A look at the U.S. economy and private debt.

      Lines form in front of Cyprus banks as they re-open for the first time in two weeks.  A deal was struck last week in which accounts with less than 100,000 euros were transferred to one bank, the Bank of Cyprus.  All accounts with more than that amount were frozen.  The frozen accounts were then being used to help bailout the Cyprus economy.  How much money taken from these frozen accounts is unknown. However it is reported that an estimated 40% will be removed.

      Around the world, many people of different countries view this as straight bank robbery of Cyprus citizens.  At the same time, in the U.S., many Americans are facing tax increases and government sequestration.  So now Americans face a question:  If this can happen in Cyprus, can it not happen anywhere?   Whats going on with the U.S. economy?

       Lets look at what got us where we are now. First is the Bush era tax cuts.   These cuts were suppose to create jobs.    However, for whatever the reasons may be, they did not create the amount of jobs hoped for.   Second, the wars in Afghanistan and Iraq.  These wars cost the U.S. trillions of dollars.  Third, is the big hitter -- the housing bubbling.  The housing bubble was an economic smash caused by poor banking.  While this was hardest felt in mortgage values, the overall effect trickled through the economy enough to push down the GDP. 

      The solution now, according to house republicans, is to cut entitlement programs such as medicare.   There are two big problems with that solution though.  The first is that entitlement programs were not the cause of the debt problem at all.  The second problem is that many entitlement programs are what keep the U.S. from becoming a third world country type environment.   Entitlements feed the poor, educate students and pay for disabled veterans benefits.    These are not programs that should be cut.

     At the same time, we have the Department of Homeland Security purchasing an excess amount of military grade ammunition( ~2 billion rounds) and an entire sector of the Defense Department spending an excess of money without Congressional oversight.  In addition to this, instead of employing our military for our overseas operations, we are employing forces such as Xe (aka Blackwater Mercenaries).  This of course, is all done in the name of National Security.

    So yes, I agree with the notion that government spending should be cut.   However, cutting entitlement programs?    Squeeze the poor, raise the military?  That seems like a horrible idea.  As we move away from war, money should be funneling away from war assets back into the people, not visa versa.

    However, lets look at another issue.   This issue is how the government got us out of the housing bubble crisis.   This was in the form of government funded bank bailouts.   We increased our national debt to give failing banks another chance at success.  Of course, this was in the hopes that mass layoffs and housing foreclosures would not happen.  Was this a good idea?  Well it did add a tremendous amount of debt to the national ticket.   However, the goal did seem to work out.   It did prevent layoffs and some foreclosures.   At the same time, the GDP still fell quite a bit.  Perhaps not as much as it would have otherwise.

    The housing bubble also brings up another topic.   One that economist Michael Hudson views as a "private debt crisis."   The view is, that the problem with current U.S. economics is not with the public debt and deficit.  The problem, he says, lies with private banks making poor decisions for Capital gains at the expense of the lower to middle class.  This I completely agree with. 

    The U.S. government, after all, is not in any worry of defaulting on its debt.   Not yet at least, and according to many economists, the point at which default could occur is very far down the road.  The U.S. government, after all, has been going into and out of a deficit for the last two hundred years.    In fact, some economists such as Paul Krugman believe that we should raise the debt ceiling, and take more debt to infuse the economy.

    Indeed, the debt crisis was not started by the U.S. government creating debt.   It originated in the housing bubble. The housing bubble was an effect of the private banking sector giving out sub-prime mortgages that they knew could not be paid back.  There also has to be a reason why the Bush tax cuts didn't effectively create jobs.   So lets look at this a little more.

    Number One:  Banks are giving out huge amounts of credit cards.  They are giving them in excess regardless of the debtors ability to pay.  Why are they doing this?    There is not a real substantial loss from a debtor defaulting.   The bank is insured.  It collects its insurance and sells off the debt to collection firms such as CACH, LLC. 

   Number Two:  Banks are making a killing off of cannibalizing the economy.    Slowly, it seems as though our economy is moving from Industrial Capitalism to Financial Capitalism.   What does that mean?   Well at one time our economy was being pushed forward by goods and services. Banks would give out loans for companies to create industry.   Now bank loans are going towards corporate raiding.   In other words, banks are loaning money for corporations to buy out other corporations.  These corporations then siphon off pensions, assets and reduce the work force.

    This happened recently with Disney's acquisition of Lucas Arts.   The first thing Disney did was monetize it's assets and layoff its employees.   Now Disney can license making Star Wars games to other companies and make money off of the licensing regardless of whether the games are successful or not. 

    Disney is not the only company to do this and banks are heading up the profit frontier moving this trend forward.  This was also the premise of the Occupy Wall Street movement.  Banks are funding financial decisions designed to siphon off economic growth to pad the pockets of the 1%.   What happens?    Well the middle class disappears and industrial capitalism shrinks.  This is exactly what is happening in the U.S. and you can find plenty of Disney corporate take over type situations as examples.

   Okay, so we have this established.  Private debt from banks is abusing the economy.  What can we do about it?   Can we fine the banks?  Send them to jail?   Well here's the problem, the banks themselves are insolvent.   In other words, they have no actual money to be taken by the government.  If the government shuts the bank down, it hurts the economy even more.  If the government takes over the bank, according to Michael Hudson, that's called "socialism"

   In the White House, we have two different views on the economy; liberal and conservative.   The conservative view says that the market is over-regulated by the government.  They prefer a laissez-faire approach toward private markets.  The liberal view is that the market needs government oversight.  These two views fight with each other until they have a solution.  

   What is that solution currently?    It's called the Sequestration.   A short term solution that causes more short term problems for a long term deficit and debt problem.    I think Washington needs a new view.  

M.

Sources:

Too big to fail, too big to jail?.

Government debt and deficits are not the problem -- private debt is. 

The bad Ceiling Feeling

Capital controls stifle Cyprus as banks re-open

VisualizingEconomics.com
Disney lays off LucasArts

Disclaimer:  The articles in this blog fall under the "Fair Use" clause of the Copyright Act of 1976, 17 U.S.C. § 107 for news journalism.

Easy Primer for U.S. Economics

      There are a number of economic problems facing Americans today.  However, for some of my readers, when I talk about  economics, it may not make sense.  This article is meant to be a primer for those new to understanding the U.S. economy.   I'm also going to dispel a few notions that I consider to be myths.

      What is going on with the U.S. economy?   Well right now the U.S. has a large deficit.  That is, the government's total taxes are not enough to cover the government's bills.  The amount of money needed to pay the governments' bills not covered by taxes is called the "deficit."   The U.S. government has been operating with a deficit on and off since it's founding.   It is not, and I repeat, it is not a sign of economic depression.  This amount, however, can be an indicator of economic growth or decline.  Generally, when the economy is good, the deficit goes down because more taxes are able to be accrued from economic growth.

     The real signature of economic growth or depression is called the "Gross Domestic Product" or "GDP".   The GDP is the total monetary value of all goods and services produced within the borders of the United States.   When the GDP is growing, our economy is doing good.  When the GDP is falling, by an excess of 10%, the economy is in a depression.  When the GDP  is "slowing down,"  it is considered a recession.   This "slow down" is usually not considered recessional unless it occurs for at least 6 months. 

     Okay, so we have the GDP and we have the U.S. deficit.   So where does the U.S. government get money to pay for the bills that taxes can't pay?    This is where the U.S. National Debt comes in.   The U.S. "borrows" money from the Federal Reserve and this money is called the National Debt.   The National Debt is then payed for during times when the government has a surplus of taxes rather than a deficit.  There is also a charity founded by John F Kennedy for paying it.

    Now that you have an understanding of the Deficit, the GDP and the National Debt, lets talk about a few myths.   Well, they may not be myths, but in my opinion, they are not quite true.

Myth Number One:  The Fiat Currency that the United States is going to fail.    This is not true and if it were true, the U.S. would be very far from it.   The United States dollar is very strong nationally and world-wide.  The government has a lot of bills but it  is also not in any fear of defaulting.  I have recently seen a lot of youtube videos and websites pop up talking about the fall of the U.S. dollar.    It is important to understand that within the limitations of fiat currency, the U.S. dollar is very strong. Most economists would argue that returning to a gold standard system would be a huge mistake.

Myth Number Two:  China holds most (or all) of the U.S. government's debt.   The U.S. government borrows its money mainly from treasury bills, notes and bonds issued by the Federal Reserve.    The truth is that the majority of the U.S. debt is held by U.S. citizens.   That's right, the government borrows mainly from its own citizens to pay it's bills.    Where does this China rumor come from?   Well many foreign governments own parts of the U.S. debt.  China is the largest among those.   Wait, other governments own the U.S. debt?  Isn't that bad?    Not really, especially considering how much debt the U.S. owns of foreign entities.    This in itself, is another topic.

Myth Number Three:  Social Security is the biggest portion of the national deficit.    This is where some of you may disagree with me.   Social Security is not a problem.   At least, it is not a short term problem.    SS has had a surplus of funds since it was created.   In fact, it has had such a nice surplus, that some of the National Debt is borrowed from Social Security.  The problem with Social Security is that it's surplus is going to run out in 15 - 20 years.   When this surplus runs out, it will be in a deficit and the national debt will have to help pay for it.    This however, is a long term problem.   Some argue that it is a looming threat.  I see it as a result of a well balanced budget.    I mean think about it.  We can guarantee that our elderly are going to be taken care of for the next 20 years.   In other words, we have 20 years to plan for taking care of our parents.   That's a good amount of time. 

Myth Number Four:  It is always the president's fault when taxes are raised or the economy is failing.  This is, lastly, not true.   Now I'm not trying to defend the President for his misgivings.  However, lets look at some facts.   The President's job is to enforce taxes and government spending.  However, it is Congress's job to make the plan for how those acquired taxes are spent.  This is a facet of the checks and balances system.   The President is suppose to submit a budget. Then Congress will either agree to pass, amend or reject the budget.  Ultimately, it is up to Congress to decide how tax money is spent and it is up to the President to enforce Congress's decisions.  

Article 1, Section 7 of the Constitution:  “All bills for raising revenue shall originate in the House of Representatives.”
Article II, Section 3 of the Constitution: The President “shall… recommend to [Congress’s] consideration such measures as he shall judge necessary and expedient.”

     Now the President can veto Congress's decisions.  However, Congress can also over-ride the President's decisions with a 2/3 vote.   So when you point your finger at the President for our poor budgets, also point your finger at your elected Senators and Representatives.   Their decisions and voices are very important.

    Historically our government has run most efficiently when the Senate, House and the President are able to make decisions cooperatively.

M.

Sources:
 What is the GDP and why is it so important?
 Who owns American debt?
Social Security is not the Problem
The Federal Budget and the Constitution
Government Debt and Deficits are not the Problem -- Private Debt Is
Zfacts - Nation Debt Graph

Ice Fire! New energy resource or a potential environmental threat?

      Global warming seems to be a looming threat that most people either blissfully ignore or fearfully accept.  Whichever end you are on, we all know that in order for our society to move forward, we need resources.    Resources to fuel our cars, cook our food and keep us warm at night.   Yet in light of global warming, those same resources that feed us seem to be destroying us.  By polluting the air with CO2 and other atmospheric gases, the use of our resources is arguably creating what we know as the "green house effect."

       Now there is much debate over whether global warming is a natural occurrence or a man made problem that should be addressed.  In light of these problems and debates, Japanese researchers have extracted a new energy source from the sea floor about 50km from Japan's mainland. The source is known as Methane clathrate, or "Fire Ice."  

       What is Fire Ice? (Methane clathrate).   It is a frozen cage complex of water and methane.  Methane gas is formed when micro-organisms on sedimentary rock (within the sea floor) break down organic matter.  The methane then seeps up the sedimentary and becomes frozen within water near the surface of the ocean floor.  It is the high pressure and extreme cold of the ocean bed that facilitates the process. 

       Fire Ice looks a powdery ice cube.  However, when it is lit on fire, it burns very well while remaining a solid piece of ice.  Thus, the name "fire ice" was adopted.   Not only does it look cool, but it also burns up to 40% more efficiently than coal.  The main reason for this is that hydrogen in methane is burned rather than the carbon in coal.   It is also is a relatively pure compound versus coal --which contains large amounts of ash.  Reportedly, as well, Fire Ice releases 50% less CO2 into the atmosphere than its oil and coal counterpart.

      Japan, largely importing its oil from the United States, has been looking for alternate fuel resources for a long time. The estimate is that there is enough Fire Ice in Japan's Nankai Trouth to sustain the country for the next 11 years.   At the same time, the U.S. and Canada have been looking into Fire Ice as a potential resource as well.  So sounds like a win-win, right?     Not quite.  

     Remember that CO2 is a green house gas?   Well Methane is also a green house gas.   In fact, methane is much more potent green house gas than CO2.   The reason methane is not as much of a big deal is that there is so much less methane in the atmosphere.  The effects of it are not as clearly seen as CO2.  So this presents a different question.

     Isn't it bad to be pulling up all that methane from the sea floor?   The answer is yes and no.  The methane that comes from the sea floor is in the form of ice as methane clathrate.  It does not escape into the atmosphere.    However, methane clathrate does melt and here lies the problem.   When methane clathrate (Fire Ice) melts, it will release methane into the atmosphere.   In fact, it will release a lot of methane into the atmosphere.  

    Not only this, but methane from permafrost melt and methane hydrates on the arctic sea-floor has become a growing concern for environmentalists. On the arctic seabed, frozen methane is feared to be releasing as ocean floors become warmer.   The released methane then creates a "run-away" amount of global warming that scientists are concerned would be irreversible.  Now methane only stays in the atmosphere for around 10 - 15 years.  However, it would still cause 10 - 15 years of harsh climate change. 

    At the moment, we do not know the effects of the arctic permafrost melt and the fears of scientists are not realities.    At the same time, the potential of Fire Ice is incredible.  And as long as the Fire Ice is burned before melting, no methane is released into the atmosphere.   Yet it is still a risk.   How much of a risk?   It is a worthy question.   What do you think?    Incredible resource or a disaster waiting to happen?

M.

Sources:
Japan extracts gas from methane hydrate in world first 
Japan becomes first country to unravel mystery of Fire Ice
Ice on Fire: The next Fossil Fuel
Is methane a better greenhouse gas than CO2?

Disclaimer:  The articles in this blog fall under the "Fair Use" clause of the Copyright Act of 1976, 17 U.S.C. § 107 for news journalism.

Explosive new research in bionic technology for Amputees.

     Globally, there are approximately 1 million limb amputations every year. In America and Western Europe, there are nearly 4 million amputees combined.  Most amputations, however, are not attributed to war time injuries.  Over 80% of amputations are due to Degenerative Nerve Disease due to type 2 Diabetes and Vascular Diseases such as Congenital Heart Disease, Dyscascular disease, Trauma and Cancer. 

      With growing trends in amputations, the topic has become hot among researches looking to give amputees better quality of life conditions.   So much so that the prosthetic limb industry is now in a race for technologies that appeal to amputees.   And from this, has come the Bionic hand. 

      What is the Bionic Hand?   The bionic hand is a prosthetic limb in the shape of a hand. It responds to the humans nervous system and allows the amputee to control the limb and perform simple tasks.  Luke Skywalker's robotic hand in real life?   It appears the road to this sort of technology is currently underway.

      Bebionic, a US company based out of San Antonio Texas has begun a 4 month trial for 7 lucky Amputees with the hand.  The results so far, have been extremely positive.  An amputee, Nigel Ackland from Cambridgeshire England, has reported that he can perform simple tasks such as playing cards, tying his shoe and drinking from a plastic bottle.

" It is controlled by the same signals from the user's brain that would have been used to operate his original, flesh and blood arm.  When the muscles in the upper arm are flexed by the thoughts, these movements are detected by sensors that trigger one of 14 pre-programmed grips, mirroring human movements. The different grip patterns include a clenched fist, a pointed finger and a pinching motion, according to how the user tenses their upper arm.  The hand features a lifelike appearance and grip patterns which can be wirelessly programmed and tailored to suit each individual’s requirements. "  --dailymail.co.uk

     Yet Bebionic is not the only company making ground breaking work in this field.  Now a researcher out of Ecole Polyechnique Federale de Lausanne in Switzerland has created a Bionic Hand that allows the user to sense feeling.  The researcher, Silvestro Micera, has stated that "This is real progress, real hope for amputees.  It will be the first prosthetic that will provide real-time sensory feedback for grasping." 

    An unnamed amputee out of Rome has been selected for trials with the hand and the EPFL reports that the hand could be in production as early as 2015.  Where do you stand on this?   Are you one of the 1 in 200 people world-wide at risk for needing amputation?  Such questions are scary to pose. But with new ground breaking research, it is also interesting to wonder what it would be like to actually wear and use one of these Hands.

M.

Sources:
Statistics by Country for Amputations
Type 2 Diabetes and Amputation
Amputee Statistics you ought to know
Bebionic
Man with the world's most advanced bionic hand can now tie his own shoelaces (and, more importantly, drink beer)
Touching breakthrough: Bionic hand to return sense of feeling

Eric Holder, John Brennan and a 13 hour Rand Paul Filibuster over U.S drone program

          In the wake of a desire for filibuster reform, Senator Rand Paul of Kentucky drops a historic 13 hour filibuster on the vote of John Brennan as the new director of the CIA.   Brennan has been the President Obama's top counter-terrorism adviser for the past four years.  He has also been President's most vocal supporter of the U.S. military's drone attack program. 

          In April of 2012, Brennan defended the drone program stating that it was legal under the Authorization for Use of Military Force bill passed after the September 11 attacks.  He also stated that there was nothing within international law banning the use of remotely piloted planes for the purpose of using lethal force against the U.S.'s enemies "outside of an active battlefield when the country involved consents or is unable or unwilling to take action against the threat."

          This defense, while generally approved within the U.S., was not well received world wide.  Most countries of world disapprove of the program.    Yet the program does exactly what it is designed to do and it does it well.   It defeats the enemies of the U.S. while keeping U.S. troops from getting killed.  It is a phenomenal use of technology to achieve the U.S.'s goals.  So what is the problem? 

          Why would anyone disapprove of technology that keeps our soldiers alive?  The answer is two fold.   First, there is no due process for the targets of drone strikes.  Once you get on the military's kill list, there is no way to wave a surrender flag or a habeas corpus trial by jury.   It is simply execution.    Second, there is collateral damage.  There are innocent civilians and children who have been killed by these strikes.  Yet there will be no justice for the innocent people killed because this is war. 

          Yes, the U.S. is at war with the Taliban and Al Qaeda.  Casualties of war are going to happen.  However, this can be viewed as a different issue and brings me to a third question that is being asked.   U.S. soldiers involved in drone strikes are not physically there for combat.  They do their duties and they go home to their wives and children.   Effectively, they are removed from the guilt of their actions -- not completely, but physically.  Should U.S. soldiers be physically in combat areas to make decisions that have potentially strong moral outcomes?   Sure, the blame for mistakes are placed upon their superior officers.  This is how it should be, but will that change our moral stance on war time combat?

          Lastly, we don't know how many casualties of war the drone program has produced.  The Obama Administration has stated that the casualties are very minimal and that the program is extremely effective.   This is under scrutiny however, as there are conflicting reports as to who is considered a combatant. 

          In light of these issues and a growing drone program on U.S. soil, Senator Rand Paul wrote a letter to Eric Holder, the U.S. Attorney General. The letter asked for clarification on whether the President has authorization to use the drone program on U.S. soil with lethal force.  Holder, in response, stated that he would not rule out the possibility, in an extreme circumstance, that the President could use lethal force with a drone on U.S. soil.  This, in turn, lead to the 13 hour filibuster of the President's number one supporter of U.S. drone strikes for the position of director of the CIA. 

          So now we look at the last issue.   Aren't filibusters being abused in a way that is counterproductive?    The general idea behind a filibuster is to block a vote to continue debate or bring light to an existing topic.   There is nothing wrong with this idea.  However, many senators have been using the "silent filibuster" as means to curb a vote or to gain minority support without taking to the stand and speaking.

          Did Senator Rand Paul abuse the filibuster to achieve his goals?   Many politicians and political commentators are viewing Paul's filibuster as exactly what the filibuster is meant to do.  He did not remain silent, he spoke for 13 hours.   He got public notice of an issue that he felt needed to be addressed.  In the end, Brennan was still voted into office as the CIA's director.   However, Paul got what he was asking for.

        In a response to the filibuster, Eric Holder clarified that the President could not use a drone to kill American's outside of an emergency situation.  And now U.S. citizens are faced with re looking at the drone program as a moral use of combat inside and outside American soil.   It is a good question, where do you stand on this?   And how will you vote in future elections in regard to it?

M.

Sources: 

Holder does not rule out U.S. soil drone strikes

Filibuster 

John Brennan, Obama's drone warrior

What did the Rand Paulibuster tell us about filibuster reform?

A great day for Filibuster and Filibuster reform

The 7 best moments of Rand Paul's filibuster  

Livingunderdrones.org

Eric Holder clarifies policy on drone attacks on U.S. soil. 

North Korea: Nuclear Weapons in the Wrong Hands?

             North Korea this week has threatened to end the 1953 Korean War Armistice Agreement in response to a series of military drills that began on March 1st between the U.S. and South Korea.   The North is viewing the drills and exercises as a threat and has notched up its own drills and presence across the demilitarized zone.  The drills will continue for 2 months even with the North donning the U.S. as its "sworn enemy" 

            In December, the North fired a ballistic missile over Japan in what the North claimed to be a peaceful satellite launch.   Yet the satellite has confirmed to be dead in space and the North claims that the launch was a success.   In response to this, the U.S. has called the satellite launch a cover up to test intercontinental ballistic missiles and the North has been subjected to extreme economic trade sanctions by the U.N.   Furthermore, and since then, the North Korean government has successfully tested its third nuclear bomb at a test site near the Chinese border. 

           The U.S. and South Korea have been fairly well versed to North Korean threats since the Armistice in 1953.   The North has even gone so far as to promote anti-U.S propaganda within its country for the last 50 years.    With the North now bearing nuclear power, the questions are:  How much of a threat is the North now that it has a new leader and new weaponry?   What are the implications of Nuclear War on a moral stance?  Does this new leader know what he is doing with the most powerfully destructive weaponry in the world in the palm of his hands?  Where does China stand in this?  And more importantly, what is the U.S. going to do?

         Anything from here is speculation.  On a global and moral view, the countries of the world have been working on denuclearization for a long time.   However, since the North's recent nuclear test, the U.S. has started producing more counter defense measures with anti-missile systems.   This in turn has created an international stir with China and Russia ratcheting up their own nuclear programs.   Are we on the road to another cold war arms race?   Hopefully not.   

         We already know what nuclear bombs do.   They blow up entire regions and leave those regions devastated with radiation poisoning for decades.   Depending on how strong the bomb is, those decades could turn into centuries like the Chernobyl disaster site.   Why would any country desire to inflict such devastating destruction upon any life or upon their own world?   Can we not be brothers and sister in the human race to the extent of protecting our own planet from a wasteful existence?   After all, we all live here and we have no other options for planetary habitation.  

        This is not unknown to China, the U.S., South Korea or Russia.   The Chinese even having protests in their streets condemning the recent nuclear test in response.   What about the North though?    And what right does the U.S have in dictating whether a country has nuclear power?   What right does the U.S. have in promoting such harsh sanctions on the country.  The North is impoverished, right?

       The answer is yes, the north is impoverished.  The Democratic People's Republic of Korea(DPRK; NK government) seems to be grossly involved in the impoverishment of its own citizens.  Furthermore, the DPRK has a history of systematically oppressing its lower class and redistributing the country's wealth and common needs in so that many of the lower class citizens starve.  The country is so bad that it has been considered one of the worst humanitarian crisis in the world -- with recent reports of cannibalism and famine.   Not only this, but the DPRK is the only government in the world who actively still uses Gulag camps.   What are Gulag camps?   In short, they are political prisons, assuming for citizens who protest against the way the government has treated its people. 

      The country is in dire need of human rights and humanitarian aid and here lies the problem:  Any economic stimulus given to the country goes straight to its now nuclear powered military program.   It is no wonder that the U.N. presses harsh sanctions.    In light of this, it is also a very good question whether the DPRK could responsibly hold a nuclear device.   If they won't be responsible about their own people, how can they be responsible with a nuclear weapon? 


       Of course, now you can ask, how can any country be responsible with a nuclear weapon?   And that I will discuss another day.    

Sources:
Wiki Korean Armistice Agreement
North Korea Fires ICBM
Chinese denounce North Korean nuclear test
Gulag Camps in NK
Famine and Cannibalism in North Korea