Category government

Oct 6 2013

#2013Shutdown’s effect on Business and the Future of America…

Professor David Victor, Ph.D.

Professor David Victor, Ph.D.

One of my former (and future, no doubt!) professors from Eastern Michigan University, Dr. David Victor, posted this morning about a possible future oil boom for Iceland, noting that a recent survey and discovery shows Iceland sits on a *LOT* of the possible undiscovered oil reserves in the world, estimates place it at 13%.  With the thawing of the northern ice cap, and the North Atlantic Current keeping ice from marring up the major ports of the island nation, all of these things could conspire to bring a well-needed boon to it’s economy.

However, another follower on Facebook of Dr. Victor, the Chair of CitrinGroup, also threw in his two cents, stating that while the Chinese are courting and betting on future oil producers, such as Iceland, the United States, already suffering an anemic economy, is wasting it’s time on policy matters that in the grand scheme of things, don’t really matter.  I tend to agree.

The United States’ economy is JUST starting to  gain traction, while sitting fairly stationery and spinning it’s wheels, begging to move forward since the crisis began in the Subprime Mortgage market in 2007.  We’re finally starting to see forward momentum beyond the familiar numbers of “0.04% gains.”  People are beginning to feel confident in the economic system again.

However, when people see the Government itself can’t get it together and pay it’s OWN bills, that’s when people begin to hold onto their OWN money, going “What if I find myself right back in 2008 again?”  I admit, I found myself thinking twice when I made a relatively small purchase this morning, because the well-being of MY household budget is determined by the fiscal health of the Federal Government.

When recessions and slumps hit the nation, the Government is there to provide relief, to buffer the blow with benefits, stimulus and other some-such capital, by pumping money into the system.  However, if that money is cut off too soon, the economy can slump again.  Bad news breeds bad feelings.  Bad feelings breed either a binge on spending, or a lack of spending, more often, the latter.  When people stop spending, the economy grinds to a screeching halt — as we saw starting with the credit freezes of 2008.  While one can argue the merits of policy on both sides of the aisle, the latest budgetary and policy debate is doing nothing but killing consumer confidence, and indeed, making foreign markets question the stability of the American economy.

While Obamacare is certainly an expensive program, so was the F-35 Fighter — which estimates have the cancelled fighter costing as much as a trillion dollars — a number often attributed to the cost of Obamacare.  Oddly enough, I haven’t heard it mentioned once by Republicans on the Hill, even though it is now essentially a great waste of capital and expenditures.

Who’s right?  Who knows.  One thing I do know is — #2013Shutdown can be a death knell for the fragile traction the American economy took years to get.

Related articles
Oct 1 2013

A Government Shutdown… what it means, and why you should care…

download“Due to the failure of Congress to enact appropriations for fiscal year 2014, Office of Management and Budget Director Sylvia Mathews Burwell tonight directed agencies to execute their plans for an orderly shutdown of the Federal government.”

Continue reading →

Aug 30 2013

China signals Lunar Landing within Decade…

“…we were done with the moon, ANYWAY — STUPID MOON!”
  — Jon Stewart

In a spot from The Daily Show four years ago, Jon Stewart pokes fun at the fact that India found water on the Moon, that the United States missed in the last forty years of exploration.  “Billions of gallons of it.”

Jon Stewart: “…I didn’t know NASA had a base in India!”
Aasif Mandvi: “THEY DON’T!  This is the Indian Space Research Organization!”

Parody aside, the latest space news is that the People’s Republic of China, the rising super-power directly challenging the United States’ unchallenged military presence on, above or AROUND the world, is now setting it’s sights on a lunar landing.

Launching its own [uninhabited] test space station, designated Tiangong 1 (Heavenly Palace 1) in 2011, the Tiangong Space Program is China’s attempt to place a large, modular space station in orbit by the beginning of the next decade.  From here, Chinese cosmonauts can conduct their own research and development, as well as support it’s own lunar program, free from the stranglehold the United States and it’s allies has had on Space for the last half-century.

China may be coming to space-faring late, compared to the United States, Russia and India, however, let’s look at the current setups: The United States has a minimal space program, with NO current flight ability of it’s own.  Astronauts/Cosmonauts from the United States require the use of launch vehicles and equipment from the Russian Federation (and to a limited point, at this time, private companies such as SpaceX) to reach, resupply or restaff its interests aboard the International Space Station.   Indeed, another sign of the times is the massive cut NASA took from the President’s pen, through Congress, in appropriations.  The Space Shuttle was retired.  The successor to the Space Shuttle, the Apollo-inspired Project Constellation, was cancelled, leaving the United States military and government’s ability to reach out to the stars in limbo for the foreseeable future.

Indeed, this was echoed by NASA Administrator Charles Bolden.  “NASA is not going to the Moon with a human as a primary project probably in my lifetime,” he stated.

However, he continued: “…and the reason is, we can only do so many things,”

While he didn’t specifically elaborate, it’s possible that NASA’s future plans could lie elsewhere — specifically, landings on asteroids, or even Mars, in relatively short order.

While the cancellation of the Constellation Project puts a American landing on Mars anytime soon in question, as Orion was designed with the intention of being capable of travelling to both the Moon AND to Mars, will American innovation and the memories of the Space Race of the 1960s embolden American spirit in an even broader space race?

Related articles
Aug 17 2013

The Banking System isn’t getting better — it’s getting worse.

Having worked in finance for over half a decade, and now having been involved in high finance now nearly a decade, I’ve been exposed to now only the internal workings of how credit and finance works from the inside, but I’ve studied it extensively as a matter of interest, and I see a problem developing — some if it we all know about, the other parts, not so much.

While our individual finances are improving overall, I see a big problem developing with the same system that brought it down in 2007 — unregulated banking.

In the United States, from the 1700s to the early 1900s, there was banking crash roughly every 15 years.  With the institution of strong regulation, particularly after the Stock Market Crash of 1929, the United States entered a golden age of banking.

How can this be?  With over 100 years of 15 year booms and busts, why did it all of a sudden stabilize?  Regulation.  With strong, effective regulation, bank busts came to a halt.  Not a SINGLE widespread bank bust occurred for over FIFTY years in America.

While a majority of this process took place in the 80s and 90s, the arguable beginning was the Nixon Shock; a term attributed to the end of the Bretton Woods system in the United States, when Nixon unilaterally wrote off the US Dollar’s ability to be converted into Gold; the United States Dollar became a free-floating value currency, which caused the US Dollar to become a reserve currency in many nations of the world — massively increasing it’s value.  In the 1980s, this trend continued: deregulation became the buzz word.  With more risks, banks could make more money with the same hard cash in it’s accounts.

restore-glass-steagallThe most hardcore change, in my opinion came during the Clinton administration, when Congress approved the repeal of the Glass-Steagall Act of 1933, repealed by the Gramm-Leach-Bliley Act of 1999, signed by Bill Clinton in November of that year.  This VERY important piece of legislation turned banking regulation on it’s head: Glass-Steagall was an instrument that separated Main Street banks from Wall Street banks.  In english, this means regular depositor banks (such as Bank of America, or Huntington Bank or Chase Bank) could play the stock market and make investments with depositor money that it otherwise barred from doing under the 1930s legislation, just like Investment banks and corporations can and do.

Seen as a vestige of post-Crash and pre-/post-World War II stabilizing legislation, it was, at the time, seen as unnecessary.  However, when deregulation began picking up steam in the 1980s, things happened in short order:

– The 1980s and 1990s Savings & Loan Crises: Savings and Loan thrifts were given many of the same powers as banks under deregulation legislation signed by President Carter in 1980; without the same regulations banks were subject to.  With the massive take-off of real estate lending, (outstanding mortgage debt was $700 Billion-ish in 1970, and nearly doubled to $1.2 Trillion in 1980), S&L’s took massive risks by lending out more money than they should have, on top of rising interest rates caused many institutions to fail.  This was failure to such a degree the United States had never seen.

– Repeal of Glass-Steagall Act: With the S&L failures still fresh on the minds of financiers and politicians, many argued further deregulation was required to avert such a disaster in the future.  Congress passed Gramm-Leach-Bliley and it was signed by President Clinton at the twilight of his Administration.  By the end of the next Administration (G. W. Bush), only EIGHT years later. the United States was reeling from the worst banking and credit crisis it had seen since the dawn of the 20th century, and it was spreading throughout the world.  The FDIC began publishing lists of bank failures every Friday, conducting raids on banks it or the State controllers deemed in danger of failing, or already had, legally — and, for the first time in history, the FDIC, the Federal Depositors Insurance Corporation’s funds went NEGATIVE from insuring lost depositor money.

All of these took place within 25 years of the beginning of banking deregulation in the United States — AFTER an over 50-year golden era for banking in the United States where bank failure was almost unheard of, to the point where bank failures and bank runs were becoming regular weekly news events on Friday nights.

Even more disturbing, the largest four banking institutions in the United States, the four largest banks (Bank of America, Citigroup, JPMorganChase and Wells Fargo) are now THIRTY percent LARGER than they were in 2007!

How can the next banking crisis be softened, if not stopped?

– Reconstitute a Bretton Woods-like system for the American economy: peg it with something convertible to stabilize the possible future crash of the US Dollar.  This would, in general, lower the value of the dollar, however, the dollar would be safe from a crash, or other cataclysmic disaster brought on by a perceived lack of confidence in the American financial system, which is all that currently “holds up” the American economy and the value of the US Dollar.

– Reinstitute a Glass-Steagall Law.  Banks shouldn’t be allowed to gamble with depositor money.  When banks buy futures or invest in trusts or mutual funds with depositor money, it’s the same as taking it down to the Casino and betting on a three-of-a-kind.  In fact, I’d be willing to bet on a CASINO win, over futures and stocks, at the moment.

Related articles
Aug 15 2013

Gag Order includes your Defense?

Courtesy drivebyplanet.com

Courtesy drivebyplanet.com

Ladar Levison started the email service Lavabit ten years ago; taking a significant amount of his adult life building his business.  While it’s understandable some in the government could be concerned over the use of non-government interceptable communications (is that even a phrase?) being used by terrorists or other people bent on causing whatever, this fact isn’t what disturbs me.

What deeply disturbs me, is he was forced to close, then under a gag order of the United States Government, isn’t allowed to discuss it at all — not even with his LAWYER.

Has it come to such a point where the United States will use legal scare-tactics to not only shut down threatening interests, but even deny those people (when they, themselves, have done nothing wrong) the right to not only defend themselves against it, but silence them?

I get that Lavabit was seen as a threat by the US Government, I’m not denying that.  Stuff like that CAN a threat.  It’s that they went after the owner, who has business interests in keeping people’s private information PRIVATE, and they essentially scared him into silence to such a point, he can’t even legally consult his lawyer.

Deeply disturbing.

Related articles
Aug 6 2013

This Day in History: 1945: Hiroshima Nuclear Strike

Today marks the 68th anniversary of the United States’ attack on Hiroshima with the nuclear weapon dubbed “Little Boy.” This, along with the strike of “Fat Man” over Nagasaki three days later are the only two uses of Nuclear weapons to date, and catalyzed the end of the War in the Pacific.

The Emperor Showa (a wartime photograph).

The Emperor Showa

Following the signing of the Potsdam Declaration by the United States, the United Kingdom and the Republic of China which called for the surrender of the Empire of Japan on 26 July 1945, the Empire refused the order by the allies and vowed to continue forward.

A few days later, the first bomb was dropped — on Hiroshima. The equivalent of 50,000 pounds of TNT blasted above the city, killing over 100,000. Three days later, with the Japanese licking their figurative wounds from the first strike, the United States Air Force dropped the next weapon on Nagasaki, killing an estimated 50,000.

With further strikes of the weapons of mass destruction possible, including the fact that the Imperial Japanese Navy now devastated to such a point it was unable to function effectively as well as plans to initiate Operation: DOWNFALL, an allied-planned and manned invasion of Japan, AND now a declaration of war by the Soviet Union, the Emperor of Japan, Hirohito (now Showa) ordered the immediate surrender of the Imperial Japanese Forces and unconditionally accepted the terms of the allied forces in the Potsdam Declaration, bringing the War in the Pacific and World War II to an end.

Signing the Instrument of Surrender on behalf of the Emperor was the Foreign Minister Mamoru Shigemitsu, aboard the USS Missouri in Tokyo Bay.

Japanese Foreign Minister Mamoru Shigemitsu si...

Japanese Foreign Minister Mamoru Shigemitsu signs the Instrument of Surrender on behalf of the Japanese Government, on board USS Missouri (BB-63), 2 September 1945.

Afterward, the United States Military Occupation of Japan, which took effect immediately, lasted until 1952. The level of military devastation to the Japanese islands weren’t completely apparent until after the fighting stopped. Devastated infrastructure made caring for the Japanese nation very difficult, but was rebuilt by the efforts of the Occupation and the strong will of their new Japanese friends.

Today, the day is celebrated in Japan as a remembrance to those who died at Hiroshima, and to the valiant efforts to everyone, not just Japanese, who gave their lives to the battles that brought an end to World War on the planet.

In an age where just a few small weapons can destroy the world dozens of times over, those weapons brought about calls for global peace and calls for cooperation never before seen, so their usage would never again be necessary.

Related articles
Aug 5 2013

Zardari leaves Pakistan with a legacy…

English: Asif Ali Zardari.

Pakistani President Asif Ali Zardari.

In the last week, Pakistan has held it’s Presidential elections in which PML (N) nominee Mamnoon Hussain won in a landslide 432 to 77 against Pakistan Movement for Justice party nominee Wajihuddin Ahmed.

Why is the election of Hussain such a big deal?  Political handoffs take place all the time.

This is the first, in Pakistani history, that a democratic change, by the will of the people has come.  For Pakistan, a nation nearly a century old, this is it’s first true democratically willed exchange of power.

Pakistan itself was conceived in 1930 by a proclamation by British Indian politician Sir Muhammad Iqbal, the nation itself formed in 1940 as a sovereign state for Muslims that was originally part of British-controlled India.  Since then, it has been fraught with political problems and disaster that left many wondering if Pakistan would ever become democratically governed.

Pakistan received official independence on 14 August, 1947 from British India, becoming a British controlled dominion under control of King George V of the United Kingdom, under the title of “Emperor of India.”  He later renounced this role and styled himself as the “King of Pakistan,” a title passed to his daughter, the incumbent Queen Elizabeth II of the United Kingdom, who styled herself as the Queen of Pakistan.

In 1956, a revolution created and installed an Islamic Parliamentary Republic, which was supposed to be civilian run, but in the process, a military coup took over the revolution and installed the army’s commander-in-chief, Ayub Khan, as the ruler of Pakistan.

Pervez Musharraf

Former Chief Executive and President General Pervez Musharraf

In 1970, free elections were held, heralded as a transition from a military junta to a democratically elected civilian government, but the sitting military government refused to hand power to the elected successor.  Internal fighting in the nation sparked an independence movement which led to a secession of east Pakistan into the nation now known as Bangladesh.

Power was handed to a civilian government which didn’t last long, and Pakistan soon found itself under martial law again with the coup led by army General Zia-ul-Haq.  Zia, who died in a plane crash 1988, was succeeded by Pakistan’s first female Prime MInister, Benazir Bhutto, followed by Nawaz Sharif after a scandal which cost her her seat.  During Sharif’s time in office, Pakistan’s military nuclear weapons testing led to destabilization and the Kargill War of 1999, in which point Army Chief of Staff General Pervez Musharraf assumed power in a bloodless coup.

Ruling as both civilian and military leader of Pakistan, he executed his duties often under one title, as a civilian or commander in chief independently, theoretically, while being the same person.  He resigned from his Army post amid massive protests for elections, but continued on as President of Pakistan until the return of Benazir Bhutto in 2007, returning from a self-imposed exile to see that Musharraf’s dictatorship was unseated.  Assassinated in the twilight hours of 2007, Musharraf heeded calls for an election, which saw him replaced with Bhutto’s husband, Asif Ali Zardari.

President Zardari took the helm of Pakistan during some of it’s most trying times –and became a friend of the United States in the war on terror, which was extremely unpopular amongst voters in Pakistan, particularly since the capture and killing of Osama Bin Laden, which took place in an initially secret strike in Abottabad.

Which leads to today.  For the first time in it’s history, a democratically elected government of Pakistan is set to hand authority and power over to a new democratically elected government.  This is history in the making, particularly for a newer, nuclear-powered nation.  What can the future hold for a stable, and flourishing Pakistan?

Related articles
Jul 26 2013

Halliburton Pleads Guilty to Destroying Evidence in Deepwater Horizon Explosion

Halliburton is expected to plead guilty to the destruction of evidence related to the explosion and sinking of the Deepwater Horizon oil rig in 2010.

The agreement, made with the United States Department of Justice includes paying the maximum fine of $200,000 — and has indeed, already made a $55 million contribution to the National Fish and Wildlife Foundation.

Indeed, the United States has agreed not to pursue further criminal prosecution in exchange for further cooperation in the ongoing  criminal investigation.

Government regulation has once again triumphed.  Halliburton has admitted that it destroyed results of simulations involved cement blocking the blown oil well — the results showing the cementing was unstable and would not work.  Hiding these results, it went ahead with the attempt anyway, which acted as a contractor to the United States Government.  Was this done strictly so it could make the attempt and collect the money — regardless of what happens; and damn the rest?

In an era where people are calling for less government regulation overall — this goes to show that government oversight of business, particularly in government contractors, is a good thing.  Halliburton lied to the people of the United States, then proceeded to go forth with a project that they knew probably wouldn’t work, knowing the results of the simulations — trampling and dishonoring the lives of those who were not only lost, but to the families of those who lost their loved ones, livelihood and those who worked tirelessly to restore habitats and our sea.

Related articles
Detroit Skyline. Courtesy of Mike Boening www.memoriesbymike.zenfolio.com
Jul 19 2013

Detroit Bankruptcy… Why is this such a big deal? I will tell you…

Yesterday, at 4:07PM, on approval from Governor Rick Snyder, Detroit Emergency Manager Kevyn Orr ordered the City of Detroit to file for Chapter 9 bankruptcy protection under Title XI of the USC.  Sure.  Other cities have done this before — and people and businesses do it every day, but what’s the big deal?

The big deal is simple: Detroit is the largest municipality in history to declare itself insolvent.  This not only is going to be a major rule-writing moment in American legal history, but also has the potential to do as much harm as it does good over the long term.

The long term positives are fairly simple: Detroit, if successful, will be relieved of most of it’s obligations, and many of the others will be repaid at drastically reduced amounts, as ordered by a federal bankruptcy judge.  This will allow Detroit to begin paying its bills — without borrowing to do so, as it has for the past decade.  This is a good thing.

Detroit Mayor Dave Bing, Detroit Emergency Manager Kevyn Orr, Michigan Governor Rick Snyder

Detroit Mayor Dave Bing, Detroit Emergency Manager Kevyn Orr, Michigan Governor Rick Snyder

The bad news is what gets cut.  The Emergency Manager of Detroit made it clear that his priorities were people first, then creditors — meaning he wanted to protect pay, pensions and benefits for workers and retirees of the City of Detroit as much as he could.  He made this abundantly clear; but stated it was not off the table.  Creditors and contractors would be the next priority.  Creditors didn’t take kindly to this, and indeed, made THAT also clear.

Before all this can happen though, the filing sets in motion several things: the first is immediate relief from creditors.  As of the moment the bankruptcy was filed, for the moment, creditors lost all rights to any money for the time being.  This can, if the Judge allows, give Detroit enough relief to pay what’s necessary to keep it running: it’s employees, contractors and even things like the light bills.  What’s next, and likely beginning to happen today, is the investigation by the court of wether or not Detroit CAN qualify for a Title XI bankruptcy.  Just because one files doesn’t mean one qualifies.  This sets into motion a massive audit of EVERY creditor of every DOLLAR owed BY the City — likely including employees as well.  Next, creditors to the city have a right to appeal, and will likely use the excuse that the City/Emergency Manager negotiated in bad faith, just to hold the process up — as it’s their legal right to do so.  Assuming the City is found to be eligible, the Judge then decides what gets the axe, what gets paid, and who gets paid in what amounts; as likely, those who do get paid (speaking in the terms of creditors and contracts) will likely get paid only a portion, if not a FRACTION, of what they’re owed.

Because this move essentially lays waste to Detroit’s already junk-level bond and credit, the move also will not at all inspire confidence in businesses in Detroit, particularly those who DO business with Detroit.  My major fear is large employers will wind up packing up, and saying “So long, Detroit — it was a nice ride, we wish you the best of luck.”  Not only is this further revenue from taxes and spending lost, just one or two larges businesses to do so could inspire other businesses OR people to flee as well.  A CLEAR vote of no-confidence by the business sector if it were to happen.

Make no mistake, we’re witnessing history — the municipal equivalent of Lehman Brothers is happening as we  speak; which will write books and rules on how to accomplish such a bankruptcy in the future.

I see a Title XI as a mixed blessing for Detroit.  The good — DEFINITELY comes with the bad here.

“We have a great city, but a city going down hill for the last 60 years,” he said at an evening press conference. He said 38% of the city’s budget is being spent on “legacy costs,” such as pensions and debt service. He said police take almost an hour to respond to calls, compared to a national average of 11 minutes, and that 40% of street lights in the city are turned off.  That’s unacceptable,”
    — Kevyn Orr
    Emergency Manager, City of Detroit

Detroit city skyline shot courtesy of Mike Boening
www.memoriesbymike.zenfolio.com

Related articles
Jul 17 2013

If North Korea and Cuba have been trading arms…

North Korean Missiles aboard the DPRK Ship Chong Chon Gang. (Courtesy of Yahoo)

North Korean Missiles aboard the DPRK Ship Chong Chon Gang. (Courtesy of Yahoo)

…could this lead to a new Cuban Missile Crisis?

Panama found a North Korean vessel with several missiles (stated to be “outdated”) in its hold bound from Cuba back to the Juche-state that is banned from importing almost any type of weapon by sanction.

The Cuban government, in a televised statement, stated they were headed to North Korea for “repair” and return back to the communist state.

Let’s leave the “repair” aspect of this alone — and assume for a moment, that that’s true.  This means that North Korea and Cuba could very  well have been doing this for awhile, freely — with nobody’s knowledge.

Imagine another Cuban Missile Crisis, with arms once again aimed at the United States by a nation less than 100 miles away from the US Coastline.  Except this time, the arms and the figurative “button” are now in the hands of authoritarian North Korea — and a government hell-bent on proving a point to it’s people that it can, indeed “rain holy fire” down on the nation that the Juche and Songun state has made out to be it’s blood-enemy.

chong-chon-gang

DPRK Ship Chong Chon Gang

Could this be a flue warning sign of something that could come in the future?  Could this have also blown open a cover of how North Korea’s been getting stuff?

Related articles