Monday, December 28, 2009

Lucky Obama

Indeed Obama Administration is lucky that on the Detroit bound plane it was an inept terrorist who tried to blow the plan. The plan flopped, fortunately no one died and essentially Obama Administration escaped.

However, in future the Administration is unlikely to be so lucky since there are no early signs that the Administration is eager to address the two critical failures:
- failure to block boarding of the suspect after knowing few details about him (UK had banned the suspect from entering) and
- failure to co-ordinate appropriate security check practices with foreign airports for USA bound flights (not that American airports have any great system of security checks).

With the ham handed handling of this whole affair by Homeland Security Secretary Janet Napolitano (first she claimed that the system worked and then admitted the failure); prospectus are not good here. So far observation of most Americans is she does not have a clue that it is actually her responsibility to get the act together.

Secretary of State Hillary Clinton unfortunately is also going to have tasks drawn on her hands - why did State Department fail in blocking visa for the suspect? It is very, very difficult to imagine someone who is dangerous to UK will not be dangerous to USA. This begs a question about the basic co-ordination with many other nations (at least with friendly nations like UK) in this matter. As news reports are, still the basic matching name of a terror suspect with the prepared list is not complete with all airlines, not it is accurate enough.

Unless President Obama finds some one better than the current Homeland Security Secretary who is more skillful at articulation as well, chances are that the Administration will have to be apologetic in future too. That Department has failed to alert Americans about the 'privacy compromises' which Americans have to do in order to minimize the risk.

Unfortunately next time, lives may not be spared and for sure that will be a political challenge (for right reasons) hard to contain for President Obama.

Sunday, December 20, 2009

Health Care Reform

With proposed Senate passage on December 24, 09; legislative process for Health Care Reform (HCR) is in the final inning. After that it will be Conference and then the bill will be on President's table to sign into the law of the land.

There have been many types of reporting about this year long saga - fiscal conservatives fighting for tight cost controls (Fred Hiatt of WaPo, Megan McArdlee of The Atlantic ); wonkish coverage by bloggers like Ezra Klein of WaPo, Chait of TNR and Karen Tumulty of Time; liberal coverage by NYT; Netroot Progressive / Lefty coverage by Daily Kos and Huffington Post and finally of course the GOP Media (Fox, Rush, NRO, etc.). Each of these media outlets and interest groups are finally passing their verdict on the final passage of this bill.

Left folks like Daily Kos and Huffington Post are withdrawing their support to the bill which they extended so far. In an anger directed towards to President Obama; these guys are opposing the bill (exemplified by the celebrated Op-Ed of Howard Dean) because it does not contain Public Option (PO). CBO has confirmed that PO would not have solved American Health Care issues given the limited play accorded to it - insurance for folks who are not covered at work. President Obama was right to be wary of this route from start and it is absolutely foolish and wrong to oppose this bill for the lack of PO. Further, it is wrong for Daily Kos os to take the high ground of claiming that Democrats who supported Iraq War are supporting this bill. That is BS. First of all, there is no logical reasoning to equate politics of Bush Iraq War with a domestic issue like HCR. Next, I opposed Bush's Iraq War from the start and for sure do not oppose HCR for the reasons Daily Kos is opposing, lack of PO. So that line of argument is yet another 'crap' coming out of Lefty organizations.

Another serious line of attack from Left is as espoused by Greenwald and Matt Taibbi types - Obama and Congressional Democrats are sold out to protecting interests of Corporate America. When Howard Dean argues that the proposed HCR is sell out to Insurance companies, it is a variation of this type of attack. This line of argument is bit sophisticated than the standard Lefty argument of 'lack of PO'. To be sure Daily Kos continues to criticize that the bill is way to easy on Insurance companies as well. In general this criticism is more valid regarding 'pro Banker' policy stance of this Administration and Congress. White House and Congress have been far more lenient towards Corporate Interests of Wall Street Bankers than players in Health Care Industry. Deals with Big Pharma companies (which also prohibit cheaper drug imports) and big hospitals (many of the strict cost control measures are not applicable to these big hospitals); do reflect the proclivity of this Administration in being soft with Corporate America. But without those buy-ins from Big Pharma and Hospitals, there would not have been backing of those industries to the HCR so far. Otherwise with multi-million dollar lobbying efforts and advertisements; HCR would have been derailed long back.

As President Obama points out, Howard Dean is wrong in saying that the bill is soft on Insurance companies. Substantial constraints on their existing industrial practices are proposed in these bills while the market is expanded by pulling in 30 million new patients. Further, in any case, as Ezra Klein has effectively argued, the real problem with American Health System is underlying runway costs and Insurance companies are just one bit upper layer on those provider costs. The fundamental mistakes done by Howard Deans and Progressives on Left are:
- to brow beat Insurance companies as if they are the ones who set the price (which is completely dictated by providers on which Insurance also have much less control in many cases to negotiate reasonable rates) and
- then to erroneously argue that PO is the answer to control the health care costs (which it cannot be due the huge % of population covered by employer provided care who will be outside of PO).

Progressives also forget that the mandate of 2008 election was 'for improving Health Care System' and was not for 'bringing Single Player System'; so none of these options like Medicare buy-in or so are relevant.

But it is not only Progressives or Lefty who are screwed up here. There has never been a consistent and logical argument in opposing HCR by Conservatives or GOP. They all have reduced to the pathetic levels of Sarah Palin and hence not worth to even bother about their criticism. Of course, late in the inning GOP does not have to undertake any political opposition when Howard Dean, Daily Kos, Huffington Post and MoveOn Org are doing their job so effectively and with aplomb! The Progressive Netroots are really running the true Opposition to Obama.

This leaves the group of Centrist or Fiscal Hawks or at times Budget Vigilantes (like our Bond Vigilantes in financial market). Fred Hiatt of WaPo and Megan McArdlee at The Atlantic have been vociferously opposing this bill for its lot weaker cost control provisions. But today WaPo Editorial comes with conditional, guarded endorsement of the bill. Essentially the editorial argues that the bill at least tries to put some cost controls where there are none today and it is worthwhile to grant this opportunity to the young Administration of President Obama. That is right and a worthwhile endeavor. However, one fact of the proposed HCR is certain - costs to government are increasing and it is an entitlement expansion. No matter what such fiscal expansion is going to happen. The bill is paying that expansion by proposed cost control measures and argument is those are weaker.

It is the question of what is worse - Fed budget busting by the existing runway costs because there are no effective cost controls at present (the so called status quo option) or increased risk to Fed budget by effective but weaker cost controls while cost / entitlement expansion is for sure (proposed HCR).

Megan McArdlee says the second choice is the worse and hence her opposition to the bill. I see lot of merit in that argument because as my earlier blog post shows, there are still many more loop holes in the proposed HCR from cost containment point of view. No matter how much scolding OMB chief Peter Orzsag does on Media (his famous rip of WSJ Editorial comes to mind), this bill of 2000 pages is full of 'land mines' where proposed cost control measures are going to blow. I am dumb, but even I slow learner like me can see how Democrats in Congress have stacked up the politics of this bill:
- first Senate Finance Committee proposes what is the high water mark of fiscal prudence,
- then full Senate dilutes that further which is what Sen. Reid has done (I believe single handedly Sen. Reid has done more damage, chaos and mess of this whole process than anyone else) and
- then finally when the bill is merged with House bill in Conference; it gets more near to the rank fiscal insanity of House Members.
No wonder with process like that McArdlees of the world see much less merit in supporting this bill.

Given all these different point of view, the persuasion of Ezra Klein and guarded endorsement of WaPo Editorial, the Editorial which has been quite vigilant so far; I feel more towards Left of Megan but not up to the point of backing this bill full heartedly . This is for the reason that every government guaranteed entitlement commitment is always fulfilled (that is what electoral democracies are for) but cost control measures are always 'iffy'.

May be as WaPo Editorial points, with every passing day as our budget crisis starts tightening up around America's financial neck; the political pressure to attack costs will keep on increasing and may be that will make the Congress eventually address underlying problems of HCR . However, one wonders between now and then whether the price will be as steep as like what America is paying now for the mistakes of Bush starting the Iraq war (so many lives and Trillions of Dollars?). I hope it is not.

Saturday, December 19, 2009

HCR - Cost Control Holes Remain

CBO report is out handing the necessary victory to Sen. Reid to close the Senate passage by Dec 24. However, browsing through the report it is clear that Sen. Reid would have retained all the holes which would not address the Cost Control Measures effectively. One specific hole is how Medicare Costs are controlled. Here is what the report has to say in that regard:

"The legislation also would establish an Independent Payment Advisory Board, which would be required, under certain circumstances, to recommend changes to the Medicare program to limit the rate of growth in that program’s spending. Those recommendations would go into effect automatically unless blocked by subsequent legislative action. Such recommendations would be required if the Chief Actuary for the Medicare program projected that the program’s spending per beneficiary would grow more rapidly than a measure of inflation (the average of the growth rates of the consumer price index for medical services and the overall index for all urban consumers). The provision would place a number of limitations on the actions available to the board, including a prohibition against modifying eligibility or benefits, so its recommendations probably would focus on:
• Reductions in subsidies for non-Medicare benefits offered by Medicare Advantage plans; and
• Changes to payment rates or methodologies for services furnished in the fee-forservice sector by providers other than hospitals, physicians, hospices, and suppliers of durable medical equipment that is offered through competitive bidding."

What this means is the Board would not recommend changes in lot many cases as Medicare Expenses would not increase faster than 'average of consumer price index of medical services and general CPI growth'. I believe originally it was only 'CPI of medical services' which might have been improved further to include average with general CPI as well. But the most desired proposition is it should be only 'general CPI'. This is because general growth rates are highest for over all Medical Services (say 10%), then for Medicare (say at 5%) and then for general CPI (say at 3%) in decreasing order. To bend the curve means to bring the Medicare growth rates more aligned to general CPI. There is no reason to have any correlation with growth of Medical Services overall. In this particular example it is not clear whether Lieberman-Rockefeller amendment in this regard is accepted.

This is just one example what one blogger can dig into. For sure, more such 'land mines' are planted all over the 2000 pages of this bill. Now that Nebraska Sentor Nelson is on board, it is very very unlikely Sen. Reid would make any changes in the bill. This means the bill will be passed with all these 'land mines' and much weaker and ineffective Cost Controls. Mix this one with House Bill which has almost 'no cost controls' and general thinking is Conference Bill will be more near to House Bill than Senate version.

All this means, despite all the scolding of Media by Peter Orszag; White House is going to give far more importance to passage of the bill than having right cost control measures. This is bad and it means essentially White House and President Obama are not sticking to their words of 'strict cost control' measures. People are tired of telling Congress to be prudent here. Democrats in Congress and Senator Reid in particular are 'shameless' and appear to have decided to pass a bill with no regards to 'cost control measures'. Tragedy is we hoped President Obama will be vigilant in this regard, but all signs point that he would let go this bill as is and will not bother 'watering down' of cost control measures which Congress is undertaking.

Avatar

B+

Clips

There seems to be 2 technologies at play - one which mixes facial expressions of actor actresses with digital figures and the other one is movie in 3D. Both technologies deliver on their hype and there James Cameron has lived up to his reputation. In no uncertain words one can say that this movie has revolutionized movie making and movie delivery.

Gholum character in Lord of the Rings was fabricated in a way where facial expressions, eye movements and bodily actions were all mixed with digital processing. But apart from that, this movie is the one where such 'digital character' technology has matured and has come off the age. Clearly this technology is not for James Cameron to monopolize. It is not known to be patented / proprietorially managed so as no one else can use it. That is not the case and hence others will consume this technology too. But Lucas Films in San Francisco has not come out with their version of such a technology; movie Star Trek did not have that. What this all means is Cameron and certain select studios in Hollywood will have an edge in making such movies going forward. It is also clear that not for very long we will see movie making with traditional casts only. That is the revolution Cameron has brought. It is a phenomenal achievement.

The second revolution is in 3D delivery. For so many times in last few decades Hollywood has tom tomed 3D technology that one is reluctant to believe the hype this time too. However, here it is for real. Again it is doubtful whether audience will enjoy any movies without this technology. There were previews of Disney's Alice in Wonderland and NASA's Hubble 3D movie as pre-movie entertainment and both were unbelievable. So going forward it will be very hard to accept any movie without such breathtaking delivery system. Again it was very visionary for Cameron to work hard to deliver Avatar as a 3D movie.

The question is then why B+ rating? Have you watched latest 'Star Trek' movie released in Summer of 2009? Cameron needs to understand the importance of 'script' in Science Fiction. Compare Avatar with Star Trek and one realizes how feeble the script of Avatar is. Again, what about 'District 9' - that script, plot and technicality of direction; all are miles ahead of Avatar.

Avatar's main plot of 'greedy and dumb' Corporate America is quite boring. Of course, when greed of Corporate America and million dollar bonuses of Bankers are well known and here to stay, it is not that the plot is not realistic. But where is the creativity in this plot and script? Though Cameron is Master Story Teller, he has based the story on number of well ingrained cultural artifacts / clutches and in that sense simply given up on the need to come up with any intriguing and original story. Ex Marine with legs lost, another retired Marine serving Corporate interests, young but dumb brash Corporate Chieftain caring for interests of share holders, European colonial style outpost exploiting indigenous people and their livelihood, a scientist with missionary zeal, allies coming together to resist human evil (WWII similarities?), air battles ending in one on one combat, etc.; all these are well worn subplot gimmicks which Cameron deploys so as probably he is free to concentrate on the technology. All that is depressing and nothing new there.

But not all things are old and there are few things which are indeed creative - Pandora, life on a moon instead of the main planet, that is dreamy but plausible. It is deeply romantic when Jupiter like Planet occupies the huge swath of Pandora sky. Another equally plausible idea is how reluctant Mother Nature, who only keeps balance of Life, comes to help when that Life itself is threatened by Humans. Bioluminous plants and exotic creatures of Pandora, whole of that imagination and imagery is exceptional; very fruitful result of decades of thinking by Cameron and worthy of hundreds of millions dollars poured over years. These are the reasons the movie is worth watching despite the weaker script. Though there is much less scope for traditional 'acting', actor Sam Worthington has rendered Jake Sully cutely. That is one bright spot too.

Cameron and 20th Century Fox will for sure make money, Billion Dollar or so in early months or at least in the first year. There is nothing to be taken aback by a Billion Dollar tag because you know Dollar is worthless and hence Billion Dollar is the minimum mark new Hollywood franchise has to make; especially when the production cost runs at $300 millions. Avatar as a new franchise will surely achieve that financial mark, setting the stage for a sequel. But looking at the early response and my anecdotal evidence, Avatar may not be that block bluster money spigot. When I watched the movie, there were still 5 to 10% seats empty on the first day. Industry reports also indicate the slow North American start, further hampered by winter storms and snow on East Coast. But may be world wide it will make lot of money, enough to sustain Cameron for follow on releases.

Wednesday, December 16, 2009

Fed Chairman Ben Bernanke

"It just seems unlikely that Time magazine will name any other person as the 'Person of the Year' than Ben Bernanke."

-- Blog post 'Bernanke' on 21st Century Politics, Monday, August 24, 2009.

So that is the case today. Time announced Bernanke as their Person of the Year 2009. In a way it was easy to see considering universally recognized deft handling of Great Recession by Fed.

However, America needs to understand that going forward there is only one task for Fed - unwinding of the liquidity and other measures put in motion to fight the recession. It will not be Fed which will provide the employment or expanded credit to businesses. It is going to be policies adopted by the Congress and pursued by this Administration which will have the direct impact. Bernanke effect will be muted in 2010 and beyond. The only relevance of Bernanke will be how systematic unwinding of the Fed liquidity takes place.

In any case, Bernanke's hands are full in fighting the Congress which has folks like Ron Paul who basically wants to destroy Fed and if not that then at least add the crippling audit of Fed's books. Law makers have a point since Fed, all said and done, does have more autonomy and freedom than a normal accountability what People would demand. Agreed that it is the same freedom and flexibility which precisely helped Bernanke in fighting the Great Recession; but that is also another name of 'getting away' with the neglect when Alan Greenspan essentially mismanaged American Economy and brought America and the Global Economy to the stand still. Congress is trying restitution of Fed sins before Bernanke, the sins to which even Bernanke was partially responsible. How to bring a sense to such Fed regulations and how to thread the needle; that is a tough problem which this blogger can not speculate. However, for good or bad Congress does not have that luxury and it will have to address it as a part of ongoing Financial Regulation Bills which are proceeding through the labyrinth of Congress. Hope is Congress gets it right in this delicate re-arrangement of Fed otherwise America is likely to miss competent masters like Bernanke.

Monday, December 14, 2009

Sen. Joe Lieberman

With one single Sunday Talk Show appearance Sen. Lieberman has raised a political storm. Looking at the fierce reactions from Ezra Klein, Matt Yeglesias, Daily Kos, Huffington Post and many other bastions of Liberal netroots as well as Ezra’s scuffle with WaPo establishment - editorial board member Chuck Lane; it is clear that this story has legs.

True, we are not talking here re-election of Lieberman since he is unlikely to seek that. There may not be obvious political ramifications of this, but sense is that this particular incident – wanton behavior by a Senator to kill Health Care Reform for the sake of it without any serious policy objections – will be remembered long and there will be consequences of it.

To start with it will not be simple for White House to say Sen. Reid to compromise with Sen. Lieberman after the strong reaction from the Liberal base. It is clear that there are no serious policy objections from Sen. Lieberman since he is all over policy map. As the viral video shows (Greg Sargent of The Plum Line); same Sen. Lieberman endorsed the particular policy he is opposing now – buy in Medicare for folks older than 55 years. If Sen. Lieberman opposed these policies, he should not have agreed to Sen. Reid in the first place for the Medicare buy-in.

Next, Democrats in Senate will be more inclined to accept compromise with Sen. Ben Nelson, Sen. Olympia Snowe than with Sen. Lieberman. This means either abortion amendment of Sen. Nelson is in or public option becomes a trigger as wanted by Sen. Snowe; or both.

Further, Dems will also evaluate the possibility of ‘reconciliation’ which White House does not favor since it will involve de-assembling of the whole bill into ‘passable components’ one at a time.

Finally, public pressure to consider ‘filibuster’ procedural reforms will keep on increasing. Not sure whether it will translate into any concrete change the way dysfunctional Senate works, but the chances of procedural reforms increase with such intransigent behavior by few Senators.

All in all this is a typical and clear demonstration of how American Senate is broken and petty politics by few Senators essentially destroys well being of all Americans.

Saturday, December 05, 2009

Pakistan - the war is coming home

The latest terrorist attack on a mosque in Rawalpindi kills at least 27 people of which 17 were children, mostly of Pakistani Military Servicemen. If ever any proof was needed that playing with snakes (terrorists) can eventually bite your own progeny, this is it.

These and other recent terror attacks on Pakistani Army should amply wake up General Kayani, PM Gilani, Nawaz Sharif and his brother who is Punjab CM so that finally they are ready to discard 'terrorism as the strategic weapon'. Pakistani Army and political establishment has reached a fulcrum now - either it rips all bad elements of her armed forces or finally concede 'space and initiative' to militants paving the way for destruction of Pakistan and establishment of fundamentalist states (yes multiple, Pakistan will no longer remain united in that eventuality).

With experts like Farid Zakaria pointing to real possibilities of Pakistan loosing control of nuclear weapons to terrorists; challenges in Pakistan are becoming grave by every passing day. If President Obama's new addition of troops to Afghan theater helps there, it will be a much needed help at a critical time. It is also heartening to read that President Obama and CIA want to increase the Predator attacks and now want to cover hitherto untouched Balochistan too. Pakistani establishment needs to realize that for the short term political comfort (because Pakistani population naturally dislikes Predator attacks completely); they cannot afford to be any less aggressive here. All means and weapons need to be used to finally cleanse these terrorists. Otherwise there will not be a nation called Pakistan.

Friday, December 04, 2009

Krugman Misleads

If you read Paul Krugman's latest NYT Op-Ed, you would be mistaken to think it is the Centrist Democrat who are the real problem especially when Krugman blesses the bill for it's cost control measures. But if you read the Time article which points out critical failures of the proposed bill on cost control account; you can clearly see Krugman is simple 'spinning' the bad bill in making.

That is sad. We need folks like Krugman continue to insist upon Congress to summon the courage in limiting the costs. Read the travesty of Medicare Commission and one realizes it is not the Centrist Democrats, but Sen. Reid who is the villain here. Unfortunately, for all the talk of toughness, Obama White House is letting Congress this bad bill.

Krugman on so many occasions compromises factual information to purport his ideological agenda. In that sense he is no different that ideologues on Right. In the end, folks like Krugman bring more damage to this country and it's good debate than being helpful. It is a disgrace and shame.