Should Greece Fail?

A day hasn't gone by, in the last 2-3 months, that we don't see dozens of articles about Greece's economic fate, the first, second, third loan bail-out, the revolt of the people in the streets, etc.  Really, though, why are these Greek people in the street whining?  Why do they think that the Eurozone or the IMF "owes" it to them to lend them the money they need?  Or, are they right?  The general thinking is that massive overspending on social programs; years of capitulation to union labor’s unreasonable demands; mind bending corruption at every level; and tax evasion on a grand scale is what had brought Greece to its knees.  No-one can argue with all that, but the problem is much deeper than that.  For example, why were the Greeks given all that money to spend (borrowed money) in the first place?  Who helped them make all those investments in "junk" bonds, that made money for the "consultants", and why?    BTW, parenthetically, Greece is NOT the only country that is in dire economic conditions, for the same exact reasons.  Many other European countries, and the USA, are right there besides Greece. The culprit is called "deficit spending"!   That's how they all got in trouble.

Back in 1967, Greenspan - a great economists before he became part of the establishment, said, "Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process.It stands as a protector of property rights".  And, that was only about 5 years before USA abandoned the gold standard, a sad day in its economic history.

Anyway, back to Greece.  It should NOT have adopted the euro, ten or so years ago.  Once they did that, control over their economy was handed over to the European regulators and they lost the freedom to deflate their currency, when needed, to increase tourism and improve their economic picture.  Having said that, talk about dropping the euro now and moving back to drachma, is just that, talk - it doesn't make much sense.  Their debt would still be in expensive euros, the drachma would de-valuate the day after they adopted it, based on their economic state, and thus their real debt would double overnight.

Plus, the European leaders would not allow that to happen, because it would signal that other countries in economic trouble could do the same thing.  So, what is going to happen?  Or, what should happen?  Should Greece refuse the new aid package, that would force new austerity measures, and just go bankrupt?

The Europen Union will NOT allow that to happen.  Once again, if they allowed Greece to default, that would signal that everyone in economic trouble could just default and face no consequences.

So, what will happen?  It's not very clear, I guess we'll have to wait and see.

Libya, War #3

So, we are now involved in a third war, Libya, regardless of what our elected officials tell us.  I mean, you must have heard it, "Exit Strategy", No Boots on the Ground", "Only establishing a no-fly zone",... and all the other malarkie...

Why are we doing this?  Even the casual browser of the history of that area can tell that this is a no-win situation for the USA (and for other countries involved in this allied intervention.  A no fly zone will NOT achieve anything other that prolong the pain and suffering and postpone resolution of the situation.  But, they told us, Libya has a strategic importance to the USA (and the World) because of its oil.  Come on, give me a break, it supplies 2% of the world's oil!  Important?  Maybe... Strategic?  Go sell it to someone else.

Some bring up the example of how we used no-fly zones to give an opportunity to the Kurds of Northern Iraq who were being persecuted by Husein.  Day and night!!  Thu Kurds were a distinct group, different than the rest of the Iraqis and when isolated they could pool together their resources, and better themselves.  This has nothing to do with the tribal system of Libya, which, by the way, none of our politicians understand :-(  So, let's say the Quadhafi leaves, is overthrown, etc.  Who takes over?  What structure or group is ready and poised to take over?  There is none, because of the country's tribal structure.  This is a civil was, with multiple faction (you'll see them sprout as this progresses) fighting each other and we now game them a common enemy, the USA.

And what about the coalition?  What a joke.  The French are in today, well sort of, and may be out tomorrow, the Germans were i, but they don't want to play any longer, the British are in (don;t know how wholeheartedly), the Chinese and the Germans tried to block the coalition, and so on...  I can see the writing on the wall.  At the end, we may have to go this one alone, as well.

But our leaders keep telling us no boots on the ground, they have an exit strategy :-(

Japanese Accident and the US Media

I have been following the news on the Japanese Nuclear problem very closely (well, as closely as I can) and I am disappointed in the media coverage of what is happening (yeah, I know, I shouldn't expect any better).  What I cannot understand is "why?".  I saw a half a dozen interviews on the major TV station (CNN, FOX, etc.) over the last couple of days, before I gave up and I think I finally realized that news is no longer news, it's opinion and agendas, whatever they might be.   There is no other explanation, for example, for them having Jim Walsh as an nuclear expert commentator!  Please, give us a break, PhD from MIT (in Political science), BS from Brown (in Philosophy), providing expert opinion on one of the most intricate engineering problems?  They must take us for fools, but you know, most viewers probably saw "MIT" and that was enough for them, his opinion all of a sudden became "expert" opinion - very sad.  No, I am not an expert, but I don;t pretend to be one, either.


Then, I've been reading the Drudgereport, NPR, BBC on-line, and just in case, some of other sites that may have an inkling of what's going on, like the National Energy Institute, IAEA's site, etc.


BBC (and Drudgereport) post that 500 bone marrow centers in the EU are on alert to receive Japanese exposed to radiation.  What??  500 centers on alert?  So, they expect hundreds of people to get doses higher than 0.7 Gray?  And, most of them to get the dose to the whole bod and to get it all in a matter of minutes, so they can develop acute radiation sickness and need a bone marrow transplant?    (Check out the CDC site for Acute Radiation Syndrome, that's what one should do).  Don't these "reporters" realize that when the site is reporting, lets say, 400 mSv levels at the plant, those are at radiation monitor levels, usually right next to the plant?  And, if that is a direct dose, all one needs is to be a few tens of feet away, for that level to be reduced by factors of 10 to 100? Spending 10 minutes on line, I was able to fond that!


And Drudgereport (well, Yahoo news) reports,  

RADIATION LEVELS SOAR AFTER 3RD NUKE EXPLOSION... 

which starts with:

 "

By ERIC TALMADGE and SHINO YUASA, Associated Press – 8 mins ago

SOMA, Japan – Dangerous levels of radiation leaking from a crippled nuclear plant forced Japan..." 

As soon as I saw this, I checked the NEI site, which says: 

"UPDATE AS OF 10:20 A.M. EDT, TUESDAY, MARCH 15:

The level of radioactivity at the Fukushima Daiichi nuclear power plant has been decreasing, according to the International Atomic Energy Agency.

At 8 p.m. EDT March 15, a dose rate of 1,190 millirem per hour was observed. Six hours later, the dose rate was 60 millirem per hour, IAEA said.

About 150 residents near the Fukushima Daiichi site have been checked for radiation and 23 have been decontaminated.

At this point, I guess I just need to give up, rather than expecting any Yahoo, or BBC, or CNN reporter to understand the issue even just well enough to ask the right people to comment, or to make sure their information is corroborated.  Silly me :-(

Bravo to the Resilient Japanese

A 9.0 earthquake, a 30-ft tsunami, 4 unstable nuclear plants!

The Japanese have been hit hard, but one has to applaud their resolve.  Waiting patiently in long lines for food, water, etc. 140,000+ people orderly evacuating a 30 km radius!  Not screaming in the streets, killing each other, looting and demanding that the government "gives" them something that's owed to them. Compare that to what we saw on TV during Katrina :-(  What has happened to our country?

And no, I am not putting all the blame on the people, it also has to do with "how" governments treat their citizens, but now matter how I look at it, I come away with nothing but respect for the Japanese, and bitterness knowing that's now how we would respond (or have responded) to similar calamities.

I hope all of us take a page from their book!!

When taxing is too much...

I was driving, the other day, listening to NPR and they were discussing the estate tax proposed modifications, which got me to thinking.

• I work 60 hrs a week and make $100K (my money) and pay income taxes on that, both to the Feds and the State.
• Using the remaining of my money (which I've already paid taxes on), I buy clothes, a car, etc. and I pay sales taxes on that.
• I also need to buy gas for my car, and I pay sales and gasoline taxes on that.
• Since I am privileged to own a car, I also have the privilege of paying annual excise tax on the car.
• From the remaining balance of my money I put some aside and bought a house. I get rewarded by having to pay real estate taxes on that.
• There was just a bit of money left, so I decided to take my wife away for 2 days, I had to pay all sorts of government fees (taxes) on the airline tickets and again a number of taxes on my hotel bill.
• During the weekend we went out to eat.... you guessed it, I had to pay meals taxes.

All these taxes (and many others I can't think of, at this moment) are levied against my $100K a year. Then, a few years from now (hopefully, many years from no), I die and leave this nice house and whatever money I had saved to my children. Aha, not so fast, they have to now pay estate tax. So, I am being penalized for leaving something to my children? How does that make sense?

And I know, people will say, not the first $500K or whatever, or it's meant to catch people leaving tens of millions, but that is so irrelevant! I can see if the house was stolen or the government gave it to me, of somehow I had found the money in my savings account, but darn it, I worked very hard for it and paid taxes on what I made along the way. Why this additional estate tax? Doesn't make sense.

USA dealt a blow at the G20 Meeting

I can still hear the echo. The USA was told in no uncertain terms that (a) we don't know how to manage our own finances - never mind helping the rest of the world manage theirs, and (b) we have to stop whining about being shut out of world markets and blame currency manipulation, and start building better products, that would be attractive to those foreign markets.

Analysts have been telling us for months (years ?) that the US hegemony of the world finance is pretty much finished and China may be the next likely leader, and now it looks as if that's eminent.

I can't really blame the other countries for telling us that we destroyed our economy and we are now asking them to pay for fixing it. They are right. Not only did we destroy ours, we almost took a number of other economies down with us (our only defense may be that their greed helped, as well).

And, our delegation went to the G20 complaining about the Chinese illegally or unethically manipulating their currency value to take advantage of us. We did that about a week and a half after the Fed announced dumping another $600 Billion (actually closer to $900 Billion) into out economy. What is that? Isn't that currency manipulation/devaluation? How do we expect anyone to take us seriously? What are the Chinese supposed to do? Think about it. They hold close to 2 trillion dollars of US Treasure bonds, and the Feds just made sure they lost some of that value. If I were them, I'd be pissed too.

I don't know what the solution is, but what I *do* know is that always blaming someone else doesn't work. The Chinese are not to blame for our current situation. The tax system, the ever-increasing size of government, the ever-decreasing productivity of the American worker, the ever-decreasing quality of American products, big Unions, much higher wages than other countries, etc. All these, and many others, may be contributors to bringing us to the brink we are today. And convincing the Chinese not to manipulate their currency will not solve our problems. Let's be realistic. A auto-factory worker in China makes the equivalent of $1.20 and hour. So, we'll convince the Chinese to stop their currency games and that may increase by 20%, 30%, even 50%. So, now the Chinese auto-factory worker hourly rate will be $1.80. Do you think we will all of a sudden become competitive, when the US auto-factory worker hourly rate is $39.00. Dream on...

How about we build a car that is of such quality that Germans import it and make it their top-of the line, luxury vehicle, much more expensive than their Mercedes? Now there is a concept - compete on quality! But that is not our mentality. We have all become accustomed to the Walmart mentality, i.e., "I don't care about the quality, as long as it's cheap and I can get lots of it". Sure, the Chinese may have adopted a similar paradigm, but guess what, *we* are the ones stocking Walmart's selves with "Made in China" products. The reverse is not true, and it couldn't be, since we don't have a manufacturing based economy in America, not any longer.

I hope the way the US was shot down at the G20 becomes a wake-up call, but I am not holding my breath.

I know that posting these thoughts here don't change anything, but at least it helps me vent some of my frustration. So the Fed decided to issue another 600 billion dollars (oops, make that ~ 900 billion) into the economy. How is that backed up, you ask? It's not, it's phony money, monopoly money, only this is *NOT* a game! Brazil, China, Germany,... they are all complaining and for good reason. Since releasing this money into the economy will further devaluate the dollar, all their holding in US bonds, the ones they were convinced to buy in order to the help the US and world economy, all of a sudden are less valuable! So what if they decide to do the same with their economy? How will that impact the US? You don't really want to know :-(

But it's not just other countries that are being affected. Watch for an almost immediate raise in prices of most commodities, in this country. Watch for a quick jump in gas prices. Watch for another increase in unemployment. What are these people thinking? Who is advising them? They tried it, they've already pumped almost 2 trillion dollars of stimulus and bailout money into the economy and it didn't work! And, that's because they are not addressing the real problem. Small and medium size companies will not invest in creating more jobs, not in this climate of uncertainty, of looming tax increases at the beginning of the year, etc. Why should they?

But, don't worry, the government may extend unemployment benefits again, so where are we at now, three years, or so? I am all for helping people who were hit by bad times, but extending the unemployment benefits doesn't do much to solve their problem, all it does is increase their dependence on the government hand-outs. Use the money to create jobs, instead. Where are the millions of new jobs that would be created, updating the country's infrastructure?

Oh, yeah, another 900 billion of fake money will magically solve all problems. Strap-in, we are in for a very bumpy ride :-(