My perma-bear thoughts on the economy seem to have been stymied by the US printing presses--so I turn to another thing I think has huge implications for the world. Namely the Israel-Palestinian issue.
Obama's speech left many of us in awe--but it's a familiar feeling. We have seen this since Iowa and really since Obama's debut in 2004. He's masterful--but aside from nuance and atmosphhherics he's not saying much different from Dubya. His words need to be followed by action---and in the next few weeks.
Specifically--getting Bibi to agree to a settler freeze is first. Have him allude to the two-state solution IF there is normalization of ties with the Arab states. An explicit recognitition of Israel's (even with Hamas) right to exist might only happen at the end.
Negotiations with Syria might lead to something in the Golan heights if Hezbollah is empowered. This might lead to a virtuous circle of concessions and more security elsewhere.
Take from Ramos' book--'The Age of the Unthinkable'. Strange bedfellows can emerge but empowering others breeds success in today's world. Also, focusing on indirect control and not on the levers that have been pushed 1000 times (and failed 1000 times)
These steps will require incredible pressure on Bibi and the Jewish lobby. A few carrots Obama has are his incredible popularity now, his promise to not let Iran get a nuclear weapon, and the demographic necessity to get it done now lest it turn into an apartheid situation.
The time to spend his political capital is now.
Friday, June 5, 2009
Friday, May 29, 2009
U.S. debt big picture
More than six months after the crash, I remain incredibly bearish. The major reason for this is US debt levels, in their various forms.
As best I can gather, this is roughly a 100 trillion dollar problem (I like working in round numbers). Federal debt is 11 trillion. Household debt is 13 trillion. Corporate debt is 12 T. Financial debt is 17 T. Social security deficit is 9 T. Medicare is 32 T.
The last number is huge and things really hit the fan in eight years or so. Hence Obama's push to get health care costs down. Let's pretend the entitlements problem is solved by some means of collective sacrifice.
The number that really concerns me is household debt. At 130% of income it needs to get back to like half this. Hence, de-leveraging is going to be a major drag on what drives 70% of the economy. This won't be a couple of years either.
Can anyone tell me how we let it get this far?
As best I can gather, this is roughly a 100 trillion dollar problem (I like working in round numbers). Federal debt is 11 trillion. Household debt is 13 trillion. Corporate debt is 12 T. Financial debt is 17 T. Social security deficit is 9 T. Medicare is 32 T.
The last number is huge and things really hit the fan in eight years or so. Hence Obama's push to get health care costs down. Let's pretend the entitlements problem is solved by some means of collective sacrifice.
The number that really concerns me is household debt. At 130% of income it needs to get back to like half this. Hence, de-leveraging is going to be a major drag on what drives 70% of the economy. This won't be a couple of years either.
Can anyone tell me how we let it get this far?
Tuesday, April 21, 2009
Advice for Chrysler's union
Accept a 40% pay cut. Demand a 40% pay cut of the management team. Demand humongous profit-sharing incentives. Demand union involvement in day to day cost control.
This worked for Ricardo Semler's company Semco in the 1990's. The construction manufacturer rode out Brazil's inflation and continued to make revolutionary changes in its business model. Today it is one of Brazil's mot profitable companies. Semler can not now say how many people he employs or exactly what kind of company Semco is.
The commerce grad in me is left shaking his head.
The Semco story is told in Joshua Cooper Ramo's new book 'The Age of the Unthinkable' The ideas in it are kind of--profound--for lack of a better word. I need to let them be digested. But the last sentence of the book asks, "What does this revolution ask of me?" I've decided that I should blog more about this topic.
But first-----Viking Wars!!!!!!!!!!!!!!
This worked for Ricardo Semler's company Semco in the 1990's. The construction manufacturer rode out Brazil's inflation and continued to make revolutionary changes in its business model. Today it is one of Brazil's mot profitable companies. Semler can not now say how many people he employs or exactly what kind of company Semco is.
The commerce grad in me is left shaking his head.
The Semco story is told in Joshua Cooper Ramo's new book 'The Age of the Unthinkable' The ideas in it are kind of--profound--for lack of a better word. I need to let them be digested. But the last sentence of the book asks, "What does this revolution ask of me?" I've decided that I should blog more about this topic.
But first-----Viking Wars!!!!!!!!!!!!!!
Saturday, February 21, 2009
Budget ideas
Obama needs to moderately (say 4% across the board) This will not do muuch but should be passable given the crisis..
The heavylifts need to come from defence and entitlements. Only defence can be dealt with now.
Defence needs a reorientation. The crisis means that the US can no longer be the world's police and its footprint needs to be halved. As a foreign policy hawk I would like a base in Afghanistan, Iraq, Georgia, Kenya, and the Phillipines please. Close the rest and bring all the troops home from Germany and Japan.
Reduce the size of the navy. The US will have less need to project its power.
Pull out of NATO and the UN. The world needs a new league of liberal democracies. Parter with Russia, Iran, China, DPRK on ad hoc basis. Israel should not be in until a 2 state solution is agreed to. The more liberal and fair and the less corruption these countriesx have the more power they get. Keep Britain, UK and France wi th veto power.
The IMF, World Bank and G20 should remain leaders for economic growth and should remain stable. The world needs to be united and cannot withdraw!
The Soviets will really not like the Georgia base so give up the missile shield. It doesn't work anyway. Stop or curtail new weapons development.
Re-structure bases and military organization and procurement so that it is leaner and adaptable to changing world. Commit to strong force but a different one.
The heavylifts need to come from defence and entitlements. Only defence can be dealt with now.
Defence needs a reorientation. The crisis means that the US can no longer be the world's police and its footprint needs to be halved. As a foreign policy hawk I would like a base in Afghanistan, Iraq, Georgia, Kenya, and the Phillipines please. Close the rest and bring all the troops home from Germany and Japan.
Reduce the size of the navy. The US will have less need to project its power.
Pull out of NATO and the UN. The world needs a new league of liberal democracies. Parter with Russia, Iran, China, DPRK on ad hoc basis. Israel should not be in until a 2 state solution is agreed to. The more liberal and fair and the less corruption these countriesx have the more power they get. Keep Britain, UK and France wi th veto power.
The IMF, World Bank and G20 should remain leaders for economic growth and should remain stable. The world needs to be united and cannot withdraw!
The Soviets will really not like the Georgia base so give up the missile shield. It doesn't work anyway. Stop or curtail new weapons development.
Re-structure bases and military organization and procurement so that it is leaner and adaptable to changing world. Commit to strong force but a different one.
Friday, February 20, 2009
Obama needs to bring it on Tuesday night
Obama needs to give the speech of his life on Tuesday night.
This is saying alot given his debut in Boston four years ago. IMHO, the only Obama speeches approaching this were the victory speech in Iowa and the "race" speech in Philadelphia. His inaugural address was kind of a let down. (In fact, I am hoping he knew he had to "keep his powder dry" until he really needed to rouse the nation--that moment is now)
He needs to reach for the rhetorical heights when he addresses a joiint session of Congress Tuesday. Lots of "This is AMERICA!" and stern looks, and Ra-ra Red, White and Blue and "We can do it if we are, once again, the UNITED States of America!" and reminiscing about the Marshall Plan and the moon landing and standing up to communism etc. Eventhe Pubbies will have to get up and cheer.
He needs to finish on this of course, and start off with a description of he dire circumstances and the need for tough choices. Few specifics but an explicit apeal to the politicians in the room to be strong in the next few months for the good of the country. The country needs tough love right now and changes need to be dealt with with maturity.
The US needs a lift right now for a few reasons. The economic news is so bleak that Americans are wondering if their country will ever be the same again. It's sapping consumer confidence which is still needed for economic growth. And most of all--cause the really heavy lifting is just now beginning. Passing tax cuts and new spending was easy (BTW I think the stumulus wa s wrong headed and won't work and they should've saved their money--the best part of it may be that it might've sated Pelosi's appetite) The real heavy lifts--for a while--are housing, banking, and the auto sector--all of which I'll detail later. (Tomorrow, I'll write about budget ideas)
Obama needs to be more like Bill Clinton was today when he said, "Those who want to bet against America need to remember-that hasn't worked out so well over the past 230 years" Obama is not only the leader of the country who has to be sombre and judicious and bi-partisan. He also needs to make tough calls and piss people off for the long-term good of the nation. He also needs to be hopeful, confident and optimisic.
A least one person in the U.S. needs to be. Tuesday means a lot.
This is saying alot given his debut in Boston four years ago. IMHO, the only Obama speeches approaching this were the victory speech in Iowa and the "race" speech in Philadelphia. His inaugural address was kind of a let down. (In fact, I am hoping he knew he had to "keep his powder dry" until he really needed to rouse the nation--that moment is now)
He needs to reach for the rhetorical heights when he addresses a joiint session of Congress Tuesday. Lots of "This is AMERICA!" and stern looks, and Ra-ra Red, White and Blue and "We can do it if we are, once again, the UNITED States of America!" and reminiscing about the Marshall Plan and the moon landing and standing up to communism etc. Eventhe Pubbies will have to get up and cheer.
He needs to finish on this of course, and start off with a description of he dire circumstances and the need for tough choices. Few specifics but an explicit apeal to the politicians in the room to be strong in the next few months for the good of the country. The country needs tough love right now and changes need to be dealt with with maturity.
The US needs a lift right now for a few reasons. The economic news is so bleak that Americans are wondering if their country will ever be the same again. It's sapping consumer confidence which is still needed for economic growth. And most of all--cause the really heavy lifting is just now beginning. Passing tax cuts and new spending was easy (BTW I think the stumulus wa s wrong headed and won't work and they should've saved their money--the best part of it may be that it might've sated Pelosi's appetite) The real heavy lifts--for a while--are housing, banking, and the auto sector--all of which I'll detail later. (Tomorrow, I'll write about budget ideas)
Obama needs to be more like Bill Clinton was today when he said, "Those who want to bet against America need to remember-that hasn't worked out so well over the past 230 years" Obama is not only the leader of the country who has to be sombre and judicious and bi-partisan. He also needs to make tough calls and piss people off for the long-term good of the nation. He also needs to be hopeful, confident and optimisic.
A least one person in the U.S. needs to be. Tuesday means a lot.
Thursday, February 19, 2009
My Obamafication
OK --the Ottawa trip sealed it--I'm now an Obamatron.
Actually, last week's press conference was a clincher too. The way he moved effortlessly from foreign crises to domestic ones, sounding like he had a detailed grasp of each issue. And his political handling of difficult issues just left me in awe.
I guess I always saw his potential--but just didn't think he could realize it--this early.
Now I'm a true beleiver.
I guess also that blogging for Hillary (partly for McCain but mostly for her) made me want to destroy Obama for most of 2008--old habits die hard.
Now I've reached the point where I'm going to work for Obama's re-election no matter what. (Even if McCain runs again in 2012--something I don't think is unfathomable.)
This is a big step for me.
Hence, I've changed the description of my blog and will be dispensing only policy and political advice for Barack Obama. I'll try to post every day. I'll start tomorrow with 'How to Fix the Economy in 3 easy steps.'
Actually, last week's press conference was a clincher too. The way he moved effortlessly from foreign crises to domestic ones, sounding like he had a detailed grasp of each issue. And his political handling of difficult issues just left me in awe.
I guess I always saw his potential--but just didn't think he could realize it--this early.
Now I'm a true beleiver.
I guess also that blogging for Hillary (partly for McCain but mostly for her) made me want to destroy Obama for most of 2008--old habits die hard.
Now I've reached the point where I'm going to work for Obama's re-election no matter what. (Even if McCain runs again in 2012--something I don't think is unfathomable.)
This is a big step for me.
Hence, I've changed the description of my blog and will be dispensing only policy and political advice for Barack Obama. I'll try to post every day. I'll start tomorrow with 'How to Fix the Economy in 3 easy steps.'
Monday, January 19, 2009
Two mega-priorities for Obama and ten "pressure-points"
Saving America and the world requires two mega-priorities be handled first. After that ten different "pressure points" need to be pressed simultaneously.
MEGA PRIORITY #1--ENTITLEMENT REFORM--Outlays for Social Security, Medicare and Medicaid make up more than half of federal spending. With more baby boomers entering retirement--this situation will only get worse. Putting the US on sound financial footing is very difficult and politically costly and that's why it needs to be done right away because he will never have as much political capital as he does now.
MEGA-PRIORITY #2--TWO-STATE SOLUTION IN MIDDLE EAST--The major structural problem internationally is the Israeli-Palestinian conflict. The longer he waits the longer he is complicit in accepting the status quo. And the settlements on the West Bank are reaching the point of no return. If they are not dramatically scaled back/abandoned soon there will never be a settlement and the only outcome will be apartheid by the Jewish people of a majority Palestinian population.
The window is quickly closing on these two crises powered by demographics. The obstacles are enormous, but they can only be overcome by a first term president at the height of his power with the mandate of the public to make change. The moment is now and Obama has to move with fierce urgency. My tongue is forever in my cheek.
Two carrots can also be used to get the kind of concessions needed. Seniors and the left will be more willing to accept change to entitlement programs if there is health care reform promised. And the Israelis will be more willing to remove settlers if they know we are going to deal with the Iranians one way or the other.
Resolving these problems will pay gi-normous dividends. But there is still a laundry list of things to do.
Traditional prioritizing won't work because there are too many critical things which can't be delayed. Instead, see the domestic and international problems as concentric circles which overlap. Focus on the pressure points simultaneously. Hopefully the budding solutions will mutually reinforce each other.
Five domestic pressure points
#1 Efficiency in healthcare--putting records online and concentrating on prevention and sharing best practices will reduce costs.
#2 Education reform--Merit pay and sharing best practices will help US competitiveness' in training for math and science.
#3 Energy efficiency--Green focus helps with world relations-we need a revolution in science and math education-----green homes, schools, businesses, schools, hospitals is by definition a two-fer---the economic answer is America leading the world in sustainable living breakthroughs
#4 Regulatory reform--necessary to avoid repeat of financial mess
#5 Budgetary efficiency--Doing a better job with less is Obama's job. Cuts at Defence and efficiencies at Homeland Security are neede because they are the bigggest outlays outside entitlements. However, keeping America safe has to be his priority above all others, even the economy--as existential as that is. But find efficiencies while you do it.
Five international pressure points
#1 World trade--Keep global system going while trade balances and capital flows move to equilibrium. Meeting Canada, Mexico early and phoning top ten trading partners and reiterating commitment to economic and financial stability would be reassuring on first day.
#2 Russia, India, China--US needs help from the heavy lifters to solve world's problems. Russia is especially critical because of it weapons, its fragile economy, its place on the Security Council, its geography spanning 1/3 of the planet, its natural resources, and its potential to help with Israel and Iran. Potential carrots include missile shield questions and our involvement in its former satellite states.
India is integral to the economy as well as Pakistan and by extension Afghanistan.
China is critical to the economy and in continuing to fund American debt until the trade deficit can rebalance some. It is also necessary for dealing with Iran and also Sudan because of the oil it imports.
#3 Champion human rights while staying on offense against terror--On the first day at least move in the direction of withdrawal from Iraq and closing Guantanamo Bay. Increase troop levels in Afghanistan and offer to negotiate with moderate Taliban.
# 4 Iran--Stopping their nuclearization is critical and this must be done in conjunction with the two state solution. It is an existential threat to Israel and playing super hard-ball with the Iranians will win you concessions on the settler front.
#5 African development--Build on progress of Bush AIDS policy, Jeffrey Sachs efforts and work of Bill Gates in championing "creative capitalism". Differ- from Bush that freedom and democracy will end tyranny. Voting is important, but without rule of law and other institutions of liberal democracy it can lead to the situation now in the Congo.
MEGA PRIORITY #1--ENTITLEMENT REFORM--Outlays for Social Security, Medicare and Medicaid make up more than half of federal spending. With more baby boomers entering retirement--this situation will only get worse. Putting the US on sound financial footing is very difficult and politically costly and that's why it needs to be done right away because he will never have as much political capital as he does now.
MEGA-PRIORITY #2--TWO-STATE SOLUTION IN MIDDLE EAST--The major structural problem internationally is the Israeli-Palestinian conflict. The longer he waits the longer he is complicit in accepting the status quo. And the settlements on the West Bank are reaching the point of no return. If they are not dramatically scaled back/abandoned soon there will never be a settlement and the only outcome will be apartheid by the Jewish people of a majority Palestinian population.
The window is quickly closing on these two crises powered by demographics. The obstacles are enormous, but they can only be overcome by a first term president at the height of his power with the mandate of the public to make change. The moment is now and Obama has to move with fierce urgency. My tongue is forever in my cheek.
Two carrots can also be used to get the kind of concessions needed. Seniors and the left will be more willing to accept change to entitlement programs if there is health care reform promised. And the Israelis will be more willing to remove settlers if they know we are going to deal with the Iranians one way or the other.
Resolving these problems will pay gi-normous dividends. But there is still a laundry list of things to do.
Traditional prioritizing won't work because there are too many critical things which can't be delayed. Instead, see the domestic and international problems as concentric circles which overlap. Focus on the pressure points simultaneously. Hopefully the budding solutions will mutually reinforce each other.
Five domestic pressure points
#1 Efficiency in healthcare--putting records online and concentrating on prevention and sharing best practices will reduce costs.
#2 Education reform--Merit pay and sharing best practices will help US competitiveness' in training for math and science.
#3 Energy efficiency--Green focus helps with world relations-we need a revolution in science and math education-----green homes, schools, businesses, schools, hospitals is by definition a two-fer---the economic answer is America leading the world in sustainable living breakthroughs
#4 Regulatory reform--necessary to avoid repeat of financial mess
#5 Budgetary efficiency--Doing a better job with less is Obama's job. Cuts at Defence and efficiencies at Homeland Security are neede because they are the bigggest outlays outside entitlements. However, keeping America safe has to be his priority above all others, even the economy--as existential as that is. But find efficiencies while you do it.
Five international pressure points
#1 World trade--Keep global system going while trade balances and capital flows move to equilibrium. Meeting Canada, Mexico early and phoning top ten trading partners and reiterating commitment to economic and financial stability would be reassuring on first day.
#2 Russia, India, China--US needs help from the heavy lifters to solve world's problems. Russia is especially critical because of it weapons, its fragile economy, its place on the Security Council, its geography spanning 1/3 of the planet, its natural resources, and its potential to help with Israel and Iran. Potential carrots include missile shield questions and our involvement in its former satellite states.
India is integral to the economy as well as Pakistan and by extension Afghanistan.
China is critical to the economy and in continuing to fund American debt until the trade deficit can rebalance some. It is also necessary for dealing with Iran and also Sudan because of the oil it imports.
#3 Champion human rights while staying on offense against terror--On the first day at least move in the direction of withdrawal from Iraq and closing Guantanamo Bay. Increase troop levels in Afghanistan and offer to negotiate with moderate Taliban.
# 4 Iran--Stopping their nuclearization is critical and this must be done in conjunction with the two state solution. It is an existential threat to Israel and playing super hard-ball with the Iranians will win you concessions on the settler front.
#5 African development--Build on progress of Bush AIDS policy, Jeffrey Sachs efforts and work of Bill Gates in championing "creative capitalism". Differ- from Bush that freedom and democracy will end tyranny. Voting is important, but without rule of law and other institutions of liberal democracy it can lead to the situation now in the Congo.
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