Showing posts with label international. Show all posts
Showing posts with label international. Show all posts

Monday, April 23, 2012

Spain In Recession

It was announced this morning that Spain is officially in recession. Not a surprise. Spain, like other countries in the periphery of Europe, has been pressed by Germany and the European Central Bank to pursue policies of economic austerity. This is guaranteed to make things worse. Paul Krugman recently (and accurately) identified what was happening in Spain as insane.

But the insanity is not confined to Spain. It is happening everywhere in Europe, but voters are beginning to push back. Spain's unemployment rate, by the way is 23.6% and among young people about 50%. Austerity will make this worse. Is Europe committing economic suicide? Or just political suicide?

In the Netherlands, already in recession, the government has resigned after failing to get approval for further austerity measures.

Guess what? The economic measures causing such distress in Europe are just like the ones contained in Paul Ryan's budget.

Two years ago, the Republican narrative was that it was the budget deficit that caused the economic decline and loss of jobs. I would call that an intentional lie, except there are some voodoo economists playing for team Republican who still hawk those wares.

But it isn't true. It is true that economic crises and the resulting loss of jobs and income causes budget deficits. More government spending is still the most effective and speedy remedy for declines in aggregate demand that result from unemployment, even while spending on such safety net measures as extended unemployment benefits protects businesses from even more precipitous declines in their customer base.

Sunday, April 22, 2012

Europe On The Edge

This weekend's elections in France may portend a serious shakeup in European politics. Nicolas Sarkozy lost the first round of elections to the Socialist candidate, Francois Hollande. There will be a runoff election between these two leading candidates on May 6.

I had previously suggested that the first decade of the Euro could well be the last. For awhile, it appeared that the Greek government might be the most vulnerable in Europe to a repudiation by the electorate of austerity measures. Clearly this past weekend, French voters sent a strong signal. It seems increasingly likely that European voters in other countries will reject the austerity forced on them by the European Central Bank under the strong influence of Germany.

"It [the election] may also represent the first stirrings of a challenge to the German-dominated narrative of the euro crisis, which holds that public debt and runaway spending are the main culprits and that austerity must precede growth." - NY Times.

It has been obvious to what I would call the sensible economists (those of a Keynesian bent) for a long time that austerity in a time of recession will not lead to growth. It should have been equally obvious to political leaders that intentionally causing a depression in one's own country is not a recipe for reelection.

Over the weekend, the Dutch government failed to gain majority support for austerity measures, and more Czechs turned out to protest a tax increase and budget cuts than any protest since 1989.

Other countries whose voters increasingly press for growth instead of austerity include Great Britain, Spain and Italy.

It may be possible to rescue the Euro, but it looks more and more difficult.

Monday, April 16, 2012

European Economy Update

I haven't written lately about Europe. The news isn't good. While the European Central Bank has recently taken useful measures to ease the crisis, the political leadership is doing the opposite - seeking more austerity.

Are there no wise leaders in Europe? Apparently not.

If debt is the problem, it doesn't help people repay that debt when unemployment rises. In Spain, unemployment is close to 25% - for young people, it is 50%. By the way, before the economic crisis, Spain's budget surplus was greater than Germany's. The problem has been private, not public debt.

The whole problem in Europe, it has become clear, is caused by fixed exchange rate (inherent consequence of the Euro) and intellectual rigidity. The continent could easily descend into a new recession/depression. Economist Nouriel Roubini explains:

"The trouble is that the eurozone has an austerity strategy but no growth strategy. And, without that, all it has is a recession strategy that makes austerity and reform self-defeating, because, if output continues to contract, deficit and debt ratios will continue to rise to unsustainable levels. Moreover, the social and political backlash eventually will become overwhelming."

The US could easily avoid a similar fate by a robust fiscal stimulus, except one of our major political parties has effectively halted any effort by the administration to improve the economy. The only thing we have going for us is the Fed and its monetary measures, including quantitative easing. So far it seems to be working, but much too slowly.

Friday, February 24, 2012

Are Corporations People?

Two years ago in its decision in the case of Citizens United, the US Supreme Court ruled that the First Amendment protects the speech of corporations as thoroughly as it does the speech of individuals. Or as one of this year's presidential candidate explained, "corporations are people."

Now the Court is faced with a slightly different issue: can corporations be sued for actions that violate the civil rights of individuals overseas, including taking part in repression, torture, executions and other civil rights abuses. Corporations argue that only individuals can be so charged. The issues are addressed in today's New York Times.

So, do corporations have the rights of individuals in one case, but are not responsible for corporate acts in another? Here is a more detailed look.

The world wonders.

Monday, January 23, 2012

The iPhone and America's Discontents

Yesterday's New York Times had a very informative article focused on why iPhones are made in China, not in America. And the answer is, it isn't just about price.

The article explains: "It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products."

In short, at least in Apple's case, it is about quality. And continuous improvement.

For the past two decades, Americans have been misled by a chorus of triumphalist pronouncements about the decline and fall of the Soviet Union. "See," we are told,"communism failed. It can't work. Only capitalism can work, everyone knows that."

Is that so? The last time I checked, the People's Republic of China had a communist government.


So how come they are taking over production of our goods from our industries?


I think they have been paying attention not to the thoughts of Mao, but to the thoughts of W. Edwards Deming.


Read the New York Times article.


I'll share more thoughts later.

Thursday, January 12, 2012

Hungary Update

Hungarian Prime Minister Viktor Orban seems well on his way to turning Hungary into an authoritarian dictatorship. In an earlier post, I suggested Hungary was beginning to resemble the authoritarian regime of Admiral Horthy, who led Hungary from 1922 to 1944.

That was a good guess. Viktor Orban himself has called attention to Horthy as a model. The latest report from Hungary by Professor Scheppele is not good. The most hopeful sign is that the EU is calling Hungary to task. Whether the EU's measures will work any better than the timid measures taken by the League of Nations in the 1920's and 1930's is anybody's guess.

What seems clear is that the events in Hungary are a serious threat to democracy in Europe.

Saturday, January 7, 2012

Rescue at Sea

Earlier this week, TV news reports showed footage of an Iranian fishing vessel and crew rescued from pirates near the Straits of Hormuz by US Navy sailors.

The TV report mentioned that the operation was supported by the nearby aircraft carrier Stennis. Not mentioned, but of more interest to me is that the fishing vessel had been intercepted by USS Kidd (DDG-100) and the rescue was effected by sailors from Kidd. Kidd is an Arleigh Burke class guided missile destroyer with the Aegis combat system. After I retired from the navy, I worked for a few years as a senior member of the engineering staff and engineering project manager on the Aegis combat system at RCA.

Also of interest is that Kidd's commanding officer is Cdr. Jennifer L. Ellinger, a 1993 graduate of the U.S. Naval Academy. That calls to mind a couple of other personal memories:

1. It was about 40 years ago that the navy first authorized assignment of women to ships at sea. At the time, I was Operations Officer of USS Albany, a Talos guided missile cruiser built during WWII as a heavy cruiser. When the decision was announced, there was a lot of grumbling and assertions that women couldn't work at sea. When my officers joined in the grumbling, I suggested that there was not a single job in the operations department that couldn't be performed as well by a qualified woman. I didn't mean it as a put-down, but in hopes it would open their eyes. I also knew that the policy against assigning women to ships had created some irrational situations. For example, the Fleet Programming Center, Pacific, the organization supporting Albany's tactical data system, had civilian and military computer programmers, both male and female. The programmers were often sent to ride the ships at sea when the center received computer program problem reports, in order to see for themselves what the problem was. Some of the computer programs were on aircraft carriers. The computer programmer for the carrier programs was a female Lieutenant Commander. She was not allowed to ride the carrier at sea. Instead, the center sent a female civilian to ride the carrier. The 1972 change in policy opened these doors.

2. During my subsequent tour in the Pentagon (1972-1975), my wife Elizabeth worked for the National Organization for Women and took part in a coalition effort to open up the service academies to women. This effort was successful, and Congress opened the academies to women in 1976. Four years later I was on a NATO tour and was very impressed by one of the early Naval Academy women graduates performing a job on the staff of the Commander, US Naval Forces Europe. She was doing a job normally assigned to an officer two grades senior to her, and was doing it very well. Now about 22% of entering Naval Academy plebes are women.

By the way, USS Kidd's second in command, Cdr. Gabriel Varela, of Phoenix, Arizona, enlisted in the Navy in 1987, achieved the rank of Petty Officer First Class, and was commissioned at Officer's Candidate School in 1995.

The navy assigns only its best and brightest officers to serve in Aegis destroyers and cruisers.

Monday, January 2, 2012

More On Hungary - News Isn't Good

Paul Krugman has posted another update on Hungary by his colleague, Kim Lane Scheppele. The news is really not good. Hungary is on the cusp of becoming a despotism.

Sunday, January 1, 2012

New Years Objectives

I don't do New Years Resolutions.

As Popeye used to say, "I yam what I yam." If there is anything I have learned in more than seven decades, it is that I am unlikely to become a better person, wiser, more handsome, faster, thinner, healthier, more skillful, funnier, or more expressive. Popeye got it about right.

But that doesn't mean one shouldn't set more or less achievable goals for the near future. Some of mine:

1. Finish repairing our house from Irene's destruction;
2. Finish my novel;
3. Organize my photographs;
4. Read War and Peace;
5. Keep blogging.

Thursday, December 29, 2011

Now Synchronize Your Calendars

Set your calendars ahead one day - at least, if you live in Samoa (capital, Apia).

Samoa will have no Friday this month. At midnight tonight, Samoa will leap forward to Saturday, December 31, 2011, skipping Friday, December 30.

This decision reverses the change made July 4, 1892, when Samoa changed its date to conform to the Western hemisphere and have the same date as American Samoa, capital Pango Pango.

This isn't the only recent change intended to conform to practices in New Zealand and Australia, Samoa's closest trading partners. In 2009, Samoa switched to driving on the left side of the country's roads. Among other things, this made it easier for Samoans living in Australia and New Zealand to ship used cars to relatives living in Samoa.

Monday, December 19, 2011

Hungary - Back To The Future?

Disturbing post today on Hungary's authoritarian revolution.  It sounds like a more extreme version of what has been happening in Wisconsin, Michigan and other states in the United States.

The post appears on Paul Krugman's web site, but it is written by Kim Lane Scheppele, Director of the Law and Public Policy program at Princeton University.

It sounds like what is happening in Hungary is a reappearance of the kind of authoritarian regime that has characterized Hungary in the past, including the notorious period of Admiral Horthy's dominance from 1920 to 1946. The forms of governance may resemble those of democracy, but the content is increasingly that of authoritarianism.

By the way, Newt Gingrich's recent diatribes against judges would fit right in with the new Hungarian system.

Sunday, December 18, 2011

Vaclav Havel, 1936-2011

A great man died today.

Vaclav [pronounced "Vatslav"] Havel had been a literary figure and dissident under the Czechoslovak communist regime. He spent four years in communist prisons, but managed to inspire a large following through his plays and other writings. He was an eloquent advocate of democracy.

Havel was one of the first spokesmen for the Charter 77 human rights movement (after the abortive "Prague Spring" of 1968), a leading figure in the Velvet Revolution of 1989, the last president of the state of Czechoslovakia and the first president of the Czech Republic. He died Sunday night  at the age of 75 at his country place in North Bohemia. He was one of the greatest Czechs of modern history.

Despite his international prominence and popularity, Havel had become something of a controversial figure in  his own country. Radio Prague has published a detailed obituary, describing Havel's accomplishments and related controversies.

The New York Times has a slightly different take.

A curious feature of most biographies of Havel is that while mentioning that the Havel family was wealthy, that Havel's father founded the Barrandov subdivision and movie studio near Prague, and that the family's property was confiscated in 1948 by the communists, no mention is made of the Havels' activities during the Nazi occupation. In fact, the elder Havel collaborated with the Nazi regime, including producing Nazi propaganda films at Barrandov. Here is one account of that period.

It would be unfair to brand the younger Havel with his family's collaboration (he was only three years old when the Germans invaded Czechoslovakia in 1939), and it is hard to imagine Havel himself as a collaborator. Still, it is curious that Czechs still avert their eyes from some details of that period.

Havel himself, during the communist period, referred to Czechoslovakia as "Absurdistan."

Havel's grandfather developed a Prague landmark, the Lucerna ballroom and theater, near Wenceslas square. One hall is decorated with an ironic sculpture of Wenceslas astride a dead horse dangling from the ceiling.

It's a Czech thing.

http://upload.wikimedia.org/wikipedia/commons/3/3c/Cern%C3%BD_Wenceslas.JPG

Tuesday, December 13, 2011

Mission Accomplished?

Tonight's TV news showed joyous scenes of our military members returning from Iraq to be united with their families.

Those who answer their country's call have every right to be proud of what they did.

Those who sent them into Iraq with the flimsiest of excuses and a bodyguard of lies have nothing to be proud of.

I have not forgotten the air of triumph exuded by the neocons who pushed this policy. From their standpoint, getting the United States to go to war against Saddam Hussein, who had nothing to do with 9/11, was a great accomplishment.

There was no wisdom here.

It is well to turn the future of Iraq back over to the Iraqis. Where will this lead? No one knows. There are those who believe our presence has accomplished little in the long run other than to strengthen the political and military influnce of Iran in the region.

I'm not prepared to accept this view, either. We shall see.

For a cautionary tale, one might read the triumphant celebration of victory penned by the leading neo-conservative, Richard Perle, in USA Today in the spring of 2003:


Posted 5/1/2003 5:44 PM










Relax, celebrate victory











"By Richard Perle
From start to finish, President Bush has led the United States and its coalition partners to the most important military victory since World War II. And like the allied victory over the axis powers, the liberation of Iraq is more than the end of a brutal dictatorship: It is the foundation for a decent, humane government that will represent all the people of Iraq.
This was a war worth fighting. It ended quickly with few civilian casualties and with little damage to Iraq's cities, towns or infrastructure. It ended without the Arab world rising up against us, as the war's critics feared, without the quagmire they predicted, without the heavy losses in house-to-house fighting they warned us to expect. It was conducted with immense skill and selfless courage by men and women who will remain until Iraqis are safe, and who will return home as heroes."

How long is a quagmire? How many lives is a quagmire? How much blood and treasure  is a quagmire?


Wednesday, December 7, 2011

Infamy: December 7, 1941

Seventy years ago today, I was playing with toy cars in the living room of our upstairs apartment in Tallahassee, Florida. just two days earlier, my stepfather, a staff sergeant in the US Army Air Corps, had returned from several weeks at the Carolina Maneuvers. Earlier in the summer, he had been away at the Louisiana maneuvers. My little brother, born in Yazoo City, Mississippi during that absence, was in his play pen.

Suddenly there was a loud knock at the door and landlord announced: "the Japs have bombed Pearl Harbor."

The only thing I didn't understand about his announcement was, what was Pearl Harbor.

The other part of the landlord's announcement was that all military personnel were recalled to their bases. My stepfather put on his uniform and left. We didn't see him for a couple of days. When he returned, it was to pack his foot locker and take it to the barracks.

Not long afterward, we moved into base housing and stayed there until my stepfather received orders to a unit in Mobile, Alabama, to prepare for overseas movement.

None of this was a great surprise. Those who write about the period often emphasize that America was unprepared for war. Not exactly.

Even at the age of four and a half, I understood that we were getting ready for a war. I had seen the evidence with my own eyes. And heard it with my own ears, as we lived next to newly constructed airbases. On our way to Tallahassee from Mississippi, we had traveled along two-lane highways through small towns filled with the moving vehicles of vast convoys. Maybe people in the interior of the country didn't understand what was going on, but it was obvious to those of us in the South.

Thursday, December 1, 2011

Europe In Perspective

Lord Ismay, the first Secretary General of NATO, once observed that the purpose of the alliance was to "keep the Russians out, the Americans in, and the Germans down."

That worked for about twenty-five years, but the dynamics of Europe began to change about halfway through the decade of the seventies. Germany began flexing her economic, political and military muscle about that time. General Alexander Haig, Supreme Allied Commander, Europe (SACEUR) from 1974 to 1979, embraced that change by supporting the appointment of a German general as Deputy SACEUR, filling a position vacated by France when they withdrew from the NATO integrated military structure in 1967.

The truth is, Europeans were never as concerned about the Soviet Union as they were about Germany. Admitting Germany into NATO worried the Soviet Union, but in fact it was aimed more at controlling Germany by embracing them than it was aimed at defending against Moscow.

At the same time, Ismay's goal of "keep[ing]...the Americans in..." was to a great extent for the same purpose. Only America could serve as a counterweight to Germany. In addition, persistent animosities among European nations were so strong that only an outside, neutral power (the US) could moderate these ancient passions.

Reading today's headlines, it seems that nothing much has changed in the past three decades. (I served on the staff of the Supreme Allied Powers, Europe (SHAPE) from 1978 to 1981.) Even in the Euro zone, it appears that the United States continues to be a necessary counterweight to Germany.

Tuesday, November 29, 2011

Debt Ceiling Update

Not long ago headlines were screaming about our supposed debt crisis - we had to fix it by taking away benefits for Americans with modest incomes or we are all doomed.

We may be doomed, but not because of the federal debt. Not in the short or medium term, at least.

It is amazing, after all the hype, how little uproar there has been at the failure of the "super committee."

In my view, it would be good to get the debt level down, but by putting people back to work so federal expenditures decline and revenues increase. We need greater aggregate demand and an effective industrial policy as well.

A bigger debt problem is the overhang of private indebtedness. As the most recent data shows, Nonfinancial private sector debt is about 170% of GDP, but is declining. The last time private sector debt exceeded 170% of GDP was at the height of the depression, when it exceeded 230%. At that time, GDP plunged but existing debts retained their nominal values.

The recent decline in debt to GDP ratio is good for individual debtors, but not good for the economy. If everyone tries to pay off their debts at once, the economy will contract.

Unless the Europeans do something different than they have been doing, this seems likely to happen in the Euro Zone. Both economists and investors seem to believe the US economy will follow Europe into contraction.

Monday, November 28, 2011

OECD Joins Critics Of Economic Dithering

Today the Organization for Economic Cooperation and Development (OECD) joined the chorus of economic observers and major players calling for urgent action to put "weakening global [economic] activity back on track."

The OECD calls for action both by Europe and the United States. OECD's latest Economic Outlook report foresees serious risks to the global economy.

OECD Chief Economist Carlo Padoan observes that “Prospects only improve if decisive action is taken quickly.” 

The Outlook’s baseline scenario assumes that policy-makers take sufficient action to avoid disorderly sovereign defaults, a sharp credit contraction, systemic bank failures and excessive fiscal tightening. It sees GDP across the OECD countries slowing from 1.9% this year to 1.6% in 2012, before recovering to 2.3% in 2013. Unemployment in the OECD area is also projected to remain high for an extended period, with the jobless rate staying at around 8% through the next two years.

“We are concerned that policy-makers fail to see the urgency of taking decisive action to tackle the real and growing risks to the global economy,” Mr Padoan said during the launch of the report in Paris. “We see the US  growth recovering only slowly, the euro area entering into mild recession and Japan growing faster because of reconstruction, but this boost is temporary and will fade away.”

Saturday, November 26, 2011

Japanese Carrier Force Gets Underway

Exactly seventy years ago, November 26, 1941, a Japanese carrier force, the Kido Butai, under command of Vice Admiral Chuichi Nagumo, got underway from Hitokappu Wan in the Kurile Islands, under strict and effective radio silence. The force of six aircraft carriers, with 359 airplanes embarked, was the most powerful carrier force with the greatest concentration of naval air power ever assembled up to that time.

Accompanying the force were two fast battleships, two heavy cruisers, one light cruiser, nine destroyers and three fleet (long-range) submarines. An advanced expeditionary force including twenty fleet submarines and five midget submarines, had already departed Japan enroute to the objective area. The force also was accompanied by eight oilers for refueling along the way.

The day the Kido Butai left the Kuriles, Japanese negotiators in Washington received a note from US Secretary of State Cordell Hull proposing a solution to the crisis in the Far East. Japanese leaders dismissed the Hull note as the same old proposal they had rejected before.

Japan had not yet made an irrevocable decision for war. Nagumo got underway with the understanding that if "negotiations with the United States reach a successful conclusion, the task force will immediately put about and return to the homeland." The final decision was to be made early in December.

November 26th was a particularly active day on the diplomatic front in Washington as Ambassadors Nomura and Kurusu frantically sought agreement with Secretary of State Hull. Messages to them from Tokyo (intercepted, decoded and translated by US Army and Navy intelligence) emphasized the importance of oil. Tokyo wanted agreement for the US to supply 4 million tons of oil per year.

Nomura and Kurusu reported diminishing hopes for agreement, and dutifully reported that Hull was meeting with the Chinese ambassador as well as with them. Nomura and Kurusu knew nothing about the Kido Butai's movements.

The clock was ticking.


Friday, November 25, 2011

Euro - The First Decade

Next year will be the tenth anniversary of the introduction of the Euro into circulation.

We were living in Europe (though not in the Euro Zone) at the time. As I recall, the Euro was worth about 85 cents when it was introduced. It was a great convenience to travelers, who over much of Europe no longer had to convert dollars into a dozen different currencies.

But I always wondered how the common currency would work in practice. We now know the answer - not very well.

Unless the Europeans get their act together, the first decade of the Euro may well be the last.

Wednesday, November 23, 2011

Greece, Italy And Now...Germany?

News from Europe isn't improving. Today, Germany attempted a bond auction and couldn't find buyers for about a third of the bonds. Looks like investors are casting a jaundiced eye even on Germany as a safe haven.

In truth, by some measures (primary deficit), Italy is performing better than Germany.

Austerity doesn't seem to be working for anyone. Investors, both in Europe and in the US, seem to be less concerned about deficits and sovereign debt and more concerned about the possibility of further deflation, recession and economic contraction. Americans should worry about what is happening in Europe, because a breakup of the Euro could drag the US economy down with it.

Keep your fingers crossed.

By the way, the US Treasury is having no trouble marketing securities at historically low rates.

So much for Standard and Poor's.