A Winter of Discontent - My Christmas List

While we decorate the Christmas tree or light the Menorah those of us that remain in our homes can be thankful we have this recession survived thus far. Unless you work for Goldman Sachs there is little to be optimistic about. Millions remain out of work with little chance of ever finding work. This year's college graduates can look forward to coming home to their parents house - if they still have one. Something fundamental has to change.

Our politicians have their solutions, a new health care program followed by enacting cap and trade legislation that will increase energy costs for everyone. In this surreal atmosphere we are lectured by Chinese finance ministers that point out that there is no way the world can continue to keep buying US government debt to keep Washington and the USA a going concern.

The political class is much more relaxed and confident that the economy has stabilized and starting a slow and steady recovery. In reality it seems much more like 1937 when in the midst of the Great Depression the economy once again went off a cliff. This double dip had several causes.

First, the growing uncertainty in business and elsewhere about where the government was headed caused business leaders to sit on the sidelines and not invest or grow their business. Washington was giving business leaders lectures and prodding to do their bidding and these business leaders wanted to stay out of harm's way until the dust settled. In one memorable exchange between Eleanor Roosevelt and FDR, the President asked why business leaders failed to make new investments and seemed to lack confidence in the economy. Eleanor's retort: "Because they fear you".

Today business leaders are afraid about a lot of things. How much will it cost to provide health care to its workers under the new plan? What will energy costs be under this new cap and trade plan. Lobbyists will certainly be involved in how the carbon credits are allocated to special favorites. What will be the impact on those less favored by the politicians. Then there is fear of the ballooning government debts. Are interest rates going to spike to pay for all this government activity? Seems safer to just wait it out.

The other big millstone around FDR's neck was caused by his own pride and joy, the brand new Social Security system. The new SS taxes had come to pass and 2% of the wage income was sucked into it but benefits were not yet being paid out. This took 1% of the wages of each employee and 1% from the - well still from the same employee. You can weigh the benefits of Social Security all you want but that was not a propitious moment to enact such legislation.

Today, we are being led to believe that all these people will suddenly be insured and that government by fiat will declare costs to be reduced. How they can make these claims with a straight face, I do not know. The new cap and trade deal will certainly suck more money out of everybody. Meanwhile we are being asked to fund other countries attempts to lessen their greenhouse gas emissions.

It sounds like we are in store for another downward roller coaster ride.

With the air of gloom and doom around us all I want to make out my Christmas wish list.

1. I wish our elected politicians had a clue about economics, finance and human nature. I wish they were not a bunch of narcissistic, windbags who only care to further their own interests and not those of the American people.
2. I wish our President would demonstrate some leadership and less talk while not handing over the task of crafting policies and legislation to hoards of K-street lobbyists and a Congressional leadership that deserves to be committed to a loony farm.
3. I wish our companies were competitive again and could start to hire workers. Even if the we may never attain wage parity with country like China, the unique feature of the American system punishes them by making them primarily responsible for health insurance driving up the costs of their products and encouraging them to move jobs overseas. Our high corporate tax should be recognized for what it is, a job destroyer that also encourages moving operations overseas.
4. I wish the stranglehold the teacher's unions have over education could be broken. That pay for performance and other incentives would attract and hold a better quality of teacher that this current system which rewards nothing but seniority and in fact discourages more qualified people from joining it.
5. I wish the unions would recognize that they are part of team and that the companies they work for can and will go out of business if they are not successful. That providing rewards solely based on seniority is not fair to younger workers, the companies they work nor for the United States. I wish they understood that feather bedding, working slow and hindering output is a sure road to oblivion.
6. I wish corporate executives were not mainly interested in their bonuses and perks and more interested in developing new products and services that people would want to buy. I wish they understood that while off shoring American labor and American technology to China has the allure of raking in immediate profits, in the long term their country and their children will be impoverished by handing over our crown jewels to a foreign country that is intent on shoving America down the stairs.
7. I wish the American people themselves were more interested in the major issues of the day not the trivialities we see in the popular media. I wish they were more intelligent and not as easily lead or distracted by scheming politicians and other charlatans.
   

I guess its time for a good stiff drink for I doubt any of this will come about any time soon.

False Prophets - Krugman 2012

2009 - With the real economy resting firmly on the bottom of the ocean, 10% plus unemployment, non-government jobs a fantasy to behold the reality dawns that we are still stuck in the muck of recession and we are not getting out any time soon - no matter what the stock market does. Into this maelstrom come the prophets with their prescriptions for revival, with the easy solutions for our salvation - just spend more money. With the private sector stressed out, households up to their eyeballs in debt, small business on the ropes and everyone in fear of losing their job these soothsayers suggest the easy way out of our difficulties is for government to borrow more and more and spend more and more and thereby make up for the lack of private sector spending.

Since the economic debacle these neo-Keynesians have returned to center stage and their "high priest" is Paul Krugman a Nobel Prize winner and familiar figure on the Sunday morning talk shows that few Americans bother to watch. To Krugman Obama's stimulus plan was "wrong" because it was dramatically smaller than what was needed to revive the economy. These people believe that government bureaucrats have the expertise and knowledge to run an economy the size of the United States indicating a startling amount of hubris not unlike that exhibited by former President George Bush in the early days of his administration. Yet when you start to examine where the first stimulus went, it was mostly squandered or merely absorbed by local governments. It is no surprise that Washington DC is enjoying boom times.

Krugman believes that since the United States held similar levels of debt at the end of WWII we can certainly handle taking on much more debt now. It must be remembered that, in 1945 the United States possessed about 45% of world manufacturing output, had the most skilled work forces in the word, was self-sufficient in many raw materials and was the creditor for most of the world - much of which lay in ruins. Today, with the United States propped up with over $3 billion a day in foreign lending to support our spendthrift government, indebted to foreigners for trillions of dollars, dependent on foreigners for much of our energy and vital resources including our intellectual capacity and "American know-how" these people remain convinced that we have the capacity to surmount any obstacle.

George Bush and his cronies viewed the world the through WWII shaded glasses also, expecting the Iraqi's to come out and greet us like Paris in 1944 and to ride on with god's blessings to lead the world, never expecting that fundamentally things have changed. The neo-Keynesians are no better, expecting something inherent in the spirit of the American people to lead us out of our difficulty despite all indicators pointing to long term secular decline under a ruinous debt burden.

The big fly in Krugman's thinking is that the great expansion in the government debts must be met every few weeks with another round of Treasury bond auctions as old debt must be recycled and new ones piled on. Buyers for these instruments are becoming harder to find, especially with the Chinese losing their appetite for the American debt and fearing for the safety for their assets that are already denominated in US dollars.

During Obama's recent trip to China, this point was driven home as he was queried at length about his plans for expanding health care in the US and how that would be paid for. The humiliations for this government and its spendthrift people are only going to get worse as attempts are made to borrow more and more. Currently, deficits are expected to remain above $1 Trillion a year as far as the eye can see.

The government is already on a well worn path to ruin. Krugman and his Keynesian friends offer the solution as dramatically spending and borrowing more money. Perhaps, they can inflate yet another bubble and we can all ride this one out for all its worth. In reality we are nearly total bankruptcy and can look forward to a much reduced lifestyle in the future for both us and our children.

This sorry future has befallen many a great empire and it only wishful thinking to think that we Americans are exceptional and can somehow avoid it. I have turned my eye towards Rome and Britain in my former posts. I have taken my old Paul Kennedy book "The Rise and Fall of the Great Powers" down from its shelf and marveled at how the Spanish and the French serially ruined themselves.

Recently I have read several articles by Niall Ferguson who also approaches this from a historical perspective and also who also draws the many of the same conclusions as I do. I much enjoyed his recent lambasting of Krugman and his plans for spending our way out of the recession. Yes, Krugman must be hopping mad at the last Newsweek piece (here is the link: Empire at Risk ). Krugman can be a prickly character.

One minor flaw with Ferguson's last article is that while he points out that the USA will inevitably be forced to scale back its military commitments, it will probably have to scale back its other vital services as well - including any new health care initiative.

Oh, well I'll bet Krugman would answer "No sweat, we'll borrow more money". Where will Paul be in 2012?

Polish View of Obama's Plans, Yet Another Sellout

Many view the Obama's cancellation of the missile defense shield in the Czech Republic and in Poland with a sense of relief. The Russians have been huffing and puffing and making all sorts of threats to take countermeasures. So in his abrupt reversal Obama is certainly going please a lot of people,especially those with jelly knees. Unfortunately he has given a great many leaders in Eastern Europe another sense of deja vous. Once gain the great powers have made decisions about Poland without her consent despite solemn promises made in the past. The USA the country that much of the world depends on for their own security has cut and run - again.

Poland has been around this block before having been carved up among the Prussians, Russians, Germans and the Austrians on many occasions going back to 1772. Barely a week before the start of WWII the Nazis and the Soviets inked the infamous Ribbentrop-Molotov nonaggression pact. Under its secret protocols Poland would be crushed yet again. After WWII Poland was rendered a Russian vassal state.

The significance of the missile defense shield was insignificant compared to it's symbolic importance. Russian nuclear forces would overwhelm this puny defense system rendering it tactically useless. It did however represent the US commitment to Poland and to Eastern Europe in general. With the Russian bear again acting it's own brutal self interest in its recent attack on the Republic of Georgia and other actions around the periphery of former vassal states, the Poles are right to be worried.

What Russia seeks in fighting against the missile shield is to scale back the presence of the United States in the countries around their periphery, countries they deem to be in their strategic sphere of interest, and by right in their sphere of domination. It does not matter what anyone living in those countries has to say about it. Free from American meddling the Russians can freely use intimidation and blackmail to get their way just like they could in the past. Freezing natural gas supplies is new tool Putin has used against the Ukrainians, but I suppose that is better than the tanks used against Georgia.


This abrupt U-turn is another sign of the declining power of the United States. The United States is ever more dependent on other powers for just about everything, including the basic funding of its day to day operations. The American juggernaut is too expensive to maintain and hence we must seek accommodation wherever possible. As American power continues to wane, other countries can be expected to fill the breech. Russia is only too happy to be one of them, even if its economy is a kleptocratic oligarchy funded and made powerful with its oil wealth.

As Lech Walesa said:"American has always cared only about its own interests, and those of others only serve the US. Now we have another example of this, he said. I can see what kind of policy the Obama administration is pursuing towards this part of Europe. We should reconsider our approach to the United States".

With time as American power continues to evaporate we may find the allies discarded along the way were something we should have held on to instead of giving them up.

Please Don't Feed Me to the Bears

Donna Munson set out to help the friendly bears around her remote home in Colorado. Feeding them and taking care of them she probably felt they would appreciate her kindness. Unfortunately, bears are wild animals and her generosity proved fatal when a 400 pound Black Bear killed and started to consume her.

Unlike humans, animals lacking our cerebral cortex have simpler means of thinking about things. Mostly there is little thinking at all. Feed an animal, it associates you with food. This is true for your Beta Fish in your aquarium or for a powerful predator like these bears.

Mrs Munson's actions, certainly proved dangerous to herself, they also pose a menace for anyone that might come across one of her hungry bears. Last week, I was hiking in Norther NJ, by myself and I was told to be on the lookout for another 400 pound bear that was seen nearby. Armed only with my telephoto lens off I went, hoping for a shot at long distance. Normally, black bears are shy and will retreat when humans are around. Their sharp noses and our noisy habits usually give away our presence long before we get to spot them. However, if someone like Mrs Munson was around making them used to humans giving them food, this bear may have sought me out, attacked me and ripped out my liver and ate it.

Mrs Munson's actions have also been a disaster for her bears. Two of them have now been shot dead.

It seems wherever humans go they have this innate need to feed wild animals whatever the repercussions. Many of these people seem to believe these animals are like the ones seen in Disney pictures and need our help. In Monterey California I have seen them feeding prairie dogs whole twizzlers. Can an animal that small survive after eating a twizzler? In NJ we have dozens of people trekking up to the local parks to feed deer, geese and wild turkeys. Since NJ has a large bear problem, hopefully there no Mrs Munson's around feeding them.

Here is an example of the activity around a 200 acre park in NJ where every day dozens of people trek up to feed the wildlife. This wildlife has exploded with unexpected repercussions for the park and the other animals that inhabit it.



Every day or so a bread truck dumps hundred of pounds of bread to feed the deer. This has helped the population in this small park to balloon to over 200 deer. This number is unsustainable and is sustained by people feeding them and by the deer foraging in people's backyards destroying their shrubs and plants.



As you can see above, the park itself is rather strange, no vegetation exists below four feet of the ground. In fact deer have eliminated the habitat for birds, toads, frogs, salamanders and many other creatures. The wild flowers and orchids that formerly existed on the forest floor have all been eaten. Where are the wild blueberries?

All this concentrated feeding has invited another menace - disease. Normally, deer don't feed at communal feeding troughs, swapping spit and assorted viruses and bacteria. Out west hunters bait stations have helped the deer version of Mad Cow disease to propagate. With no predators, these deer are only limited by the cars that hit them on the road, which is almost a daily occurrence.

Idiots that feed wild animals need to stopped, whether by being lectured or fined. No, these are not Bambi and Yogi bear - they are wild animals and should be treated as such. And, most importantly, lacking any predators to control the population a well devised hunt is necessary to cull the herds to sustainable levels.

And, please don't feed me to the bears.

Bibi's Final Blunder, a One State Solution

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Israel is back on the settlement bandwagon and intent on laying claim to all the historic lands of Israel. With American money bankrolling the Jewish state, that of course makes us complicit in whatever they do. Obama has been attempting to curtail these settlements, while the administration of Bibi Netanyahu is trying to go full speed ahead. With that it is interesting to make the note of the history of this region of the world since before Obama took office.

A huge political earthquake shook the land of Israel in 2005 when the old war horse Ariel Sharon, broke with the Likud party to form a new centralist party called Kadima. Unlike Likud this new party was formed in attempt to disengage from Palestinian territory, remove settlements and pursue a two-state solution. That this policy was pursued by Arik Sharon, a man not known for strategic retreats was pursuing this path is quite remarkable.

Sharon's career goes back to the war of Independence. During the '56 Suez offensive where he led the Paratroopers that attempted to capture Mitla pass, far in advance of Israeli forcing and bottling up Egyptian forces in Sinai. Exceeding orders he precipitated a battle inside the pass that resulted in high casualties which stymied his career for a period of time. Taking part of all the big Arab-Israeli wars Sharon's character was fully on display in the '73 Yom Kippur War where he lead a tank division in the Sinai where his actions were both bold and reckless. Twice the Chief of Staff recommended Sharon be replaced only to be overruled by Defense Minister Dayan.

After initially being caught unaware, the Israeli forces were pushed back into the Sinai before the front stabilized and a counterattack was planned via a corridor that was pushed westward to the Suez canal. Sharon, ever the swashbuckling type wanted to float his tanks to the Egyptian side of the canal, before bridging operations could be completed, before a supply line could be established and before the large Egyptian counterattack had been thwarted. If Sharon had gone into Egypt without a clear supply line he could have met the fate of Rommel in his "dash to the wire" at El Alamein where he ran out of gas. Israel could not afford the loss of one of its top armored divisions. Yet, Sharon was bridled enough to wait for the proper moment. Israeli forces invaded Egypt and surrounded and doomed the Egyptian 3rd Army before a cease fire was imposed by American intervention.

The Pattonesque quality in Sharon is readily apparent, and in later years this was carried forward as Prime Minister and also as minister of housing where he was an avid builder of settlements. These settlers were induced with cheap housing, day care and other inducements; many effectively paid for with aid money from the USA.

The plan was to lure Jews from the USA, Europe and other places to settle here and win the battle of demography and squeeze the Palestinians into every decreasing pockets where they could be controlled. With the Intifada and the incessant fighting these Jews never materialized. Instead the Palestinians were the ones being fruitful and multiplying. Instead the Palestinians with time on their side, would eventually transform Israel into a majority Palestinian state. The long-term outlook for a Jewish State appeared pretty grim.

Sharon's actions of unilateral withdrawal from Gaza and removal of settlements was fought by Likud and it's leader Bibi Netanyahu. The old general's finally coming to realize the larger strategic dimension to the conflict and choosing a strategic withdrawal to defensible lines was a real watershed. Unfortunately, he soon suffered a stroke and left the picture. His successor Olmert never had the prestige to advance much further before he was finally felled in a corruption scandal.

The seizure of power by Hamas and the Gaza rocket attacks weakened the new Kidima party and with the election of Obama, Israel passed back into the hands of the Likud under Bibi. Unlike the Bush administration, Obama did not want to give Israel carte blanch. Our relations with a billion Muslims had to be considered and not be subservient the desires a few million Jews. Many of these Israeli Jews in fact want accomodation and final peace with the Palistians.

If the Obama administration has been cursed with the realization that after 8 years of George Bush and the Israeli lobby giving Likud policies the seal of approval, Bibi is now stuck with the Obama administration not wanting to become a Likud lap dog.

Obama and in fact George Bush have for a time thwarted Bibi's desire to bomb Iran and ignite the whole mid-east in flames. This self defeating plan will result in many more American body bags coming out of Iraq and Afghanistan, sky high oil prices and a host of other evils. From Bibi's perspective it would enhance Israeli-US relationships since those with the Arab would tank leaving Israel still in position as our best friend in the middle east.

Meanwhile, with attention diverted to Iran, Israeli settlers are about to put the final coup de grace to a two-state solution, the plan to expand the Israeli settles to the east of Jerusalem and encircle the Arab areas with new Jewish settlements.

The lynch pin of this effort is the settlement known as E-1 just to the west of Ma' ale Adumim, which is the subject of the Goggle imagery in this article. Just to the west we see a system of roads and roundabouts all going nowhere. Once complete this new complex will thwart any effort to establish a contiguous Palestinian state.

A few hours of Goggle Map "flyovers" of Palestinian and Israeli settlements, followed by looking up photographs of these areas will leave the viewer with an indeligible impression on what is happening here. Palestinians are being forced into ghettos while virtual resort communities with horse stables, pools and other amenities are in walled off sections, exclusively the providence of these settlers.

Once Bibi and Likud's master plan is complete, what is left? The long hard slog will continue for decades and eventually become a Civil Rights struggle for Palestinians's rights. Over time how can the "Jewish State" remain a Jewish State if a large number of its people are non-Jews, marginalized and imprisoned in their isolated communities? Is this where the Israeli public wants to go?

Looking down the road Bibi may yet become the most successful jihadist of all time, the man that took down the Jewish State.

The United States as Banana Republic

With GM deal almost in the bag, the Obama administration flushed what was left of the capitalistic system down the toilet, all to curry favor his favored constituents - the UAW. In the last proposal in a drastic re-definition of the rules of normal bankruptcy proceedings the bondholders will a receive a pittance, 10% of the company while the UAW will receive $10 Billion in cash and 39% of the company. I guess this is a bargain since the union at Chrysler may receive 55% of the company. Being a "secured creditor" now has little distinction since long established rules of law and of contract can be changed at a moments notice, just like they are in Hugo Chavez's Venezuela. No wonder Hugo is applauding Obama's socialist tendencies.

Of course these bondholders are in actually our pension and 401K funds, already bruised and battered by the economic collapse. The UAW, the number one prime reason that GM, Chrysler and Ford are facing liquidation (see earlier posts) will be rewarded with significant stakes in the company which will lessen the chances the company will indeed fix itself up. Instead they will suckle the teat of government.

Going forward what fool would lend money to company where the government can, at a whim the change the rules of the contract and leave you holding nothing but empty promises. Apparently, a lot of rules are on the chopping block nowadays. Instead of investing its much safer to just buy bold bars and hide them in the basement. Unfortunately, this is not likely to stimulate any economic activity.

In a capitalistic system the key ingredient to prosperity is confidence. In an environment where there is no confidence there is no investment and business activity languishes. In 1937 Franklin Roosevelt found out the hard way after repeated attacks on business had made many businessmen fearful that their assets would be confiscated or taxed into oblivion. In one of the darker moments Franklin asked to Eleanor why businessmen were not investing and growing the economy out of the depression. Eleanor's response: "Because they fear you".

Our first Treasury Secretary Alexander Hamilton fought for the rules of contract to be enforced, the rules of law to be followed, for securities to be freely transferrable and the government to act in a fiscally responsible manner. These were hard fought battles, but they resulted in the country that became and economic superpower.

Today, Obama may think that by helping his union supporters and ripping up the underpinning of our financial system he is doing the "right thing". Overturning long established principles for political purposes is something more likely to happen in a banana republic or a third world dictatorship. Once the trust and confidence of the business community is gone, they will not be easy to recreate. Foreign lenders like the Chinese understand that they too may be on the receiving end of this arbitrary behavior and are determined not to fall victim to it. Domestic lenders, which are needed to invest in GM and Chrysler if they are to get off the government life support will be fearful to invest since they see the current set of bondholders being screwed to help the union.

Instead it appears that faith in bonds and contracts will soon be as valuable as our faith in government - as valuable as a stack of Polish War Bonds.

Obama's Vietnam - GM!

As former Secretary of State Colin Powell said to George W Bush: "You break it, you own it".

The Obama's are certainly wowing them in Europe with Barack reminding everyone of John F Kennedy, while Michelle performs a masterful performance as Jackie. The style and commanding presence of the new President are a welcome change from the late Bumbler in Chief George W. The Europeans are eating it all up.

Turning to substance things are not so rosy. The Europeans do not want to mire themselves more firmly into Afghanistan, despite Obama urging them to do so. There is great fear in the administration that Afghanistan could become Obama's Vietnam and derail his economic plans just like Vietnam did to Johnson's.

Yet, Obama may have already have blundered into his own Vietnam and that is GM not Afghanistan. The unprecedented firing of the GM CEO Rich Wagoner by the President of the United States certainly puts the Obama in the driver' seat at GM.

This episode reminds me of another JFK moment, when the US green lighted the coup d'etat against Vietnamese President Ngo Dinh Diem and in effect became the masters of Vietnam. As Ho Chi Minh put it: "I can scarcely believe the Americans would be so stupid."

From that point forward the Americans would search in vain for a nation leader for Vietnam and instead wound up with a series of puppet Presidents with no support in the country at large. We broke it, we owned it.

Turning to GM, the main problem is that the unions have contracted overly generous benefits to both current workers and retirees that are not sustainable with the shrunken size of the company. To provide for retirees GM must ship 900,000 cars a year! The math does not work out.

The sorry truth is the company must be radically reorganized which means less jobs and benefits especially for union members. A rational set of work rules and incentives to work, innovate and make cars cheaper and of higher quality would also be a good idea.

This task is now to befall the political process where the party in charge is intimately associated with union interests. Where will this political courage come from? If Obama tries to scale back the union, which certainly must be done, he will run afoul of major elements of his party. If conditions continue and the government keeps the company on life support, the rotting husk will be Obama's. If the whole thing collapses, it is Obama's.

Before the President was calling the shots, he had the necessary smoke screen to let what needs to be done, be done. Now that Congress has the knowledge that it can dictate to the company, where will this end?

Perhaps we will witness the spectacle of the merry go round GM CEOS and more and more cash infusions. In Vietnam at one point they had to ask around the table: "Would anyone like to be Prime Minister". No takers here! Would anyone want to be CEO of GM while its being run from Washington?

The Employer Free Choice Act - Not to hire

Once again we are being treated to another propaganda campaign on behalf of organized labor, spinning television commercials about the wonderfully named "Employee Free Choice Act". The prospects are good for this foolhardy measure with Democrats eager to please their union supporters even if the net effect is to strangle what's left of the American economy. Senator Tom Harken plans to introduce the measure in Congress next week.

Frequently, the naming of bill is enough to give you a feel about what it's really about. During the Bush years we had the Patriot Act, another wonderfully named bill that authorized plenty of things of dubious Constitutionality. Vote against it, you must not be a patriot. Vote against the Employee Free Choice Act you are against Employees being free.

I worked for 16 years in a UAW organized defense plant as an engineer I had close working relations with the union for much of my early adult life. This place now sits idle awaiting the wrecking ball. All the union jobs have been moved, outsourced and lost. One of the biggest millstone around the company and our attempts to win government contracts was always the UAW.

Instead of being free, being a less than senior worker in a union shop is a fact another form of bondage, limiting an employees prospects for advancement and betterment and leaving him the sole recourse of toughing it out until he has sufficient seniority to be untouchable. Younger workers in a union shop cannot do much to better their condition since pay and other perks are based solely on seniority, which always benefit the older union die hards. When the layoffs come, these younger employees are first fired.

When I compare a union workplace with bondage, I meant no hyperbole. Intellectual vigor and energy are discouraged and sloth and waste are both encouraged and rewarded. Doing things faster, better or cheaper result in less time and a half or double time overtime. With union rules requiring that OT be available equally to all the union workers, everyone is responsible for sloth and working slow to guarantee additional income for all union members. This descended down to prototype, demo work and things that were meant to win new work to keep the existing employees employed or to hire new people. This was not a concern for the union, whose leaders were all long serving and thought themselves untouchable. Younger or less senior people are considered expendable.

The most sad experience I have witnessed working alongside the UAW happened in the engineering prototype lab. This was a small lab, not intended for production purposes, but it still had a fairly large stockroom where parts were stored and kitted out for assembly as parts came in. A porter from another plant heard of the job opening, applied for the spot and was accepted. He was a black man, not very learned and had been with the company for a mere 15 years. This stock room had in fact a small computer terminal in it and our enterprising new stock clerk got the idea that he wanted to learn to use one. He came out with the idea of making a database of all the items in the stockroom that he could manage inventory from the computer. At first, all went along well. He was learning about software. He was prompt, could be readily found (unlike the earlier guy who was always on break) was cheerful and helpful to all.

In most work environments this would be rewarded. Here it counts for naught. Another porter who had more seniority heard about the job position and was able to "bump" this guy from the job and send him back to hauling boxes. This new guy saw the position as an ideal place to sleep during the day. He also had the disadvantage of not being able to read, and so after prodding he would present a box to an engineer on the floor and have him read it to him.

Even a senior union guy could run afoul of the union mentality i.e. work slow get more overtime pay, don't work hard or innovate. We had another old union worker, Sydney who was an old WWII navy man and he believed in working. Despite poor eyesight he worked on detailed wire wrapped panels doing work five times as fast with no errors. Catcalls, garbage thrown at him while he was staring through his thick glasses were the reward. Notably at lunch he came upstairs for the engineering supervisor's card game leaving his union co-workers downstairs.

Since engineers were essentially forbidden to handle any tools, any work had to be done by a union guy. Most of them were determined to work as slow as possible and make mistakes to force more paid overtime work. This was taken to an absurd level. Once they attempted to have calculators deemed to be test equipment so an engineer would need coverage to use one! There was a similar attempted with CRT terminals. In the end we could not get stuff out the door and compete with companies down in Texas, Georgia and other places - far from the union label. We lost contracts, our BAFFOS were not good enough. Eventually, the work was outsourced to PA and then Florida to non-union sites. Later it went to contract houses or even India. Now its a vacant site, a dream. The union has been shut down.

Currently, the UAW has forced the company to agree to desist from forever reopening any form of manufacturing plant within 100 miles of the site, without reactivating the union. This means that **my former company** will never open any manufacturing facility in the state of NJ, for all eternity.

With all the competition from workers in China and India and other places that are eager to work and determined to improve their condition, are unions the solution to our problems or the final nail in our coffin?

The Banking Crisis - Mission Accomplished

The FDR one hundred day playbook remains in operation as Obama shifts the big guns to a new target - health care. As if the banking crisis and the economy imploding where not enough, the guns are being moved off the mark before the target has been achieved. That target, our economic survival and our future should be the focus right now. Instead we will embark on a new voyage with no clear means to pay for it. If the playbook is to be followed we will see a slam dunk health care package rammed through and then onward to energy policy.

While all these things are all worthy of attention, the battle at hand is not "Mission Accomplished". Far from it. The shifting of guns analogy reminds me of a famous WWII naval battle between the pocket battleship, the Admiral Graf von Spee and the a British battle group of three cruisers. The German captain kept switching his guns between the Exeter and the other two ships which were closing in on him. Every time he thought he finished off the Exeter, he would target the other ships only to change his mind and switch back, wasting time. In the end he made smoke and escaped only to be forced to scuttle his ship a few days later.

Obama has shifted the guns away from the imploding banks on to things he would rather accomplish in his first hundred days. Mission Accomplished! Soon we will no doubt be treated to a surreal debate about how to pump more money into our bloated health care system to fund more free benefits. While millions are losing their jobs and about to have their belongings dumped on the front yard of their foreclosed homes, we will listen intently the merits of single payer or multi-payer health care systems. Many of these people may have to visit an electronics store to watch the debate on a TV that is actually plugging into a wall and not sitting out in the rain.

It is an interesting fact that current health care disaster is another unintended consequence of past government action; action by none other than Franklin D Roosevelt. During WWII they imposed strict wage and price controls so that companies that were in need of labor had to find an incentive to attract them that did not similarly attract government attention. They chose to offer health benefits, the result of which is after over half a century our companies are no longer competitive with foreign ones because they have to shoulder these height costs plus our higher corporate taxes while foreign companies do not. The democrats have never liked Team Business USA, they prefer employees to the people that would actually give them jobs.

Government is unlikely to find a solution the health care problem. Instead the plan is to hike taxes on the rich to pay for these new benefits. Since they still don't have enough money, I guess Hillary will be dispatched back to China to again beg the Chinese to buy more Tresury Bills and ignore their own suffering population. The additional shifting of taxes will most likely impede recovery, just as FDR's then new social security payroll tax doomed the economy in 1937 when the government raised taxes 2% wiping out a modest recovery and returning the country the worst depths of the depression.

I had enough of George Bush walking away from unfinished business and leading us to an even bigger problems. Switching from fighting the terrorists in Afghanistan into taking our Saddam was clearly a bait and switch. Now, Obama hopes to achieve a bait and switch tri-fecta, first huge new spending on pet projects, then health care and then energy policy. Where will he get the energy? Where we he get the money? The next time Hillary lands in Beijing the Chinese Prime Minister should make sure he is somewhere else - a world away. Our kids could only be so lucky.

Requiem for a Failure - the George Bush Presidency

George W Bush has left quite a legacy for the new President and for the nation he leaves behind. A curious blend of arrogance and stupidity have marked out this administration for singular contempt. What few successes it has had, in Africa for example are dwarfed by fiascoes on every major field of endeavor. The Republican party - formerly the party of hard headed business interests and practicality has been turned into a minor religious fringe party that resembles more the know-nothings of the 1850s. The United States is even more in dire financial trouble than ever before, in hock to the Chinese and other powers and dependent for just about everything except agricultural products. This marks one more way station on the way to oblivion for the United States. How did it all happen?

The initial military victory in Afghanistan apparently went to the heads of the leaders of the self-styled hyper power who felt that they had no need for world opinion or for that matter any form of political accommodation with the rest of the world. While the Bush administration's adventure into Iraq have siphoned off relatively few lives and a great deal of American treasure, the diversion of the nations attention to the barren fields of Mesopotamia instead of the greater need of concentrating on its core economic problems is by far the larger problem. Instead the focus has been on causalities in Iraq, the reconstruction in Iraq, the insurgency in Iraq, the elections in Iraq, the new government in Iraq, etc. etc. Meanwhile, the other countries of the world have been moving forward, at breakneck speed - particularly in Asia.

Historically, George W is not the first westerner to run aground on the sands of Mesopotamia. Fittingly, Bush joins the ancient Romans by following closely the footsteps of Crassus and Emperor Julian into the barren wastes of Mesopotamia and to their eventual doom. Barren since the destruction of the irrigation systems by Tamerlane, the desert sands of Iraq do hold a substantial aquifer of petroleum and with it the promise of a cheap victory, paid for at no expense to ourselves by using the oil revenues. Anticipating things would follow along the lines of the first Gulf War which was paid at the Saudis expense, this painless vision of warfare with low casualties and small costs was the model they followed. The allure of a cheap victory followed by the vision of adoring crowds of 1944 Paris certainly helped motivate the Bush people to their doom. George W joined a renowned list of suckers going back to Roman times.

The first sucker was Crassus, who lead his legions into Mesopotamia, trusting his Iraqi guides that led him to the middle of the desert, where he was surrounded by enemy forces. Soon afterwards his severed head was held up high on a pike. The Emperor Julian was next to follow the same sorry path when he trusted in an Iraqi deserter the intelligence that he should quit his own strongly fortified base of operations and move out into the countryside in expectation that the population would come out to support him. Unfortunately, once his base of operations was gone so were his prospects. Soon his legions were in retreat and his death soon followed.

George Bush followed a similar path, trusting Ahmed Chalabi and his visions of easy victory into the hell hole of Iraq. In time, perhaps Iraq may become a strong democracy in the middle east and afford the supporters of the intervention some comfort. However, weighed against the costs in a time of declining American influence and strength this adventure has certainly cost the United States a great deal of time and treasure when the country is running out of both. The action in Iraq has also had the unfortunate outcome of empowering Iran and other forces that are hostile to US interests. In effect the USA got the blood sweat and tears only for Iran to reap the rewards.

At least the Emperor Julian reined in wasteful spending in a desperate attempt to save the empire, throwing out the hangers on and the other leaches that were sucking the empire dry. George Bush merely encouraged them to take more and more. The mantra of "deficits do not matter" took hold as the country was being propped up for foreign creditors to the tune of $2 billion a day.

The economic collapse that reveled itself in the autumn of 2008 can not be laid purely on Bush's incompetency as the Democrats would like. Secular forces have been at work for years (see earlier posts) that have converted the United States from a self sufficient nation to one dependant on others and on the dole of foreigners. Years of reliance on foreign credit with no ready means to repay except the blood sweat and tears of our children has been the hallmark of the United States for last twenty years.

Once the economic collapse was made painfully obvious to him, Bush at least had the sense to finally throw his ideology to the wind as it became clear that as he was in line to become the next Herbert Hoover. The massive injections of liquidity followed by his Treasury secretary, Hank Paulson were the opposite of the liquidate, liquidate, liquidate method followed by Secretary Mellon in the 30s. This brought some stability to the system but at the cost of adding to the ruinous debt and allowing the Democrats to throw all financial prudence to the wind and embark on a massive Keynesian economic stimulus. The Democrats can claim to be merely following the Republican example.

This type of stimulus has been tried before like in Japan in the 90s or the USA in the 70s. It did not work well in either situation. At present these new debts will find willing buyers as everyone has fled equities and bonds and is satisfied to merely hold US Treasury Bills to preserve capital. In effect we are in a Treasury bubble.

Later as the rest of the world recovers, these flows will reverse and the trick will be keep finding buyers to turn over more and more debt as it matures. With the Chinese, Saudis and everyone else anxious to find alternatives to US debt and the shaky future prospects for the dollar the situation is parlous indeed. Inevitably the demand for Treasuries will wane and they will have to attract new buyers by offering higher interest rates. Higher rates will depress the US economy for years to come. As a last resort the government will have no choice to resort to the printing press to inflate its way out of its debts. This ultra-stealthy tax on all money balances will be the final ruin of investors that have already trusted their future to their 401Ks and other investments.

Inevitably Bush will get tarred for all these things as the Democrats and their allies in academia and the media attempt to foist the whole mess on him, while ignoring their own complicity. Two hundred years of the Roman "debasement of the currency" has been accomplished in under 60 years of the Pax Americana and the abuse of the public credit. Alas, for that we can blame only ourselves.