3 Million Jobs unfilled in September 2011???

Shipyard workers on National Security Cutter

National Security Cutters

That headline screams out at a time that the United States languishes in what has been now dubbed the Great Recession. This past week saw the President propose spending almost half a trillion dollars on a jobs bill at at time when there are already 3 million jobs waiting to be filled. The problem in filling those jobs is examined in a two part post by Steve DeAngelis on his Enterprise Resilience Management Blob. Steve links several articles and adds his own thoughts to what needs to be done to get America back to work.

In June, two members of the President's Jobs and Competitiveness Council, Jeffrey Immelt, the Council's Chairman as well as the chairman and CEO of General Electric, and Kenneth Chenault, the CEO of American Express Co., wrote an op-ed piece explaining what the Council is doing to try and generate jobs. ["How We're Meeting the Job Creation Challenge," Wall Street Journal, 13 June 2011] They stated the obvious when they wrote that "the inescapable truth is that we have a persistent jobs challenge that demands an aggressive response." The Council, which includes 26 private-sector leaders, was established to develop "ideas that will accelerate job growth and improve America's competitiveness." The June op-ed piece was the Council's "initial 'progress report' to the president." It included "a series of steps" that Council members believe "can help spur hiring in the short term in areas like construction, manufacturing, health care and tourism." Immelt and Chenault admitted that the challenges are daunting and the solutions difficult.

Read more:
Creating Jobs in America Part 1

DeAngelis continues in a second post to expand on this thread and adds recommendations from
Robert J. Samuelson and Arthur Laffer on what it takes to get real job growth.

In yesterday's post, I discussed some of the initial recommendations offered by the President's Jobs and Competitiveness Council as well as some of the programs that the President put forward in his jobs bill. Having listened and read what is being offered on the jobs front, opinion columnist Robert J. Samuelson believes that politicians and their constituencies "need a refresher course in Job Creation 101."

Read more:
Creating Jobs in America Part 2

Continuing on the subject of jobs, comes this post courtesy of Galrahn of Information Dissemination who questions what kind of trade off we will see in replacing construction jobs with higher paying defence jobs.

An especially troubling aspect of the present situation is that the cuts mandated by the Budget Control Act to reduce deficits could grow bigger if the president’s jobs bill passes, because the special committee would need to find additional savings to cover the price-tag for its package of tax changes and targeted spending. So in the current environment where legislators are trying to cut deficits and stimulate the economy at the same time, the government could end up destroying many thousands of good jobs to create lots of not-so-good jobs in areas like construction. What kind of a tradeoff is that?

Here is the bottom line of what deep defense cuts will entail.

So let’s do the math. The number of jobs created by defense spending varies depending on the nature of the activity and how much each job pays, but it’s a safe bet that at least one direct job is created for every $200,000 in spending. Thus, the $100 billion in annual military spending cuts that might be spawned by deficit-control legislation potentially accounts for 500,000 direct jobs. But that’s just the beginning, because numerous additional jobs are created in retail, construction, education and other pursuits as defense workers spend their income. Analysts argue endlessly about what this economic multiplier effect might be, however a very conservative guess would be that each direct job leads to the creation of at least one indirect job (the real number is probably over twice that). So even a restrained analysis suggests that $100 billion in defense cuts will wipe out a million jobs.

Not pretty, even during the Great Depression, President Franklin D Roosevelt understood the logic of keeping the shipyards working by continuing to let contracts to build a small number of ships and then let a new contract for an improved version.

Read more:
FDR Shipbuilding programs 1933-45

Galrahn adds this logical argument.

Shipbuilding is always a good government investment when it comes to jobs, which is why I strongly believe the Obama administration really screwed up their stimulus spending choices. They should have invested in shipbuilding, starting with heavy investments early on with the US Coast Guard (Icebreakers and Cutters) and building up towards bigger investments in the Navy - specifically T-AKEs and Virginia class submarines, although LPD-17s would be useful and the MSC ships that made up the Sea Base would have been optimal from an economic stimulus point of view. What a fantastic failure of a missed opportunity considering that government spending would have contributed more to GDP and had far greater direct/indirect/induced spending impacts towards positive economic activity than the low-wage earning projects favored instead.

Read more:
Jobs, Jobs, Jobs, Jobs, Jobs, Jobs, Jobs!

Now I think that we can all agree that for Americans to regain our heritage of being innovators and industrious we need to step it up as a society. One related post, by Thomas Barnett addressed the United States shrinking share of global economic power that will according the the illustration, see the US in second place in 19 short years. Barnett suggests that we need to look to our own neighborhood to expand our relationships with our southern neighbors. His post spawned some interesting comments, including one that pointed out that until we curtail the drug demand in this country, we can expect little in the way of ending the downward spiral of societies below our own borders.

Read more: as well as the comments.
China slows but still grows thanks to regional gravity

Reflections on China 2009

Grest Wall, Tower 4

Snow Day Beijing, November 9, 2009

Forbidden City, Beijing

Looking North to Qianmen Gate

Cable car to Great Wall

Great Wall

Strolling on the wall, 15 degrees and 20 mph wind.

The past two weeks my wife and I have been visiting her parents in Beijing, China and the blog has been silent. I am back now with thousands of impressions of China and how much she has changed since my last visit 6 years ago. The best way to narrate my travels is to describe our first days and what turned out to be the earliest winter in recorded Chinese history.

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When we arrived the sky was leaden and the temperature hovering just above freezing. Our driver whisked us from the airport along a modern expressway that soon slowed to a crawl typical more of Los Angeles Monday morning traffic than what I had last experienced in Beijing. The one thing that had not changed was urban travel which reflects every person for themselves; be they autos, bikes or pedestrians. Our driver threaded and honked his way to the hotel near my in-laws home in the Hadrian District home of dozens of universities. We settled in and after visiting my wife's parents turned in early to get a head start on the next day. We awoke find the city gripped in the worst snow storm in recent history. We laid low for a day and then set out the next day to visit the Forbidden City by taking a subway system that is as efficient as any in the world today. Two yuen, (28 cents) allows you to ride to your destination amid the crowds that saw over half the riders wearing surgical masks as a caution against contacting Swine Flu.

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The Forbidden City under a blanket of fresh snow is even more spectacular than it's summer livery. The contrast of white snow on the gold roofs and red palaces is amazing and serves to give an even more mystical aura to the home of two dynasties. The palace take all of a day to visit and absorb and is worth every penny of the entrance fee and the cost of a audio guide that does much better and is more accurate than the guides who offer their services outside the gate.

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The impression of Beijing is a city with part of the population in the 21st century and the rest deposited in each century going back hundreds of years. The contrast is stunning and ever present in all parts of the city. BMW's and Audi's share the road with thousands of taxis and pedi-trikes caring gross amounts of product balanced on their thin tires and bicycles who turn a deaf ear to the constant blaring of horns warning of an approaching car. Amid this chaos is injected millions of pedestrians who dart between the cars heedless of traffic lights. Amazingly I saw no one struck, and only one small fender-bender in two weeks of urban travel. I marveled that the road rage we are used to in America seems to be an unknown commodity in China. Part of this may be that people understand if they are hit it is their fault for not getting out of the way of the car or truck.

I would strongly concur with fellow blogger Thomas Barnett that he has never met a Communist in his travels to China. Those who can, are earning money hand over fist and are more adventurous capitalist than most Americans. Consider this from a report from China Daily Newspaper, there are over 440,000 millionaires in China with Beijing home to 143,000 millionaires and over 8000 billionaires. Of course this is in Yuen, but in dollars, China now counts 143 billionaires, second only to the United States. Chairman Mao's dream to find equality has been dashed on the rocks of Chinese history that now sees the rise of what can only be described as a new Mandarin Class who live a super rich lifestyle. The difference this time is that the common man now thinks that it is possible for him to reach that level via hard work and entrepreneurship by either building a better mousetrap or by being the guy who can market it.

The problem that glares out, is what to do with the rest of the country, approximately 800 million strong, who are just barely past the subsistence level of farming. If you bring them all on board and raise their lifestyles, they would make the over consuming United States look like monks in a monastery.

One stunning contrast is the line or lack of lines at Chairman Mao's tomb. My wife remarked that nobody cares about him except visitors who want to pretend to the communism still has the answers. Just south of Mao's tomb and beyond the Qiamen Gate lies a street that is lined with shops from every major brand. The street rebuilt to resemble an upscale Qing Dynasty channeling Disney's Main Street is separated from the squalor of small shops that border the back walls of those stores. Here you will find China in it's raw form, small shops on crowded narrow lanes hawking every kind of product imaginable. Turn left and a walk of fifty feet brings you back to upscale shopping. Again the contrast is stunning and not lost on this traveler.

Over the next week or so I will write more about my travels and what I saw and learned about China from being down in the street with the people and not on a tour bus or shepherded about by as a VIP. Before I close this post I want to note a bit about the hotel and many of our fellow guests. The Xijao Hotel caters to providing accommodations to many visiting foreign students who are attending either seminars or sessions at one of the 12 universities within walking distance of the hotel. Every day we took breakfast and found the dining room filled with students from the Middle East, Africa, Russia and Europe. We encounter no Americans, although they are present in small numbers. Most of the students staying in the hotel were there attending the Beijing language and Culture University learning to better their Chinese before moving on to other universities in the area.

If Americans are going to compete in the global market place we need to get them out into the world and build bridges before we find our nation surrounded by a rapidly gaining world that views us as having caused most of the environmental problems. The hype of Global Warming has rung like a gong in the ears of the rest of the world who now see America as the big consumer and driver of pollution and over consumption. It is ironic that China is now the #2 polluter and if their economy keeps up the pace they will overtake us in less than a decade for that title.

I have just scratched the surface of my impressions of China in 2009. As the days unfold I will continue to write about my experiences and share they on this forum.

How America Can Grow 20 Million New Jobs in A Decade

Bell Labs

Steve DeAngelis of Enterra Solutions can always be counted on to produce some of the most thought provoking and timely blog posts of anyone in the game. These next two posts address a favorite subject of mine, innovation and how in relates to education.

Steve opens with this troubling news.

"New York Times' columnist Bob Herbert claims "the biggest issue confronting ordinary Americans right now — the biggest by far — is the devastatingly weak employment environment. Politicians talk about it, but aggressive job-creation efforts are not part of the policy mix. Nearly 15 million Americans are unemployed, according to official statistics. The real numbers are far worse. The unemployment rate for black Americans is a back-breaking 15.1 percent. Five million people have been unemployed for more than six months, and the consensus is that even when the recession ends, the employment landscape will remain dismal. A full recovery in employment will take years. With jobless recoveries becoming the norm, there is a real question as to whether the U.S. economy is capable of providing sufficient employment for all who want and need to work. This is an overwhelming crisis that is not being met with anything like the urgency required" ["It’s Time to Get Help," 8 September 2009]. Adrian Slywotzky, writing for BusinessWeek, asserts that we are looking in the wrong direction for help. He insists we need to stop looking at politicians and business leaders for help and start looking to scientists instead ["How Science Can Create Millions of New Jobs," 7 September 2009 print issue]."

Steve's post is long and deserves a full reading as well as the articles he linked. The most troubling data comes from the second article where Slywotzky's lays out the following.

"Name an industry that can produce 1 million new, high-paying jobs over the next three years. You can't, because there isn't one. And that's the problem. America needs good jobs, soon. We need 6.7 million just to replace losses from the current recession, then an additional 10 million to keep up with population growth and to spark demand over the next decade."

Slywotzky points to a massive drop in R and D by almost every major industry in the country as the root cause of a decline in innovation and cutting edge inventions. The follow statistics should make every American sit up and take notice.

"The PC, Internet, and cellular industries, born in the 1980s and 1990s, more than offset the loss of high-paying jobs in consumer electronics, steel, and other sectors. But in recent years, outsourced software and manufacturing jobs have largely been replaced by millions of low-wage service jobs in fast-food, retail, and the like. Compounding the effects of outsourcing and extended recession, the ongoing destruction of old business models (think print journalism, the music business, and landline telephones) will slash a large number of high-value jobs in the coming decade. The result? A broken demand structure. Of the roughly 130 million jobs in the U.S., only 20%, or 26 million, pay more than $60,000 a year. The other 80% pay an average of $33,000. That ratio is not a good foundation for a strong middle class and a prosperous society. It's time to identify—and fix—the root of the problem."

That last statistic should run tremors up the spine of everyone on both sides of the political spectrum. How can 20% of the population continue to carry the tax burden as spending explodes in all sectors? Currently over 40% of tax filing Americans have no tax liability, leaving a smaller and smaller percentage to carry the water for everyone else. Our middle class is shrinking along with the dollars spent to develop new products. One thing not mentioned in this article is the fact that much of the money for research and development since World War II was fueled by the World War II and the Cold War. The Microwave was developed from a magnetron invented in the 40's for radar. The Internet was developed for military communication. The list goes on to include almost every major innovation in the past fifty years. The answer is not a return to that kind of military industrial complex system, but as Steve paraphrases.

"Slywotzky says today's situation is analogous to that found in America following the Second World War. America's best minds had been put to work trying to produce materials that could win the war at the expense of basic research. The country was able to turn around because it was able to redirect its efforts following the war. As a result, America became the anchor of the global economy. China, which hopes to become the anchor of the global economy, has also committed itself to research and innovation. If America hopes to keep up, it needs to follow a strategy similar to that recommended by Slywotzky."

Read the rest:Science and Jobs

Steve continues to focus on this important message in this next post where he writes.

"Luke Johnson, who runs a private equity firm called Risk Capital Partners, recently published an op-ed piece in the Financial Times in which he claims "Inventors are our greatest heroes" [2 September 2009]. He explicitly makes the claim because he believes that society under-appreciates the people who spend their time inventing the things that make our lives better."

We have lost our focus when our greatest heroes are those who entertain us with sporting exhibitions, musical notes or outrageous behavior.

Read more: Inventors as Heroes

Illustrating that this issue has finally gotten the attention of the White House is this from my blog friend, the intrepid Dan of tdaxp.com, who offers this in summation of his post on education.

"By encouraging (through various means) schools to focus on core classes, we can move away from teaching mere hobbies into creating a strong, 21st century workforce."

Read more: Better Curricula.

I have written at length about the challenges facing America. We face the kind of crossroad that Poet Robert Frost wrote about in "The Road Not Taken" (poem), when he took the road that appeared more difficult, only to find in the end it was worth the journey. A refocusing on our future and a real commitment to send more future captains of industry to the engine room, instead of sending thousands to the bridge, armed with only an MBA.

Drug Wars, Corporate Welfare and Teaching Technê

Mexican Drug Cartels

The Real Deal

Classical World

Three subjects to occupy an evenings reading. First, is this from Strafor who files this report on Mexico's efforts to confront the drug cartels http://www.stratfor.com/.

Mexico’s war against drug cartels continued in 2008. The mission President Felipe Calderon launched shortly after his inauguration two years ago to target the cartels has since escalated in nearly every way imaginable. Significant changes in Mexico’s security situation and the nature of the drug trade in the Western Hemisphere also have occurred over the last 12 months.

In this year’s report on Mexico’s drug cartels, we assess the most significant developments of the past year and provide an updated description of the country’s powerful drug-trafficking organizations. This annual report is a product of the coverage we maintain on a weekly basis through our Mexico Security Memo and various other reports.

The subject covered include:

Mexico’s Drug-Trafficking Organizations

Calderon’s Success Story

2008: A Year of Flux

Changing Geography

Deteriorating Security

Looking Ahead

The whole story:

Mexico and the War Against the Drug Cartels in 2008

And this related article from the Christian Science Monitor, reminds us that long wars will eventually wear down some societies, to a dull point where they give way to the less painful path, only to fall off a cliff.

Mexicans Question President Calderón's Drug War

Mexico City - Five thousand, three hundred, and seventy-six people have been killed in Mexico's drug war so far this year, double the number from last year and more than all the US troops killed in Iraq.

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Is this what victory looks like?

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That's the question Mexico is grappling with two years after President Felipe Calderón took office announcing a massive military effort to dismantle drug trafficking organizations.

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My blog friend Dan, host of tdaxp.com has been diligent in following the latest attempted grabs by the domestic auto industry to slow their plunge onto the rocks of reality, (competition).

Here are two of his latest posts, Dan says in part:

There are two lines of argument I have read for the UAW Bailout. One is essentially Keynesian, and argues in these bad economic times, building a giant pit and hiding money in it would be a good move, so building cars no one wants is no worse.

Read more: Buy their cars, or they’ll take your money

Here is a tease about Dan's next post:

The interesting point is near the end, where he says GM is a victim of history in the choices those companies made in supporting the UAW:

Read more: GM: Gaining the political benefits, and Making you pay

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Lastly, Victor Davis Hanson Private Papers offers this opinion about the state of a classical education in our universities. Hanson, hits all the bases by pulling no punches in describing where he thinks our institutions have strayed away from their bedrock foundations built on a foundation classical thought.

Until recently, classical education served as the foundation of the wider liberal arts curriculum, which in turn defined the mission of the traditional university. Classical learning dedicated itself to turning out literate citizens who could read and write well, express themselves, and make sense of the confusion of the present by drawing on the wisdom of the past. Students grounded in the classics appreciated the history of their civilization and understood the rights and responsibilities of their unique citizenship. Universities, then, acted as cultural custodians, helping students understand our present values in the context of a 2,500-year tradition that began with the ancient Greeks.

But in recent decades, classical and traditional liberal arts education has begun to erode, and a variety of unexpected consequences have followed. The academic battle has now gone beyond the in-house “culture wars” of the 1980s. Though the argument over politically correct curricula, controversial faculty appointments, and the traditional mission of the university is ongoing, the university now finds itself being bypassed technologically, conceptually, and culturally, in ways both welcome and disturbing.

Read more: "Humanities Move Off Campus"

Two Great Christmas Gifts

With Christmas just a couple of weeks away here are two really worthwhile book recommendations that will stimulate your mind and open your eyes to the future, by reviewing the past.

Major kudos to Steve DeAngelis of Enterra Solutions for this post. Steve writes about Niall Ferguson, the Laurence A. Tisch Professor of History at Harvard University and the William Ziegler Professor at Harvard Business School, on the release of his new book, The Ascent of Money: The Financial History of the World.

Steve links a review by Shelby Coffey III in the November 30, 2008 Washington Post, "Markets Don't Make Bubbles, People Do," and makes insightful comments about both the review and Ferguson's book.

A brief excerpt of Steve's post.

People choking in the grasp of the current financial crisis are wondering how we got in this position and what we can do about it. Ferguson's web site provides this synopsis of his new book:

"Bread, cash, dosh, dough, loot: Call it what you like, it matters. To Christians, love of it is the root of all evil. To generals, it’s the sinews of war. To revolutionaries, it’s the chains of labour. But in The Ascent of Money, Niall Ferguson shows that finance is in fact the foundation of human progress. What’s more, he reveals financial history as the essential back-story behind all history. The evolution of credit and debt was as important as any technological innovation in the rise of civilization, from ancient Babylon to the silver mines of Bolivia.

...The importance of Ferguson's book is that it highlights how essential capital flows are for the success of globalization. The only way to bring millions of more people out of poverty is to create wealth. Ferguson's book explains why financial systems are essential in that endeavor.

Coffey's review noted these remarks made by Ferguson on MSNBC.

Ferguson is making the rounds with his new book, saying last week on MSNBC that the United States should follow up the G-20 Economic Summit with a "G-2" meeting with just the Chinese. The professor also winningly confesses that even he is confused about the thrust of Treasury Secretary Henry Paulson's $700 billion rescue fund. Ferguson has, nonetheless, written an admirably illuminating book that will take its place beside such modern classics as John Train's The Money Masters, Peter L. Bernstein's Against the Gods, and Adam Smith's Supermoney.

Ferguson's comments about a summit with China mirror much of what Thomas Barnett has been advocating about locking China in at today's prices.

Read the whole post: Show Me the Money.

Niall Ferguson is one of my favorite authors, writing The War of the World and Colossus: The Rise and Fall of the American Empire among other best sellers. His expertise in economic history, coupled with an amazing ability to be a great storyteller gives him two tools, that make him one of the important scribes of our time. Among his teaching positions he is also a resident faculty member of the Minda de Gunzburg Center for European Studies. He is also a Senior Research Fellow of Jesus College, Oxford University, and a Senior Fellow of the Hoover Institution, Stanford University.

His newly released book The Ascent of Money: A Financial History of the World is described this way on Amazon.

Niall Ferguson follows the money to tell the human story behind the evolution of finance, from its origins in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance.

Through Ferguson’s expert lens familiar historical landmarks appear in a new and sharper financial focus. Suddenly, the civilization of the Renaissance looks very different: a boom in the market for art and architecture made possible when Italian bankers adopted Arabic mathematics. The rise of the Dutch republic is reinterpreted as the triumph of the world’s first modern bond market over insolvent Habsburg absolutism. And the origins of the French Revolution are traced back to a stock market bubble caused by a convicted Scot murderer.

With the clarity and verve for which he is known, Ferguson elucidates key financial institutions and concepts by showing where they came from. What is money? What do banks do? What’s the difference between a stock and a bond? Why buy insurance or real estate? And what exactly does a hedge fund do?

This is history for the present. Ferguson travels to post-Katrina New Orleans to ask why the free market can’t provide adequate protection against catastrophe. He delves into the origins of the subprime mortgage crisis.

Perhaps most important, The Ascent of Money documents how a new financial revolution is propelling the world’s biggest countries, India and China, from poverty to wealth in the space of a single generation—an economic transformation unprecedented in human history.

Based on my previous reading of Ferguson's work I hardily recommend this book to everyone who desires a clear understanding of the current times and how in the end, it is always the money that makes the world go around.

Ferguson's book should be have equal billing on any one's Christmas wish list alongside Thomas Barnett's book, Great Powers: America and the World After Bush to be published in February 2009. Tom recently posted the table of contents on his blog to give readers a road map of where he is going with his vision of grand strategy.

Great Powers Table of Contents and for more Great Powers material.

It is described this way at Amazon.

In civilian and military circles alike, The Pentagon’s New Map became one of the most talked about books of 2004. “A combination of Tom Friedman on globalization and Carl von Clausewitz on war, [it is] the red-hot book among the nation’s admirals and generals,” wrote David Ignatius in The Washington Post. Barnett’s second book, Blueprint for Action, demonstrated how to put the first book’s principles to work. Now, in Great Powers, Barnett delivers his most sweeping— and important—book of all.

In Great Powers, Barnett offers a tour de force analysis of the grand realignments that are both already here and coming up fast in the spheres of economics, diplomacy, defense, technology, security, the environment, and much more. The “great powers” are no longer just the world’s major nation-states but the powerful forces, past, present, and future, moving with us and past us like a freight train. It is not a simple matter of a course correction but of a complete recalibration, and the opportunities it presents are far greater than the perils. Barnett gives us a fundamental understanding of both, showing us not only how the world is now but how it will be.

I will have more on Great Powers in the coming weeks.

What the ----- People!

BAILOUT BOOGIE!

DEBT RELIEF?

BRITISH RETREAT FROM KABUL, 1842

The next three topics will give all who pay their bills, work hard for a living and have supported our efforts in Afghanistan, a sinking feeling.

Prolific and insightful blog friend Dan of tdaxp.com posted this about the pending bail-out being considered for the American auto industry. After reading this, one can understand why it costs about $2000 more to produce an car from the Big Three, than any of their foreign competitors.

GM + UAW: Not a winning combination

UPDATE: Thomas Barnett sounds off on the bailout. Why bailout Detroit?

And if that story doesn't make you feel sick, read on:

Dan writes about the mortage bailout and sets up the link with these words:

Do you have a mortgage you pay every month? Or were you saving up to make a big down payment.

Then you made the wrong decision.

Smart borrowers have simply stopped paying the mortgages, letting them (unlike you) qualify for bailouts from the federal government:

Have you been paying your mortgage? Then it sucks to be you

And for anyone who missed this! Here is a story about the latest brain f**** by whoever is in charge of logistics support for our military effort in Afhganistan.

Militants grab US military Humvees in ambush

U.S. military officials in Afghanistan did not have much detail about Monday's attack in northwestern Pakistan, but said the supply convoy was carrying at least two Humvees and numerous water tank trailers.

As many as 70 armed militants attacked two convoys within 30 minutes at the Khyber Pass, a mountain pass that links Pakistan and Afghanistan, local officials said. The pass is located in Khyber, one of seven semiautonomous tribal agencies along the Afghan border.

U.S. military spokesman Maj. John Redfield said he did not know how many transport trucks were stolen, but some reports said militants took as many as 13.

More at:

US Embarrassed as Taliban Steal Humvees

Taliban militants were driving around in captured US army Humvee armoured vehicles in Pakistan's tribal region close to the historic Khyber Pass last night after hijacking more than a dozen supply trucks travelling along the vital land route that supplies coalition forces in Afghanistan.

Anyone who can read would have been aware of the danger of traversing the Khyber Pass, and ensured proper security.

This from a story filed on August 31, 2008.

Using age-old guerrilla tactics, they hijack or destroy the ponderous lorries creeping up the narrow road and sell the contents in local bazaars to finance new raids.
A prominent, independent tribesman from the Khyber region, who cannot be named for his own safety, told The Sunday Telegraph that the Pakistani army was close to losing control of the pass.

Read more:

Taliban ambushes threaten Nato's vital logistics route into ...

And this report from July 2008.

Source: Reuters
PESHAWAR, Pakistan, July 9 (Reuters) - Gunmen attacked a Pakistani military supply convoy in a northwestern region near the Afghan border, killing four paramilitary soldiers and wounding four, a government official said on Wednesday.
The attack late on Tuesday was the first major assault on security forces in the Khyber region since they launched a sweep on June 28 to push back militants threatening the city of Peshawar.
The ambush was on a remote road linking two military outposts to the south of the Khyber Pass, through which fuel and other supplies are trucked to U.S. and other foreign forces in Afghanistan.

Reuters AlertNet - Four Pakistani troops killed in militant ambush

And this warning sign from another century.

Until the First Afghan War the Sirkar (the Indian colloquial name for the East India Company) had an overwhelming reputation for efficiency and good luck. The British were considered to be unconquerable and omnipotent. The Afghan War severely undermined this view. The retreat from Kabul in January 1842 and the annihilation of Elphinstone’s Kabul garrison dealt a mortal blow to British prestige in the East only rivaled by the fall of Singapore 100 years later.

First Afghan War-Kabul and Gandamak

And this:

In Afghanistan, Little Has Changed in 200 Years - Ben MacIntyre, Times

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And this post from pavocavalry of Understanding Each Other, Diversity and Dissent.

Is it Khyber Agency’s turn now? -AIMAL KHAN-US POLICY-FATA-TRIBAL AREAS-AFGHANISTAN

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I have never seen the war in Iraq being a redux of Vietnam, but Afghanistan is turning out to be a horse of a different color.

If you make it this far, and have read every link. You are dismissed to either seek out a stiff libation, or a bottle of Pepto-Bismo to calm your stomach.

Economics! The Glue That Holds Our World Together

The people have spoken and we prepare to usher in a new administration. On first blush, it is impossible to guess with any certainty how great the course changes will be for our ship of state.

My blog friend Dan of tdaxp.com who was just as sceptical of Obama as I, wrote this post,Change.gov.

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Dan said:

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This is a good sign. Hopefully the transition from the Bush and Obama Administration goes well. The creation of the Office of the President-Elect and creation of the .gov domain name for it, imply that both the Bush and Obama teams are working hard to transition from one set of political appointees to another, but also demonstrate regime continuity to other countries, as well.

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I note that our nation has peacefully changed regimes 43 out of 44 times during our history. This change seems to be off to a smooth transition.

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Turning to the biggest challenge facing both the United States and in turn the nations of our shared World is the economic crisis. It is the first, and most important challenge for our new President and his team. As in past major System Perturbations, working together in a bi-partisan way is the only tactic that works. In our connected world this now means everyone.

To help illustrate my point, I will highlight a series of post this week by Steve DeAngelis of Enterra Solutions.

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Steve wrote this the day after the election.

On the day after elections in America, it seems like a good time to talk about democracy elsewhere. Politicians like to talk about politics and the ideologies behind their particular brand of politics. In the West, we are fond of democracy -- especially representational democracy -- and we try to spread the gospel about it wherever we go. Often we hear it in speeches like the one President Woodrow Wilson gave before Congress in April 1917: "The world must be made safe for democracy. Its peace must be planted upon the tested foundations of political liberty." Over a decade and a half before that speech, Wilson had defined what he meant by democracy.

.....My colleague Tom Barnett and I have preached that if you want to instill democratic principles in governments then improve the lives of the people in autocratic countries. Economic progress almost always precedes political progress. Asia provides two good examples of economics racing ahead of politics: relations between North and South Korea and relations between Taiwan and China. In both cases, economic ties are much stronger than political ones and economic policies in North Korea and China are much more liberal than political policies...

Read the whole post here: Economics Drive Political Change.

Steve then writes about how the effect of our own lax credit rules caused a butterfly effect that has spread it's effect across the globe.

We've all heard about the butterfly effect -- the notion that a butterfly can gently flaps its wings somewhere in the world and set in motion a series of events that result in catastrophic wind damage thousands of miles away. The current financial crisis is something like that. It began with easy credit being given to people who couldn't afford it and with so-called "liar loans." The simple act of lying on a credit form -- repeated hundreds of thousands of times -- set in motion a series of events that has resulted in catastrophic financial damage thousands of miles away in emerging markets. These emerging markets represent the future of the global financial system and governments are trying to find ways to throw them a lifeline.

Steve ends this post with these words of wisdom for our new administration.

Fear must be replaced with hope. At the same time, credit must be extended in an economically sound way. Consumption based on risky credit creates rather than solves problems. Romania sits on the cusp of prosperity and letting it slide back into the morass of poverty that gripped it while it was part of the Soviet bloc would be unwise. The same can be said about most emerging market countries. Financial isolation is no longer an option in a connected world. In the NBC television series Heroes, characters were told, "Save the cheerleader and save the world." Today's heroes need to save emerging market countries to save the world.

Read more...Trust and Credit in Emerging Markets.

In this last post, Steve DeAngelis explains why Americans should be concerned with economic conditions outside their own country.

He writes:

Many Americans who are worried about their economic futures wonder why they should be concerned about someone else's financial crisis half a world away. There are a number of reasons. It was the building boom in China that resurrected the slumping heavy machinery business in the United States. It has been consumers in emerging market countries who have helped ease America's trade deficit over the past several months. Emerging market countries are the West's best hope for reigniting a growing global economy and keeping them afloat so that they can continue to progress is critical.

The anger that has risen among the general public in the U.S. about the government's rescue plan demonstrates that they don't understand the difference between liquidity and solvency. The Treasury is trying to ensure liquidity so that insolvency doesn't become a bigger challenger than it already is. Insolvent companies are going to fail, but they need not drag down the entire economy. President Bush has called for an international meeting to address the global crisis; but Landler notes that "there is a limit to what the United States can do to solve the problems of these countries" because it is wrestling with major financial problems of its own.

"'The most important thing the United States can do is stabilize its financial system,' Mr. Lowery, of the Treasury, said. 'The other thing we can do is to support the actions taken by emerging-market countries.'"

Writing from the eastern side of the Pacific, Shawn of Asia Logistics wrap, has this post about our economic connectivity with Asia.

He begins:

Although most people understand that U.S. trade with Northeast Asia is quite large and significant, it is only tangible for many of us when you begin to break that trade down to a more local level. By using the term tangible, I am referring to the goods and services we buy, the companies or organizations with which we are employed, and the people with whom we interact on a regular basis.

Over the next few posts Shawn will offer a case study of a tangible economic connection between Korea and our own state of Georgia.

Shawn explains his motive this way.

My goal is to provide study material for those interested in better understanding the positive impacts of FDI on local, U.S. communities and also touch on what makes communities successful in attracting FDI. I believe the effort to educate others on the positive impacts of FDI is extremely important at a time when trade with other countries, including countries friendly to the United States, is more and more perceived as a negative for the U.S. economy.

Read more:

Case Study: South Korean FDI in the State of Georgia, Part I

At the top of this post I wrote that economics would be the most important task facing the new administration. To further illustrate that I offer this post by Thomas Barnett, who in this latest Sunday column, makes this observation and prediction about the legacy of the Bush-Cheney administration.

Tom writes:

Barack Obama's victory presents to America a wonderful opportunity to redefine our engagement with the world's rising great powers.

Along those lines, it's worthwhile to remember what Bush-Cheney got right with China.

....We were told by international affairs realists at Cold War's end that America would not be allowed to continue owning the world's largest gun, that other great powers would necessarily balance us symmetrically by creating one of their own.

This has not happened and isn't close to happening anywhere, not even with "rising China," whose military build-up specifically targets our ability to target their ability to target Taiwan's ability to defend itself....

Tom wrote that the most important non-issue since 2001 was:

The lack of a serious U.S.-China confrontation in the years since 9/11 is the most important dog that did not bark across the Bush-Cheney administration.

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In the grand sweep of history, this is arguably George W. Bush's greatest legacy: the encouragement of China to become a legitimate stakeholder in global security.

In true non-partisan form, Barnett in his sweeping grand visionary view made this comment.

Indeed, history will likely judge this success as greater than the Bush administration's failures in Iraq.

Barnett, who has publicly backed the change that he felt Barak Obama would bring to American leadership, ended with this important advice to the new government.

Democrats, who now control both Congress and the White House, would do well to retain the Bush administration's long-term perspective on China, especially during this moment of profound global economic uncertainty, when we need Beijing's help almost as much as it needs Washington's calm leadership.

Barnett: What Bush- Cheney got right with China .

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No nation can rule the world and try and impose it's will on others without unintended consequences coming back to haunt them. Our nation has been the catalyst for change that has benefited not only Americans, but people in every corner of the world. Let us hope we set our course carefully and sail on to meet the challenges and overcome them as we have been doing for the past 232 years.

Hump Day Reads.

Wednesdays have always been noted as being Hump day for millions of Americans whose work week is Monday thru Friday. Unfortunately, the slipping economy may erase this benchmark of the passage of time for many of those millions who stand to lose their jobs during this latest self-inflicted wound to our national psychic.

Let's be honest folks, Wall Street wolves, saw easy pickings that Congress and a passive war focused Administration placed on their doorstep. A few weeks ago an engineer here in California ran his train into an oncoming freight train and killed 25 souls, while he busily exchanged text messages with some youthful train buffs. Our government, both branches were busy sending each other the equivalent of text messages as our economic train crashed into reality. After the crash, the Congress and the Administration began behaving like two drunk drivers trying to say the other was driving.

The links below offer analysis and suggestions of what this will all mean for not only Americans but the global community. Later in a revealing post, Michael Barone calls attention to something that should raise a big question mark in everyone's mind.


Thomas Barnett offers his analysis of what he tags as the greatest system perturbation of this century.

How to view this system perturbation

Barnett opens with this:

The analyst in me detaches in fascination: the profound interdependency of global economics being asserted negatively, it makes everything that came before it (9/11, Afghanistan, Iraq, SARS/avian flu, tsunamis, Russia/Georgia) seem minuscule in comparison.

This is the financial Y2K of our nightmares: demonstrating an undeniable, inescapable connectivity that renders all fantasies of great power conflicts essentially moot. The "common wealth," as Sachs would put it, is simply made manifest.

Arguably, this is the first great, system-perturbing crisis of globalization, because it truly captures all the main players in a way that previous ones did not.

And filed this post earlier.
The more strategic analysis of the financial crisis emerges


Martin Wolf of Financial Times writes:
It is time for comprehensive rescues of financial systems

And looking beyond Wall Street, Michael Barone, of U.S. News and World Report, filed this report on October 8, 2008.
Immigration and the Mortgage Meltdown

Wall Street Journal has this graphic to illustrate their report.
http://s.wsj.net/public/resources/documents/info-launch08.html?project=Underwater0809

Closing out the evening is Zenpundit who was kind enough to add a previous article of mine to a post he entitled: Sturm und Angst Politischen Ökonomie

UPDATE:
Victor Davis Hanson has this lesson about Wall Street.
Wall Street 101

The End of Prosperity, or A Better Future?

Back about twenty five years ago, their was a wave of Pyramid schemes that swept accross the United States. People gathered in large numbers at night in meeting rooms to willingly join in what turned out to be a Ponzi scheme that ended with 99% of the participants loosing their money. The fad died out, but not before thousands lost their investment. The current economic crisis is much more serious, but carries the scent of a similar animal. Americans were encouraged to live beyond their means. Borrow, re-finance, flip-their property, and spend, spend, spend to keep the economy churning. Easy credit, and consuming as if this was the last decade on Earth, brought us to this point.

We have become in many ways a country who's domestic economy resembles the ancient Spartans. Many of our citizens, especially those living in upscale urban areas, enjoy what could be be termed the services of twenty first century helots in the form of undocumented aliens who clean their homes, cook their food and raise their children. Not to mention, those who still work in the few factories and family farms to supply their insatiable desires. It seems ironic that the urban and suburban areas of our country seem to enjoy the bulk of these services and look at disdain on those who reside in the more rural areas, as country bumpkins, gun toting, bible thumping clods, who are too unsophisticated to be allowed to be a part of the decision making of this nation. Now, those people are being asked to bail out those who played this national pyramid game of living beyond their means. I personally, am pissed off at having to dig deep to bail out people who let greed fuel their lives. There is enough blame to go around, both political parties are in deep shit as far as I am concerned.

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The Bush Administration gave away their economic oversight to those in Congress who wanted easy credit and economic access without thresholds, for their continued support for the war effort. This smacks of Lyndon Johnson trying to fuel the "Great Society" while fighting the Vietnam War. This taking the eye of the economic ball, may turn out to be more damaging to our well being than ten, 9/11's. Bush can not escape the fact, that he was the captain of our "Ship of State" when we hit this iceberg. His legacy, regardless of success in Iraq, may turn out to be more like Hoover's, than Truman's another unpopular president, whose legacy was recognized generations later.

Now is not the time for revenge. We must find a way to get out of this manure pile so that our children don't have to spend the rest of their lives growing turnips on the balconies of their state provided housing units, just to survive.

Below are two articles that offer some ideas of how we got here and how we can salvage something for the next generation.

Historian and author, Niall Ferguson penned this article in Time magazine, about the question that is on everyone's mind if not their lips. "Are we headed into a second Great Depression?"

He begins:

Congress's initial rejection of the Bush Administration's $700 billion bailout plan calls to mind an unhappy precedent. Back in 1930, the Senate passed the Smoot-Hawley Tariff Act, which raised duties on some 20,000 imported goods. Historians define this as one of the critical steps that led to the Great Depression — a tipping point when the world realized that partisan self-interest had trumped global leadership on Capitol Hill.

He explains what happened to tip the scales.

The U.S. — not to mention Western Europe — is in the grip of a downward spiral that financial experts call deleveraging. Having accumulated debts beyond what's sustainable, households and financial institutions are being forced to reduce them. The pressure to do so results from a decline in the price of the assets they bought with the money they borrowed. It's a vicious feedback loop. When families and banks tip into bankruptcy, more assets get dumped on the market, driving prices down further and necessitating more deleveraging. This process now has so much momentum that even $700 billion in taxpayers' money may not suffice to stop it.

Ferguson, a historian who specializes in economic history outlines the historical parallels of this current crisis and the Great Depression.

We tend to think of the Depression as having been triggered by the stock-market crash of 1929. The Wall Street crash is conventionally said to have begun on "Black Thursday" — Oct. 24, 1929, when the Dow Jones industrial average declined 2% — though in fact the market had been slipping since early September. On "Black Monday" (Oct. 28), it plunged 13%, the next day a further 12%. Over the next three years, the U.S. stock market declined a staggering 89%, reaching its nadir in July 1932. The index did not regain its 1929 peak until 1954.

On Sept. 29 of this year, as investors and traders reacted to Congress's rejection of the bailout plan presented by Treasury Secretary Hank Paulson, the stock market sell-off was dramatic: the Dow fell nearly 7% that day, a one-day drop that has been matched only 17 times since the index's birth in 1896. From its peak last October, the Dow has fallen more than 25%.

Yet the underlying cause of the Great Depression — as Milton Friedman and Anna Jacobson Schwartz argued in their seminal book A Monetary History of the United States: 1867-1960, published in 1963 — was not the stock-market crash but a "great contraction" of credit due to an epidemic of bank failures.

Ferguson offers thoughts about how this plunging economic jumbo jet can be pulled out before slamming to earth.

He writes this about our relationship with the other big economic player, China.

The notion that Asia has somehow "decoupled" itself from the U.S. now seems fanciful. China and America have come so close to merging financially that we can almost speak of "Chimerica." When Fannie and Freddie were on the brink of collapse, many were surprised to learn that fully a fifth of China's currency reserves was composed of their bonds. Small wonder. Having spent much of the past decade intervening on currency markets to prevent the appreciation of its renminbi, China has accumulated a huge hoard of dollar-denominated bonds. No foreign nation stands to lose more from a U.S. financial collapse.

....But while we certainly face a global slowdown, we may yet avoid another depression. Now, unlike in the Great Depression, central banks and finance ministries know it's better to run deficits and print money than to suffer massive losses of output and jobs....

His final words, offer some hope.

Given the immensity of the crisis, a Congress-approved bailout may be just a short-term fix. But a short-term fix is better than no fix. If nothing else, it would signal to the world that — unlike in 1930 — the U.S. is doing what it can to avoid financial calamity and sidestep Depression 2.0.

The whole story:
The End of Prosperity?


Steve DeAngelis of Enterra Solutions penned this optimistic post about how the United States might try and recover some of it's economic luster after the current crisis and downturn has settled.

He begins:

When the cloud of economic dust created by the implosion of large U.S. financial institutions finally begins to settle, some optimistic analysts believe that the U.S. economy that will emerge from the debris will be quite different than the economy that faltered. They believe that the U.S. will innovate its way back to health ["Can America Invent Its Way Back?" by Michael Mandel, BusinessWeek, 11 September 2008]. As readers of this blog know, innovation is one of the topics to which I continually return. Creativity not only fascinates me, but as an entrepreneur I see it as the engine that powers the future. That is exactly what the "innovation economists" are counting on.

DeAngelis sees hope amid the rubble of what is left after American's began to eat their seed corn.

The world has reason to be concerned with the latest financial crisis but has no reason to be forlorn. Mankind has managed to create more wealth in the last two hundred years than in all of the rest of history combined. One reason, of course, is that the explosion of knowledge and technology has made mankind more productive than ever. There is little reason to believe such progress will end -- even if it has been slowed down for the moment.

He ends his post with words that have been the driving force behind every entrepreneur since man moved beyond being a hunter-gatherer to develop civilization.

I have noted before that entrepreneurs are optimistic by nature. They believe in the future or they wouldn't be entrepreneurs. I'm certainly no different. I see opportunities everywhere I travel. I get invigorated being around other entrepreneurs who also see a bright future and are working to make it happen. Innovators, whether found in established or entrepreneurial organizations, share a common bond of hope. I suspect that the reason that McCain and Obama have embraced innovation as part of their campaigns is that hope is in short supply at the moment. It remains to be seen whether the U.S. can invent its way out of the current financial downturn, but my gut tells me it can.

Read the whole post here:
Innovation Economics

Thanks for taking the time to read this, and the important links.