now don’t go off and think that this is a Democrat problem just because they are in office, the Republicans are as aggressive a set of co-conspirators as you will ever meet.
Be they Democrats, be they Republicans, or be they the uber-wealthy new political candidate of your dreams; if they do not step up to the real problems for our country then you have just elected another politician who is telling you what you want to hear and who is the champion of your most sacred single issue. Of course, your most sacred single issue is one of the reasons that the country is in the sad sorry state that it is. The persons you want to serve you in Congress need to be people who can tell you why you need to do those hard and difficult things that we are all going to have to sacrifice to achieve.
Congress shows no talent or ability in three areas where they should be able to step up to the challenge, and where they ought to be actively engaged in creating the legislative and policy directions to craft an American future that will be sufficiently strong to fulfill its fundamental promises and obligations to its citizens. And unfortunately for us, these areas have one vitally important consequence for us: Congress takes our money to subsidize the budget to cover for their deficiencies.
First, Congress continues to create programs that require increasing governmental spending. Now if these programs produced corresponding benefits to the country and/or growth in the private sector that outweighed the costs, then the costs might make sense. But they are not; most programs are fraught with mismanagement, waste & fraud. And it’s not that these Congressional stalwarts are unaware of the abuse of the budget, they are usually neck deep in the morass. The indications can be observed in obvious and visible ear-marks peppered throughout the mire of their bills.
Second, our members of Congress are addicted or subservient to numerous special interests that urge, prod and coerce them into forging bad laws and bad policy. The results of their pandering to their special interest masters is that the public is provided with the opportunity to fund not only their special friends but we get to pay for the interest on the monies that we likely borrowed to fund it. Now isn’t that special!
Third, Congress refuses to recognize or admit to the one problem that supersedes all other problems combined. They will do nothing to address the Public-debt, a mere $13 trillion dollar problem. To put this in prospective, think the USA’s GDP for this year. Essentially we owe as much as we produce in a year. And to make things more impressive, Congress lets us pick up for the tab on having borrowed the money to pay for this excess. Now don’t go off and think that this is a Democrat problem just because they are in office, the Republicans are as aggressive a set of co-conspirators as you will ever meet.
Be they Democrats, be they Republicans, or be they the uber-wealthy new political candidate of your dreams; if they do not step up to the real problems for our country then you have just elected another politician who is telling you what you want to hear and who is the champion of your most sacred single issue. Of course, your most sacred single issue is one of the reasons that the country is in the sad sorry state that it is. The persons you want to serve you in Congress need to be people who can tell you why you need to do those hard and difficult things that we are all going to have to sacrifice to achieve.
Wednesday, June 2, 2010
Blockading Any Solution: Continuing the Israeli – Arab Impasse
The Israeli boarding of the latest Gaza destined flotilla this week, which has sparked the International outcry regarding the intolerable action on Israel’s part, will spur numerous proposals and plans for international action and sanctions against Israel. But will anyone seize the moment to use this event to set forth a new approach to making progress toward a path to resolving this decades long conflict? No.
The Israelis and Hamas-governed Gaza Palestinians are locked into their well-practiced and behaviorally conditioned stimulus-response mentality. They are not likely to find a solution as they are both doing the exact opposite of the old joke about “looking for their keys under the street-lamp because the light is better over here”. They are both looking for their solutions in the dark with blind-folds on and both hands tied behind their backs.
The international community is divided among countries that advocate the complete destruction of Israel, that support the right of a nation to protect itself by all means necessary (which oddly can apply to either party in this conflict), and those countries that counsel that only a diplomatic solution will be able to settle the dispute. The first two positions do nothing to resolve the conflict as they are the conflict; and the diplomacy approach has demonstrated its efficacy for this situation by essentially failing to do more than produce occasional and sporadic lulls in the conflict.
What then to do, how do you find a resolution to the Israel – Palestinian dispute?
An alternative to diplomacy, to sanctions, to threats or the continuation of madness might be contracts. A contracts approach could be used in smaller instances, on manageable issues and between any particular parties that can help play a role in breaking through the impasse brick by brick. The concept of using contracts to resolve the conflict may not be clear to some; but it offers a number of advantages, not the least of which it is an essential underpinning of any diplomatic approach that is chiefly espoused by most nations.
Other advantages of the contracts approach include allowing different parties to address their own interest-centric needs directly and specifically, it allows multiple issues to be dealt with simultaneously and without being contaminated by side issues or other groups, it allows for small steps to be made without being held hostage to negotiations on some unrelated or a currently unresolvable issue; and it requires each party to clearly define the conditions of the agreement.
It is this last part that makes the most difference. In addition to detailing the points of the contract agreement, the contract specifies the responsibilities, consequences and penalties that go into effect should the contract be broken. This advantage contains within it one of the motivating forces that helps invest the participating parties with self-interest in complying with the contract.
If you don’t think it would work, consider how a contract between Turkey and Israel might be able to deal with their current problem of the Gaza blockage versus the delivery of humanitarian aid. What would Israel require of Turkey to provide aid delivery and what consequences would Turkey be held to if they failed to fulfill the contractual terms and conditions? Likewise what would Turkey expect of Israel, if they did not allow for delivery of humanitarian aid under the terms and conditions of the contract?
Establish a contract on this issue, put it into effect and then there is one less brick in the wall. Keep weakening the wall brick-by-brick and eventually the impasse is broken.
The Israelis and Hamas-governed Gaza Palestinians are locked into their well-practiced and behaviorally conditioned stimulus-response mentality. They are not likely to find a solution as they are both doing the exact opposite of the old joke about “looking for their keys under the street-lamp because the light is better over here”. They are both looking for their solutions in the dark with blind-folds on and both hands tied behind their backs.
The international community is divided among countries that advocate the complete destruction of Israel, that support the right of a nation to protect itself by all means necessary (which oddly can apply to either party in this conflict), and those countries that counsel that only a diplomatic solution will be able to settle the dispute. The first two positions do nothing to resolve the conflict as they are the conflict; and the diplomacy approach has demonstrated its efficacy for this situation by essentially failing to do more than produce occasional and sporadic lulls in the conflict.
What then to do, how do you find a resolution to the Israel – Palestinian dispute?
An alternative to diplomacy, to sanctions, to threats or the continuation of madness might be contracts. A contracts approach could be used in smaller instances, on manageable issues and between any particular parties that can help play a role in breaking through the impasse brick by brick. The concept of using contracts to resolve the conflict may not be clear to some; but it offers a number of advantages, not the least of which it is an essential underpinning of any diplomatic approach that is chiefly espoused by most nations.
Other advantages of the contracts approach include allowing different parties to address their own interest-centric needs directly and specifically, it allows multiple issues to be dealt with simultaneously and without being contaminated by side issues or other groups, it allows for small steps to be made without being held hostage to negotiations on some unrelated or a currently unresolvable issue; and it requires each party to clearly define the conditions of the agreement.
It is this last part that makes the most difference. In addition to detailing the points of the contract agreement, the contract specifies the responsibilities, consequences and penalties that go into effect should the contract be broken. This advantage contains within it one of the motivating forces that helps invest the participating parties with self-interest in complying with the contract.
If you don’t think it would work, consider how a contract between Turkey and Israel might be able to deal with their current problem of the Gaza blockage versus the delivery of humanitarian aid. What would Israel require of Turkey to provide aid delivery and what consequences would Turkey be held to if they failed to fulfill the contractual terms and conditions? Likewise what would Turkey expect of Israel, if they did not allow for delivery of humanitarian aid under the terms and conditions of the contract?
Establish a contract on this issue, put it into effect and then there is one less brick in the wall. Keep weakening the wall brick-by-brick and eventually the impasse is broken.
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