Wednesday, March 31, 2010

Oil Exploration Approved


In a bit of an about-face, President Obama's administration is considering the expansion of offshore oil drilling:

As The New York Times reports:

Published: March 30, 2010 
WASHINGTON — The Obama administration is proposing to open vast expanses of water along the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska to oil and natural gas drilling, much of it for the first time, officials said Tuesday. 
The proposal — a compromise that will please oil companies and domestic drilling advocates but anger some residents of affected states and many environmental organizations — would end a longstanding moratorium on oil exploration along the East Coast from the northern tip of Delaware to the central coast of Florida, covering 167 million acres of ocean.
Under the plan, the coastline from New Jersey northward would remain closed to all oil and gas activity. So would the Pacific Coast, from Mexico to the Canadian border.
[Read more.... ]

This action seems to be in direct conflict with the President's avowed stance on energy:

Perhaps two pieces of reality are setting in:

  1. Climate issues are a distant 317th on voters' minds and the connection between climate and human-produced CO2 is tenuous, at best.
  2. It's the economy, stupid.
The real question is whether these newly-opened areas are truly feasible for oil and gas exploration or are they a diversion from the fact that more promising areas are being permanently restricted.



A Visit To The Library


A trip to the local library resulted in a couple of interesting pictures.

The HISTORY section had this interesting juxtaposition [click for larger view]:

Okay, it's a bit tough figuring it out from a picture.  The History section was filled with VHS tapes....

A trip to the library should result in some browsing and a book to take back home.  So I chose this one:

The back cover says:
The Predictioneer's Game teaches us that we can predict how a conflict may be resolved if we carefully consider the incentives for all parties in the conflict.  Using an extraordinary range of applications, from ancient history to tomorrow's headlines, Bruce Bueno de Mesquita demonstrates the power of the game-theoretic approach.
        -  Roger B. Myerson, Nobel Prize-winning economist and professor, University of Chicago
I'll be interested to see if it gives me new perspective or simply confuses this old mind.



Tuesday, March 30, 2010

For Al Fin Readers


The following material was referenced in Al Fin's blog, but only linked to a picture:

Understanding Medicare


The official Medicare site is expansive and fairly well organized... but it is intimidating and for many older Americans, it is beyond comprehension. Regardless, it is a good place to start and can greatly aid seniors getting started with the Medicare program.

But beyond that, there is the world of supplemental insurance. I would venture to say that most people approaching the Medicare-eligible age have little or no understanding of what the Medicare program entails. Most people assume that once they sign up they get health care coverage. Well, that is true; there is basic health care coverage provided by Medicare.

But be careful about using the term "provided." Medicare may be something for which you have paid taxes, but it is not free. It is deducted each month from your Social Security check. And it doesn't pay doctors much which is why many are reluctant to take only payments from Medicare for their services. That's where supplemental insurance comes in.

The two types of supplemental insurance are Medicare Advantage which covers most of what Medicare does not with low or zero deductibles, but may limit your coverage to a specific geography or health care network. The other is Medigap which is more like conventional Blue Cross insurance that can be used just about anywhere, but has more deductibles.

With Medicare Advantage, you generally get the full package including prescription coverage. With Medigap, you buy a separate prescription insurance package... and the medicines which are covered vary greatly from one insurance policy to the next. For example, Blue Cross Blue Shield of Michigan has a "formulary" that is roughly the size of a telephone book. Other companies may have a formulary that is the size of a People Magazine. So, while you may get a lower price on your insurance, you may not be covered for the medicine you need.

That is not to say that everyone needs the "Cadillac" plan. But the problem is that, as with any types of insurance, you are gambling that you don't need it ... and if you do with a low-cost plan, you may end up not being covered for some very expensive medicines.

So, what have you learned here.

  1. Medicare insurance is not free
  2. Medicare insurance is basic coverage that may not be sufficient
  3. Supplemental insurance comes in a variety of offerings under two categories: Medicare Advantage and Medigap
  4. Prescription coverage may or may not be included in the supplemental insurance
  5. Prescription coverage varies significantly
Now that you have mastered that, you are well on your way to understanding that a simple, easy-to-understand, one-stop source of health care coverage may be desirable... and wholly impractical for meeting the financial and care needs of a very diverse population.
As much as some people would like someone to make their decisions for them, for the vast majority of people, the quality of the outcomes are related to the effort of the input. Just as one vehicle model from one automobile manufacturer would simplify the marketplace, the outcome just might not be satisfactory for everyone.



Monday, March 29, 2010

Blue Cross Plans


Today I plan to attend a seminar on a new Blue Cross Blue Shield offering for Michigan. The situation in this state is a little unsettled with regard to this non-profit insurer because BCBS has been seeking considerable rate increase to cover not only the non-profit aspect of their business, but the real losses as well.

It ought to be interesting. Insurance coverage is every imaginable variety of fruit, so comparing apples to oranges is the easy part. I'm hoping to gain some insight about this offering and I'll be joined by several others who volunteer their time providing assistance to seniors in matters related to Medicare supplemental insurance.

I'll pass along anything that might be useful. For those of you who are 65 or older, you can see a site these volunteers have pulled together here. I'm certain there will be many changes appearing there over the course of this year as the health care legislation "features" are identified and understood... and the impact on seniors becomes more apparent.

The most likely impact on seniors over the next decade will be higher Medicare premiums along with higher supplemental insurance premiums [if available]. The recently passed "re-forming" health care legislation did little except add more entitlements to the system. It is time to take a serious look at the alternative proposed by Rep. Paul Ryan of Wisconsin.

He understands that having the government re-form health care is like having the Mafia re-form police departments. The government, as the Mafia, are simply organizations that channel useful funds away from the ordinary citizen.


BCBS did present materials about a new "Medicare Plus Blue PPO" and a new "MyBlue Medigap" along with some explanations about how they vary and how they treat such important considerations as coverage [must use network doctors versus any doctor] and deductibles [low to high]. It was quite useful, but I walked away with the thought that buying supplemental Medicare insurance was a lot like buying a new car:

  • narrow down the brands buy some objective or subjective parameters
  • narrow down the type of vehicle
  • narrow down the trim level and options
  • compare the bottom line price to the vehicle and features you want
  • figure out your finances
  • hope for the best
Our group stayed after the seminar was concluded to meet with a BCBSM representative and we are going to pursue a process whereby we will receive updates on all products and feedback on our website regarding the BCBSM information to ensure accuracy and currency.



Sunday, March 28, 2010

Waxman And Stupak Ask For Help With The Math


These CEOs would send their Chief Financial Officers to explain it to the deadheads, but it would just be a waste of effort.

AT&T, Deere CEOs Called by Waxman to Back Up Health-Bill Costs

March 27, 2010, 7:28 PM EDT

By Viola Gienger

March 27 (Bloomberg) -- Representative Henry Waxman called the chief executive officers of AT&T Inc., Verizon Communications Inc., Caterpillar Inc. and Deere & Co. to provide evidence to support costs the companies plan to book related to the new health-care law.

Waxman of California, chairman of the House Energy and Commerce Committee, and subcommittee Chairman Bart Stupak of Michigan released letters they wrote to the executives, saying their plans to record expenses against earnings as a result of the law contradict other estimates. The lawmakers requested the executives appear at hearing Stupak plans on April 21.

[Full story]

Come on you Dumbocrats. You got your legislation passed. So what's your big problem? Afraid the fiscal truth is coming out sooner than the Fall elections?

Businesses have to use generally accepted accounting rules in their accounting and earnings reporting. When a corporation fails to let stockholders know that there is a high risk to earnings... to disclose pertinent facts... the stockholders raise holy hell. The CEOs have more to fear from their stockholders and the SEC than the mental lightweights in Congress.
Tell Rep. Stupak that you will consider showing up next February... if there is still a Representative Stupak in Congress. I'd make the odds for that pretty small.
Oh, those jobs that are supposed to come as a result of the new health care legislation? Don't look for them in the corporate world. The money for those jobs just went into paying more taxes.



Saturday, March 27, 2010

Looking Inside The Health Care Bill


As Rep. Nancy Pelosi indicate, we can now find out what is inside the Health Care "re-form" legislation. As reports:

Obama's health care reform: VAT or Sinkhole?

By Shawn Tully, senior editor at large

(Fortune) -- In President Obama's 2011 budget, a kind of fiscal "cigarette warning" appears in a box on page 146 under a table displaying a future of big deficits and mounting debt. The Administration, the warning declares, is creating a "Fiscal Commission" to "achieve sustainability over the long-run."

With those bland words, the Administration is acknowledging that the immense weight of the national debt poses a dire threat to the economy, unless America takes radical action. Yet with the signing of the $931 billion healthcare overhaul, fixing future budget problems becomes far more difficult. The reform will immensely swell the amount of federal borrowing, even while the Administration touts the bill as a model of fiscal responsibility.

[Full story....]

Your are covered, you are covered, you are covered... now, hand over all your money and jewelry....



Friday, March 26, 2010

Ooops - Inflation


The financial markets are based on expectations. Stocks go up when the economy is bad if enough people believe that a recovery in profits is coming. So this tells, from The Wall Street Journal us that the financial markets are expecting bad things:

Subscription article.





Wow! This looks like a great scam to get personal information from doctors who are really gullible.

There is absolutely nothing about the organization that is trying to get doctors to provide their personal information. [click image for larger view].

The AMA should be warning doctors not to be sending this kind of information out to anonymous recipients. Of course, doctors should be smart enough to figure that out, but some might be pissed off enough to not think this through.

This is the Facebook link for the site. Again, no real information about the person[s] behind this.

Regardless, this is potentially an interstate scam that needs to be investigated by the FBI. Of course, that doesn't address the REAL PROBLEM.



Google Goes Radically Right


This was in Thursday's The Wall Street Journal:

The connection seemed obvious to me... and ironic. As the United States moves toward the European approach of government-controlled, economy-crippling social welfare, Sergey Brin, who co-founded Google, was willing to risk a large loss of revenue for his company to fight for the principle of freedom... freedom to do business without interference from a central government.

As The Wall Street Journal reported:

Does it take being born in a country with a strong central government to teach the lesson that freedom is important?

This is not to imply that he is politically aligned with the Tea Party... at least consciously... but it does show that when it gets personally and professionally important, he shares the principle that less government is better.

Read the article here.



Thursday, March 25, 2010

Crossing The Political Line


Strange bedfellows, indeed. Barack "Expand-the-war-in-Afghanistan" Obama and left-wing "dismantle-the-military" activists. Fiscal conservatives and religious conservatives.

That's the problem with having really only two party choices. You try to tie up a "best fit" and you get fit to be tied. There's not a lot of logic or reason to the combinations... other than an alignment of who you oppose.

In The Netherlands, you have many more political parties:

  • CDA - Christian Democrats
  • VVD - Liberal Party
  • PvdA - Labour Party
  • Groen Links - Green Socialistic
  • D66 - Democrats
  • LPF - Lijst Pim Fortuijn
  • CU - Christian Union
  • LN - Leefbaar Nederland
  • SGP - Reformed Political Party
  • Groep Wilders - Freedom Party
That makes getting anything done by the government quite difficult... and that is probably a very good thing.
My view is that the Founding Fathers got it pretty much right: the more the government is "hands off" the people, the better; the more religion is "hands off" the government, the better.
It would have worked better in Russia and China; it would have worked better in Iran and Afghanistan; it works better in the United States.

Idealism is what precedes experience; cynicism is what follows.
- David T. Wolf



Making Up The Constitution As Needed


Rep. John Conyers; Chairman of the House Judiciary Committee:

Committee on the Judiciary (Chair)

* Subcommittee on Commercial and Administrative Law
* Subcommittee on Courts, the Internet, and Intellectual Property
* Subcommittee on the Constitution, Civil Rights, and Civil Liberties

Now you have an idea of why some people [who are not ideologically invested in nationalization efforts] are so upset with their government.



Making The News


"Making the news" used to mean that some event was newsworthy enough to be broadcast or written about in the major media. Now it is more literally "making up the news."

In order to do so, you have to have a forced "confrontation" and a distortion of what happened during that situation. Then you have to have those in a position to spread the distortion actively do so.

Gateway Pundit has the ultimate example.



Fall Politics: Better Not Be Business As Usual


I was in the area, so I stopped in at Mike Cox's campaign headquarters. Mike [photo with family at right] is running for the Republican nomination for Michigan Governor. Because he is presently busy as Michigan's Attorney General, Mike was not at the HQ, but I did get to meet with his PR chairman, Nick DeLeeuw [photo at left from his Facebook page].

Nick showed me around the cavernous and empty offices, but it is obvious that they are planning to gear up fairly rapidly. Nick was active at for quite awhile and I had established a casual email relationship with him and Jack McHugh of the Mackinac Center for Public Policy. I met Jack for the first time a couple of weeks ago, so I took a chance that Nick might be hanging around the campaign offices.

Nick had sent out a link to Mike's 92-point plan for Michigan which I scanned. My reaction was that it reminded me of Obama's plan for everyone and everything on the presidential campaign website. I wanted to have a clear statement of Cox's goals, priorities and strategies before wading through the details. This could have come from Obama's website, but it didn't:

Today I am releasing the first steps on changing Michigan. The time for small changes and timid acts is past; we must make bold and revolutionary changes.
I understand perfectly that Mike's positions are quite different from President Obama's, but the point was that a lot of "things to do" around the theme of change just doesn't excite me like it should... for some odd reason. I want a businesslike approach ... something that Alan Mulally might do if he were running the state... not more slogans. That's not to say that the individual 92 points don't have merit. It is to say that if you are going to "make bold and revolutionary changes" you damn well better have a clear vision of what that is and where it is going to take you... something akin to Mulally's One Ford.

How about a One Michigan approach? That might be asking too much of any politician in this state. The residents probably are not ready for that much unity... red, blue, upper, lower. Fragmentation is the law of this political jungle with the promise of more favors to the winners.

I didn't grill him too hard, but said that I hope that the primary battle with Peter Hoekstra, whose district is centered around Muskegon and Ludington along the eastern Lake Michigan shores, would be gentlemanly. Don't blow up your bridges tossing grenades back and forth in the primary. Nick assured me that although the primary would be hotly contested, the real target is the Democratic party and both Mike and Pete know that. That's presuming that Pete will opt out of Congress for a chance at being Michigan's governor. The odds are quite high.

It ought to be an interesting battle. These are two heavyweights in Michigan, despite this being a big union state. There is a very strong possibility that whoever of these two wins the Republican primary will ultimately be Michigan's next governor. There simply isn't enough pork coming out of Washington to salvage the governor's office for the Democratic Party given the horrendous job the current governor has done and the general anger of the residents over the perceived sleazy dealings in Washington.

2010 is here... and



Wednesday, March 24, 2010

Happy Birthday Brad


Time flies... happy 27th!


Insurance Yes; Doctors Not So Much


You can't be tossed out by an insurance company for a pre-existing condition... but you can be tossed out by your doctor... ooops!

A Health Care Storm Is Coming

Marc Siegel, 03.23.10, 02:50 PM EDT

The reform bill will make doctors' jobs even harder.

Under Obamacare my networks for referring patients will dry up, as more and more doctors can no longer afford to accept the low-quality insurance that will spread like a plague. Even as this insurance expands to cover all patients, many doctors who don't quit will stop accepting this insurance.

What kind of universal health care is that?

Marc Siegel, M.D. is an associate professor of medicine and medical director of Doctor Radio at NYU Langone Medical Center and a Fox News medical contributor.

[Full story]



Vitamin D Irradiation Centers


Important feature of the new health care legislation:

DERMATOLOGISTS and plastic surgeons may find themselves off the hook. Last weekend, the Senate replaced a 5 percent tax on elective cosmetic procedures with one on indoor tanning services in its proposed health care bill... [full story]
Because we are such a health care oriented nation now, I suggest that anyone presently in the tanning salon business reclassify themselves as a "Vitamin D Irradiation Center" and figure out how they can get paid by the federal government for providing a preventive health care service rather than pay taxes for being a frivolous cosmetic enhancement center.

Where is a good lawyer when you need one? Or a Democratic Party representative?



Tuesday, March 23, 2010

Obama's Vision: Single Payer System


Much has already be written about President Obama's real long-range health care goal: a single-payer system.

Here is what The New York Times wrote in 2006 about a real single-payer system:
... Slow-Motion Public Health System Falters ....
Be careful what you wish for; you may get your wish.



Big Increases In Health Care Premiums Or Nothing


Sebelius pointed to provisions in the House- and Senate-passed health reform bills that would require insurers to spend 80-85 percent of premiums on medical claims.
Option 1: Insurance companies significantly raise rates so that they can still cover administrative costs... for some reason insurance companies cannot run on autopilot.

Option 2: Insurance companies no longer insure.

For those of you who cannot fathom the economics, continue to vote Democratic Party.



Opt Out?


Opt out or cop out?

The rationale for the [health care insurance] mandate is that it is necessary to carry out the other reforms of insurance that the public overwhelmingly approves -- in particular, ending pre-existing-condition exclusions by insurance companies. If legislation banned those exclusions without a mandate, healthy people would rationally refuse to buy coverage until they got sick, and the entire insurance system would break down. The mandate is designed to deter people from opportunistically dipping into the insurance funds when they are sick and refusing to contribute when they are healthy.

But Congress could address this problem more directly. The law could give people a right to opt out of the mandate if they signed a form agreeing that they could not opt in for the following five years. In other words, instead of paying a fine, they would forgo a potential benefit. For five years they would become ineligible for federal subsidies for health insurance and, if they did buy coverage, no insurer would have to cover a pre-existing condition of theirs.

The idea for this opt-out comes from an analogous provision in Germany, which has a small sector of private insurance in addition to a much larger state insurance system. Only some Germans are eligible to opt for private insurance, but if they make that choice, the law prevents them from getting back at will into the public system. That deters opportunistic switches in and out of the public funds, and it helps to prevent the private insurers from cherry-picking healthy people and driving up insurance costs in the public sector.

In the United States, an opt-out would not apply to anyone whose income was close enough to the poverty level to qualify for Medicaid. It would be available on a new income-tax form on which people with incomes above that threshold could choose between paying a fine for failing to insure or taking the five-year opt-out. (Taking the opt-out would not affect eligibility for veterans' health care, Medicare, emergency care, or any program entirely funded by a state or out of charitable donations.)

[full story]

So, let's get this straight... if you are poor and the target of the "insurance reform" legislation, you can't opt out because the government covers you. If you are not poor, but don't want to pay for the insurance, you are covered in emergencies or by other programs, you can opt out and the funds the government was counting on to pay for covering the poor will diminish... so taxes would have to be raised.

Sounds like creative the creative accounting used in the new legislation that takes $500 billion from Medicare and makes Medicare solvent.



The Next Obama Battle


Regardless of your political persuasion, you have to hand it to President Obama and his ability to "marshal the troops" to get his agenda passed... all in the face of intense opposition by a distinct minority in Congress and a distinct majority of U.S. citizens. You can just hear him exclaiming, "Damn the torpedoes; full speed ahead."

So, the big question is: what's next?

  • We've had bailouts for banks and unions with takeovers of GM and Chrysler
  • We're getting nationalization of health care [that's the end game and the game is rigged]
  • We're facing nationalization of energy... the next logical step in the nationalization of the economy
President Obama hasn't attempted to hide his agenda. He told us during the presidential campaign and he has been telling us ever since. It's just that there are an awful lot of people who listen to everything he says and only hear one thing: "not Bush."



Monday, March 22, 2010



We've been stupaked! Rep. Bart Stupak of Michigan voted his Party because he really didn't have principles. That's understandable. Politics is generally the placement of party ahead of principles. It's just that Rep. Stupak made a great show of his principles... before he didn't.

So, we've been stupaked. Royally stupaked. There's no need to call Rep. Stupak's office. You'll just get a recorded message that says, in effect, "Stupak you!"



Michigan Attorney General To Challenge Health Care Bill


Cox Files Constitutional Challenge to Federal Health Care Legislation

Contact: John Sellek or Joy Yearout 517-373-8060
Agency: Attorney General

March 22, 2010

LANSING - Michigan Attorney General Mike Cox today announced that Michigan has joined the State of Florida in a lawsuit challenging the constitutionality of health care legislation passed by the U.S. House of Representatives Sunday night (H.R. 3590).

"Congress' attempt to force Michigan families to buy health insurance - or else - raises serious constitutional concerns," said Cox. "We will fight to defend the individual rights and freedoms of Michigan citizens against this radical overreach by the federal government."

Read more....



Just Another Banana Republic


When it happened in Cuba, that was because of world communism. When it happened in Venezuela, that was because of big oil. When it happened in the United States, that was because... because... because...

They who would give up an essential liberty for temporary security, deserve neither liberty or security. - Benjamin Franklin.



Sunday, March 21, 2010

An Early Spring


We always hope for March to be like this in Michigan, so when the skies are clear and the temperatures are in the mid-60s we ignore what everything looks like and get right into the barbecue mode.

While that looks like a large wave about to flood the shore, it is just a very unusual area of ice in the center surrounded by open water. Click on the images for a larger view.

The burgers were great! We didn't even mind the first yellow jacket of the season. Unfortunately, yesterday's high was 35°F which put a bit of a damper on the end of winter. But sunshine and low 50s are forecasted for the week which is seasonal for the beginning of Spring.



Friday, March 19, 2010

Democrats Check Your Demographics


From The Washington Post:

House leaders announce $940 billion health-care compromise bill Washington Post Staff Writer
Friday, March 19, 2010

Pushing toward a Sunday vote that could transform the nation's health-insurance system, House leaders announced a $940 billion compromise Thursday that would extend coverage to the vast majority of Americans, cut billions of dollars from Medicare, and impose new taxes on the wealthy and the well-insured.

Read more....

With millions of "Baby Boomers" heading into social security... you know, that big group of births right after WWII... the Democratic Party is writing its ticket into a tiny minority. All of the welfare cases and illegal immigrants can't make up for the group that is going to get screwed during their last years of employment and then see the Medicare system into which they paid for 40 years suddenly get "thrifted" to pay for those who have paid little or nothing.

The demographics are that "Baby Boomers" vote... not so much the Democratic Party's newly bought "voters," are those that actually show up to vote. The Rasmussen Reports uses that bit of knowledge when taking their polls of national issues.

Oh, and deficits are going to be reduced by increasing spending by nearly $1 trillion? Well, we all know the other side of that equation. Check your wallets; send the contents to the IRS. That should stimulate business and investment.



Thursday, March 18, 2010

I Deem It So


One can learn a lot from our government leaders. For example, I always thought that making a choice meant that a choice was actually made, but now I know that you can "deem" to have made a choice. This is very valuable information... especially when interacting with governmental agencies.

We just received this once-in-a-decade form from the government:

By all appearances, it is a form with filled with information from which you make choices to let the government know more about who is living where. Some portions contain many possibilities from which you have to choose. This is time-consuming. And sometimes what you think is right is not offered as a choice, so you have to spend more time actually writing in your choice.

Thanks to Reps. Pelosi and Slaughter, I have seen a far more efficient approach to getting things done with the government. Therefore, I have "deemed" to made my choices from all of the possible choices and am now free to return the form with my "deemed" answers.

Can there be anything better coming out of Washington D.C. than that? Oh, sure, you may have read this someplace:

Whoever, being over eighteen years of age, refuses or willfully neglects, when requested by the Secretary, or by any other authorized officer or employee of the Department of Commerce or bureau or agency thereof acting under the instructions of the Secretary or authorized officer, to answer, to the best of his knowledge, any of the questions on any schedule submitted to him in connection with any census or survey provided for by subchapters I, II, IV, and V of chapter 5 of this title, applying to himself or to the family to which he belongs or is related, or to the farm or farms of which he or his family is the occupant, shall be fined not more than $100.
That's all taken care of now. As the old song goes, "All I have to do is deem." Maybe I should run for Congress....



Wednesday, March 17, 2010

China: It's Not About Economics


Recently, I attended a meeting at the Westland AMVETS where Jack McHugh of the Mackinac Center for Public Policy was giving a presentation. Jack and I had not met before then although we communicated occasionally by email. I have great respect for Jack's work and opinions, but we have have one slight difference in our viewpoints: China. Jack even acknowledged that in a friendly, off-hand remark at the meeting.

Jack and I both believe in the benefits of free trade. Where we differ with regard to China is my opinion that trade with China is highly manipulated by China to the detriment of U.S. manufacturers and is done so because China's interests are strategic first and economic second.

Jack rightly points out that manufacturing has been a declining segment of the U.S. economy for decades as it regards employment. It is a function of production efficiency that fewer workers are required to produce more goods. Besides, no one wants to be a production worker... do they? In my mind, that is not the point entirely. Trading with China is unlike trade with Germany or India or Brazil.

China has a far-reaching goal in which trade is simply a tool to be used in any way that gains a strategic advantage.
The series of posts dealing with this strategic goal is summarized here, but this is the key graphic:

[click on picture to enlarge]

A few days ago, the British online paper Telegraph wrote:

U.S. President Obama shakes hands with Chinese ambassador to the  U.S. Zhou as U.S. ambassador to China Huntsman looks on during a tour of  the Great Wall of China in Badaling
US President Barack Obama shakes hands with Chinese ambassador to America Zhou Wenzhong on the Great Wall of China Photo: Reuters

China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand.

Read full story....

China views trade as the hammer for its long-term strategic goals... and the U.S. is just another nail to be pounded. While others like Jack and the Telegraph view trade with China as primarily economic in nature, I continue to view it as a strategic struggle for power with the economic aspect as the "red herring."

Will China ultimately fail in its efforts because the "economics" of what they are doing are against them? I'm not holding my breath.

Jack's email response:

Good stuff.

I don't disagree that with China, "the economic is the geopolitical," but I certainly wouldn't characterize the economic competition as a "red herring," and here's why: It would be just as fair to say that with China "the geopolitical is the economic." IOW, one is not the second fiddle to the other; rather they are two faces of a single holistic entity, The Middle Kingdom.

In China's view it is only right and proper that the largest country with the oldest civilization - whose people are bloody smart and endowed with a Confucian work ethic that makes everyone else including us look like slackers - should become the preeminent world economic power. Naturally, with that position comes strategic geo-political concerns, just was the case with Britain in the 19th C, and the U.S. in the 20th. Like the U.S. in the 20th C, China doesn't have imperialistic territorial aspirations beyond its periphery, but that doesn't mean it has no interest in mucking around in distant places in furtherance of its interests.

As I said in an earlier exchange, in the 20th C China was stupid and poor, but it was unrealistic to think they would stay that way forever.

The Middle Kingdom is a tough, worthy competitor in both the economic and the geo-political realm. No they don't "play fair" according to conventional western conventions. In their pursuit of economic and geopolitical preeminence they aren't inhibited by the kind of moralistic considerations that often enliven foreign policy debates in this country. One might think of them as an Asian "France" in this regard.

We can't take our marbles and go home when they behave in ways we don't like. If we raise restrictive trade barriers, that will make us poorer and less capable of competing. If we whine and beg, "Can't we all just get along," that will be correctly interpreted as weakness and opportunity.

So what can we do? Get in the game, economically and geo-politically. Sharpen up our game on both fronts. How? Cato Institute and the Mackinac Center have the domestic economic agenda for that. Organizations like the Center for Strategic and International Studies have the program on the geo-political front.

I suspect that Bruce Hall and I have no fundamental disagreements on this part.

Jack McHugh



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Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
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February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)