Sunday, August 25, 2013

Sequester, Pain Not Yet Felt

After a major gashing of teeth the sequester has had less of an adverse effect on the economy than was predicted. But the sequester has failed thus far, because the object was to frighten Congress and the President into agreeing to sensible fiscal reforms that would keep the federal deficit within tolerable limits. The sequester has had only modest economic effects because some of its most onerous provisions were quickly modified and delayed. The pressure on politicians that sequestration was supposed to exert has lifted. Again we have moved into the area of business as usual. To those of us who see government as a bloated and growing monster more cuts are wanted.

While the sequester hasn’t put us squarely back on the track to a balanced budget it has had bad effects according to many. It has slowed the economic recovery, even if not dramatically then at least to some extent. Many federal employees not laid off have been furloughed without pay for several days a month, this has reduced their income and hence their spending as consumers. Sequestration has slashed a number of programs intended to assist the poor and semi-poor. Programs such as "Head Start" and "Meals on Wheels" have had to reduce spending. Only now are we getting more detail than previously disclosed about the potential impact of cuts on fiscal 2014 spending.

Economist such as Keynes make a big point about consumption driving production, which drives employment, to that extent some people feel the sequester has further increased the growing inequality of income and wealth in America, to them it has done further harm to the country. Remember the sequester is only in its fifth month, the bad news is most of the pain of cutbacks is yet to be felt. Federal agencies have been ingenious in delaying the full effects of the sequester by drawing on reserve funds, and hoping that politicians would find another way to deal with budget problems. As these funds become exhausted, layoffs and furloughs will increase. 

On August 22nd a news headline said the Defense Department may have to fire at least 6,272 civilian employees if automatic cuts known as sequestration slice $52 billion from its fiscal 2014 budget, according to a Pentagon planning document. Additional budget analysis is “likely to produce further reductions” as the services focus on shrinking their contract labor forces, according to a Pentagon “execution plan” recently announced. The job cuts, although less than one percent of the non-uniformed workforce, would mark an escalation from the unpaid leave mandated under sequestration in the current fiscal year.

The services should expect a $475 billion budget after sequestration cuts for the fiscal year that starts Oct. 1, 2013 almost 10 percent less than the pending $526.6 billion request, according to the document dated Aug. 1st. Sequestration would result in 16 percent reductions in the Pentagon’s procurement and research spending and 12 percent cuts in operations, maintenance and military construction. For the most part, major weapons programs aren’t being targeted for extensive reductions, according to the plan, which was a presentation by Pentagon budget and cost-assessment officials for generals and admirals who oversee force structure and resources for their respective services. Expect the pain from these cuts to filter down through the economy.

Footnote; Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest such as the post below on how the budget will again be front and center in just a few weeks,

Monday, August 19, 2013

Americans Should Show A Little Spine

For years Americans have been more concerned for their safety then necessary, could be because we are a coddled bunch. Looking across the world we live in one of the safer and more secure nations, yet many Americans claim that they live in fear of being attacked. The weapons used in a recent attack on spectators at the Boston Marathon were common pressure cookers, they were armed with a detonator and filled with BB’s, nails and pellets. The explosions killed at least three people, including a eight year old boy and maimed and injured more than 170 others. The recent Boston Marathon bombing may in the end prove no more then a teenage boy and his misdirected older brother making a crude easy to assemble bomb and placing it and setting it off in a highly visible setting.

 As we delve further into the evidence we will get a better ideas of the motivation and their intent. One thing the incident has already proved is that if ever a country wanted to maximize and encourage people to copy a negative act for attention, America can optimized the opportunity. We have also shown that America has the ability to throw a large and massive amount of resources into an investigation. This event is conformation of our ability to mount what could be considered a crazy overreaction to an incident. It culminated into massive and rampant speculation, and drove people into a frenzy, as the media and others talked about possible sinister links with terrorist groups and an extended cell of conspirators. We should remember that to the rest of the world the life of an average American is no more special or important in the overriding scheme of things then a person from any other nation.

Americans should show a little spine both when it comes to the idea or threat of an attack. This is not to say it is not tragic, for it is, but those effected most are the families of those who die, and those who are injured, not the rest of us who view it all from across the miles. The attitude and acceptance that it will occasionally happen does not mean that we shouldn't take prudent efforts to limit and curtail such incidents. This should stop far short of taking away our freedoms. Efforts to protect our country and it's people has already proved to be very expensive, the budget of  the Homeland Security agency is massive. Our focus must be on the big picture, the plots and attacks that would have far reaching effects. Incidents like the Boston bombing are merely collateral damage when you think of the massive loss of life that can take place.

In an opinion piece written by Ted Koppel and printed in the WSJ on August 7th, titled;  "America's Chronic Overreaction To Terrorism" Kopple delves into terrorism over the last several decades and makes many good points. Some readers thought Koppel was acting as a mouth piece for Obama but in fact Obama is in no hurry to stop the NSA program. Kopple wrote; Terrorism, after all, is designed to produce overreaction. It is the means by which the weak induce the powerful to inflict damage upon themselves. At home, the U.S. has constructed an anti-terrorism enterprise so immense, so costly and so inexorably interwoven with the defense establishment, police and intelligence agencies, communications systems, and with social media, travel networks and their attendant security apparatus, that the idea of downsizing, let alone disbanding such a construct, is an exercise in futility.

Bottom-line, we live in a dangerous world, many terrorist attacks occur every day throughout the world.  We will always be vulnerable to people being killed in a senseless manner. The people carrying out such acts usually have motivations that form outside the mainstream and norms of society. The way we as a society react to and handle these situations, and deploy our assets, will help determine the future frequency of such events. But more important may be understanding and lessening the cultural motivations that cause them, this could prove very challenging. Many other countries seem to shake off these ugly incidents faster then America.

I choose not to live in fear and I feel that there is a limit to how much of my money should be used to protect me. I choose not to sacrifice either my freedom or privacy. Those of us who want programs that spy on us disbanded has created a bizarre alliance of the far left that often calls more government action and the less government libertarians. Personally I'm reminded of the saying that alludes to fear having a way of feeding on itself, "in the night even bushes become bears." Fear has become a big business as we always justify spending a little more, doing a little more, being a tad more cautious. In the future I propose we face these events with courage, a stiff upper lip, bravery and resolve. Pressing on, not wallowing in the carnage, but picking our selves up and putting it behind us as soon as possible.

Footnote; My apologies if you find this post offensive, or insensitive, sensitivity is not my strong suit, this post merely reflects my personal opinion. As always comments are welcome and I urge you to glance at the blog archives for other post you might find interesting.


Sunday, August 18, 2013

The Wrong Kind Of Growth

Not all economic growth is created equal. If you spend money but afterwards have little to show for it, you have wasted it. Sadly much of the money America "invest it itself" each year through government spending and programs falls into this category. We need the right kind of economic growth, growth that is sustainable, with a purpose, well directed, and that has long lasting benefits. It should be in harmony with the environment and at the same time make economic sense. Proper planning often allows for rebuilding and improving rather then replacing and destroying everything currently on the ground.

Many of the worse examples of poorly directed growth can be contributed to poorly crafted government programs. I'm forced to think of  cash for clunkers, the problem is that many of the cars destroyed were not the nations worse "clunkers", but instead cars swept into the group because they qualified as a trade in. Another example is how America handled the move from analog to digital television, it cause the premature death of literally hundreds of  millions of  functional televisions, most hit the curb for trash pickup, and found their way into the nations landfills. Little effort was made to collect and recycle these units. To make things worse very few of the replacement units were made in America, the money spent on them quickly left our shores adding to our trade deficit and providing few jobs for Americans.

Jam into the poorly directed growth all the government money spent on hospitals and colleges that many Americans can no longer afford to visit or attend. While two totally different animals, both have been propelled into the future using tax dollars. This has influenced where they are built and the priorities of their design. Colleges have spent billions on theater style classrooms, massive parking garages, spacious student union buildings, and student housing that compete with the private sector. Hospitals often flee the city and construct whole communities on the edge of town leaving a hole in the neighborhood they left, this often results in the closing of local businesses and urban blight.

Growth need not be ugly and destructive, but when using huge amounts of other peoples money common sense often is the first thing to go as planners seek to create a clean slate where those in power can construct a monument onto themselves. Historically government has a poor record of spending our tax money well, it seems that those making the decisions are easily swayed by self interest or because they have no "skin in the game". Often they simply fail to demand a fair return on the money spent. This is what makes many tax payers skeptical about claims that infrastructure spending is the silver bullet that will be able to move us forward.

When looking at the quality of growth a flaw many refuse to acknowledge about quantitative easing is that it acts as a false tailwind that comes at a huge price when at some point it must end, it is not a situation or normal constant that can remain or exist, it is an abnormal monetary environment. QE carries with it huge side-effects by distorting and creating a false market as well as encouraging investors to take on more risk. Possibly the biggest flaw manifest itself in the squandering of opportunities that some see a get out of "problems free" card, but in reality this money is not free. One of the biggest concerns is that the withdrawal of this program by its design in effect creates its own headwind.

Recently the government muddied the water further on defining growth when they made a minor change in how the  GDP is calculated, this will have the effect of making things appear better and giving the impression of  even more growth, it will also improve the GDP / national debt ratio thus making our debt seem less dramatic. If government was interested in a more honest reflection on economic growth they could back bankruptcies out of the GDP as lost assets, fact is many debts are not getting paid down or off but simply being written off. In a recent post I wrote about how new business start-ups propel the economy forward when created but often leave a wake of destruction behind when they fail after a short time.

With each of the pull backs following the Great Depression jobs returned more slowly then the one before. This seems to be a trend as the world economy continues to change, this time the job creation is far less as small business the creator of jobs is under assault. With larger businesses having a number of advantages going forward and eating the lunch of their smaller competition it is no surprise that the National Federation of Independent Business recently reported that more companies reduced the size of their staff than increased it over the past month, marking the third straight negative reading. Some 12% of small businesses trimmed jobs while 9% added workers. Hiring intentions remained weak. "Overall, there is not a lot of promise for new job growth," said William C. Dunkelberg, chief economist of the NFIB. 

Today many regulations favor big business. They have the ability to raise money while many small businesses cannot. Regulations also weigh heavier on small firms. As their smaller competitors fail large firms pick up more business. This is one of the main reason for lack of new job creation and why this recovery will be so hard to sustain. The 1982 recession should never be used as a comparison as to what we have today. That recession was self induced when Fed Chairman Paul Volcker raised interest rates to curb inflation. The reason behind that recession is far different then what we face today making invalid any claims of similarity, as dropping rates quickly brought back a surge of activity.

Footnote;  Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest to you, may I suggest the post below that are related to this subject,

Saturday, August 17, 2013

After The Coming Crash

Today I was mulling around in my mind how people will look back and reflect on this mess if the predictions of the doomsayers prove correct. As you know many of us the are far from optimistic. While the future is hard to predict, as in politics the people who watch and study the economy are becoming more polarized as to the direction of the economy. Many of us are slipping into one of the two distinct camps, one that sees this as an economy slowly on the mend with the worse behind us and the other who clearly takes the position that things are not working. Not only have things gotten worse but the distorted economy and manipulated markets only mask the fact that a day of reckoning is fast approaching and we are facing a bigger and meaner economic set back then any the world has witnessed in modern times.

On the "blue skies" side of this argument are those talking their book and the truly optimistic. They see more jobs being created and are certain that as the economy picks up the deficit will come back into a more manageable range. These upbeat legions broadcast the message that we have learned from past mistakes and things are now on a much stronger foundation and problems are being dealt with. As they spin a scenario of higher corporate profits ahead they remind us how those claiming the "Sky is falling" have always been with us and yet even in the worse days we tend to muddle through. They declare that those who worry that the debt, currency games, and massive reliance on records created and sent off into the clouds will someday come back to haunt us are daft!

In a BBC interview that aired in October of 2012 the governor of the Bank of England, Mervyn King commented that the last few years have given him a deeper understanding of some of Keynes' writing about the 1930s. I have always had my doubts about the long term "benefits" of QE. And the thought of government indulging in "off balance sheet" transactions brings back bad memories of all the too-clever-by-half banking practices that got us in the present mess. As a simple accountant wedded to the sanctity of double entry bookkeeping, every debit must have a corresponding credit and vice versa. So if in creating this money as a cash asset, there must be a liability to balance it out somewhere. Unless my simple accountant's mind has this wrong, government has merely created more debt and has merely kicked the can a few years down the road.

Before the financial crisis of 2008, Sir Mervyn says, he had struggled to comprehend how policymakers had allowed the economic disaster. My thoughts are if indeed we do have the blow off many of us see coming it will be big, it will be deep, it will shake society to its roots, and it will most likely last for years. We could possibly witness a watershed event in the economic history of the world. We could see people lose all confidence in paper money and those that run both the Reserve Banks and Government. With the recent creation of billions of documents and a massive amount of records being held on computers, this includes complex derivatives, the courts will be overwhelmed and the tangled mess may never be set right. 

Currently many traders and investors claim to be playing this close to the vest and riding the markets higher as they are pushed up by a wave of easy money, they intend to rush to the exit before it all collapses into rubble. As usual the masses will be shocked and wonder why the "light never came on", how they, their leaders and fine public servants could have mucked things up and have let this happen. Even while entitlement programs are being shredded, reduced, rewritten, and promises broken, they will look towards government to do more. As they do it will become clear that those in power do not have as much power as many think. Yes, even the powerful will be tossed about by events rather then in control of shaping them.

The majority of people will look back and say, it happened so fast and with so little warning that they could only go along on the ride. We do indeed live in interesting times. In my book Advancing Time I focus on how change is occurring at an increasingly faster rate. One of the biggest changes over the last few decades is in the speed and way we communicate, this will have a massive bearing on the effect and speed of a great unraveling. To many of us, as with the occurrence of other unseemly events that take place in history it is merely a question of when and not if. While we have learned much during the last two hundred years about economics and how to manage our economy we should not be so arrogant as to think we can control greed or change the nature of bankers and politicians.

Footnote;  Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest to you. 

Sunday, August 11, 2013

Japan's Economy Going Forward

A word of caution to those thinking Japan's economy has turned the corner because of its efforts to drop the value of the yen by about 17 percent since mid-November. On July 29th BBC reported that industrial output fell 3.3% in June, from the previous month. Compared with the same month a year ago it fell 4.8%. More surprising was the 0.4% decline in household spending from a year earlier. Analysts had expected growth of 1.0%. Japan has been trying to boost domestic consumption in an attempt to revive its stagnant economy. While the data was weak and highlighted the challenges faced by the government, it was not a cause for immediate concern that Japan has again turned downward.

The thought is while falling consumer prices may sound good, they tend to hurt the economy as consumers and businesses put off big purchases in the hope of getting a better deal later on. In response Prime Minister Shinzo Abe's government has unveiled a series of aggressive measures to boost domestic demand and end deflation, many policymakers and analysts have said that ending the deflationary cycle is key to reviving Japan's economy. Even with a falling yen analysts said it was too early to declare the end of deflation. If you look at a narrower basket of goods without energy a clear rising trend isn't there. Koichi Fujishiro, from Dai-ichi Life Research Institute in Tokyo said "Only when wages start going up will we be able to say that it's a more sustainable and meaningful trend. So far, it can still end on a short blip up."

Meanwhile data showed that consumer prices, excluding food recently jumped by 0.4% - the biggest increase for five years. The rise was mainly due to higher energy bills rather than increased domestic demand. Japan has suffered a shortage of energy since the closing of almost all the country's nuclear reactors, which followed the earthquake and tsunami in 2011. As a result, it has been importing much of the energy it needs. Since becoming prime minister late last year, Mr. Abe has looked to decrease the value of the yen with government spending and ultra-loose monetary policy, in order to help boost exporters' earnings. However, the weaker yen means it is more costly to import fuel and other commodities into the resource poor country.

Prime Minister Shinzo Abe has introduced a set of policies called “Abenomics”. These policies focus in three key areas: massive fiscal stimulus, aggressive monetary policy similar to that of America's Federal Reserve’s QE’s 1-3, and improving the competitiveness of the Japanese economy. It will take many years to greatly improve the competitiveness of the Japanese economy, so for the next few years Abenomics has to rely mainly on fiscal stimulus and aggressive monetary policy. Will Abenomics, with its main focus in more aggressive buying of assets by the Bank of Japan (BOJ) and expanding the money supply be successful in increasing the economy’s growth rate?

With this program Japan has pulled a page from Ben Bernanke's playbook and plans to copy the Fed’s large-scale asset purchases in an effort to get the economy rolling again. QE1 was  introduced during the early days of the crisis as the Fed attempted to prevent the American economy from slipping into a very serious depression. While most economists  believe that QE1 was extremely important in providing liquidity to the American banking system at a time when liquidity was in scarce supply many have doubts about the efficacy of QE2 and QE3 that further increased bank reserves, and lowered long-term interest rates even further.

Despite the aggressive action of the Fed the recovery of the American economy has been slower than in any previous recession. More than four years after the crisis erupted, unemployment is still much higher then when the crisis began and the growth rate of GDP is still far below its long-term growth path. Japan is not in a financial crisis, so the success of QE1 in providing liquidity to banks is not very relevant. Expansive monetary policy by Japan is likely to end its deflation and lead to price increases. That is the good news, the bad news is that the evidence so far on QE2 and QE3 is not reassuring and it is questionable if Abenomics’ monetary loosening will significantly raise the long term growth rate of Japan’s real GDP, as in America such a monetary policy carries substantial risk and side effects.

When you introduce demography into the picture the water gets incredibly muddied. Japan is stuck with a shrinking population, neither monetary nor fiscal policy will adequately solve the problem. Continuing to run fiscal deficits in a deflationary environment will only means that government debt is pushed onward and upwards leading to a variety of possible scenarios as to what the end game will finally be. Cutting the deficit and raising consumption tax would only make deflation worse. The current BOJ policy while effectively driving down the yen is producing very little in the way of visible inflation. What it is doing is systematically distorting financial markets across the planet, Italian ten year government bond yields for example recently hit their lowest level since November 2010 based on the idea that at the end of the day, even if the country’s debt (currently at 127% of GDP) does continue to rise Japan style, it doesn’t matter that much since the ECB will be there to back them up. Italy is in fact the EU country most similar to Japan in terms of growth and demographic issues.

It was reported recently that Sumitomo Mitsui Financial Group Inc.’s lending unit almost halved its JGB holdings to 11.5 trillion yen in the three months through June, this was confirmed according to the company’s  earnings presentation. Mitsubishi UFJ Financial Group Inc. also pared its holdings by 17 percent over the quarter to 40.3 trillion yen and Mizuho Financial Group Inc. reduced the amount by 20 percent to 24.6 trillion yen. “As we can see from the megabanks that are drastically reducing their Japan Government Bond (JGB) holdings, there are some company managers with a reasonable mind,” said Fujimaki.a former Soros adviser “The risk of a default is shifting from the private sector to the public as the BOJ splurges on JGBs. If we continue down this path the credibility of the BOJ will be lost and the yen will plunge.”

Bottom-line, if investors in Japan's government bonds begin to believe that Abenomics will be successful in dropping the value of the yen and in bringing back inflation it would be logical for owners of  JGBs to move out of the securities and buy foreign bonds or equities. That would place upward pressure on Japanese bond yields and raise the cost of government to service its massive debt. With the BOJ  set to absorb half of the government bonds planned for sale this fiscal year, domestic investors have already started venturing overseas for higher yielding assets. Japanese were net buyers of foreign debt for a fourth straight week, according to figures released yesterday by the Ministry of Finance in Tokyo. If this turns in to a tsunami of  money fleeing Japan it will constitute the end of the line for those holding both JGBs and the yen.

Footnote; Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest such as the post below,

Thursday, August 8, 2013

Pakistan, Why It Is Important

Many Americans do not understand why we continue to give and pour money into Pakistan.  The Islamic Republic of Pakistan is a sovereign country in South Asia with a population of over 180 million people. What makes Pakistan an important player in its neighborhood is that it has nuclear weapons and is politically unstable. Trouble has been brewing in our relationship with Pakistan for years even though America has poured billions of dollars in aid into the country, it could be argued that we were buying their loyalty rather than that we had a strong interest in being their friend. When the Pakistan government failed to control  extremist elements in the country America began to use drones to attack within the country's border, this has stirred outrage and protest against America.

Many reasons exist to be concerned about Pakistan going forward, for years the country has experienced internal violence and attacks from extremist groups within the country. With the government sometimes struggling to maintain order, and a military that sometimes threatens to take control over the country the political stability of Pakistan is often questioned. The fact that Pakistan, and India it's neighbor to the south both possess  nuclear weapons and have a history of problems and tensions is a huge worry and concern for the region. Pakistan's motive for pursuing a nuclear weapons program was to counter the threat posed by its principal rival, India, which has superior conventional forces.

The relationship went bad between India and Pakistan from the very moment Pakistan was created and has been affected by the seeds of discord in Kashmir, a problem which remains to this very day. Despite being a new struggling state, the first Prime Minister of Pakistan launched an immediate war with India over Kashmir. That leader was assassinated and very soon Pakistan settled down under martial law. The military leader General Ayub Khan watched India lose the war with China in 1962 and decided to take advantage of the situation by launching another all-out war over Kashmir. He was replaced by Yahya Khan in 1969 and in just a span of two years conditions were created for the Bangladesh War of 1971.

While Pakistan lost decisively and lost a huge amount of land in the form of Bangladesh little was done to resolve the bad feelings. Yahya lost office due to that debacle and gave way to Zulfikar Ali Bhutto and a whiff of democracy. If India thought that democracy would mean peace, they were sadly mistaken. Bhutto hated India and made the famous declaration: “Pakistan will fight, fight for a thousand years. If.. India builds the (Atom) bomb.... (Pakistan) will eat grass or (leaves), even go hungry, but we (Pakistan) will get one of our own (Atom bomb).... We (Pakistan) have no other Choice!...”  Bottom-line as to why Pakistan is important, it is in a position to start World War III.

One encouraging sign that things may improve is that in recent elections former Pakistani Prime Minister Nawaz Sharif has again been elected to lead the country. This is a remarkable comeback for the 63-year-old Sharif, who has twice served as the country's premier. Toppled in a military coup in 1999, he spent years in exile before returning to the country in 2007. Recently Sharif expressed a desire to work with all parties to solve the country's problems in a victory speech given to his supporters. "I appeal to all to come sit with me at the table so that this nation can get rid of this curse of power cuts, inflation, and unemployment," Sharif said. Despite a string of terrorist attacks voter turnout was large, in the hope of pushing for a solution to the nation's woes in a historic election that marks the country's first democratic transition of power in its 66-year history.

There is widespread hope on both sides of the border that Sharif will now take similarly bold steps to improve relations with India following his election victory, this would reduce the chance of a fourth major war between the nuclear-armed foes. The reason for this optimism is not only his track record of reaching out to India the last time he was prime minister but also his commitment to turning around Pakistan's mediocre  economy. Closer ties with India would allow much greater trade between the two countries. Reducing the threat from India could also help Sharif accomplish another unspoken goal, reducing the clout of the Pakistani army, which has long used the potential for armed conflict to justify a huge defense budget. The army sabotaged Sharif's previous peace efforts in 1999 by secretly sending troops into India and eventually toppling him in a coup.

A major problem confronting the region is that while nuclear weapons can add to national security they also add layer upon layer of complexity to national defense, even efforts to deploy a missile defense system can be viewed as an offensive act. On April 30, Indrani Bagchi, the Times of India's diplomatic editor wrote that India will retaliate massively even if Pakistan uses tactical nuclear weapons against it. India will protect its security interests by retaliating to a “smaller” tactical attack in exactly the same manner as it would respond to a “big” strategic attack. Yes, the reason Pakistan is important is that it has nuclear weapons and could be sucked into, or be the one to start a nuclear war. Adding to this concern is that Pakistan is an obvious place for a jihadi organization to seek a nuclear weapon or fissile material, both the military and security services have been infiltrated by a number of jihad sympathizers.  

The three key threats are a terrorist theft of a nuclear weapon, transfer of a nuclear weapon to another state like Iran and a takeover of nuclear weapons by a militant group during a period of instability. Pakistan is home to the harshest variants of Muslim fundamentalism, and headquarters of  organizations that espouse extremist ideologies, these include Al Qaeda, the Haqqani network, and Lashkar-e-Tayiba. Nuclear bombs capable of destroying entire cities are transported in delivery vans on congested and dangerous roads. And sources say that since the American raid  to kill Osama bin Laden, the Pakistanis have provoked anxiety inside the Pentagon by increasing the pace of these movements. Ironically the Pakistani government makes its nuclear weapons more vulnerable to theft by jihadis in an attempt to hide them from the United States, the country that funds much of its military budget.

Footnote; This post dovetails with many of my recent writings. Other related articles may be found in my blog archive, thanks for reading, your comments are encouraged. A more recent article on Pakistan from August 24, 2014, can be found below.


Saturday, August 3, 2013

Budget Woes Approching Very Fast

While the subject of the budget has dropped off the radar for a bit as the focus of the American people has wandered off to subjects like NSA surveillance and the death of a black teenager in Florida it seems the budget is about to raise its ugly head again. Sadly little has changed, we have been lulled with the rest of the world into complacency as we have kicked the can down the road and as a nation we have yet to feel much pain from the sequester. Not dealing with what we were told was a massive problem has only reinforced the idea that far too much has been made as to the ramifications of an out of control budget going forward.

This post is to remind you that Congress has left the building, as the "budget deadline" at the end of September creeps towards us Congress has gone off to enjoy its five week summer recess, many of us who live in the working world might dub this a paid vacation. Just imagine the surprise and shock of the American people in early September when they realize that nothing has been done. We are left to fortify ourselves with the knowledge that the President has hit the countryside with the message that he "has again" put front and center the issue of the economy with economic growth as a priority. His message is filled with phrases like fairness, a more prosperous middle class, equality, and opportunity.

Sadly the record of the President falls far short of the credit he heaps upon his administration for bringing America back from the mess he inherited. The never ending blame game also continues as he constantly points his finger at congress and the pesky Republicans who stand in the way of achieving a better future. Polls show just how unpopular Washington has become, some have gone on to call it down right dysfunctional. While the President alludes it is not his fault I'm afraid that many Americans think otherwise placing the blame squarely on his shoulders. Obama's claims that those who oppose him and are attacking his administration with "phony scandals" does little to sway or gain support from the many Americans who feel the country is on the wrong path.

Bottom-line is we seem no closer to addressing the problems of our nation today then we were last year or in the years before. This time no one is referring to this as a financial cliff, the sense of urgency has vanished and been replaced by the feel of  normalcy. This does not alter the fact that we cannot talk are way out of this mess. Recently Detroit declared bankruptcy, and this appears to many as a harbinger of things to come or should we say the classic canary in the coal mine. We should not be shocked when budget issues are only faced, and very poorly dealt with at the last minute. I am reminded of a saying I hear years ago, "if not for the last minute nothing would ever get done" it is unfortunate this has become the norm.

Footnote; Your comments are welcome and encouraged. If you have time check out the archives for other post that may be of interest such as the post below on how the government is increasing its control over spinning public opinion.

Thursday, August 1, 2013

Afghanistan's very bleak future

Many Americans have recently tried to block Afghanistan out of their thoughts, going forward little exist to be excited or optimist about. As with Vietnam, it seems that we may have to settle with claims of "peace with honor" as we rush for the exit. This reminds me of the experience the French had in Algeria. After years of effort, the French did not achieve victory, they only proved how difficult and expensive some of these missions can become. The announcement by President Obama that American troops would be departing leaves many people wondering about the void we will be leaving and how it will be filled.

A Place Where Violence Rules
America intends to leave only a small contingency to train and give "U.S. support" capabilities to the Afghans, this would include counter-terrorism operations. NATO says a 187,000 Afghan force is in place to provide security and protection for the Afghan people. A major problem is that the Afghan Army has been plagued by inefficiency and endemic corruption. Training efforts have been drastically slowed by the corruption, widespread illiteracy, vanishing supplies, and lack of discipline, this became apparent when U.S. trainers reported missing vehicles, weapons, and other military equipment, including the outright theft of fuel provided by the U.S

To say the many problems in Afghanistan can be overcome may be optimistic, death threats have been leveled against U.S. officers who have tried to stop Afghan soldiers from stealing. Afghan soldiers who find improvised explosive devices often snip the command wires instead of marking them and waiting for U.S. forces to come to detonate them. This just allows the insurgents to return and reconnect them. U.S. trainers frequently remove the cell phones of Afghan soldiers hours before a mission for fear that the operation will be compromised, American trainers have to spend large amounts of time verifying that Afghan rosters are accurate and are not padded with "ghosts" being "paid" by Afghan commanders who quietly collected the bogus wages.

Then there is the issue of desertion and insider attacks. Desertion has been a significant problem in the Afghan Army. One in every four combat soldiers quit the Afghan Army during the 12-month period ending in September 2009, according to data from the U.S. Defense Department. Beginning in 2011, insurgent forces in Afghanistan began using a tactic of insider attacks on the NATO-led International Security Assistance Force (ISAF) and Afghan military forces. In the attacks, Taliban personnel or sympathizers belonging to, or pretending to belong to, the Afghan military or police forces suddenly attack ISAF personnel, often within the security of ISAF military bases and Afghan government facilities.

With Karzai scheduled to step down next year, the Afghan people have reason to be concerned about their future. The challenges facing Afghanistan are both vexing and formidable, many people are concerned as to the cost and commitments to security going forward and if the Taliban will play a role, their attitude towards women would most likely set back much of the progress that has been achieved. Currently, the future of American's future involvement is not carved in stone, but it looks like a fast exit is coming. According to Obama, any agreement on troop withdrawals must include an immunity agreement in which US troops are not subjected to Afghan law. American is looking to legally protect its troops after a series of damaging incidents and disclosures involving American troops in Afghanistan occurred.

High-profile military incidents like the one involving US troops posing with body parts of dead insurgents and a video apparently showing a US helicopter crew singing "Bye-bye Miss American Pie" before blasting a group of Afghan men with a Hellfire missile, the 2012 Afghanistan Quran burning protest, and the Panjwai shooting spree has created fractures in the partnership between Afghanistan and the NATO troops. These incidents have undermined the image of foreign forces in a country where there is already deep resentment due to civilian deaths and added to the perception among many Afghans that US troops lack respect for Afghan culture and people.

Considering the strained relations between Afghanistan and the United States it may be time to exit. President Obama stated "We achieved our central goal, or have come very close to achieving our central goal, which is to de-capacitate al-Qaeda, to dismantle them, to make sure that they can’t attack us again,” he then added. “At the end of this conflict, we are going to be able to say that the sacrifices that were made by those men and women in uniform have brought about the goal that we sought.” The fact is many Americans may feel this is an optimistic view of the situation by a President who like many of the American people know or are inclined to think we have spent way too much achieving very little.