NYC Junta

WNYC carried a story this morning about American companies doing business in Iran. While technically it is illegal under American law for companies to deal with Iran, business successfully lobbied to be allowed to subvert the embargo by using their foreign subsidiaries. This is how, for example, Honeywell is able to sell Iran technology to refine oil into gasoline.

The SEC used to compile a list of companies that were evading sanctions in this manner. Lobbyists fought successfully to end that practice; however, the New York Times carried a story over the weekend listing 74 companies doing business with Iran despite US laws and national security strategies that aim to stifle such business. So who is really in charge? Uncle Sam or the oil and gas corporations? (For it is mainly energy companies on the list).

What’s more, the companies in violation (in spirit, if not in letter) are also recipients of major government contracts—totaling over $100 billion in the past decade. So not only do they flout the national policies of their government, but they aren’t even ostracized for doing so. Sounds like a compelling case for the pointlessness of sanctions.

In the News business, iran, politics, sanctions, usa

Are the Greeks likely to secede from the EU because of their sovereign debt? John Mauldin, a financial investor and writer who claims 1 million+ email subscribers, says its not as fanciful as it sounds:

The third option is that they could vote to leave the European Union. While this is unthinkable to most Europeans, it is an option that may appeal to some Greeks. They could create their own currency and effectively devalue their debt. It would make their labor and exports cheaper…

Most people scoff at this notion, but money is flying out of Greek banks into non-Greek ones, and to my way of thinking that is a suggestion that some Greeks think secession might be a possibility. It is also causing severe stress at Greek banks.

Mr Mauldin’s letter is worth reading in its entirety (he requires an email address to access full letter). It’s a 20min read but explains the reasons behind the Greek financial crisis and the possible ways out, and along the way showing the parallels with the rest of Europe and America.

Greece is being told that it must cut its budget to an 8.7% deficit this year and down to 3% within three years.

For my American readers, let’s put that into perspective. That is the equivalent of a $560-billion-dollar US budget cut this year and another such cut next year. That would mean huge cuts in entitlements, Social Security, defense, education, wages, subsidies, and on and on. And repealing the Bush tax cuts? That would just be for starters. No “let’s freeze the budget” and try and grow our way out of it, as we effectively did in the ’90s, or gradually cutting the budget a few hundred billion a year while raising taxes. That combination of tax increases and budget cuts would guarantee a US recession. Unemployment, already high, would climb higher.

And yet, that is what the Greek government is being asked to do as the price for a bailout.

[...]

Whether it is Japan or Portugal or the US or (pick a country), the body of evidence clearly shows that there is a limit to the amount of debt a sovereign country can handle without a crisis developing. That limit is different for each country, but there is a limit that the bond market will impose. And there are many countries in the developed world that are approaching that limit.

I highly recommend subscribing to his newsletter. It’s free.

In the News financial crisis, greece, sovereign debt, usa

Earlier in the day yesterday, I tweeted that I’d like to hear Obama admit the truth about the state of our Union. While he couldn’t come out and put it the way I did, I noticed that he avoided the traditional opening of the speech, “The state of our Union is strong.”

Obama opened with a frank assessment of the tough times we’re facing, but put them in a historical context so as to soften the blow of bad news. It was not until the twelfth paragraph of his speech (six minutes into it), as he concluded his introduction and came to specific proposals, that he affirmed the strength of the country.

It’s because of this spirit — this great decency and great strength — that I have never been more hopeful about America’s future than I am tonight.  Despite our hardships, our union is strong.  We do not give up.  We do not quit.  We do not allow fear or division to break our spirit.  In this new decade, it’s time the American people get a government that matches their decency; that embodies their strength.

I found the speech uplifting, and welcomed the return of Obama the Force. Throughout 2009, it seemed the strong, eloquent man I had voted for was taking a back seat too often, and not standing up for important principles. Despite the power of the speech, I still find fault with his policies on the war, national security, and the prosecution of war crimes which were clearly committed by our government. I will still fight him on that. But this was a welcome return of a strong leader with the right ideas on jobs, energy and education.

One of the high points was when he said we need to reject those who say his program is too ambitious, and “that we should just put things on hold for a while.” Obama’s response channeled Martin Luther King’s Letter from Birmingham Jail, where the civil rights leader wrote, “For years now I have heard the word ‘Wait!’ … This ‘Wait’ has almost always meant ‘Never.’”

As the President put it:

For those who make these claims, I have one simple question: How long should we wait?  How long should America put its future on hold?

You see, Washington has been telling us to wait for decades, even as the problems have grown worse.  Meanwhile, China is not waiting to revamp its economy.  Germany is not waiting.  India is not waiting.  These nations — they’re not standing still.  These nations aren’t playing for second place.

I’m looking forward to the ways in which Obama might rally his party to avoid a monstrous November defeat. It will be difficult. But as he said, they still have the largest majority in decades, and we the people expect them to pass some meaningful legislation.

What did you think of the speech?

Articles, In the News obama, politics, usa

Good for Google, finally standing up to China, I hope this embarrasses the Chinese government. The Chinese government has been extraordinarily effective at censoring the internet, contradicting many who thought initially that the internet would be the trojan horse through which more liberal ideas circulated through to the people. I don’t care about the justifications about keeping order, or the tired story about protecting people from pornography, any regime afraid of ideas is a bad one.

I’m the benefactor of a smart colleague who is a voracious reader and, like I occasionally do, leaves magazines around the office for others to read after he finishes them. Among the mags I got today was Foreign Policy, just read Walter Russel Mead’s excellent piece that has gotten a lot of attention this past week for really exploring the comparison between the foreign policy of Obama and Carter.

In the News carter, china, google, obama, usa

News broke yesterday that China suceeded in pressuring Cambodia into deporting a few dozen Uighurs who had escaped the country after the riots there a few months ago. Not going to go into the whole Uighur debate, I’ve posted about that before on here, but those guys have it pretty rough. And now it comes out that China seems to have basically dangled new investments in front of the Cambodians to get them to return the Uighurs. So, who wants to live in a world dominated by Chinese power? Anyone think those Uighurs are going to get a fair trial? They’ll be sent to jail for life or executed (China executes more people than all other countries combined). This story is another reason why China’s massive foreign investment campaign in third-world countries merits close scrutiny.

In the News cambodia, china, uighurs

I couldn’t believe this story, the Somali pirates have set up a stock exchange to help fund their activities. Pretty egalitarian too those pirates, not only for the jihadi fat-cats, even the common-folk can get involved, read to the end and check out the young woman who did pretty well after contributing an RPG she got, uh, from alimony.

In the News pirates, stock exchange

From today’s Times:

Eleven ships and 262 crew members are believed to be detained by pirates right now.

That’s a lot of people. Blackbeard lives.

In the News kidnapping, pirates

I’m sure some of you have seen the news about the British couple that was taken hostage by Somali pirates in the Indian ocean. They were on their private yacht when they were taken. This presents some diffierences than if they were traveling on a commercial vessel. In those cases the company has an interest in having their people released and will often pay a ransom to make that happen. Because these are just two private people on their own boat they don’t have that going for them, and foreign governments are very reluctant to pay ransoms or give in to the demands of criminals and terrorists (at least publicy).

Further bad news has come in the form of the pirate demands, about which there have been conflicting reports. The NY Times reported yesterday that the pirates are demanding the release of their confederates being held by various governments. If true that will really complicate any potential release.

We can discuss in greater detail at the Junta, but the captives would be in much better shape if the pirates were only interested in money. It also sounds like there is some feuding among the pirates and what to do with the couple.  The UK Mirror is reporting today that the pirates may substatially lower their ransom demands.

In the News kidnapping, pirates, somalia, terror, the sea

China Economic Review highlights this WSJ story on American diplomatic efforts to get the Chinese to buy more oil from Saudi Arabia. The idea is that if China buys less oil from Iran, they will be more inclined to support the sanctions the Americans are proposing.

What about a converse situation? Instead of pressuring the Chinese to abandon their Iranian contracts, we could be lifting sanctions and doing more business with Iran. Didn’t someone once say that if goods don’t cross borders, armies will? We should be increasing ties to the Iranians – including business, academic and cultural connections – so as to decrease animosity.

Some will say that this would “reward” the Iranians for “bad behavior.” Nonsense. What have sanctions brought us, except more hostility? Even the Iranian protesters who were out on the streets demonstrating against Ahmedinejad do not favor sanctions against the regime they have far more reason to despise than we do.

If we really care about the brave Iranian souls who were out fighting for democracy this summer, we should reject sanctions and work toward the normalization of relations, which means doing business together.

In the News china, energy, iran, oil, saudi arabia

Thinking a lot this weekend about Afghanistan. I just finished Dexter Filkin’s excellent book, “The Forever War“, and read the piece Filkin’s also had in this weekend’s NY Times Magazine on General Stanley McChrystal, who is in charge of the war in Afghanistan. He is requesting at least another 40,000 troops to win the war in Afghanistan. I have a hard time thinking about any compromise with the Taliban that puts them in charge and abandons the Afghan people to their brutal, primitive rule. But the US has been there for over 8 years now, and I doubt that we can (or should) build a modern state there, in particular with the corrupt Karzai government stealing elections and trafficking in narcotics. Obama has a tough call on his hands, but I think I’m against sending a large number of troops. I think the fight is in Pakistan and dealing with that country’s disfunction. I still feel that way, but reading Part I in journalist David Rhode’s kidnapping saga, I was struck by this section:

Over those months, I came to a simple realization. After seven years of reporting in the region, I did not fully understand how extreme many of the Taliban had become. Before the kidnapping, I viewed the organization as a form of “Al Qaeda lite,” a religiously motivated movement primarily focused on controlling Afghanistan.

Living side by side with the Haqqanis’ followers, I learned that the goal of the hard-line Taliban was far more ambitious. Contact with foreign militants in the tribal areas appeared to have deeply affected many young Taliban fighters. They wanted to create a fundamentalist Islamic emirate with Al Qaeda that spanned the Muslim world.

I’m not so sure we can strike a balance in trying to limit an extremist sanctuary and not have a huge number of troops there. Either way we are confronted by a series of bad decisions, it’s just a question of which one is worse.

In the News afghanistan, kidnapping, taliban, war