Monday, August 21, 2017

Economic Growth Does Not Equal Economic Strength

Today Projects Are Being Built That Are Destined To Fail
It is very important people understand that economic growth does not equal economic strength. Quantity simply does not make up for poor quality, we are talking about two totally different animals. While economic growth appears robust and a solid GDP number can result in a feel-good moment that builds consumer confidence it can also mask growing weakness in various parts of the economy. We should be careful we are not sold a bill of goods or mislead by those promoting a message that "all is well" and using the term “economists say” implying these people are experts but at the same time failing to give greater details or even mentioning their names.

Recently while grabbing a handful of junk newspapers for recycling I could not help but notice the headline, "Indiana Needs Immigrants For Growth." It should be noted the publication in which the article appeared was one of those small pesky unprofitable government supported rags distributed to spread propaganda on the local level. These can be easily recognized by the fact you receive them for free as a service to you rather than by subscription and they are filled with ads from quasi-government entities and nonprofit organizations receiving government grants. Another commonality is all the articles within are focused on putting a positive spin on current and planned boondoggles in the area. The fact is when money is plentiful and interest rates low economic growth is fueled by projects that never should of, or would never have been conceived during normal times.

Getting back to the article that claimed we need immigrants for growth, the problem I had with it is that it was based on two myths. The first being economies are held captive to population growth, part of the quantity argument that more is good. More troubling is the second myth which is built around the idea the average immigrant is a plus to the community and country rather than a drain on social services. This is often based on claims they are needed in the work force and have skills that will allow them to rapidly be assimilated into the community. This can be spun into a more people more demand for goods and services scenario or bigger is better way of viewing the economy. I feel we should look deeper and be troubled when this growth is created by money flowing from the government in the way of entitlements, however, immigration policy is a subject for another article.

Money Poorly Spent Becomes A Negative Over Time
The false narrative that simply growing the size of an economy even by using deficit spending undercuts the importance of a solid economic base as well as the long-term stability of the financial system. We must question whether the numbers work in the long run and whether when people retire the money will be available to fund their pensions and fulfill other promises made to them by society. It is dangerous to confuse the notion that getting bigger will balanced budgets and that financial restraint can simply be cast aside. In fact, austerity has been given a bum rap in that it is merely the medicine for out of control spending. The recent trend has been to blame austerity for the pain it causes, however, it doesn't make sense to blame the medicine taken after someone gets sick for the discomfort the illness has caused. In fact, if a government runs its business in a proper austere and responsible manner the issue of cutting or tightening should never surface.

This article is to highlight the fact that not all economic growth is equal. This becomes apparent when we look at a failed project versus a successful one that cost the same to build but pays dividends for many years. Sadly, much of the money being spent in the American economy flows into the area of greasing the wheels of commerce rather than creating real growth. By not properly directing more of our spending into areas that return long-term benefits and maximizing prior investments we are squandering our resources. To make matters worse we have even gone to embracing an attitude of borrowing from future growth by financing current projects by a series of Ponzi schemes that delay paying for them until some future date. This kind of financing has disaster written all over it. When all is said and done this will not end well.


Footnote; Several projects proposed in the city where I live reflect what is happening across much of America. Financial restraint is being cast aside to create the illusion of growth with projects that have little hope of ever becoming profitable. An example of such spending can be found in the article below.
 http://brucewilds.blogspot.com/2016/07/an-example-of-local-government-run-amuck.html

Sunday, August 20, 2017

Capital-preservation Remains job-one.html


The Loss Of Savings Reduces Our Options
A key first step towards achieving financial security is to take measures that ensure capital preservation. An investor and anyone that has worked hard to save and build a nest egg does not want to face having to start back at square one or even worse dig their way out from under a pile of debt, and I mean ever! Sadly, it is far easier than you might think to lose your wealth or have it ripped away by crooks because you invest in a scheme that turns sour or a slew of other "bad luck" scenarios. Governments and banks have entered this game by instituting laws allowing for "bail ins" where they can seize depositors accounts when an institution fails and expanding clawback rules. Capital preservation should be high on our list of priorities when it comes to financial planning and even higher as we move closer to retirement.

Capital prevention goes beyond retaining the same number of dollars, the concept extends to retaining the same amount of buying power and options. In a world where the value of things are constantly changing and being affected by outside factors, this means we cannot just bury our money in a hole in the ground. Obtaining financial knowledge and showing the discipline to take action when necessary are key ingredients in achieving this goal. Also, a little good luck goes a long way in keeping us out of trouble in this dangerous world of baffling and confusing economic theories that are full of loops that feedback upon themselves or unexpected pitfalls. 

Many of the "modern monetary theories" in use today have not been proven over time but reflect an attitude that we can control economic cycles better than in the past. The basis of the economy we have today is unsustainable and because it has been able to exist for so long does not mean it can continue.  The fact the system muddles through does not guarantee that we will not suffer financial harm as individuals. The policies being put forth by central bankers have massive implications for both investors and society, this is more than a game and it directly affects the lives of people everywhere. The crux of this article is not to present a recipe for achieving a safe financial future but to remind you how important capital preservation is and urge you to elevate it as a priority.

While reading my blog or that of anyone who feels the need to express an opinion remember nobody is right all the time, but they can be wrong all the time. I have had the good fortune of doing far better than most people in building what appears to be a solid base and reasonable future but this is no guarantee of how I will fare going forward. The road ahead often takes twists and bends that we can neither foresee or predict. One thing has become crystal clear over the last few decades and that is the economic landscape is constantly changing this means we really are no safer today than in the past. One day you can be a hero and the next day a goat.

A term that I absolutely despise that has come into use by television moderators and the financial media in the last few years is "risk on and risk off day."  I do not feel the world is that simple or that we should try to change direction so quickly.  The world has grown far more complex and interconnected opening up new risk of contagion with "debt bombs" capable of reeking destruction hidden often just out of sight. For a long time, I have been saying "debt does matter" because when debts are erased from one column or entity it is often instantly reflected somewhere else as a drop in net worth.

One of my largest reasons for concern is that I feel the numbers being presented to us do not make rational sense, the "numbers don't work." Newly formed entitlements mean an American born in 1945 can expect nearly $2.2m in lifetime net transfers from the "state" and far more than they pay in. A study by the International Monetary Fund in 2011 compared the tax bills of what citizens pay over their lifetime with the value of the benefits that they are forecast to receive. When you realize if a person toils for forty years earning twenty-five thousand dollars a year they only make one million dollars then the numbers become both frightening and surreal. This leaves all of us vulnerable if the current financial system breaks down and has to be rebooted or restarted under a new or drastically different set of rules.This is why we should all remember that even if we wish to continue working in our later years and are fortunate enough to be able to, that work is much more likable if you do it by choice rather than necessity,

Footnote; Your comments are welcome and encouraged. If you have time please check out the archives for another post that may be of interest. Below are two posts that still remain relevant, one deals with how getting paid when someone owes you money can turn into a nightmare, the other is on the subject of inflation.

 http://brucewilds.blogspot.com/2014/05/debt-mirage-always-moving-into-distance.html
 http://brucewilds.blogspot.com/2014/02/when-will-inflation-strike_1.html


Tuesday, August 15, 2017

"Its The Economy Stupid" and this means, "Good jobs"

The Future Is All About Jobs, Jobs, Jobs!
Americans don't just want jobs, they want "good jobs" and this means full-time work that pays well and has benefits. A phrase "The economy, stupid" was coined by James Carville when he was a campaign strategist for Bill Clinton's successful 1992 presidential campaign against sitting president George H. W. Bush. Directly linked to this phrase is the idea of job creation. Today the fear of being replaced by a robot or seeing your job being outsourced or eliminated is on the rise. Few occupations are totally secure from the wave of labor saving technology currently in the pipeline. This means it is the job of those we have sent to Washington to create or paint a vision that shows how America can integrate labor saving devices into a job creating bonanza or at least an economy that is sustainable going forward.

After facing decades of stagnating or falling wages when adjusted for inflation little wonder exist as to why the average American feels insecure or downright betrayed. Several new technologies headed in our direction scream more economic disruption ahead. One writer I follow has pointed out on more than one occasion how self-driving vehicles is a game changer. Self-driving semi rigs able to safely maneuver and fill the nations interstate highways during the night when traffic is light will reduce daytime congestion but also greatly reduce the ranks of a major occupation that pays relatively well. The ramifications of self-driving vehicles will extend into areas such as taxi jobs and potentially change the relationship most American's have with their automobile. Currently, the automobile is thought of as a mainstay of modern life in this country. Imagine not having to own a car or reducing the number of automobiles in your family because a safe and secure ride is available at the push of a button.

Amazon Boast, It's Moving Towards A Robot Workforce
This returns me to the subject of the economy and jobs. Much of the angst Americans have directed at Washington is in some way or another related to how government policies have allowed jobs to flee the country and sometimes even encouraged this trend. Recent reports signal and makes it increasingly clear that automation is not going away. Increasing wages will only accelerate and drive the trend of replacing expensive human workers with robots. Amazon the behemoth retailer known for cutting prices and exploiting brick and mortar retailers that have higher overhead because they are located in our communities often boast of its cost saving move to utilize more robots and cut human jobs.

The fact is in my area while we continue to hear about unemployment at sixteen-year lows many people remain under employed and are struggling. The average American has good reason to worry not only about their job but the future opportunities available for their children. Let me make it clear, robots taking our jobs will bode poorly for the huge majority of society. The idea that those ultimately left with the decision as to how to divide the economic pie will be generous or fair is a little naive. History shows the ruling class tends to tilt the rules in their favor. Soaring economic inequality is already a major issue and the divide is most likely going to grow ever wider. When it is pointed out that entitlements are about to explode the deficit in coming years logic dictates the nation can no longer delay addressing this issue. While very important to voters creating good quality sustainable jobs is an area where Washington has failed to excel.

Soon Robots Will Be Coming For Your Job
Rest assured when push comes to shove those displaced from the job market or only able to scrape by will find they are only given enough to insure they remain docile and behave. If it ever comes to the point where these people filled with angst hit the streets in angry protest it is very likely they will be beaten into submission for the greater good. It should be pointed out that going forward those on the government dole or a guaranteed income may find they are at the mercy of a system where at any time benefits are canceled or cut.

Tied into Trump's solution to create new jobs and energize America's economy is the strong message that we must demand from other nations fairer trade policies that level the playing field. We cannot compete when other nations pay their workers little, degrade the environment, and often subsidize exports in various ways. This is a stand Trump shares with Bernie Sanders.  Like many backseat political strategist, I have grown weary of politicians failing to fulfill their promises or for that matter accomplishing much of anything. Even while we are told unemployment is at a sixteen year low and we hear companies are clamoring for workers something is definitely wrong and a series of polls indicate that a focus on job creation and the economy is where the attention of those in Washington should be.

Many people voted for Trump because as a businessman they hoped he would have a strong real life advantage over politicians in understanding how to create jobs. To be great a country must be economically strong. The key to any policy geared to creating jobs is getting the foot of government off the neck of small business. This means reducing the regulations strangling the nations most vibrant creator of jobs and where workers gain valuable work skills is a must. Tax reform and laws governing business must reduce the advantages mere size gives big business and its ability to destroy competition by mass alone. As it is big business will benefit most by adopting more automation and robot workers and this bodes poorly for most workers and society if it is not handled in a way that minimizes the damage to our culture. 

Sunday, August 13, 2017

Wealth Redistribution Is Not The Answer To Inequality

Redistribution Of Wealth Is Not the Answer
Dealing with inequality by redistributing wealth puts society on the slippery slope to socialism. More and more we are hearing things like a guaranteed annual minimum income for all individuals is the answer to achieving a society that is more fair and just. We are constantly being told that people deserve their "chicken done right" and how dignity and respect are key to our culture and the linchpins of a great society. The problem with all this is that at some point the rights of one individual begin to impact the rights of another. Simply taking the wealth from one person and giving it to another is theft and not a long term solution to what ails our economic system.

Socialism is a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole. Deny it as they might those advocating such a system are talking about "more government" when they are talking about the "greater good." A powerful central government controlling the economy for the "greater good" is the central driver of such systems and while the theory may sound appealing it has proven to be rather inefficient when put into practice. Economic systems tied to socialism tend to be unresponsive to changing supply and demand because they lack the proper incentives that cause people to excel and reach their potential.

Shifting global, political and economic tides tend to cause people to forget the failed states of the past as they focus on today and the future. Even communism a relative of socialism is currently looked on with less disdain than in previous decades. This is because the memories of the failed attempts of several countries to create what is often viewed as a fair or better way of distributing the fruits of our labor have faded over time. As inequality grows those clamoring for an answer as to how we might achieve a more just and fair society are again slipping into this trap. Getting something for nothing has a great allure and is a strong reason for many people to line up behind a politician like Bernie Sanders but the flaws of such systems are rapidly apparent in countries like Venezuela that has now fallen into chaos. 

By focusing on how the economic machinery in China has had the effect of improving the lives of hundreds of millions in the last several decades a case can be made that their system is not so bad. This argument ignores several facts and one of the most important is that China's economic growth has been made by and is a product of America. Ironically it was the shift of American jobs to that distant shore and other countries that are responsible for growing inequality here in America. It is baffling that many economists have chosen to ignore the ramifications of China's policies and how they affect the world. When all is said and done the financial missteps in China that have continued over the years will be recognized and the growth fueled by the Chinese government expanding the money supply will come to an abrupt end this has distorted markets across the world.

How We Tax, Key To Why Inequality Continues To Grow!
After a decade of central banks flooding the world with newly created money and super low-interest rates a series of what would have at one time been considered outlandish ideas has surfaced. These include a war on cash, forgiving debt through a debt jubilee, giving everyone a guaranteed income, and even injecting money into the economic system by dropping it from a helicopter. These ideas have all found their way into conversations as not only the best way to reset the economy but as answers to the problems before us. Easy answers such as these may give those suffering from inequality hope and extend their belief those in charge really care, however, this also creates the false illusion that the system is stable.

It should be immediately apparent that wealth redistribution can take many forms and has many faces. Any real attempt to address the issue of inequality must have true incentives to create new wealth and promote the kind of growth that is both sustainable and gives the average person opportunity or in a very short time the money will again flow back into the hands of a few. Taxation is and always has been a major tool for social engineering and that is why it is so important we do not underestimate how tax policies feed back into the economy. Of course, taxation can also be used to redistribute wealth but its main function should be to fund necessary parts of the government. Sadly, while almost everyone agrees the tax code is broken almost no one can agree on how to fix it. If you feel Washington failed miserably in addressing America's healthcare woes be prepared for more of the same when it comes to the issue of tax reform.

Friday, August 11, 2017

Nuclear War Moves Up List Of Worlds 10 Worst Problems

Threat Of Nuclear War Grows Larger
Generally, we see little movement in the list of the "Worlds 10 Worst Problems" when they are counted down from least to most crucial. In fact little has changed until now from late 2013 when this list was first composed, however, we would be remiss or negligent not to do some serious reshuffling to reflect the drum beats of war flowing out of Washington and North Korea. Please note, the leap from fourth to first place for "Weapons of war and mass destruction" is very significant because it can be very difficult to get this particular genie back in the bottle once it is out. Of course, when composing this list the term "most crucial" is very subjective, meaning that it depends greatly on an individual's interest and priorities.

Like many people, I do not find what is known as the concept of Mutual Assured Destruction, or MAD to be reassuring. What the world would look like following a nuclear war is very murky, yet today it seems many people consider nuclear weapons as just another tool or option for us to use in our defense if we are attacked. The nuclear deterrent America holds is a hundred times larger than needed to stop anyone sane or rational from attacking America, and for anyone else, an arsenal of any size will be insufficient. The sad fate that conventional warfare has unleashed upon Mosul and Aleppo where death and destruction have turned once proud cities into rubble stands as a monument of man's inhumanity towards man, however, pales to the devastation a nuclear attack would wreak.

Future Generations Depend On Us
The greatest problems faced by mankind impact the shape of our lives' and our very existence. Most of these are issues that center on our sustainability which means we must begin to address these many problems with long term solutions. Sadly, politicians do not deal well with such things leaving mankind without a great deal of direction. As we look at the human condition we can let fate take us where it may choose or we can take control of our future by proper planning and by guiding it as best we can.

Below is a list of the world's ten most crucial problems. Remember the position a problem holds on this list can shift from time to time as events take place, but expect most of them to remain on the list. Unless a black swan event such as a meteor heads our way this is what you have. Some problems have been grouped with the collateral issues associated with them, this may include the current "buzz words" used to describe their importance. Different people would group these issues in a variety of other ways and move about their priority. As always your comments are welcome.     

10.   Demographics of an aging population;   As the population grows older euthanasia and the quality of life will become an issue. This must be handled in a fair, honest, humane, and compassionate way. The alternative is to simply let many older people wither and die hungry while existing in pain and squalor.

9.  We must create an environment that allows and encourages people to develop fulfilling lives;  This means improving the educational system and having an opportunity to find fulfilling work, seek happiness and express their individuality. It also means ending corruption and extending equal protection and fairness under the law.

8.   Hunger and starvation;    Severe malnutrition can make life unbearable and because of it many people only go through the motions of being alive. People that are starving cannot learn and take a role in society. Starvation and addressing the need of basic sanitation must be addressed.

7.   Income inequality and economic stability;   The uber-rich should not become exempt from all common woes and untouchable. The uber-rich and political elite should not comprise a special class who are immune and able to ignore the rules of society. Nor should the masses be placed into a situation where they are deemed deserving of what fruit society creates merely by being born. Fairness in handling the world's economic systems and currencies that allow for a solid way to exchange goods and services is necessary or other world support systems will suffer or fail.

6.   Man's inability to take control of his future by creating responsive and responsible governments;   The masses have been lulled into complacency, in many ways we are all slaves, this is not a new role for man. But we can think and should make an effort to do so, we must push our chosen leaders to do the right thing and make long-term plans that are sustainable. We must shape our future and the values of the society in which we live.

5.   The last few years stand as proof of man's cruelty to man. Strife between religions and tribes must end;   We need to develop a new tolerance that allows people to live in peace. A safe place to live for a person and their family is one of man's most basic needs. The political elite must not be held harmless for the grief and death they cause over large swatches of mankind. War crimes cannot be tolerated. While this is easy to say deciding exactly who is responsible for these crimes is often easier said than done.

 4.    Wasting Earth's limited natural resources by not conserving and the continued destruction of our environment;   I contend that many of the "green solutions" being proposed such as ethanol fuel are not a solution at all and just ways for business to profit. A solution is not truly green unless the environmental cost of "maintaining" it is very low.

 3.    Pollution and the resulting climate change it may bring;   This is showing up in oceans that are sick and being depleted of life. This also may result in rising oceans and crop failures. Either scenario will mean massive suffering across the world and could tear the social fabric and alter our day to day lives.

 2.    Overpopulation;   This is the overriding problem facing Earth and the most difficult to address. If the problem of overpopulation is not addressed all the other problems on this list will most likely become much greater. Many people still rejoice in the idea that we should be "fruitful and multiply" ignoring or oblivious to the problems it creates in the long-run. The quality of life in many ways is more important than quantity.

 1.    Weapons of war and mass destruction;   This not only includes nuclear bombs and chemical weapons but drones and the killer robots now being developed. One big mistake or going down the wrong path in developing new weapons could change life as we know it!

While people and their families go about life each day having children and doing the things we all associate with our day to day existence most people concede that something is wrong with a world where many people lack even basic sanitation and watch their children die before the age of five. I'm not saying developed countries should give everything away or bring all the people of the world up to an American standard of living. It is not our responsibility to do so and probably impossible.

In my book, Advancing Time I highlight and bring focus to the massive changes that have taken place over the last two hundred and fifty years. History viewed in the framework of man's time on Earth forms the crux of my perspective. The oldest fully developed humans based on DNA research supports the theory that Africa was the area man first inhabited between 200,000 and 140,000 years ago. In 1800 the population of the world was around 900 million, by 1900 it had soared to 1.6 billion, since then it has exploded to over 7 billion.      

When you chronicle the journey from the beginning of man to our current state it becomes clear that the world has never before experienced such rapid change. This perspective helps us make sense of our fast changing chaotic world while illuminating and clarifying the responsibilities society faces. It is important we recognize this ever-quickening pace of change and keep in mind that if these problems are not addressed there may be no future for mankind or it may be much shorter and difficult than many people expect.

Tuesday, August 8, 2017

Relationships 101 - And Your City Park

If you are wondering about relationships and the glue that binds people together a good place to learn more about them is at a city park. As a society, we function better and achieve a higher level of productivity when couples are not poorly matched. Observing the actions of people at a public park is equivalent to taking a class in basic human interaction and can lead us to question the very nature of relationships or just as important the motivations behind them. You could call this learning experience "Relationships 101" and while it differs only slightly from watching people at a mall or other locations it is unique in that it often strips away much of the human facade making it harder to mask the truth by creating false purpose or diversions.

A Far Too Common Sight Is Couples Not Connecting
Observing people might give us a better clue as to how our culture and society might be failing in highlighting the importance of choosing a proper life partner. This also extends into how people choose to interact or why they take the path of solitude or loneliness. We should remember getting to a park often takes at least a little effort and most people with a park destination have given at least some thought as to what they will do when they get there. Weeks ago a small sign was placed near a favorite wedding spot for an event telling people to turn off their phones, it has since been removed, however, it might better have been left in place because in a park putting aside your phone does have merit or in the least garners some consideration.

A subject that is very interesting is what people do in parks, sadly in a world where people seem tethered to their phones far too many bring them into the sanctuary of nature. In parks, people scroll through their phones even while walking their dog, a baby or child even riding a bike. At times you see a couple and both of them are busy fondling a phone and not to take pictures but what appears as an effort to ignore the person they are with or escape the moment. Needless to say, some activities are based on two people having a romantic or close one on one connection and sadly some of these people seem rather unconnected or sporting a connection of convenience that gives off a vibe that screams neither love or even like. This underlines the idea that some "mismatches" should never occur and prove harmful over time.

Some Couples Appear "Mismatched"
The direction I have chosen to spin this article towards is the all important area where most of us go to chose a love interest of the opposite sex, however, it might also apply in cases where a "partner" of the same sex is determined to be a better match. While pondering relationships and what constitutes a real life attraction between the various couples wandering through the park I noticed many appear to have little in common with the person they were with. This of course was based on things like their interaction or body language and while opposites are said to attract these same "opposites" may be signs of an unhealthy union and eventually unite only to generate unhappiness. The bottom-line is relationships can be very difficult.

As I sat on the park bench with the person I considered my significant other what I saw caused me to wonder whether these couples had simply settled or were brought together by some other force or consideration. This question also arose when talking about a dysfunctional couple I had the misfortune of knowing that was heading towards marriage, in this case, I wondered which of the misfits was getting the worse of the deal. Even before tying the knot the man was voicing concerns his wife to be was overbearing and controlled every dime he earned, and he saw these as only two of her many unendearing qualities, to me these served as a red flag indicating it was a relationship forged in hell. I understand people become involved with others for many reasons but the motivation or pay-back from such a union does not seem promising.

Women May Be More Willing To Settle
The key question I found myself asking is who holds most cards in a relationship? We live in a world where men and women still have different cores and values and even as these get blurred by modern morality, people born at different times have different ways of viewing events. Are men or women more inclined to settle and accept a mediocre partner that is middling or unremarkable so they won't be alone? While the situation varies greatly from person to person my conclusion, unscientific or backed up by any polls, is that women are more prone to resort to simply take a partner because they are likely to be inflicted with the need to not be alone or desperate to not come across as unwanted.

Historically for men sex has generally rated high as a driving force in relationships. As they age men seem to be less social than women and the sexual motive tends to diminish as they find other interest to occupy their time, the fact that men are less social tends to feed into their ability to seal off emotions. Women on the other hand still are viewed by not only themselves but others as being more nurturing and caring in a way that ties them to their feelings and the desire to share those feelings with others. In the need not to be alone it is possible women win hands down, the bonus for all the miserable and flawed men who roam the earth it should allow them to rejoice in that it still leaves hope that somebody wants, or at least will be willing to settle for them.

Sunday, July 30, 2017

China's Financial Missteps Continue

What Happens In China Does Not Stay In China!

The financial missteps in China have continued and it will only be when their economy falters that we will learn to what extent or hear more stories about how they have masked their problems. China recently began touting what is seen as a buoyant economic expansion as evidence it is putting its financial house back in order. The country's gross domestic product grew 6.9% in the second quarter, according to government data recently released, the same figure as the previous quarter and marginally higher than most forecasts. The latest numbers position the economy above Beijing's stated growth target for 2017. While the numbers from China show an uptick in growth from the 6.7% it recorded last year it will be difficult to sustain this in the months to come if the government begins to focus on reining in the country's rapidly ballooning debt.

China is no small underdeveloped backwater with an insignificant economy and it is important to remember that "what happens in China does not stay in China." While we tend to be fixated on the four central banks that make up the worlds major reserve currencies because of its size and how it is connected to other major players we should remember that China policy packs a major wallop.  Growth in China has been fueled by its government expanding the money supply and debt, that is distorting markets across the world. This extends to things like causing housing prices to soar in many parts of Canada. This is why it is so baffling that many economists have chosen to ignore or given a pass to the ramifications of China's policies as they affect the big picture.

Finding A More Recent Chart Proved Difficult
It is difficult to ignore the Chinese economy has "been very reliant" on government stimulus, rapid credit growth and the flow of newly created money from a loose monetary policy. One thing we are seeing is that China will do anything to move its products, this is again apparent in the fact the prices of its exports are again falling. This means producers in the U.S. and elsewhere are unable to pass through any input cost increases because China is once again busy exporting its own brand of deflation across the world by keeping the cost of consumer goods in check. Again this feeds into the debate about globalization and is a solid endorsement of the movement by China which has benefited greatly from the shifting of jobs into the country from higher cost producers.

Getting a handle on the true strength of China's economy is complicated by the Chinese government recently announcing it would change the way it calculated economic growth for the first time in 15 years, adding healthcare, tourism and the "new economy" to the overall figure. It was not immediately clear whether those additions had an impact on growth or to what extent. The latest growth numbers will likely reinforce skepticism among analysts about the reliability of official statistics. Because of doubt surrounding the accuracy of these numbers, many economists continue to use measures such as electricity output and freight shipments to get an indication of China's true economic strength.

At the end of May, for the first time since 1989 credit rating agency Moody's downgraded China warning that the country's financial health is suffering from rising debt and slowing economic growth. This follows the International Monetary Fund's pushing Beijing last year to "urgently address" the issue. This problem has been years in the making when growth in the West collapsed following the global financial crisis of 2008, China's local governments and state-owned companies borrowed heavily to build cities and roads, invest in businesses and bolster financial markets. The spending spree resulted in a domestic debt hangover, particularly among some of the country's bloated and inefficient state-owned companies.

One thing China has not done is to prove it can reduce debt without harming growth, in fact, doubt has increased considering the property market’s outsized role in the economy, jittery consumers and signs that significant deleveraging hasn’t begun. A major reason this message is being ignored and we do not see enough focus on money and wealth continuing to flee China is because it is old news. Following a slew of stories at the end of 2015 and during 2016, lazy and inept financial writers choose instead to focus on easy to write and unimportant clickbait such as toys of the ultra rich and who is the worlds richest man.

A bit of light was recently shed of how money was continuing to leave the China when Beijing's attention shifted to the biggest conglomerate of them all, billionaire Wang Jianlin’s Dalian Wanda Group. The WSJ and Bloomberg reported the company was being "punished" by Beijing and would see its funding cut off after China "concluded the conglomerate breached restrictions for overseas investments."  Known as China's "Gray Rhinos," several large conglomerates with global reach have long prospered on credit financed by Chinese state-controlled banks, however, with stabilizing the yuan a top priority Chinese companies won’t find it as easy to acquire assets overseas going forward.

In all reality, Chinese companies have been using this as a way to move money offshore and adding to the flight of capital out of China. This has continued at a pace far worse than Beijing wants to admit and this "foreign merger party" and an orgy of high-priced foreign acquisitions is partly responsible for fueling higher stock markets across the world. The abrupt end of credit flowing to such companies should be viewed as a dramatic shift in policy considering that for years Beijing had been encouraging Chinese companies to scour the globe for deals. This dramatic reversal in policy is reining in some of its highest-profile private entrepreneurs in what officials say is growing unease with their high leverage and growing influence.

Several articles appearing on the financial blog Zero Hedge have delved into the corporate leverage that emerged as a result of China's unprecedented offshore M&A spree that emerged in 2015 and raged through most of 2016. It seems the stocks of the "famous four" Chinese conglomerates plunged after China officially launched a crackdown on foreign acquisitions amid concerns of "systemic risk" that were described as having the potential to become a "reverse rollup from hell" sending the loan to value of billions in loans collateralized by the company's shares to where they unleashed a catastrophic margin call upon the company's lenders.

 The bottom-line is that in a world where main stream media pumps out stories about how all is fine and markets are soaring warnings such as "Chinese billionaire warns of 'biggest bubble in history" continue to go unheeded. Many people still claim that China has plenty of ammo left and could even afford to bail out its troubled banks even as Moody's downgrade leaves China with the same rating as Japan, which has a far bigger government debt load. Some people feel massive systemic defaults are far less likely when the bulk of the debt is owed by a public sector with a strong balance sheet, which they see as being the case with China, however, remember China is far from transparent and the risk remains out of sight. The simple fact that we have become complacent over our concern and that it has yet to develop into a catastrophe doesn't mean it is no longer a danger or valid.

Thursday, July 27, 2017

The Three Reasons Healthcare Is So Expensive

Consumers Are Drowning In The Mess Washington Has Made
Washington lawmakers are again debating what to do with a healthcare bill that never should have been passed. The current law whether you call it the Affordable Care Act, the ACA or Obamacare took an irrational path towards achieving its objective. In reality, it is no more than a massive transfer of wealth masked as "healthcare legislation." When it comes to healthcare people face issues of both care and cost, what I see as the crux of the issue is who will be paying these bills. We must look at how we can cut healthcare cost so we get more and better coverage for the money spent. Extending Medicare to give the most "basic coverage" to everyone would require some rationing of service to contain cost, but this is already being done. Expanding Medicare would allow us to discontinue Medicaid while meeting our goal of basic healthcare for all citizens.

Healthcare is ridiculously expensive because many people have convinced themselves of three things: The answers for good health outcomes rest with pills and procedures rather than good diet and exercise. Death at late stages of life is some strange, recent development in human history which justifies and necessitates extreme, exorbitant payouts to delay it for every possible last second.  And last but not least, thinking that mixing all the myriad of "health care" transactions that result from the just mentioned concepts with health insurance as originally conceived to protect a person from unforeseeable, catastrophic events like an accident is a good idea. Remember, just because we can does not mean we should, if we do not prioritize and limit healthcare it grows like a tape worm ever ready and always wanting to grow larger.

Accounting for 16% of the economy, healthcare has become the Achilles heel of American competitiveness making the cost of American produced goods less competitive and adding to our trade deficit. While the money spent on healthcare wrongly feeds the GDP giving the illusion of economic growth it is clearly the wrong kind of growth and actually a tax on society, Americans spend more on healthcare than people in other developed countries, but with very poor results. Our healthcare problems are not for lack of spending,  Our system allows insurance companies to stick their nose into every interaction you have with a health care provider, they get to take a large cut as well. It has become virtually impossible to find a modestly-priced traditional insurance plan that protects a person from unforeseeable catastrophic accidents while letting them own responsibility for the accumulation of their lifestyle choices over time, thus differentiating the healthy 70-something marathon runners from a fat slob suffering from self-induced diabetes.

Government Has Caused College And Healthcare To Soar
We all know what happens to costs when free government money flows into a system, hello college tuition! Surely, there is a legitimate and rational place for government in ensuring access to basic levels of care, but we've lost our bearings about what "basic levels of care" should mean. Indeed, healthcare and hospitals have become a quasi-government entity. After the Supreme Court  decided that Obamacare is here to stay, I heard one supporter say "I think it rather tragic that a five/four Supreme Court decision could have overturned the wishes of  Congress." Another joked, "I guess we could just let people die in the streets but then the conservatives would probably complain about the cost of collecting the corpses." This is the kind of noise that makes it difficult to stay focused on the important issues.

It is not difficult to make a case that Obamacare is a boondoggle to increase the profits of private companies and their owners. The law has proven far more expensive and harder to implement than first thought driving premiums skyward for many Americans. A better alternative would have been to adopt a single-payer system covering "basic healthcare" which is something people already get when they collapse in the street. Many proponents of such a plan argue a single payer program would be more rational, less expensive and achieve many of the goals of the healthcare bill by cutting cost through eliminating wasteful duplication, bureaucracies, and paperwork. A single payer system wouldn't eliminate insurance or pharmaceutical companies, they would continue to sell extensive types of "optional" plans that would extend coverage beyond the basic care government would provide.

Deciding what is better or workable is the job of the legislature and has become a political "hot potato" with no easy answers. We all know that there is no escaping the grim reaper, and little to no way to collect medical bills from those who die with no assets to pay for burial, cremation, etc. We also know that bankruptcy laws exist which allow people with medical bills to cast off the responsibility of paying their debts and to walk away leaving the cost to be spread out across the rest of society. We cannot effectively make or "mandate" people buy burial insurance, eat broccoli, work out, and stop eating junk even though if you are out of shape you increase your chances of getting a major disease and forcing costs on the system. When all is said and done the crux of the issue is how can America cut healthcare cost and get better care for the money spent. It should be noted that it doesn't help that hospitals and caregivers are allowed to charge different or discount prices for various insurers and take other patients to the cleaners, it is not only unfair it is downright corrupt.

Tuesday, July 25, 2017

Traits Jeff Bezos, Elon Musk and Mark Zuckerberg Share

What traits do Jeff Bezos, Elon Musk and Mark Zuckerberg, the founders and CEOs of Amazon.com, Tesla, and Facebook, respectively, share or have in common? To many people, the first thing they recognize is that each of them is very, very rich. Also, words such as iconic, forward thinking come to mind. Each of these men also holds the ability to make and shape public opinion. At any time it is very likely when you check whats happening in the news at least one and possibly all their names will come up.

In our modern world where hype flourishes it is difficult to underestimate the amount of influence each of these individuals wields. Both Bezos and Musk have excelled in grabbing government subsidies to build their empires, these subsidies come in many forms some that exist more under the radar and some blatantly obvious. All three, make a point in weaving the narrative that they are instrumental in moving us towards a brave new world where the masses, (you and I) will benefit greatly from their actions.

One thing that is totally undeniable is that a massive amount of hype surrounds each of these men. None of them come across as shy considering all three are constantly in the news and it seems this is not by accident, in fact, they seem to be publicity hounds hell bent on hyping their brand in any way they can to enhance their fame and wealth. Few people deny each of these individuals by themselves constitute a force to be reckoned with, however, when grouped together they represent something far greater and that is the global elite.

These three men in many ways epitomize the American idea of fame and fortune. Each of them has added an incredible amount of money to their wealth during the last few years. All three have seen their fortunes swell by billions as their companies' stocks have soared. Both Bezos and Zuckerberg have each seen their fortunes swell by more than $20 billion this year according to data from the Bloomberg Billionaires Index. Another thing that has soared is their lobbying efforts and the amount of money they spend in Washington DC to garner special considerations. Below you will find a few facts or links to recent news blips about each of these men.

Washington Post Moves Bezos Into Shaping Opinions
Jeff Bezos----The founder of Amazon.com has indeed had a good 2017 and in the last few weeks also claimed the title of the worlds richest man. Among the goals of this online retail mogul is replacing workers with robots which his company will both build and market plus controlling one of the most influential news media giants in America, the Washington Post. This high-flier is also the head of Blue Origin, a company with big plans to pioneer the frontier of space. Last but far from least as Amazon's CEO Bezos ties this all together with Amazon Web Service or AWS. This is a cloud service which also collects data and has ties with the government. This means they know when you are sleeping, they know when you're awake, they know when you are bad or good or if you are gaining weight. (that last part was my attempt at humor) Below are some links that will tell you more.

     https://www.space.com/37572-jeff-bezos-trillion-people-solar-system.html
     http://www.zdnet.com/article/bezos-move-spurs-20b-of-growth-in-logistics-robotics/
     https://www.theguardian.com/technology/2017/jun/02/jeff-bezos-worlds-richest-man-bill-gates

Elon Musk-----With a real time net worth of only $15.7 billion as of July 24th he trails far behind Bezos and Zuckerberg in the area of wealth but rivals them when it comes to getting media coverage. Elon Musk is one of those iconic figures the world occasionally conjures up to wow and entertain the masses as he tries to redefine transportation on earth and in space. As media generated symbols of success go he ranks up there with the best of them. Much of the aura that surrounds Musk comes from his success at PayPal. Musk co-founded X.com., an online financial service and e-mail payment company. With his youthful looks and forward thinking the media latched on to Musk and propelled him into being viewed as a visionary and wonder-boy that turns everything he touches to gold.

Elon Musk A Man Of Big And Bold Ideas
When talking about the CEO of Tesla Motors, Bloomberg News almost always says "Billionaire Elon Musk", this happens so often that many people probably think his first name is "Billionaire". As to the source of his success, it seems Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. Elon Musk's latest bout of attention occurred a few days ago when he said he has been given “verbal” government approval to build the world’s longest tunnel for an ultra-high-speed train line to connect New York to Washington. What "verbal approval" means and a lack of details combined with many government officials saying they didn't know what he was talking about left many people bewildered. Below are some links that will tell you more.

 http://www.businessinsider.com/why-elon-musk-always-talks-down-the-price-of-tesla-stock
 https://www.inc.com/julian-hayes-ii/elon-musk-and-michael-jordan-can-teach-you-to-be-s.html
https://www.bloomberg.com/news/articles/2017-07-20/musk-claims-u-s-approval-for-world-s-biggest-tunnel
https://www.forbes.com/profile/elon-musk/

Mark Zuckerberg-----While a bit less "flashy" Zuckerberg computer programmer and Internet entrepreneur who co-founded Facebook, seems to rank higher among young people than the other two. Zuckerberg was a billionaire by the age of 23 and has survived several legal battles. His first popular site breached security and violated privacy and he has been accused of intellectual theft, blasphemy, and failure to uphold a contract. His longest-running legal battle was with twins Cameron and Tyler Winklevoss who claimed that Zuckerberg had stolen their idea for Facebook. Currently, the Facebook CEO is traveling throughout the United States to fulfill his 2017 “personal challenge” to “learn about people’s hopes and challenges” this has attracted a great deal of attention and sent rumors flying and created speculation that he might be considering running for President. During his travels we have seen him drive a tractor, meet with recovering heroin addicts, don a hard hat and speak out against the staggering wealth inequality that his personal fortune so clearly represents.

Views Vary As To The True Character Of Zuckerberg
Some people might be happy to stop at being the founder and chief of one of the world’s biggest tech companies while still in their early 30s. Not Zuckerberg, the CEO of Facebook has spent the last couple of years casting himself in various guises. First, global philanthropist: he and his wife last year pledged to invest $3bn over 10 years in order to eradicate global disease, however, some detractors point out this is a very small part of his wealth and this is being done as the cafeteria workers at his company struggle to make ends meet. Zuckerberg recently revised the mission statement for Facebook, at his company's first Communities Summit in Chicago he said Facebook looks to move beyond only connecting individual "friends" in order to bring more groups of people together "to build community."

While Mark Zuckerberg criticizes the state for failing to build adequate infrastructure for Silicon Valley workers it has been pointed out that perhaps the US government, like those elsewhere cannot afford infrastructure because of the huge lengths companies like Facebook, go to in order to avoid paying the taxes that needed to pay for that infrastructure?  Last week from Alaska. Zuckerberg praised the idea of a universal basic income, an unconditional income paid by government to all citizens, regardless of whether or not they’re in work. This brings up the question of whether Zuckerberg has the right to pronounce what the welfare state should look like at the same time Facebook takes very aggressive measures to minimize its tax burden, some people think not, and to those people, the term "hypocrite" quickly springs to mind. Below are some links that will tell you more about Mark Zuckerberg.

http://www.bing.com/news/search?q=Mark+Zuckerberg&qpvt=Mark+Zuckerberg&FORM=EWRE
http://fortune.com/2017/06/22/mark-zuckerberg-facebook-mission-groups/
https://www.theguardian.com/technology/mark-zuckerberg
http://celebritybox.info/10-facts-about-mark-zuckerberg/related/
 http://www.newsweek.com/trump-mark-zuckerberg-2020-election-640288

It should be pointed out that it is not just Facebook other global tech giants such as Amazon and Google are also notorious for exploiting every loophole to get out of paying their fair share of tax. As noted before other companies such as Tesla live on the government tit. I'm not so much jealous or envious of this trio as I am dubious of any claims they might make about how their goal is to give back and better society rather than increase their power and wealth. All of them at times come across as a bit arrogant but more important are the motives behind the messages they constantly put before us.

This article has grown far longer than I originally planned because doing my research I discovered a great deal more "in my face" information than anticipated, simply put, these guys are everywhere with their reach extending far beyond that of any rock-star. I have thrown a great deal of information out that does not paint a flattering picture of these three icons of society but it is up to you to determine their real character. Over the decades a number of high-flyers have come and gone, men like Ted Turner who once appeared ready to conquer the world are now looked back upon as merely another agent of change.   

Saturday, July 22, 2017

This Cannot Be The New Normal

brucewilds.blogspot.hk / By: Bruce Wilds

The Above Chart Is Not A Reflection Of Normal! 
The confusing market action has reached the point many of us are now wondering is this the new normal. Even as the market has forged its way into new territory the new highs have done little to alleviate the concerns of many investors that something is very wrong. More important than how the economy appears to the casual observer is the strength of the foundation on which it's built. This extends to issues such as growing inequality and just where we are headed when it comes to people being able to earn a living in the future. Jobs, jobs, jobs, much of this is about what is produced and how the fruits of our labor are distributed.

The current economic trends are unsustainable and unworthy of our faith. The markets reflect what I consider a total disconnect from the economic reality of sustainability, the numbers going forward simply do not work. I find little reassurance in trends that filter much of society's money and wealth into paper assets and promises rather than what we see as real and solid tangible assets. This has masked inflation by taking newly printed money out of direct competition for tangible goods which would normally drive their prices higher. Instead, it has made many goods downright cheap in comparison to prices people pay for things that are not real and often of questionable value.

A matter that weighs heavy upon both the economy and society, in general, is the productivity debate. Economists trying to explain the apparent structural slowdown in productivity growth have been forced to ask where is the missing increase? No easy answers exist to the questions arising from our evolving economic situation and the encompassing concerns about how we measure structural shifts in the labor market, a dearth of investment opportunities, productivity-diluting technological innovations, technology-driven skills mismatches and growing inequality. Efforts to increase demand and pull productivity forward have failed and resulted in massive debt growth across the world.

As Robots Take Our Jobs What Becomes Of Us?
Whether what we produce is allowed to flow to individuals or is whisked away by government for projects they claim serve the "greater good" or in the end directed in other directions is of great importance. This even translates into the decision to produce guns or butter and should include the fundamental question of, how much productivity growth do we really want or need considering the long-term cost to our planet. It should be pointed out that for many individuals, especially those residing in the wealthier developed countries, the top priority is not simply becoming richer, but developing a richer life. Living in a way that produces a better overall outcome.

Over the long-term what the economy is presenting us with today cannot be called the new normal in that little of we call normal is reflected in this economy. While growing debt and expanding credit have moved demand forward we should not delude ourselves into thinking it will be repaid. Much of it will slip into default exacerbating future problems. It may be time for mankind to take a moment and ponder what the human animal really wants, and the fact is we are still really just an animal and the answer might be something totally different from what we are being told by those we have given the power to shape our future.

Two Very Different Pictures Of The Future
As to whether it is time to rush off and embrace what some see as a "brave new world" the debate continues. We should remember with opportunity often comes risk. One area some people see as the answer to our problems is the development of artificial intelligence also known as AI. Some forward thinkers including Elon Musk have warned of what he called the possibility of "bad utility value" saying mans position on this planet depends on his intelligence and if his intelligence is exceeded by AI it is unlikely we will remain in charge of the planet. Some of these thoughts are echoed in an article by John Havens that start out, "I, for one, do not welcome our new robot overlords"

At this point, the idea of a sustainable and balanced future seems rather elusive and it does not seem that we are on a course towards perpetual bliss. As this is being written the drums of war drown out reason and the threat of war with countries such as Russia, North Korea, or even China are all too real. Over the years as society has become richer we have seen the relative value placed on different parts of our lives shift. Overall those in charge and the elites have failed to create a compelling answer to our woes. It will be most interesting as we progress to see if we can channel our time, income, and creativity towards solving our problems rather than diverting our energy into creating new ones.
 

Footnote; Today we find we are still trapped in the box Ben Bernanke built with no way out, compounding our problems is the fact we never received the promised economic growth promised to flow from his financial remedy. The article below explores this situation.
http://brucewilds.blogspot.com/2017/06/america-is-still-trapped-in-box.html

Thursday, July 20, 2017

Iran And The Reason For Its Deep Distrust Of America

Iran Has Little Reason To Trust Aamerica
 brucewilds.blogspot.hk / By: Bruce Wilds

Much of the problem America has with Iran flows from the perception that we have created over the years by portraying Iran as being a larger than life boogeyman that threatens our very way of life and existence. Remember Iran was elevated to this level when President George W. Bush used the term "Axis Of Evil" in his State of the Union Address in 2002, not only did he include Iran as being a member, but he often repeated it throughout his presidency. A big issue with me is that Washington and the politicians who reside there have lied and misled us so often it is difficult to believe them when it comes to such an important matter as this. I'm dubious of anything coming out of Washington because the government is very attuned and highly geared to serve the agendas of special interest that place lining their pockets above the common good.

When it comes to Iran's official stance towards America anyone saying that Iran has good reason not to trust the American government is making an understatement. America through its foreign policy has reeked havoc upon many countries, but few societies have been affected or suffered from our meddling as much as Iran. A neutral source without an agenda, in this case, would be Wikipedia, and a quick read of the history of Iran post-World War II shows America has constantly interfered in their internal politics. In 1953 the British M16 and the American CIA organized a military coup d'etat to oust the nationalist and democratically elected Prime Minister and form a government that allowed the country to be firmly ruled by Mohammad-Reza Shah Pahlavi, the man we all know as the Shah of Iran, in Persian Shah means king.

Under the idea that America must get along with Iran one way or another it is only fair to call attention to some very damning declassified documents released recently that shed light on the Central Intelligence Agency’s central role in the 1953 coup that brought down Iranian Prime Minister Muhammad Mossadegh. This eventually fueling a surge of nationalism which culminated in the 1979 Iranian Revolution and has poisoned the relationship between the U.S.and Iran. The approximately 1,000 pages of documents reveal for the first time the details of how the CIA attempted to call off the failing coup but it went forward because of an insubordinate spy on the ground.

The documents conflict with the U.S government's long denied involvement in the coup. The State Department first released coup-related documents in 1989 but edited out any reference to CIA involvement. Public outrage coaxed a government promise to release a more complete edition, and some material came out in 2013. Two years later, the full installment of declassified material was scheduled but the release was delayed fearing it might interfere with the Iran nuclear talks that were taking place. Now they have finally been released, it should be noted they are not complete because numerous original CIA telegrams from that period are known to have disappeared or were destroyed long ago.

What is clear and finally brought to light is the CIA plot known as Operation Ajax, was about oil. In early 1951, amid great popular acclaim, Mossadegh nationalized Iran’s oil industry. A fuming Great Britain began conspiring with U.S. intelligence services to overthrow Mossadegh and restore the monarchy under the Shah. While some of the U.S. State Department, the newly-released cables show, blamed British intransigence for the tensions and sought to work with Mossadegh plans were made for a coup. The coup attempt began on August 15th but was swiftly thwarted. Mossadegh made dozens of arrests. General Fazlollah Zahedi, a top conspirator, went into hiding, and the Shah fled the country.

At that point according to a newly declassified cable sent on August 18, 1953, the CIA under the impression the coup had failed decided to end their role. The message read, “Operations against Mossadegh should be discontinued.” Part of the logic to bury this then bury the shovel was obvious when they wrote, “Operation has been tried and failed and we should not participate in any operation against Mossadegh which could be traced back to U.S.”  The cable which Kermit Roosevelt, top CIA officer in Iran, purportedly and famously ignored, according to Malcolm Byrne, who directs the U.S.-Iran Relations Project at the National Security Archive at George Washington University.

Byrne told Foreign Policy, “One guy was in the room with Kermit Roosevelt when he got this cable,” and “[Roosevelt] said no – we’re not done here.” It was already known that Roosevelt had not carried out an order from Langley but the cable itself and its contents were kept secret. What unfolded next is pivotal, on August 19, 1953, with the aid of “rented” crowds widely believed to have been arranged with CIA assistance, the coup succeeded and Iran’s nationalist hero jailed. The monarchy quickly restored under the Western friendly Shah. The existence and extent of Operation Ajax have long been a major point of contention for many Iranians from which the flames of anti-Western sentiment have grown, in 1979 they resulted in the U.S. hostage crisis, the Shah being overthrown and the creation of the Islamic Republic.

Many Iranians Want More Freedom
Our current agreement with Iran was reached as an alternative to the unsavory option of taking military action to halt Iran from developing a nuclear bomb. History shows war to be a pathetic option to bring about positive change, war brings about change but to what degree and for how long. In truth, few Americans know much about Iran or its 78 million inhabitants or have ever visited the country. Many people would have difficulty pinpointing its location on an unmarked map and the chief source of what knowledge they do have is usually from the evening news. The official name of the country is the Islamic Republic of Iran and it is an area that history called Persia with Persian being the official language and the rial is its currency. Iran's unique political system based on its 1979 constitution combines elements of a parliamentary democracy with a theocracy governed by the country's clergy. The country is made up of several ethnic and linguistic groups but most inhabitants are officially Shia.

The Shah maintained a close relationship with America and shared our views towards the Soviet Union its northern neighbor. Iran was a strong ally in efforts to keep the Russians contained during the cold war. While the Shah westernized and modernized Iran he also ruled with a heavy hand. Arbitrary arrests and torture by the Shah's secret police were used to crush all forms of political opposition. Ayatollah Ruhollah Khomeini an active critic of the Shah publicly denounced the government and was arrested and imprisoned for 18 months. After his release when Khomeini publicly criticized the United States government he was sent into exile. When oil prices spiked in 1973 due to an oil embargo declared by OPEC and several other countries a flood of foreign currency into Iran caused double-digit inflation, waste, and corruption that was followed by a recession and social unrest. Protest and strikes spread until they reached a point where the Shah fled the country and Ayatollah Khomeini returned in 1979.

In the spring of 1979 a new government was formed and over the next several years uprisings were subdued in a violent manner as the new government went about purging itself of the non-Islamist political opposition that had joined with them to overthrow the Shah, tens of thousands were eventually executed by the Islamic regime. A part of history that lingers strongly in the minds of many Americans is that in November 1979, a group of Iranian students seized the U.S. embassy taking  52 U.S. citizens and embassy personnel hostage after the U.S. refused to return the former Shah to Iran to face trial and execution. The hostages were finally set free on Jimmy Carter's final day in office, but many Americans continue to view this as a slap in the face. A serious bone of contention among Iranians is what happened next.

America Supported Iraq Which Attacked Iran
On September 22, 1980, the Iraqi army invaded Iranian Khuzestan this signaled the start of the Iran–Iraq War. Although Saddam Hussein's forces made several early advances, by mid-1982 the Iranian forces successfully managed to drive the Iraqi army back into Iraq and Iran made the decision to invade Iraq in a bid to conquer Iraqi territory. The war continued until 1988 when the Iraqi army defeated the Iranian forces inside Iraq and pushed the remaining Iranian troops back across the border. It is clear the United States, alongside regional and international powers, supported Iraq and Saddam Hussein with loans, military equipment, and satellite imagery during Iraqi attacks against Iranian targets. Subsequently, Khomeini accepted a truce mediated by the UN, but the war cost Iran many lives and huge economic damage, half a million Iraqi and Iranian soldiers, with an equivalent number of civilians, are believed to have died, with many more injured. It must be noted that during the conflict America and the international community remained silent as Iraq used chemical weapons of mass destruction against Iran as well as the Kurds in northern Iraq.

Following the war, Iran concentrated on a pragmatic pro-business policy of rebuilding and strengthening the economy without making any dramatic break with the ideology of the revolution. Tensions with the United States dramatically increased after the 2005 presidential election brought the conservative populist candidate, Mahmoud Ahmadinejad, to power. His over the top rhetoric galvanized the feeling Iran had no intention to take a peaceful place in the world community. In 2009 protest erupted in Iran after President Mahmoud Ahmadinejad was reported to have won nearly 60 percent of the vote despite voting irregularities. Despite the relatively peaceful nature of the protests, the police and the Basij (a paramilitary group) crushed the people by using batons, pepper spray, sticks and, in some cases, firearms. Images of Neda Agha-Soltan, who was shot and died were uploaded to mass media and broadcast around the world.

Travel Documentary Shows Little Malice Towards America
It was reported that thousands were arrested and tortured in prisons around the country, with former inmates alleging mass rape of men, women, and children by the Iranian Revolutionary Guards. Relatives of those killed are forced to sign documents claiming they had died of heart attack or meningitis. The world watched and did nothing. On June 15, 2013, the electoral victory of new Iranian President Hassan Rouhani took place and since then Iran has improved relations with other countries. This recall of history is necessary to understand the real nature of the American-Iranian relationship and how we arrived at today. It should be noted that many Iranians have no malice towards America and are far more moderate than the political apparatus with its strong links to the country's clergy. A few years ago Rick Steves produced a documentary that explored Iran in a one-hour, ground-breaking travel special. This is a good place to meet the people of this nation whose government so exasperates our own.

John Kerry a key player in crafting our current agreement with Iran has stressed that if Iran fails to meet the requirements of the current deal, all options remain on the table. Sadly armed conflict tends to be a Pandora's box rather than an easy answer to our problems. We must defend ourselves, but the fact is mothers value their children just as the peasant in a rice patty field values his ox, neither want to see them killed in a war. If we look at every war ever fought we will find that most of the people affected by the violence only wanted to be left alone. It seems the first casualty of war is truth and governments often go to enormous lengths to persuade people to go to war using the tools of patriotic seduction, propaganda, and coercion. Governments convince and mobilize the people by painting a picture of an evil enemy that must be stopped. This means a lack of knowledge does not bode well for society when it comes to our ability to foster intelligent government. The term "need to know" should be revisited and changed to "we all need to know as much as possible".

With this in mind, we should not give the Obama administration too much credit for bringing us a great or even good agreement. Remember that during the Obama years many people considered foreign policy a mess as he flip flopped ignoring even the red lines he boldly drew in the sand. When Kerry talked about offsetting the boatload of money Iran was to receive when the sanctions were lifted by "upping our game in the area" questions arise as to the cost and how Washington intends to pay for this next gambit. Even a part of the one hundred and fifty billion dollars Iran received can go a long way toward funding the many proxy wars being fought in the area. While officials say this international agreement will halt much of Iran’s nuclear program and ratchet back other elements of it several U.S. senators, both Democrat and Republican, have voiced displeasure with the parameters of the agreement, arguing that the U.S. and its partners are offering too much for something short of a full freeze on uranium enrichment.

Those who are skeptical and view this as a weak agreement say Obama backed down again. President Obama noted the qualms of Israel, Saudi Arabia and other Persian Gulf allies of the United States and that they are skeptical of Iran’s intentions. An interesting thought to consider is Iran held more cards than we were told at the time because ISIS was a growing threat. In many ways when the agreement was reached Iran held the fate of Baghdad in their hands. If the Shia militias from Iran that were defending Baghdad wavered both the Iraqi capital and the American Green Zone could have come under fire from ISIS, this would have been very embarrassing for Obama and our government. For the world, the bottom-line remains that if  Iran does not halt and reverse its course any agreement means nothing. Iran can always ramp up its plans to develop a nuclear bomb at off-site locations. The fact is if current trends continue in the future Iran looks to face a defanged and economically weakened America with less power in the region. Regardless the fact remains that one way or the other we must deal with Iran and war is not a great option.