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Sunday, July 31, 2011

THE DEBT CEILING CRISIS AND THE DEFENSE BUDGET

From all reports, our debt ceiling crisis will soon be over. Our Congress has largely played political brinkmanship 78 times over the past half a century. Why we continue this charade is just another sign that our government is broken, as only Denmark and the USA follow this tradition, and the Danish wisely keep their ceiling so high that it is never an issue. This time the overwhelming reason is that the Republicans are trying to take over the White House by weakening President Barack Obama for the 2012 presidential election.
The primary problem reverts to voters and their total misunderstanding of economic reality. The public thinks our Federal debt is like their personal debt. My HuffPo on "The Simplest Solution for Our National Debt...is to Increase It," explains all this. In short, the Tea Party has jumped on this illusion, and their strategy has worked. Amazing.
One positive to this nonsense is that it is appearing that a verboten untouchable, the defense budget, is to be part of the eventual package. Conservatives have historically been protectors of our national security, waving the freedom flag, for this also appeals to the masses. These Republican members of Congress are also largely funded by the Military-Industrial Complex to maximum defense expenditures.
My very first Huffington Post article was on this subject, and a couple more followed. But the idea is now getting contagious, for you keep hearing that the White House, and, especially former Secretary of Defense Robert Gates, want to cut the military budget. Even some Republicans have, apparently, accepted this possibility to reduce the deficit. Finally, the American people now want our Federal government to focus on domestic over international affairs.
First, some background, to appreciate the enormity of the problem and, thus, the grand opportunity. To quote from Forbes:  

Not counting the cost of the wars in Afghanistan and Iraq, the Defense budget is expected to be $553 billion in 2012, up from $549 billion in 2011. That outlay currently represents 19% of the entire federal budget and over 50% of U.S. discretionary spending...


That Middle East war, of course, adds another $120 billion, so now we are way over 50% of so called discretionary (everything minus social security medicare-whatever/equivalent and interest on the national debt) spending. On the surface, the Department of Defense dominance is alarming. The truth of the matter is that it is even worse, for the real expenditure is nearly nearly twice what is frequently quoted as the DOD budget. Thus, the military swallows about two-thirds of non-entitlement money to run our entire government. During those Cold War days when there was a real threat of the Soviet Union, we were spending far less. Today, with a rag-tag bunch (say, maybe 1000 really bad) terrorists, with the world order not at all threatened, we are misappropriating much more.  

We have, for example, eleven Navy task forces (and, therefore, eleven active aircraft carriers--more than the entire world combined--China has none, Russia has a relic more than a quarter century old and the UK all of one), and each reportedly costs $4.5 billion to annually operate. Thus, there is an opportunity to reduce the budget by $50 billion/year if we sensibly decommission most of them.  

A recent blog article of mine suggests another $50 billion savings by bringing our 516,273 troops in 150 countries back home. Did you know we still have 54,000 American military just in Germany? We won that war 66 years ago. Here on the left are American bases just in this country! You might say that the only war we ever lost was a kind of blessing, because the only domino that fell was the Soviet Union, and we have zero presence in Vietnam.  (I've said this many times before, but if you want to actually read the details, just click on that diagram.)
Yet, with no worries about a nuclear winter, we are building a new fleet of super carrier--the first once called the Gerald Ford, and, now, America--now in construction, will cost $14 billion. Why? Especially as an aircraft carrier is today obsolete. Okay, finish this last one (for posturing is a big part of wars today), and mothball (actually, as it will cost about a billion dollars to decommission each battle group, maybe try to sell them to China and Russia--and if this scares you, then, maybe Saudi Arabia, Japan, Singapore, etc.) at least nine of the twelve.  
I have only provided two possible targets of diminution. Clearly, as faith in religion develops from upbringing, defense spending has become holy because the Military-Industrial Complex (watch President Eisenhower's--he was a general, too--warning of half a century ago) has effectively indoctrinated us, while, too, of course, controlling Congress and the White House. You can't effectively argue against freedom. But it's more than that, as every state has some military presence. Just hint at closing a navy task force base, and see what happens. We are largely the problem. Thus, this debt ceiling charade might just be the spark needed to bring us to our better senses, initiating the beginning of my 10% solution.
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There are four ocean storms, with Tropical Storm Eugene south of Mexico now at 40 MPH expected to strengthen into a hurricane by Wednesday, and in the Atlantic, a small disturbance predicted to become a tropical storm, heading in the general direction of Florida.  However, the big one is Super Typhoon Muifa at 145 MPH, projected to slam into Okinawa, in fact, at this time, right over Naha, by Thursday, as a Category 3 monster, then head for China, currently in towards Zhoushan and Shanghai.

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Saturday, July 30, 2011

SIMPLIFY THE TAX LAWS: END ALL SUBSIDIES

The next installment about the ocean being our next frontier will continue on Monday.

Your knee jerk reaction about the recent headlines regarding oil company profits--just Exxon+Shell+ BP+Chevron =  $32 billion, only for the past quarter, so multiply by four to get $128 billion for the year--is to eliminate oil company subsidies.  We should, but this sum is only about $4.3 billion/year, or 0.2% of the deficit this year, enough to continue government spending for 10 hours.  Thus, the $4 trillion Congress wants to cut over the next decade can be helped by 1% if we take this "drastic" step.

This conservative blog site goes on to say that the oil and gas industry provided $17.7 million, only #19 in political contributions for the 2008 election cycle.  Lawyers gave $127 million.

But GRIST, a liberal site, says these subsidies amount to approximately $156 billion over a ten year period, four times more than an oil advocate blogger.  Thus, if this opposing article is right, then 1% is more like 4%, looking substantial.  And, by the way, that ethanol tax credit actually goes to oil companies, not farmers. Except, if you read a renewable energy newsletter, apparently everyone benefited.  No big surprise, but consider the source of the material.  As an aside, this article reveals why the Farm Lobby relented to non-continuance of this subsidy.

Let's face it, some of you (certainly not me...I have principles) were smart to buy oil stocks a long time ago because they paid dividends and increased in value for a simple reason.  They don't own much oil compared to countries, but they do everything else, for which they add a margin of profit.  Thus, if oil drops to $50/barrel, they get their cut.  When it someday jumps to $150/barrel, they will probably find a way to increase their profits for the actual percentage of their take drops by one-third.  This will nicely cover the decrease in volume.  In any case, as long as there is gasoline to sell, petroleum companies will do well. 

Thus, what about cutting all subsidies:  to farms, to you (mortgage, dependents, charity, whatever), to every organization (like churches, too).  If there is a next and bigger economic crunch, lifestyles will dramatically worsen for all.  Even Sarah Palin says end subsidies.  Gasp...I might actually agree with her on something.

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There are now six (make that five, as Tropical Storm Don brought little rain and some wind to south Texas, and dissipated) ocean storms, with Super Typhoon Muifa certainly looking ominous at 130 MPH, and appears headed for Okinawa:

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COUNTRY #186 (again??): EQUITORIAL GUINEA

A new country visited my site, and for some reason, GOOGLE again counted it as #186 (same number as Burkina Faso).  Anyway, welcome:


EQUATORIAL GUINEA POPULATION: 633,441

1 VISITOR FROM HERE!


«  Previous Country | Next Country  »   Back to Flag Counter Overview
 Background
Equatorial Guinea gained independence in 1968 after 190 years of Spanish rule. This tiny country, composed of a mainland portion plus five inhabited islands, is one of the smallest on the African continent. President Teodoro OBIANG NGUEMA MBASOGO has ruled the country since 1979 when he seized power in a coup. Although nominally a constitutional democracy since 1991, the 1996, 2002, and 2009 presidential elections - as well as the 1999 and 2004 legislative elections - were widely seen as flawed. The president exerts almost total control over the political system and has discouraged political opposition. Equatorial Guinea has experienced rapid economic growth due to the discovery of large offshore oil reserves, and in the last decade has become Sub-Saharan Africa's third largest oil exporter. Despite the country's economic windfall from oil production resulting in a massive increase in government revenue in recent years, there have been few improvements in the population's living standards.


Map data ©2011 MapLink, Tele Atlas - Terms of Use



Equitorial Guinea and Burkina Faso are both in West Africa:

(BY THE WAY, THIS SHOULD BE COMMON KNOWLEDGE BY NOW, BUT IF YOU CAN'T READ SOME OF MY PICTORIALS, JUST CLICK ON IT.)   Equitorial Guinea is located just south of Cameroon, and is known for scandals:

1.  Corruption, which is why:

 It ranks 121st on the Human Development Index, and 151st on the Transparency International Corruption Index. This year’s human development report, Beyond scarcity: Power, poverty and the global water crisis, listed Equatorial Guinea as the worst off country in Africa, where nearly 60% of its population lacks access to clean water.

2.  Exxon and practices of oil companies:

ExxonMobil and other leading oil companies are to face an investigation into how up to $500m (£310m) came to be paid into a private US bank account, said to be solely controlled by the President of Equatorial Guinea.

3.  Bank transfers, epitomized by Riggs Bank of DC:

The abuses at Riggs led Congress to consider forming a single agency with greater authority to enforce money laundering and currency control laws. Daniel E. Stipano, deputy chief counsel for the Office of the Comptroller of the Currency, said, "What happened with Riggs is unacceptable. It cannot be repeated."

Equitorial Guinea is almost twice the size of all the Hawaiian Islands.  You can be a tourist in EG.  There is no travel alert, but caution is advised.  Violent crime is rare.

If anyone from Equitorial Guinea again clicks on this blog, and is reading this, please let me know if conditions today are better.

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Friday, July 29, 2011

OUR NEXT FRONTIER: THE OCEAN--Some Early Pioneers












This is Part 3 of Our Next Frontier:  The Ocean.

The 15th through 17th centuries were the age of ocean exploration.  The first country to test the waters was...China, as Zheng He (above at top) visited west to Africa and east to America between 1405 and 1433, and was, of all the things, a Muslim.  Reportedly, He had 62 treasure ships, each larger than a football field, with up to 5 masts.  In comparison, Christopher Columbus' flagship, the Santa Maria (the right one on the left) was all of 25 yards long, or one-fourth the length.  More than a century after He, Ferdinand Magellan's (right) globe circling ships were one third the size.  But China gave up and Europe conquered the world.



 The British Empire became the largest ever, controlling almost a quarter of the world population, not as large as the Mongol Empire circa 1300, which commanded over 26%, but the land area of the British was slightly bigger.  While British colonies went on to generally do well (as, for example, the USA), the human toll was devastating, as diseases, slavery and loss of freedom crippled many of these subjugated countries.  Let's face it, colonization was not undertaken to improve the welfare of the conquered peoples.

The 21st century age of ocean development, though, will have no humanitarian downsides, although environmentalists will argue that we have screwed up our atmosphere and lands, so let us preserve our oceans.  The key to success will be a balanced approach involving all stakeholders.

Three early pioneers influenced my thinking:

Athelstan "Spilly" Spilhaus and I talked about colonizing the sea.  He was an amazing man, and only one accomplishment was his creation of the Sea Grant Program.  I remember when he was well into his 80's we sat down to discuss the future of the ocean over my bottle of Chivas Regal, and, in particular, his enormous capacity for scotch.  I sat in on a similar drinking session with the next marine visionary over a liter of Canadian Club in Kyoto...


...but John (left) was even more remarkable, for well into the evening, and maybe early next morning,  Jim Collins (right, we finished his bottle), John and I pontificated on all things nautical, and I had a couple of drinks, so did Jim, which means that John must have....  John Pina Craven had a dream about floating cities, and built a prototype, which, unfortunately sank in Kaneohe Bay.  It might still be there.  John is responsible for the Natural Energy Laboratory of Hawaii Authority, was Chief Scientist of the Polaris Program and is "famous" for deep sea intrigue involving a Russian submarine and the Glomar Explorer.  I can only regret that he was not elected to Congress, for, if he beat Cec Heftel, the oceans would today already be well into the Blue Revolution.


Kiyonori Kikutake, a Japanese architect, designed Craven's floating experiment, but earlier in 1959 proposed Marine City (above right) and was responsible for Aquapolis, the showcase exhibit of the Okinawa Expo in 1975.  I discussed with him the possibility of restoring and towing Aquapolis to the follow-up Lisbon Ocean Expo in 1998, which had nothing worthy.  More recently, he designed the Edo-Tokyo Museum.

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The Dow Jones Industrials continued to sink, down 97 to 12,143, with world markets also mostly down.    Yes, another all time record, as gold jumped $11/toz to $1627, while oil prices are easing down, the NYMEX at $96/barrel and the Brent Spot at $117/barrel.
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There are five marine storms, but only Muifa will attain hurricane status:

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I spent my Friday lunch on Magic Island under a coconut tree, and enjoyed the following view:

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