Monday, November 30, 2009

Best Idea on Afghanistan - yet

This LA Times report here is encouraging in two aspects. Resistance for more troops is becoming bipartisan, relieving a young president, the first African American from the Freudian need to appear more "American" than American -- assuming that had for a moment entered into his deliberation.

The second piece of news is the best yet -- if Americans are really behind escalation, then they should pay for it by way of a Afghanistan War Surtax. Let's see how that goes down.

Larry Summers - Best & Brightest 2

Larry Summers had to resign the Harvard presidency for his smart-alerk comment re shortage of women scientists due to possible DNA factors. His supporters argued he was merely listing a list of possible reasons the way any serious scientists would in intellectual speculation. Thinking aloud, as it were, without necessarily committing himself to any single position.

Well, if I were to similarly intellectually speculate in a public form that somewhere along Larry's family tree in eons past some of his ancestors might have had excessive arrogance DNA or perhaps some were mentally crippled mongoloids with excessively high IQ while adding the caveat that by the time Larry was born and later was universally lauded by an adoring press with a heavy duty Harvard-envy that any traces of that possible or even probable deformity had clearly become moot, would I have been intellectually speculative, therefore usefully provocative, or was I being just a horse's ass?

Mark, my most helpful friend, sent me this latest piece here on how Larry played fund manager leading the world's richest and mighty Harvard into a financial crisis.

Come to think of it, I wish he had not been drummed out of Harvard so that right now he would have had to face the humiliating task of righting Harvard's tattered balance sheets for which he was responsible.

Well, when Larry was Harvard's president he was paid millions being a part time consultant to D.E. Shaw, a hedge fund. I wonder how often D.E. Shaw acted on his advice or merely listening politely and then ignored his advice.

Anyone who has spent serious time managing money knows the difference between theory and practice. Anyone who has listened to expensive academic consultants at a fund management company also knows how often their advice is dismissed as not credible irrespective of their brilliant credentials.

In money as in so many other aspects in life, it is not a bad rule of thumb to remember that those who can, do; those who can talk well should keep talking.

Sunday, November 29, 2009

Bin Laden -- Almost Caught

Well, an official US Congressional report hereconfirmed what we long suspected. Bush dropped the ball.

Whither the US Stock Market?

These 2 charts, the stuff "chartists" love, suggest the Dow Jones Industrial Average at this point is neither here nor there -- in the middle of the "channel". They also suggest that if the Dow breaks out from its upper resistance, it will again take off in a major run. But if it breaks down below its support line in the charts, then it is headed back down, way down. This is "technical"-speak. Some people consider technical analysis a form of voodoo. Others swear by it. You choose.

Source: Big Picture Blog

2 Pictures on US consumers

I thank "The Big Picture" blog for carrying these charts.

Music to Gold Buyers

Read what China is doing for its economy here. Both the Chinese and the Hong Kong stock markets are among the best performing this year.

This is what makes a "market": Gold vs Bonds?

"This" is a gap in perception between what makes a buyer buy, a seller sell.

Both parties have one thing in "common": they both take a look into their crystal ball. There ends their similarity for they see a different future. A market is born precisely because both parties see the need to act differently.

This is what is going on in the bond market which sees Deflation and stagnation. A recent posting of mine shows the severe drop in consumer spending. You can read numerous stories about "negative equity" in homeownership and increasing personal savings -- for the first time in some years -- as US households fear for the future.

On the other hand, buyers of gold see huge increases in government spending -- all over the developed world, in US, China and Europe -- as well as money printing. So they forecast inflation ahead. Some like Marc Faber even see hyper-inflation.

Read this for a nice summary of what is going on in this gold/bond dilemma here.

JIm Rogers on Gold and Geithner

Jim Rogers, the famous ex hedge fund co founder of Soros Fund, is long gold but is not buying right now even though he thinks it will go to $2000 sometime in the distant future. He also said this in an Businessweek interview:

What's your outlook for commodities in 2010?

I'm not smart enough to know. But I will say that if the world economy gets better, then commodities will be one of the best places to be because of the shortages that are developing. If the world economy does not get better, commodities will still be the place to be because governments are printing all this money.

Tim Geithner has been under attack lately. How's he doing?

Listen, I have been a critic for years. Geithner should never have been appointed to anything. He's been wrong about just about everything for 15 years.

Do you think he'll lose his job?

Of course he's going to lose his job, because as Mr. Obama realizes that Geithner doesn't know what he's doing, he's going to look for somebody else because he doesn't want to take the heat himself. So he's going to look to blame somebody, and the obvious person is Geithner.

The entire interview is here.

Saturday, November 28, 2009

Declines of Empires

Better watch this enlarged on your screen. It's fun.

Friday, November 27, 2009

The Dazzling Blonde

The security at White House is a joke, apparently. Read this amazing report here of how a blonde effectively just walked into the White House uninvited.

Indulge for 2 seconds of racial profiling. Do you think a black or an Asian woman could have pulled this off? Just asking.

The Brits Should Know

Gordon Brown, UK Prime Minister, has finally spoken frankly and publicly about what to do with Afghanistan as reported here.

The Brits ought to know a few things about that country. They were kicked out twice by local forces when Britannia was still ruling the waves and the sun never set on their empire. The first time their entire military force was wiped out saved for a couple of individuals deliberately set free by the Afghans to deliver a message to the Court to stay away.

One Picture = Thousand Words

US data. Source: Economist's View Blog


"War, we have come to believe, is a spectator sport. The military and the press ... have turned war into a vast video arcade game. Its very essence- death - is hidden from public view.": Chris Hedges, Pulitzer Prize-winning reporter for New York Times


The Decline of the Catholic Church

I normally stay away from religious topics -- unless they have a connection to Rises and Falls of Empires, a favorite topic of mine.

This sad and sordid report here on sexual abuse by Irish priests over a very long time is relevant to the Rise and the ongoing Decline of the Roman Catholic Church.

The official government report on child abuses is here.

One normally does not think of the Vatican as an empire. At the height of the Soviet empire which covered all of Eastern Europe, Central Asia and could count China and North Korea as "cousins", Stalin famously asked an advisor dismissively: "How many divisions does the pope have?"

The last laugh is not heard in Kremlin, but in Vatican. The proper answer to Stalin would have been "How many divisions does the Pope need?" No one at Kremlin had the courage to give Stalin that answer, of course.

The Church has outlasted all secular empires. The Church and its doctrines shaped the minds over 2000 years around the world without having had to build its own armies. Well, to be fair, it had others to do its dirty work.

It is, therefore, not inappropriate to think of Vatican as an empire.

All falling empires shares these 2 features: economic and moral decay.

The Church is still rich, very rich. However, the moral decay as evidenced in this report and in other similar reports elsewhere in the world is a stake through its heart.

Has anyone wondered why celibacy is so important to the Church? Protestants long broke away from that medieval and ridiculous restrictions. What, pray tell, has sex got to do with salvation or lack of?

To enforce this ridiculous rule, the Church had to invent Virgin Birth so that the mother of Jesus bore a child without having had sex with Joseph.

Celibacy was enforced only in the 12th century at the Second Lateran Council, an edict held up by the Council of Trent in the 16th century. Prior to 1139 CE, priests could indeed take wives and, yes Virginia, have sex.

Sex was never a taboo subject in the old Testament and became an "issue" only in the New Testament which, we know, was more a book written by committees and revised over the centuries. It was more a political document than one about truth.

The fundamental issue remains: why is celibacy among priests necessary? Celibacy is the root of all sexual abuses by Catholic priests. But you can count on this conservative Pope Benedict XVI to keep on the books the law of celibacy. That can only hasten the decline of this "other" Roman Empire that has outlasted that secular Roman Empire by nearly 1800 years.

Wednesday, November 25, 2009

An Obama disaster in the making

The press is getting the unofficial word from nameless White House officials that Obama is likely to add 30,000 troops (roughly) to Afghanistan. Read this report here from the NY Times.

If he were to do this, he will jeopardize his domestic programs that are already strapped for funds, and he will send soldiers to die unnecessarily to fight a war without a firm agenda in a land that is fundamentally alien to global values.

To change that country turning it into a willing and effective ally is beyond the capability of 100,000 US GI's. No one can change a nation if it is not ready.

And no empire has ever subjugated Afghanistan which is called the country "where empires go to die" for good reasons. Russia, Britain, Persia all tried and failed. USA will be no different.

The logic of escalation will be cast in concrete once the 30,000 troops are sent. Why? Because if they can't "finish the job", more troops will be needed. Just as in Vietnam when the military consistently miscalculated what was needed with the acquiescence of a president too afraid to be the first to "lose a war".

That logic drove LBJ into early retirement and in the process turned the country into two decades of social and economic turmoil that is still reverberating to this day.

Monday, November 23, 2009

World Economic Map - A Quiz

Thanks to Greg Mankiw's useful blog I am reproducing a chart he himself got it from someone else. We all need a little help from each other.

Quiz. Around the time Jesus was walking around in Palestine changing stones into bread and stuff, which was the largest economy in the world? Second largest?

Hint. Look up Angus Maddison's majestrial opus on World Economy, a Millennial Perspective.

Everybody Hates Goldman Sachs

...And that includes officially the New York Times. Its editorial on that company is here.

While I do agree with the editorial's outrage at Goldman's cynical PR to redress its tattered image, I do strong believe there are other equally guilty culprits: Hank Paulson when he was Treasury Secretary who did not set the right carrot and stick framework to help out his former friends and colleagues at Goldman as well as other "too big to fail" Wall Street firms. His policy was all carrot.

Then there is Team Obama who should have plugged all the loopholes Paulson had bequeathed them. Instead, Geithner and Summers continued to look the other way while the Feds handed out a king's ransom to further help out Wall Street wholesale.

So, NY Times should have asked for a full accounting of what Paulson did or did not do, the resignation of Geithner and Summers as well as all the once-off tax on 2009/2008 bonuses to be credited back to the taxpayers.

Sunday, November 22, 2009

Indulge my gloating - 7 Days in May

In today's NY Times (Nov 22, 2009) here columnist Maureen Dowd wrote:

..."McChrystal and Gen. David Petraeus should have been giving their best advice to Obama — and airing their view against scaling down in Afghanistan — in confidence. Instead, McChrystal pushed his opinion in a speech in London, and Petraeus has discussed his feelings in private sessions with reporters. This creates a “Seven Days in May” syndrome, where the two generals are, in effect, lobbying against the president and undercutting him as he’s trying to make a painfully complex, life-and-death decision"...

On October 2, 2009 I referred to that movie "7 Days in May" on my blog here. I thought the general should have been fired for openly pressuring his commander-in-chief showing great disrespect. I am glad Ms Dowd is edging closer to that position.

Ms Dowd, welcome to the "Fire Gen. McChrystal" Fan Club. Better later than never.

Saturday, November 21, 2009

Xmas came early to Wall Street

..."Earlier this week, the inspector general for the Troubled Asset Relief Program, a k a, the bank bailout fund, released his report on the 2008 rescue of the American International Group, the insurer. The gist of the report is that government officials made no serious attempt to extract concessions from bankers, even though these bankers received huge benefits from the rescue. And more than money was lost. By making what was in effect a multibillion-dollar gift to Wall Street, policy makers undermined their own credibility — and put the broader economy at risk.

...So here’s the real tragedy of the botched bailout: Government officials, perhaps influenced by spending too much time with bankers, forgot that if you want to govern effectively you have retain the trust of the people. And by treating the financial industry — which got us into this mess in the first place — with kid gloves, they have squandered that trust".... Paul Krugman

To be fair, the great giveaway started with Hank Paulson, who not only spent "too much with bankers" was one himself at Goldman Sachs. Second, while Geithner was not himself a Wall Street banker, his education, his social background, his world outlook were all shaped by the same "core values" and world outlook of the elite bankers. Effectively the Wall Street titans were shaping the rescue package. And that, of course, would not have a clause to hurt their own self interest, let alone their job security.

Ultimately, let's put the blame where it belongs. It is Obama who listened to and signed off on whatever Summers and Geithner proposed.

The official government report is here.

Money has been spent. I said earlier this year that Wall Street Had Won big, like 7-0 in soccer terms. In American football terms, it would like 70-0.

No wonder Mr Lloyd Blankfein is smiling telling the world he is doing "God's work". If he were representing God, and he had in fact won big, what makes the US Government and through them you and me? We are just shits?

Friday, November 20, 2009

Is the Bond Market wrong?


Paul Krugman posted this chart in his NY Times blog to support his conclusion that the paranoia in DC about inflation fears are totally unjustified. The over-riding issue to him is insufficient stimulus a la Keynes. The chart shows net deb/GDP in the US is nowhere close to alarming since there are those countries with higher or equal relative levels of debt.

1) Provide no more than 2 reasons why Krugman could be right.
Hint: investigate into the Fed's balance sheets

2) Provide no more than 2 reasons why Krugman could be wrong.
Hint: Look up Dr. Doom's writings and his comment on Bloomberg TV that US "will become Zimbabwe", to be sure for dramatic effect to make a point!! By implication, Marc Faber and those who are long gold, short the dollar, believe the bond market is wrong while Krugman clearly believes it is right.

Tim Geithner

A recent report in NY Magazine on Tim Geithner at a recent US Congressional hearing

..."Unfortunately, the regulatory regime that failed so terribly leading up to the financial crisis is precisely the regulatory regime we have today," Treasury Secretary Tim Geithner said in prepared remarks at a Joint Economic Committee hearing today.

That struck some as a little rich, considering the recent revelations about Geithner's own behavior during the crisis, and during the question-and-answer period, a messy exchange occurred after Representative Kevin Brady of Texas asked the Treasury secretary to resign, saying the public had lost confidence in his ability to do the job.
Geithner declined.

“It is a great privilege for me to serve this president,” he said. "I agree with almost nothing you said." He then proceeded to point the finger at the Republicans, whose policies, he implied, caused the crisis in the first place. "You gave this president an economy falling off the cliff," he said, finger jabbing, ears turning pink. "Values of American savings have been cut almost in half. Millions of Americans are out of work. We're in the worst financial crisis in generations."

Brady interjected: “Remind me, Mr. Secretary, what post were you holding when President Obama took office?”
“I was the president of the Federal Reserve Bank of New York.”


Read more: Tim Geithner Throws Stones in a Glass House of Representatives -- Daily Intel

Thursday, November 19, 2009

This is childish!

What is "childish"? US demanding "clear results" in Afghanistan reforming itself, that's what.

Hilary Clinton went to Kabul to reinforce Obama's public message demanding better public governance. Read this.

I have a naive question. Rather two. First, how do you measure "better"? Second, suppose Kabul failed to pass the hurdle of what constitute minimum acceptable reforms, what then? US will pull out immediately?

Let's not kid ourselves. US presence in Kabul must rest on unambiguous national security interests clearly articulated by Washington DC and understand by the American people.

The notion of "nation building" turning Afghanistan into any resemblance of a democratic society is naive and is a non-starter. If Afghan people's support is essential to US effort there, and if that support is not in place, US should leave irrespective of what "reforms" Kabul could or could not engineer.

Frankly, when the head of state's brother is the largest opium dealer in Afghanistan, talks of meaningful reforms in Kabul are sophomoric.

US must also be clear why it is so paramount to defeat the Taliban. Wasn't the original goal the capture of Osama bin Laden? Remember the Taliban were at one point fighting comrades of the US against the Soviets.

If finding and killing bin Laden could not be achieved by the presence of nearly 70,000 GI's, not counting NATO troops, another 40,000 GI's would find bin Laden?

If Obama were to accept General McChrystal's additional troop request, we would be stationing over 100,000 troops to find one aging terrorist whose location we have failed to find in 8 years.

If a script writer were to write that into a movie proposal, he will never find work again in Hollywood!

Wednesday, November 18, 2009

France and the rest of Europe, a time bomb?

Samuel Huntington's Clashes of Civilization live? From City Journal Nov 18, 2009

Swimsuit Issue
“Burqinis” notwithstanding, France isn’t being Islamized.

This summer, a woman of Arab descent tried to enter a Paris swimming pool wearing a head-to-toe black swimsuit dubbed a “burqini” and was expelled.

The episode rekindled the “veil controversy” of 2005, when the French Parliament, at President Jacques Chirac’s urging, unanimously passed a law forbidding students to wear any “intrusive religious signs” in schools.

The Jewish yarmulke and the Christian cross were tolerated, if kept small and discreet, but not the Islamic veil—which was the law’s real focus.

The veil law, a not-so-subtle attempt to prevent the Islamization of France, implied that French society had become besieged by its 4 or 5 million Muslims, and observers might draw the same conclusion from the burqini incident.

Global Rankings of Corruption

Transparency International, world's leading NGO on this issue, has just issued its latest ranking here on which are the most and least corrupt countries and all those in between.

Two broad categories do well: Nordic and those that follow the Common Law tradition that began in England. Larger the number the more corrupt.

New Zealand is number 1 followed by Denmark and Singapore is number 3.

United States and the UK, both did worse than previous year. US dropped from 8 to 19, UK dropped from 6 to 17. I suspect the less than squeaky clean handling by DC of Wall Street in the US and the series of ministerial scandals in under-table deals in the UK were a big factor in the downgrade.

I live in 3 countries: Hong Kong ranked 12, higher than US and UK (17); Argentina (106) -- below Zambia and Tonga and Thailand (84) -- higher than Mexico (89). China is 79.

I can say with some confidence that Argentina and Thailand deserve their low ratings and that Thailand should probably in the nineties.

Generally the rankings are reasonable.

Too Big to Fail - the sociology

In the interview Leslie Stahl, famous TV personality, did with Andrew Sorkin, author of runaway best seller, "Too Big to Fail", documenting the near death of Wall Street, there was this gem of an exchange about the top few men running Wall Street including Hank Paulson, then Secretary of Treasury, former Chair of Goldman Sachs:

..."LESLEY: What one really gets out of your book is what a closed little fraternity those guys at the top were.

ANDREW: It’s remarkable. It’s really 10, 20, 30 people who were involved in all of this. I mean … 30 people running the world, and they are all mostly men, with very few exceptions.

LESLEY: And even though they had competed, it’s almost as if they were on a football team together, or something. They’re in close with each other. They can pick up the phone and call each other at home. They can get in a car and go to each other’s houses. I had no idea.

ANDREW: I have to tell you, I found the intimacy among them very surprising. The idea that they were going to each other’s homes and calling each other every ten seconds, and that they all had past histories and relationships"....

IF you out there do not remember what Simon Johnson at MIT said in a controversial article here about the sociology of Wall Street, you may wish to reread it.

In that article he wrote, among many things, about a small group of people sharing similar backgrounds and values and acted as if they had all belong to the same eating clubs at Princeton or fraternities at Dartmouth and Harvard (Paulson). That group would include Geithner (Dartmouth) and Summers (MIT and Harvard). When that article came out, he was criticized widely for being "conspiratorial" which, by definition, should not be taken seriously by serious people.

Sometimes you do not even have to talk to one another all the time to act as if in concert -- if you share the same world outlook. But when you actually do share the same outlook and do talk to one another, then it would be as if one Jesuit priest trained in Rome talking to another trained at another Jesuit monastery even if separated by a generation 20 plus years ago or later.

The entire interview is here. It is a good read.

Tuesday, November 17, 2009

China Quiz

This is an excerpt from today's NY Times:

..."Most of those who attended the event at the Museum of Science and Technology turned out to be members of the Communist Youth League, an official organization that grooms obedient students for future leadership posts.

Some Chinese bloggers whom the White House had tried to invite were barred from attending. Even then, the Chinese government took no chances, declining to broadcast the event live to a national audience — or even mention it on the main evening newscast of state-run China Central Television.

The scripted interaction underscored the obstacles Mr. Obama faces as he tries to manage the American relationship with an authoritarian China, whose wealth and clout have surged as its economy has weathered the global downturn far better than the United States’ or Europe’s"...

Quiz: Is it true managed to "weather" the global downturn better than the US? If so, give 2 reasons why you think so.

Bernanke, the Oracle?

The following is from Mish's Global Economic Trend Analysis:

..."Bernanke: Why are we still listening to this guy?

The following video should make people think twice about listening to anything that Chairmen of the Fed Ben Bernanke says. It's a compilation of statements he made from 2005-2007 that will have your head spinning"...

Bernanke Doing the Potomac 2 Steps

Fed Chairman says he supports a "strong dollar" policy as quoted here.

Quiz time: Bernanke has been for some time on record for keeping the near zero interest rate policy because the US economy remains weak and the politically explosive unemployment rate still rising.

Can he talk up the dollars by words? If so, provide 2 reasons. If not, why not?

Second quiz.

China is blaming the US for exporting inflation (here) and here because the zero interest rate policy provides a risk free leveraged currency carry-trade that is all the rage right now. Witness the rise in Aussie, gold, properties and the stock markets.

Give 2 reasons why China's criticisms are correct. And give 2 reasons why China is disingenuous in her criticisms in her own currency policy. Please focus only on the economics, not politics.

After you work through your answers there is money to be made in the currencies market.

Have fun and good luck.

Sunday, November 15, 2009

Beggars Can't Be Choosers - 2

..."In a July meeting, Chinese officials asked their American counterparts detailed questions about the health care legislation making its way through Congress. The president’s budget director, Peter R. Orszag, answered most of their questions. But the Chinese were not particularly interested in the public option or universal care for all Americans.

“They wanted to know, in painstaking detail, how the health care plan would affect the deficit,” one participant in the conversation recalled. Chinese officials expect that they will help finance whatever Congress and the White House settle on, mostly through buying Treasury debt, and like any banker, they wanted evidence that the United States had a plan to pay them back.

It is a long way from the days when President George W. Bush hectored China about currency manipulation, or when President Bill Clinton exhorted the Chinese to improve human rights"...

Source: NY Times, Nov 14, 2009

Nation Building and $$

I have long counseled college bound youngsters to take one semester of "baby" accounting if that's the only course they take that deals with money. Accounting is the lingua franca of global and indeed daily business just as English is for global communication.

Finally, someone in DC is forcing the issue of arithmetics 101 of those 2 wars here.

The $$ issue is not just about domestic budget deficits, the dollar and about winning hearts and minds in the Islamic Middle East. It is also about China, the major challenger to US global position in the 21st century. The headline of this article here so gingerly reminds the new harsh realities of USA still acting the unipolar superpower without a strong balance sheet to support its hubris.

The punch line of this China article is simply this: beggars can't be choosers.

As Tom Friedman, the author columnist, keeps saying without much impact: it's time for "nation building" back home in USA. I say amen. Otherwise, before long, someone else will land on our shores to "nation build" us!

Remember JFK and the Vietnam War?

JFK (circa 1961):

1) Confiding to his special assistant, historian Arthur Schlesinger, Jr:

..."They [Pentagon] want a force of American troops...They say it's necessary....Then we will be told we have to send in more troops. It's like taking a drink. The effect wears off and you have to have another....The war in Vietnam could be won only so long as it was their war. If it were ever converted into a white man's war, we would lose as the French had lost a decade earlier"...

2) At the University of Washington, Seatle:

..."We must face the fact that the United States is neither omnipotent or omniscient...that we are only 6% of the world's population, that we cannot impose our will upon the other 94%, that we cannot fight every wrong or reverse each adversity, and that therefore there cannot be an American solution to every world problem"...

Source: Lessons in Disaster, Gordon Goldstein, pp. 65-66

LBJ later reportedly said "I will not be the first American president to lose a war"....and then he had to send in more and more troops to protect those who had gone in before.

Just as JFK predicted: - It's like taking a drink. Except it's not Pepsi but that of JIm Roger's Kool-Aid brew.

JFK was a student of history. He wrote "Why England Slept" in his hospital bed and won a Pulitzer. While many say Arthur Schlesinger Jr. was the ghost writer, but the more salient point was JFK thought like a historian even if he had not written that book.

How many contemporary US leaders know history? Did Bush know the Brits, masters of empire management, got their royal behinds kicked in Mesopotamia, the ancient name of Iraq? Did he and his Yale/Princeton/West Point educated subordinates know Afghanistan was also known to historians as the "graveyard of empires"?

If they did, what made them think it would be "different this time"?

40,000 troops enough in Afghanistan?

My friend Mark sent me this picture here and had this to say:

..."When you look at the landscape in the attached photo and in the link below, 40k additional soldiers seem like a drop in the bucket"...

The link Mark refers to is this,

Saturday, November 14, 2009

Bravo Oxford!

Oxford honors a fallen Iranian in the most appropriate fashion. Read here.

Friday, November 13, 2009

Goldman Sachs Doing God's Work

Ever since Lloyd Blankfein's interview with a British paper describing his work as that of "God's", sarcastic reactions came from all quarters. I posted NY Times columnist Maureen Dowd's piece earlier. Now on Mish's well-known economics blog, we are given 2 versions of "Lloyd's Prayer": -

My [Mish's] Version of "Lloyd's Prayer"

Our chairman who art at Goldman
Blankfein be thy name
Thy rally’s come, God’s work be done
In the Dow as it is in the Nasdaq
Give us this day our daily gain
And forgive us our frontruning, as we punish those who frontrun against us
And bring us not under indictment
But deliver us from regulators
For thine is the cashflow, and the power, and the bonuses, forever and ever. Amen

Anon Version Sent to Mish




"Who are our friends in Afghanistan"?

Veteren colonels straight from the war zone spoke candidly to Columbia students. Source: Bwog, the popular student blog.

"David Xia [Columbia student reporter] wandered into SIPA [Columbia's School of International and Public Affairs] last night for a Saltzman Institute event on the fate of the American war in Afghanistan.

The United States' war in Afghanistan is not working, and we're not sure how to fix it.

This was the gist of Col. David Gray and Col. Gian Gentile's (both of whom have served in Iraq and Afghanistan) talk last night at SIPA.

"We don't have strategy," Gentile said. "Instead we have commander's talking points, maxims, and catechisms." The prospects of counter-insurgency and nation building have "seduced" army officials to the extent that they lost sight of a bigger strategy.

According to Gray, the army initially wanted to leave a "light footprint" – utilizing strategic raids, advanced technology, special operations forces, intelligence agencies, and native human resources - to avoid attracting Al Qaeda fighters into a chaotic vacuum. And it worked just fine. For two years.

Gray painted a gloomy picture of the many challenges the army faced in creating a viable strategy. These included fighting government corruption, countering the rampant drug trade, and reeling in intractable drug lords, and dealing with the Pashtunwali tribal code to which 70 percent of Afghans subscribe: "In the morning they'll offer you green tea and a goat grab…at night they'll be shooting at you." Moreover, tribal interests do not always align with the Afghan government's interests. "Some guy from Mazari Sharif in the north isn't crazy about going down to Kandahar in the south to fight," he said.

Gray proposes creating an Afghan civil service to staunch corruption and recruit competent officials, but could not offer a strategy addressing the lucrative opium production that fills the Taliban war chest. According to a United Nations report, guerrillas in Afghanistan have secretly stockpiled 10,000 tons of opium. The New York Times said that is enough to satisfy every dope fiend in the world for two years.

Gentile said the current military approach was trying to emulate the Iraq troop surge. In 2007, President Bush deployed 20,000 soldiers into Iraq to secure Baghdad and Al Anbar Province. Violence in Iraq decreased, but it is uncertain whether this was a result of the surge or other reasons.

General Stanley McChrystal, the top commander of American forces in Afghanistan, has requested up to 40,000 troops within the next year. In a confidential report leaked to the Washington Post, McChrystal wrote that without more troops, the conflict in Afghanistan "will likely result in failure."

Invoking the memory of Vietnam, Gentile warned against blindly sending more counter-insurgency troops and stressed the importance of aligning military means with political priorities. Sending troops designed for counter-insurgency, according to Gray, is "like asking a high school football team to go against Super Bowl champions."

Nation-building, said Gentile, takes more than 40,000 troops. And it may take years, if not generations. There will be no swift victory.

When it came time for questions, the colonels were more often than not at a loss for answers.

Gray said people often ask him who the enemy is. "I wish I could [say]…The Hakani network, Hezbi Islami Party, the Islamic Movement of Uzbekistan…probably all and any of these," he said. When a woman asked him who the US' friends are, he responded, "I have no good answer."

One person asked Gentile, "How do you think this will play out in domestic politics?" Gentile shook his head and deferred to Gray. "He's the senior colonel. He gets the harder questions," said Gentile as the audience laughed.

Another man asked about stopping heroin purchases by Western Europeans whose money eventually ends up in the pockets of the Taliban. "We take General McChrystal's 40,000 troops and deploy them in…Amsterdam," mused Gentile as everyone laughed.

The night ended as Gentile posed a question none could answer: "Can we really change Afghan society for the better at the barrel of an American gun?"

USA - The Sucker

Two items here and an excerpt from the FT:

..."Chinese companies have invested $3.5bn in a copper mine in Afghanistan, while Beijing is also wary of greater Indian involvement in the country"...

The NY Times article featured an Iraq "saved" by USA which does not want US money in business deals.

US soldiers in Afghanistan, in another report I failed to save, patrol China's mining interests because investments mean jobs and jobs mean stability which US desperately want to see more of, something the Afghan government is incapable of delivering.

Why is Beijing NOT sending, say, 40,000 of its own PLA soldiers to Afghanistan to save guard its strategic economic investments? US has no financial interests there. That 40,000 Chinese soldiers could save both General McChrystal from his too blatant public effort to pressure his Commander-in-Chief for additional soldiers and to save American lives. Too many have been wasted already to protect the opium interests of the Karzai family. Shame.

Let's see what if any help Obama could get out of his forthcoming trip to Beijing.

Education in US - Good News, Bad News

2- years community colleges historically serve a number of important purposes. They provide those without financial or academic credentials an opportunity to get some education and to polish their learning skills for those who wish to finish their BA in a 4 years college.

With a 2-years record of academic work, a 4 years college could better evaluate the applicants ability. Many of these community college students do manage to enter a regular 4-years college and then graduate with a Bachelors degree.

The difference in life-time earnings between those with a BA and those without is substantial as any number of economic studies have shown.

Community college students tend to come from families of fewer means especially new immigrants. Sometimes the students are older.

Community colleges, therefore, help improve employment opportunities.

Their capacity tends to be more "scalable" meaning expanding capacity, than a typical 4 years full service college which is far more expensive to maintain.

This report here is encouraging and alarming.

Apparently demand is outstripping supply, a very new development. I had never heard of students getting rejection slips from community colleges. "Everyone" used to get in. "Community" colleges are here to serve their communities.

So the good news is more young and maybe not so young Americans want to improve themselves by enrolling at a 2 years community college.

The bad news is there is a supply constraint. This means even for a low cost operation like a 2 years no frills community college, there is a shortage of money.

Thursday, November 12, 2009

"Doing God's Work" -- a response

Goldman Sachs Chairman Lloyd Blankfein says the firm is doing "god's work". The incomparable Maureen Dowd responds here.

Shorting Chinese stocks?

Read this for a sobering assessment of China's "recovery" story here.

Pakistan, the next Domino? 3

The disturbing news out of Pakistan is not so much about Taliban's violence but about how even the underground rockers are Not anti-Taliban. Instead they want the US out of their country.

Perhaps Washington DC should consider leaving Pakistan altogether and let their people sort out their own problems. Otherwise, US would need perhaps a minimum of 500,000 to a million soldiers to "save" Pakistan from itself And that's on top of what is needed in Afghanistan and Iraq!

Read but don't miss the video here.

Wednesday, November 11, 2009

Ohio State, not Ivy League

...."Mr. Obama himself seems to be hedging his bets, particularly on the performance of Mr. Karzai, who is considered by American officials to be an unreliable partner and is now widely derided in the White House. Mr. Obama told ABC News during an interview on Monday that given the weakness of the Karzai government in Kabul, his administration was seeking “provincial government actors that have legitimacy in the right now"...

That excerpt is in today's NY Times.

Am I understanding this right? To wit, US is sending soldiers to fight for a country headed by a guy "widely derided" in the White House, which is an euphemism for the President who is looking for leadership in the provinces? Is US going to topple Karzai to be replaced by new talents from the boonies?

Incidentally, this script came straight from Vietnam where US, fed up by Diem, had him assassinated to be replaced by generals and colonels in a tragic comic series of coup d'etat.

This raises a question about elite education. These folks running the US government were educated at the best universities (on paper) money can buy. Harvard, Yale, Columbia, West Point, Annapolis, Wellesley, and yet they wish to send more soldiers to protect a guy not only hated in his own country with a opium dealing brother but is "widely" derived in the White House itself? None of these guys in DC seem to have read anything about the Vietnam War!

Time to put more folks educated at Ohio State than from the Ivy's.

Gorbachev on Afghanistan

He surely has more credibility than this correspondent. Here is his interview with Bloomberg News.

Too tired and too few to fight!

Here is an excerpt from today's NY Times:

..."The possibility of more troops for the war in Afghanistan was discussed Sunday on “Meet the Press.” Gov. Ed Rendell of Pennsylvania noted candidly that “our troops are tired and worn out.” More than 85 percent of the men and women in the Pennsylvania National Guard have already served in Iraq or Afghanistan. “Many of them have gone three or four times and they’re wasted,” said Mr. Rendell.

More troops? “Where are we going to find these troops?” the governor asked. “That’s what I want somebody to tell me.”

While we’re preparing to pour more resources into Afghanistan, the Economic Policy Institute is telling us that one in five American children is living in poverty, that nearly 35 percent of African-American children are living in poverty, and that the unemployment crisis is pushing us toward a point in the coming years where more than half of all black children in this country will be poor"...

Is it not clear to the White House that "nation building" is more urgently needed in US of A than in Afghanistan or in Iraq. Why is it necessary to continue the follies of the previous administration that have been draining precious resources badly needed at home.

Why does Obama not learn from Lyndon B Johnson's mistakes of not wanting to be seen as "weak" by de-escalating the war?

That war ultimately led to national humiliation off the rooftop of the US Embassy in Saigon, now Ho Chi Ming City.

An erosion from within a country, any country, is more of a threat to its national security than a bunch of cunning terrorists hiding in the caves in Pakistan/Afghanistan's no man land.

Why so?

All past empires declines were preceded by economic weakness and too much deviations from its core values on which these empires had been anchored.

The best way to boost the national security of USA is to be strong itself -- Repair its national balance sheets. Increase investment in education. Reduce unemployment. Let the rest of the world look up America once again. That's the best long term solution to strengthening its national security.

Moral declines as suggested by this report below are a bad omen of worse things to come.

This report here sadly suggests how far the USA has gone down the pay of eroding its national morality for expediency.

In a previous blog I berated Tom Friedman, the famous Flat World author and columnist, for not calling a Spade a Mercenary, I brought up the subject of the moral pitfalls of dropping unpleasant actions off the national moral balance sheets by outsourcing military behavior Geneva Conventions would frown on.

The largest outsourced extension is Blackwater, a de facto affiliate of the Pentagon financed by taxpayers money but civilian owned, and most profitably so.

I understand the logistical necessity of having a Blackwater due to budgetary constraints and concerns of violating military codes by uniformed soldiers.

But let's not kid ourselves. No one would NOT equate Blackwater with Pentagon, and by extension with the entire government of USA.

Sad day for those who have always had the highest regards for the US military. All those years of training at West Point, Annapolis, Air Force Academy are being soiled by these two disastrous wars in Iraq and now in Afghanistan as if one Vietnam War was not enough to bring down the moral fibre of this once great nation.

Georg Hegel, the great German philosophy once lamented how foolish nations could be with his famous soundbite: "History repeats itself". To which one of his famous intellectual descendents rejoined: "First time as tragedy, second time as farce".

Small quiz: who was that guy?

Tuesday, November 10, 2009

Please tell me this will not happen!

If this report here ever came to pass, then the full logic of war escalation in Afghanistan, a la Vietnam, is in place.

With more troops sent, there will be pressure to send even more when the goings get tough. The military will predictably ask for even more to get the job "done".

Withdrawal in the face of more casualties will be tagged by the Hawks back home as "traitorous" and "cowardly".

Obama, like LBJ, will then be forced to escalate more. Dollar would go way down, gold way up. This would be a rerun of a bad and familiar movie with a predictable and disastrous ending. Watch this space.

Monday, November 09, 2009

Inflation Expectations & No Free Lunch

There can be no better example of the well-known axiom about "no free lunch" in this world than the inevitable consequences of the bailout of Wall Street. That bailout was itself a "no free lunch" consequence of years of slap dash financial regulations plus fighting a war without asking the American people to pay for the deficits.

Oh yes, the deficits themselves were a "no free lunch" consequence of Bush's tax cuts. Those tax cuts were supposed to destroy once and all the axiom that one needed to pay for a lunch.

There are also political "no free lunch" consequences of a bailout plan hatched by Hank Paulson and later expanded by Geither/Summers to tilt towards helping predominantly a few Wall Street firms run by their pals.

Main Street will one day exact a political price on the Obama administration for a blatantly unfair bailout plan though there was no argument that a bailout of sorts was needed to pop up the sinking economy. The anger is not about whether, but about how.

Right now, all that printing of money that costs the banks next to nothing is having its "no free lunch" consequence of increased inflation expectations around the world ( read this here) even though unemployment remains sky high. The highest since the Great Depression in the US which is not officially over 10% but unofficially over 20% counting those who are "hidden".

These inflation expectations are behind the spectacular recovery in property prices in China and Hong Kong whose currencies are dollar based; the recovery in share prices, in oil and in gold.

Is this justified? I think so.

Sunday, November 08, 2009

First Kilimanjaro, Now Tibet!

Is Global Warming really a figment of imagination? Read this.

The Unraveling of the US War in Afghanistan - 2

The latest development is here.

The "periphery" is shrinking.

With Friends like these, who needs enemies?

Precision air strikes, as in video games, were considered "cost effective" even back in the days of the Vietnam War. Minimum casualties on "our side", maximum on their side. Did it work then? No.

Now, those who don't want to learn from history are repeating the same cost effective war making. One inevitable consequence is alienating those you want to be on "our side".

If air strikes can kill your own people, imagine what air strikes do to those who are not your own comrades?

All reports indicate Afghan civilians are at least as fearful and resentful of US induced "collateral damage" as that of Taliban or Al Qaeda. Read this latest from BBC here.

Saturday, November 07, 2009

11 best universities in the World -- in pictures!

Rankings are entertaining. Sometimes even informative. But just don't take them too seriously.

This list published by Jiao Tong University in Shanghai, now a much quoted one, at least makes far more sense than the silly one in the Times of London Education Supplement I posted 2 days ago which put Berkeley at the 39th spot. Here Berkeley is ranked number 3 in the world.

I have said before any list that does not put Berkeley as one of the 10 best should immediately be discarded as rubbish. Disclosure -- I am not an alumnus.

Here is the latest top rankings and with visuals!

Two (of many) caveats.

What does "best" really mean besides counting Nobel's and other academic awards won by professors at those universities?

Is comparing Caltech, MIT or Rockefeller, three essentially specialist schools, with full-service universities such as Yale meaningful?

The user-friendly full list is here.

Or you can go straight to the source here. Be warned. That site can be very slow.

Friday, November 06, 2009

The Magic $50,000 mark - 2

A number of anonymous readers objected to my "conclusion" I reached in an earlier blog regarding choosing colleges. In that blog I proposed taking a first cut by looking at a table of the largest endowment per student and then taking a second cut by looking at the quality and suitability to the individual needs.

I clearly did not explain myself well. One commentator said Haverford was on the most expensive list but gave the best financial aids. That's good. We are really talking about two different things.

What happens to a student accepted by Haverford but is not qualified to receive financial aids? His or her parents would have to pay more to send the student to Haverford vs Princeton or Yale assuming all accept the student on identical terms -- no financial aids.

The reason why Yale or Princeton can afford to charge less is precisely their endowment per student is much higher than Haverford.

I am of course assuming the quality of Haverford is as good as that Princeton or Harvard could provide. Some would argue Haverford is better. Others would argue the other way. I am not taking sides. Choosing the "best" college is very individual.

However, on a value for money basis and assuming quality is the same, then clearly Haverford is a more expensive proposition than, say, Princeton.

Unless the potential student absolutely detests Princeton, the campus and the town, and particularly likes Haverford, the campus or the town, or for other reasons unrelated to academic excellence, then if s/he is accepted by both colleges without financial aids, I should think Princeton would be a better deal.

I also used the word "subsidized" in the early blog. That in retrospect was perhaps too ambiguous. Let me clarify.

A typical college in the US does not charge in full what it costs to educate a student. The historical ratio is 3 or 4 to 1. For every $ student pays, the university has to spend 3 or 4 times more. You can verify this by taking a look at a financial statement published by, say, Harvard or Yale or Haverford.

For those less endowed colleges they need to charge more because they don't get a large contribution from their smaller endowments. The richer ones get more income from their endowment to fund the annual budget and can afford to charge less.

It was in that context that I said richer colleges subsidize their students more than poorer ones. I did not mean poor colleges could not or would not find a way to offer a generous package to a particularly talent student.

However, taking the student body as a whole, a larger percentage of students at Haverford I suspect would have to pay more towards their cost than a student at Yale -- again I am assuming both colleges offer the same quality so as not to be side tracked by a whole different debate about who is "better".

All one has to look at is the percentage of tuition in the total college budget.

In general, those who have a larger endowment per student would be able to provide better facilities and better faculty/student counseling.

There are always exceptions.

Haverford is one. But Haverford is, in fact, not a typical small college for its students have access to 3 excellent schools: Bryn Mawr, one of the $50k+, Swathmore (not on the list but has one of the highest endowment per student) and University of Pennsylvania, one of nations' best research institutions. All credits are transferable. All these 3 are excellent schools.

So naming Haverford to knock down my argument was not a very good starting point.

Few colleges on that list over $50,000 a year have that privilege. Despite a lower endowment per student, Haverford enjoys extra benefits due to its affiliations with those other schools.

By the way faculty student ratio at Haverford is 8 to 1 versus 5 to 1 at Princeton which has the highest endowment per student among leading colleges and is not on the list of the most expensive.

The real interesting question is if Haverford, Princeton and Yale - which charge less - all accept an applicant without financial aids, which one is a "better deal" for the parents and the student who must think about how to finance those 4 years in college.

I hope this note clarifies matters.

Global Rankings of Universities -- A joke

Ever since US News & World Report revived its failing business publishing hugely successful annual rankings of US universities, it has been all the rage for papers around the world who have rediscovered the art of selling a me-too product.

The Times of London has been publishing an annual supplement ranking universities on the global basis. And the results are embarrassing.


Well, anyone who thinks University College in London ranked number 4 is superior to Princeton ranked #8, or Stanford is lesser than Duke and Cornell, or Australian National University is superior to University of Michigan or University of Hong Kong is superior to Kyoto University, a world class university boosting nobel prize winners is a fine candidate to enter a psychiatric ward.

This is not to denigrate UCL, Duke, Cornell etc. They are fine institutions. But hey, ok, rankings are fun unless they are stupid.

Here is the Report.

By the way, any ranking table that does not list University of California, Berkeley as one of the top 10 in the world should be thrown into the shredder rightaway. In this table, it was ranked 39 below Melbourne, Sydney and the Hong Kong University of Science and Technology which has a lifespan of less than 30 years. Unbelievable.

Thursday, November 05, 2009

J.P. Morgan Bank

JP Morgan used to be one of two or three bluest chip banks in the States that stood for high professional standards where scions of fine families worked for a life time. That was then. This is now. Read this report here and sigh.

Wednesday, November 04, 2009

Let's Call a Spade a Spade, Mr. Friedman!

Outsourcing is Big and is "in". Everybody does it.

Simple economics. If Country A can make the same product, if not better, at a lower price, than in your own country, you move your factories to Country A. Economic patriotism, as is taught in freshman economics, is for the birds.

But when it comes to fighting a war and you are not finding sufficient volunteers, you pay up. It too is called "outsourcing". Remember Blackwater?

This is a "cheaper" outsourcing as well measured in politics, not in $$. Since casualties are not counted as military but as civilian. Since outsourced fighters are not technically soldiers, lots of stuff can be done under the radar.

There is another more important dimension. Outsourced firms on a military contract are not bound by the same military codes of honor, such as the Geneva Conventions governing the conduct of war, especially on how prisoners of war should be treated. Why? Because those firms are technically not military and the fighters are not strictly speaking GIs in uniform.

US historically adhered to Geneva Convention codes. That was then. This is now.

Tom Friedman has written an interesting column here on this subject, but he tried so hard not to utter the M word it is embarrassing.

The word is spelled 'MERCENARIES'.

There was a time when GIs were welcomed in a foreign country by men, women, children and pretty ladies with flowers and open arms. Not any more as mounting "collateral damage" has all but accepted as "normal".

In Iraq and Afghanistan there is a widespread desire for the US soldiers to leave. It is particularly sad that while uniformed solders tend to behave honorably, those who are "contract" soldiers do not often do so. Let's call them for what they are: mercenaries, Tom.

Tuesday, November 03, 2009

The magic $50,000 mark

Take a look at the following list of colleges in the US. This list of 58 colleges have the dubious honor of charging over $50,000 a year for tuition, room, etc.

The most interesting thing about this list is why some well-known names are NOT on the list.

You would have thought the obvious names such as Harvard, Princeton, MIT, Stanford, Amherst, Williams, Yale, Caltech, would be among them. Why not?

Elementary Doctor. Those who do not charge the most have big endowments per capita. The larger they are, the more the students are subsidized by the colleges.

I posted a blog earlier re how to choose colleges (or boarding schools) after being asked by too many friends with kids. The first cut is to look at those names with the highest endowment per capita. From them, do a second filter taking into consideration other factors: location, academic reputation, facilities, quality of student counseling and the like.

Choosing a college should not be based solely on cost. A Wellesley in its idyllic setting cannot be compared with, say, Barnard in New York City.

However, if money is an issue, then this list can be useful to your selection process.


These 58 private colleges and universities published rates for tuition, fees, room, and board totaling $50,000 or more in 2009-10. Last year only five institutions did so.

Source: The College Board's Annual Survey of Colleges 2009

Sarah Lawrence College
Landmark College
Georgetown U.
New York U.
George Washington U.
Johns Hopkins U.
Columbia U.
Wesleyan U.
Trinity College (Conn.)
Washington U. in St. Louis
Bates College
Vassar College
Parsons the New School for Design
Carnegie Mellon U.
Vanderbilt U.
Skidmore College
Bard College
Harvey Mudd College
Connecticut College
Tufts U.
U. of Chicago
Claremont McKenna College
Haverford College
Boston College
Barnard College
Colgate U.
Bowdoin College
Bennington College
Eastman School of Music, U. of Rochester
Middlebury College
Pitzer College
U. of Southern California
Fordham U.
Mount Holyoke College
Scripps College
Oberlin College
Hampshire College
Union College (N.Y.)
Stevens Institute of Technology
Franklin & Marshall College
Smith College
St. John's College (Md.)
Bard College at Simon's Rock
Babson College
Bucknell U.
Colby College
Rensselaer Polytechnic Institute
Lafayette College
Boston U.
Hobart and William Smith Colleges
Dickinson College
Carleton College
Tulane U.
Northwestern U.
Cornell U.
Dartmouth College
Bryn Mawr College
Franklin W. Olin College of Engineering

The Snows of Kilimanjaro

..."Compie turned his head and there, ahead, all he could see, as wide as all the world, great, high, and unbelievably white in the sun, was the square top of Kilimanjaro. And then he knew that there was where he was going"...

It was a passage from one of Hemingway's most famous short stories that was made into a film in 1952 staring Gregory Peck, Susan Hayward and Ava Gardner. Compie was Compton, a character in his story.

What Compie (Hemingway) saw would have looked like this picture taken in 1930:

Hemingway wrote the story in the early 30's though it was published in 1961 in a collection together with other short stories. "Snows", many say, is arguably Hemingway's best short story.

If Hemingway were alive today, he could not have written that passage. Take a look at Mt Kilimanjaro today:

This picture was in today's NY Times here.

The rightwing folks in today's radicalized Republican Party in USA, continue to believe global warming is either yet another sissy Democratic party nonsense or a communist plot -- whichever fits.

If you haven't any charity in your heart, you have the worst kind of heart trouble." Bob Hope

"More and more I come to value charity and love of one's fellow being above everything else... All our lauded technological progress--our very civilization--is like the axe in the hand of the pathological criminal." »
Albert Einstein

So, good for you BradAngie. I will go to your movies more often

US Going Broke?

Robert Samuelson, a respected economist and columnist, poses this question here.

A good question, but his analysis is not quite on the mark. More interesting and relevant stuff is missing. Also he puts in a few alarmist bits for effects: "stampede in selling off stocks" is one such.

What does it mean "going broke"?

In normal parlance for mere mortals like you and me, that means typically the following:

1) your "friendly neighborhood" bank that holds your mortgage will take away your home because you are behind in your payments.
2) ditto with credit card
3) ditto with all your other valuables because you have pledged them to get loans to sustain your past life style
4) you got fired by your company because my my your disappearing credit in our civilized society marks you as an undesirable to be avoided.

Well, that's not going to happen like that in the case of US of A.

What would happen is something like this:

1) US government bills and bonds are begging for buyers by offering junk bond grade interests the way bad credit countries such as Argentina, Mexico and the likes have done so in the past.
2) dollar would remain weak and weaker
3) Contrary to Samuelson's scare words, stock markets may briefly tank due to some short term panic, however, as long as US companies continue to be creative and productive (e.g., Apple, Microsoft and yes even Goldman Sachs in financial engineering), foreign buyers can't wait to scoop up their shares.

I am just giving you a flavor of a list that is much longer.

Samuelson used Japan as a case study. At one point its debt to equity ratio, indeed, went sky high as that of the US would also do so. But hey, Japan never went "broke" in the normal sense. it is alive and kicking.

What needs to be watched carefully is this: id US consumers, meaning you and everyone else who live in the country, continue to live beyond their means on credit, then the Japan case study is irrelevant. Japan is a high savings country. US is not. Then US may not go "broke" but will look more and more like a Third World country -- a subject I have written much in my blog.

US leaders will behave in front of its credits with heads bowed speaking gently and with humility. And guess who is the single largest creditor?

Hint, It is a country that is a strategic competitor to the US and was once given a color to describe its ideology. If you don't know that immediately, you are not "allowed" to read my blog anymore.

The Bizarre Mr. ex President of Taiwan

I knew for sometime this Mr. Chen was a little out of control. See my last article on him here.

His most recent antics can only be described as nuts. I quote from an article in The Economist, Oct 24 issue. It is a subscriber only site and I am not one!

Here are a couple of choice quotes:

..."This time [Mr. Chan] is up for treason, a crime that can carry the death penalty. The charge...springs from his own bizarre claim that, during his tenure, he was an American agent."...

..."[Mr. Chan claims] that as president he took orders from the Americans...arguing that American should intervene [in his court case] as Taiwan was technically under its occupation"...

Source: The Economist, Oct 24, 2009, page 52

For too many years his party, Democratic Progressive Party (DPP) spearheded Taiwan's unabashed Independent movement. He and DPP gave so many around the world the impression that this was one brave man leading a brave party for democracy and freedom. Well, it just wasn't so simple.

University Presidents Compensation

Who says university jobs are poorly paid? The latest data reveal some surprises. Who would you guess is the highest paid university president in the US? Harvard? Stanford? Yale? 3 strikes, you are out.

Envelope please. The highest is Rensselaer Polytechnic Institute's Shirley Ann Jackson at US$1.6 million a year. Shirely who? Rensselaer? Not MIT?

Rennselaer Polytech is a respectable engineering school with a combined undergraduate and graduate student body of about 6600. MIT has a student body of 14,000. Latter is consistently ranked as number 1 science/engineering institute of higher learning in the US if not the world. It has 7 Nobel prize winners on its faculty and over 70 bombined past/present winners in its history. It has an endowment of over $11 billion before the bust. Rennselaer is ranked 31 in the latest US News report with a miniscule endowment.

MIT president's compensation at $880,000 not to mention Harvard's $690,000, Caltech's $700,000 do not even rank among the top 20.

So much for logic in the real world.

The latest news report on pay is here.

China's Great Leap Forward in Education

Those who keep comparing India to China should remember this:

..."Determined to match or exceed the performance of developed nations, China’s government has poured billions of dollars into education in the last decade. The results are remarkable: Higher-education enrollment has more than tripled since 2000, and China today awards more college degrees than the United States and India combined. Annual awards of doctoral degrees rose sevenfold between 1996 and 2006.

But critics say the quality of teaching has suffered, and in recent years universities have become more politicized as Communist Party officials began to view a senior academic position as a ticket to career success"...

Source: NY Times Nov 2, 2009

It is a well-established axiom in theory of economic development that education is the single most important factor in growth.

The great leap in education in China is not without its problems. One well-known one is rampant plagiarism and inconsistent quality. That said, more education, however imperfect, is still better than none.

Monday, November 02, 2009

The Unraveling of the US War in Afghanistan

You know the headlines re Karzai "winning" the re-election in Afghanistan. The opponent pulled out because he said the results would be rigged.

The US was quick to congratulate Karzai. This is nuts. Karzai has no credibility. His brother is one of the world's largest opium suppliers -- with the blessing and money from the CIA. Afghans despise the endemic and systemic corruption that is the Karzai government.

Yet this is the guy the US is backing? Honestly do these foreign policy folks in the White House read anything about the Vietnam War where the same mistakes were being made backing a S Vietnamese government with no legitimacy and no credibility that was also corrupt to the core?

Well, stupid question, isn't it?

As the saying goes, those who don't remember history are doomed to repeat the same mistakes.

Where Did the Tax $$ go?

The top 1% were the single largest beneficiaries. If the tax cut had not happened the nation's deficit would have been smaller by over $2 trillion.

The Headline said it all

Read this report which is yet again another proof that the war in Afghanistan is futile. Pretty soon US may have to feel necessary to push Karzai out, just as it did in S Vietnam. Then the bad becomes worse which will in the end spell disaster. This is such a familiar and bad movie