Monday, May 31, 2010

Israel - On Road to More Chaos

With Israeli Naval commandos attack on Gaza Humanitarian Aid Flotilla attack killing 10 aid workers (many foreigners); Israel is continuing its dumb headed aggression policy. If at all Israel wanted to stop the aid, policing them with lesser lethal means should have been tried.

One can understand that once one flotilla is allowed, the line from sea would start and before one knows bombs and weapons would start coming into Gaza. But this whole talk of 'sea based humanitarian aid' has been in the air for a while and Israel was required to sense the 'loss of human life / publicity disaster' lurking behind it if Israel were to stop it forcefully. The right thing to do was:
- allow the increased supply to Gaza from Israeli controlled land routes (so that easy inspections are possible to weed out bombs & weapons going into Gaza) and
- much more high profile campaign to high light dangers of such naval supply arrangements, potential for tragedies lurking in that and overall internationalization of the issue to ensure that the world understands before hand such interventions from Israel would be all but inevitable and reasonable.

Today, in absence of preparing the world public option, Israel might have stopped the flotilla but essentially has lost the public relations battle. Once again weaker adversary like Hamas has out maneuvered Israel politically. This will be a long sought break to Hamas who were on defense for now.

As usual this does not create problems for Israel only. Israeli PM Netanyahu was expected to meet President Obama but now Bibi himself has canceled this meeting. Obama Administration will continue to get a lot of flack for their backing of Israeli whereas many conservatives in USA will blindly expect the Admin to ignore the blatant aggression of Israel. Besides cancellation of this meeting also portrays kind of 'irrelevance and uselessness' of Obama Admin as the interlocutor of peace between Arab Israeli conflict. (May be Obama Admin keep out of this whole diplomacy charade until it makes it's mind and has the homework done. This whole operation 'schmooze Israel' was unnecessary, more to pander Jewish lobby than with any larger design. As of now it is the 'darkest period' at Obama White House - non-stop BP oil spill, Iran issue unresolved, renewed tensions on Korean peninsula, Afghan war uncertainty and continued weak economic recovery. It is time to prove Obama Admin that it can handle challenges thrown at it which are of not their own making.)

In any case, lately Palestine and Arabs are on upswing. Egypt ensured that Israel is named in NPT report and 'shamed' Israel for its secretive nuclear weapons program. No wonder Israeli PM is shouting 'foul' here. So for the nuke issue Israeli is put on the back foot and with the 'flotilla disaster' it is further on defensive. All this isolates Israel further.

Politically on defense, internally much more aggression and violence, internationally isolated and hands tied of remaining few friends; these all are classic signs on the road traveled by Apartheid South Africa ages back. Israeli PM Netanyahu and his ultra conservative / hawkish coalition may think they are fortifying Israeli's future, but clearly politically they are weakening the case for Israel security. With every aggression act and continued West Bank settlement expansion, 'Israel as the bully' public image is getting played to the hilt. As one understands the history of this region, this does not end well when the script advances along these lines. The only saving grace for Israeli could be - flotilla stoppage is such a huge political victory to Hamas in recent days that they will get emboldened by this and will start the missile or suicide attacks which will bring back Israel in the international public opinion court as the 'victim'. We will see whether Gaza politicians are able to demonstrate any maturity or not.

Saturday, May 29, 2010

Big Government and Oil Spill

Frank Rich at NYT connects the dots and makes a cogent case that essentially what this 'oil spill' is testing is the theory whether 'Obama's Big Government' can solve this big challenge thrown at it. Rich argues, and Peggy Noonan implies, that as long as the BP Oil Spill does not stop, Obama Theory of Big Governance is called out as a failure no matter how bankrupt Conservatives are to cling to 'oil dependence' and no matter this was the problem of Private Sector making in the first place.

However, I doubt Americans in general will be so extreme so as to accept 'stopping the oil spill' as the test of Big Government Theory since they all know that it was never created in the first place as a result of Big Government. Obama Admin can rightfully argue that in-fact the problem got created because the government was not 'that much involved' with Oil and Gar Industry to begin with. At best, one can say that stopping BP Oil Spill is providing an opportunity to make a point about the Government involvement, responsibility and usefulness for the public good at large. This is at the heart of the Right's criticism when they say Obama Admin should take the full control of stopping this spill. But Americans will also know that without the pressure from Federal Government, BP is unlikely to try all these options as well as pay for all of it (as result of which BP may even cease to exist). In other words, if American Public is faulting President Obama; then it is about 'not getting involved' fully in this whole affair. Beyond all this what American Public wants is not to politicize this issue needlessly and focus all of our energy in stopping the oil leakage and dealing with consequences. Everything else is dispensable.

Update - Here is one more case for greater Government involvement.

Update 2 - Louisiana Governor Jindal is already faulting Obama Administration not putting enough pressure on BP and not getting 'involved' more. Frank Rich specifically pointed out this dynamics with GOP Jindal and that is fully intact here. So again it is clear that if at all, Obama Admin will be more criticized for their 'less involvement' rather than more of it.

Two Holes

One was on the land - volcano eruption of Eyjafjallajökull in Iceland which started on March 20, 2010 and by May 23rd is declared as stopped. It wrecked havoc by grounding air transport over Northern Europe with total business loss in at least few billions.

The other one is a man made, deep under the sea - BP's leaking Macondo oil well in Gulf of Mexico. More than a month has passed and the leaking has not stopped yet.

The first one, world understands and humanity will learn to live by. Humanity has been living by such eruptions from time to time.

The other seems more depressing. Humanity thought that it had all the necessary technology to drill such holes to get what we need. Sure humans do have that technology but do not have 'any command' in controlling this experiment if things go wrong. Even if 'top kill' works by this Sunday (depressing news is it has reduced the oil flow by less than 10% so far and it is hardly any encouraging news at this point; folks are already talking next things for containment); it is clear that if a oil leakage takes more than a month just to stop, something has gone terribly wrong here. We are not talking here many months and possibly years to get the Gulf Ecology back provided further flow is stopped in next few days.

As many have pointed, 'risk calculations' have gone wrong here. First, America's risk calculations were thrown by President Bush II while invading Iraq. Then 'recklessness' of Wall Street and Alan Greenspan got exposed. And now we are experiencing serious undermining of deep ocean drilling risks by Oil and Gas Industry.

It is very well for Peggy Noonan to 'write off' Obama Presidency due to this continued oil spill. But soon people will realize, if indeed there is 'no quick technological' fix here; what can a President do? It is perfectly fine to blame Barack Obama and indeed there are many things which he could have responded well (and still could be instrumental in mobilizing many more experts, engineers and resources for more coordinated response here); but when you have a Nobel Laureate on the job (Stephen Chu) and many other bright engineers on duty and still you cannot plug that damn hole; we are talking clear limits on our engineering and execution abilities.

What are the consequences we are talking here? Gulf Ecology will for sure go down, potentially for many years. Same will be the fishing and related businesses over there. What about the Oil Industry? It is doubtful whether any oil company will revive any such deep water drilling projects, at least around USA, for next 3 to 4 years. BP, for all the deserved admiration in it's acceptance of culpability; may not survive as a company or at least as an independent company. It could be the case like how Three Mile Island Nuclear Power Plant Accident effectively stopped Nuclear Industry in USA for 2 decades. What American voting public will say is until we have Oil Industry demonstrating a proven record of safety for many years (a decade?); we Americans do not want to go for deep water ocean drilling.

However there is a peculiar dynamics at works here since the automobile industry - the primary consumer of oil - is on the cusp of moving away from gasoline and diesel as fuel. The question is reduced supply of oil (because more nations will be hesitant in allowing such deep water oil drilling and American Petroleum Institute is already complaining about Obama moratorium) will hasten this move to a 'post carbon' world or not. If indeed that happens, one can say that as the only 'silver lining' of this BP Oil Spill fiasco. That is where President Obama has to show the leadership and boldness in helping us go past this 'oil addiction'. We all be waiting for that as the Commission reports start coming and Congress is forced for the legislative responses.

Update (Saturday May 29, 2010 at 8.00 PM) - It seems BP and Obama Admin were essentially waiting for the Memorial Day Long Weekend to start to release the news of 'top kill' failure. The failure was more or less baked yesterday only, but it is the familiar way in which USA Politics respond to Media Cycle. Such 'failure and negative' news (similar to infidelity news of politicians) are released on 'low cycle' vacation days. The pattern is so prevalent in USA that it is beyond anything to get surprised (or to make noise) at it. Our Politics is a long way from freeing itself from the 'cynical media management'.

What next? BP is talking about some more techniques, at this point more along the lines of reducing the leakage rather than completely stopping it. But more or less it is clear that it will be August when the relief well will eventually stop this oil leakage.

Least what President Obama can do here is, come Monday and he starts preparing America for this time line. He also needs to tell Americans about 'pit falls' of this 'relief well technique' since experts say it is also hard and equivalent to 'needling a thread'. Report is some Australian drilling operation tried that technique and needed six attempts before finally succeeding.

Bottom line - every immediate solution is turning out negative and we are in for a long haul here with completely different scale of consequences and problems here. This is truly uncharted territory here and President needs to 'level with Americans' about that. Failure to do so means we are talking truly catastrophic failures of Leadership here.


Tuesday, May 25, 2010

Oily Chernobyl Continued

It is obvious that President Obama is reluctant to take charge of BP Gulf of Mexico oil spill. For all the prowess of Fed Government, their myriad labs, NASA and mighty technologically advanced Navy; Obama Administration does not feel confident in having a solution to address this problem. Alternatively it also means President Obama has failed to rally Federal technological abilities as well as private universities, organizations and companies to address this challenge. What better way to hide this failure than to continue the kabuki of ‘boot on the throat of BP’? That is what is going on. Very disgusting and cynical politics by Obama Administration.

If Katrina was a failure of leadership, that is what we are seeing here with President Obama too. He is simply not ready to jump the rope and take full charge of the situation. Liability of BP and how much the company should pay, that is completely an orthogonal issue to contain this spill. President Obama should not confuse this liability issue for political reasons with the urgent need of stopping the spill. He is failing in that and failing very badly. What a shame.

Apart from hoping that the ‘top kill’ solution works, there is nothing what anyone can do here when our leaders refuse to take ownership.

Update: Following 3 are the observations:
1. It seems the 'top kill' operation started on May 26th, 2010 may have succeeded in stopping the gushing oil. It is understandable that everyone is cautious here. People are holding of declaring the victory is good. We will know details in next few days.
2. In his press conference today (May 27, 2010) President Obama took the responsibility of this mess and admitted that many mistakes were done. That is good. He is asking the investigating commission to bring forth many missing details as well as prescriptions going forward. He has extended the moratorium on deep water oil exploration and Alaska drilling, which is good. One will have to wait to know what process improvements will be brought in near term:
- a permanent Public Private 'war room' to deal with such eventualities or
- ensuring that each private company has capabilities in bringing such complex rescue operations on its own in an event of accident or
- some combination of both.
3. In terms of policy, President Obama reiterated his contention that while America eventually graduates to a total non-oil energy policy, because such a transition is going to take a long time he wants to continue 'oil drilling' in the mix, meaning a continued acceptance of 'oil' as a viable source of energy. His bottom line is - "yes accident happened, we take blame & responsibility and we will ensure all safety precautions going forward; but we will not abandon or eliminate oil dependence". President is right that he never said "drill baby, drill"; but he is not yet ready to move beyond oil based energy policy. Missing is the vision and resolve to alter tax policy such that transition of America to non-oil based energy happens sooner rather than over a course of time, as seems to be the case now. Kerry-Lieberman bill is an improvement to status quo but it is unlikely to be a policy jolt which will fasten the move to non-carbon based energy industry. In that sense Obama endorsement of Kerry-Lieberman bill is not sufficient. In other words, still it seems 'BP Oil Spill' crisis is wasted by this Administration to leap frog USA to a non-carbon world.

Why no Chinese Brand?

One laughs when Washington Post puts an article discussing why there are no Chinese Brands. Is it not so obvious? The economy and law system which do not respect brands of other countries cannot create brands of their own. It is no brainier. Any time China insist on 'native innovation' which so many times mean stealing technology of others or to allow willful piracy of other people's intellectual property including brands; which Chinese entrepreneur would invest in brands? It is no wonder then that many American software companies find piracy infested Chinese market that much less lucrative.

Pretty soon there is going to be a point reached in Chinese Economy when 'value addition' in Knowledge Economy becomes the only source of wealth generation after having diminishing returns in manufacturing industry and by then China has 'built' all the infrastructure what it needs. Infrastructure building in itself can uplift economy only so long. It is not that China is going to add one more billion to it's already existing billion plus population. On manufacturing and export side, many other cheaper economies will continue to come along (Vietnam, Indonesia, India, Bangladesh and many African countries) while the appetite of rest of the world for these manufactured goods is only growing gradually. All this means Chinese System has to respond to the needs of 'respecting intellectual property' if they want to grow beyond a certain point. Very soon that tipping point is going to come.

Saturday, May 22, 2010

California

There has been lately a lot of comparison between Greece and California and lot of prognostication about whether California will go Greece way or not. General thinking is California will be able to avoid the Greece fate because it's interest payment is still less and manageable compared to GDP of California (more than 1 Trillion) and the printing press of Bernanke at Fed will help by extending loans as needed.

Still, it is obvious that the fiscal situation of California is precarious primarily because of the political ineptitude of state leaders, crashing of high price housing market and recession. In March of this year there was a glimmer of hope when state tax collection ran ahead of projections, but in April things are back where they have been - behind targets. California is again facing around $19 Billion deficit for a budget of the size $85 to 100 Billion per year.

Talking of expenses, pension expenses are as usual creating the havoc. This is the State and City government's liability of their public employees when they retire. Clearly that is one trap which can guarantee the bankruptcy of the state similar to how public employee expenses primarily destroy any chance of meaningful state expenditure control in Greece. (No, California does not have Greek style 13th and 14th month salary to public employees in California, otherwise start-ups would have found it hard to get employees as everyone would have flocked to these public jobs.)

But it this report is any true, finally there may be a case that state level politicians in California are talking some sense. Heartening thing is Jerry Brown is talking about that, the leading candidate from Dem side for the Governor position in November. He has been trailing to GOP Meg Whitman in these early months, but now has recovered substantially as the 'racial and anti-immigration' noise has started to become loud, especially after passing of a knuckle headed law in Arizona about immigration. It is a conventional wisdom in California Politics that any time GOP talks this non-sense, Democrat reaps benefits. This time it does not seem to be any different. For Meg Whitman her association with Wall Street is also not helping. No matter how much personal fortune she pours in the election campaign (reportedly more than $40 million so far); 'anti-immigration and pro Wall Street' labels can be very detrimental in California. (Same fate awaits to the other high profile GOP woman candidate Carly Fiorina for the California Senate office, still battling the strong primary.)

Of course the question is will Democrats like Jerry Brown be really truthful to the campaign concerns and commitments of being fiscally prudent when they actually get elected. History is not encouraging there. One hopes that the turmoil in Greece, those images on TV of burning banks; all that should make the elected officials of California fiscally less irresponsible assuming California gets time till then.

Tuesday, May 18, 2010

Bibi's Israel facing the abyss of Apartheid

Peter Beinart's recent commentary about Israel has been resonating in the blog sphere. There is not much for this blogger to add here than to point the fantastic discussion between Goldberg and Berinart at Atlantic.

There seems to be a fair degree of agreement among many pundits of Middle East that Israel under Bibi and ultra conservative parties is inexorably moving in the direction of South African apartheid regime of past. In this scenario, Israel under ultra-conservative minority Jews will try to suppress majority Arabs by brute force. This is because any possibility of two state solution is foreclosed by relentless Jewish settlements in West Bank.

It is doubtful anything constructive can be achieved here by Obama, America or any other third party when Israeli society is slowly allowing the entire agenda to be hijacked by extremists who are absolutely loath to cede any ground to Palestine. Knowing all this, may be not 'wasting any limited capital' on Arab-Israel conflict is a right course until Israelis themselves muster the courage to stop these home grown trouble makers.

Saturday, May 15, 2010

India's Social Reforms - Still Working On

Darul Uloom Deoband is trying to 'cover' itself by saying that it never asked Muslim Women not to work, but asking them to dress properly while working along with Men. That is much better than the earlier interpretation which implied that the Islamic Seminary basically opposed Muslim Women working at all. Unfortunately, this whole mess indicates that how things are still backward in India and how many people are eager to deny Women the basic right to earn livelihood, all in the name of religion.

This mess is further upended by death threats to famous lyricist Javed Akhtar. That is non-sense. Maharashtra State and state Police force need to provide protection to Akhtar as well as famous Muslim Bollywood folks need to come forward to condemn such threats. Where is Shaharukh Khan when we need him? Why is he not coming forward in condemning any 'fatwa' which puts restrictions on freedom of Indian Muslim Women as well as any hatred which threatens folks like Akhtar who are fearlessly pointing out wrong things done in the name of religion? Or do we say morality and ethics of Shaharukh Khan starts and ends with making false raucous against American Immigration to promote his films only? There is lot of hypocrisy going on here and times like today expose that.

Hypocrisy is not restricted with certain Islamic extremists folks only, but it is equally rearing it's ugly head in Hindu society as well. Khap Controversy in Harayana and North India demonstrates that amply. These Khap Panchayats - local religious councils - without any legal authority are trying to impose conditions like same gotra marriages are prohibited. Gotra is a notion of descendants from one of the eight rushis (saint / religious leaders) in Hindu mythology who were early adopters / founders of Hindu religion. Bombay High Court ruling in 1945 by erudite judges then clearly indicates difficulty in using 'gotra' as any rational or practical mechanism to navigate through Hindu marriage practices and scriptural law. Granting any say to extra legal Khap Panchayat on the basis of religion and tradition is again wrong and essentially it amounts to gutting fruits of hard won social reforms spanned across more than a century. Common hope is as India improves economically, it would be easier for Indian society to move from any of these evil social practices fast. But narrow minded electoral practices at times bring a negative effect - as like in this Khap Panchayat controversy many major national parties (Congress, BJP, INDL, etc.) remain ambivalent on purpose least to disturb any electoral calculations. We have enough of 'caste based' Politics in India to further pollute it by resurrecting more and more evil practices and traditions of past.

It is really shame that progressive government of Dr. Singh, Sonia Gandhi and Rahul Gandhi should tolerate any such non-sense in the first place. It was expected that these Congress leaders would be forthright in attacking these derogatory social practices which negate all the gains of Indian social reforms. It is no wonder that Communists in India are attacking Congress and other parties for their coy and opportunistic politics here.

One hopes that many common and enlightened folks in India overcome this mean, detrimental and short sighted politics of Indian Political Parties and force the government to remove hurdles in India's ongoing social reforms via Public Interest Litigation, other legal avenues, appropriate media coverage and finally public pressure. Otherwise all the gains of India's social reforms are at risk and that will be a shame. Apart from the independence from Britain, the greatest legacy of India's all past masters is the enlightened view of a common Indian person devoid of all religious persecution and fruits of social reforms to be enjoyed by everyone. All these India's past masters, starting from Rajaram Mohan Roy who helped to ban Sati; have paid too much of a high price to make India reach this far. Today's India to squander what these past masters have bestowed upon all Indians will be a clear betrayal of India's Great Generations from past.

Wednesday, May 12, 2010

David Cameron

Looks like finally he has delivered. The good thing is all in all he has been sincere and quite decent, compared to Brown's earlier antics and Clegg's open 'bazaar' for coalition. If Cameron fulfills what he is saying today that he wants to give Britain a stable government, there are good chances that this Tory-LibDem coalition can last the full term. But we will see how things develop since British Politics has lost the art of coalition governance in recent years and chances of things going south unexpectedly are always there. The danger of 'anxiety bouts' for LibDems is real. For example if indeed true proportional representative system does not come though for any reasons; the political space will squeeze for LibDems. In that scenario belligerent opposition Labor will continue to reap the advantage it has in terms of how parliamentary seats are carved out today whereas incumbent Tories will be able to avoid their worst fears of going away from 'first past the pole' in it's current form. For LibDems, this election was always kind of a semi final match - get the representative system based on the opportunity opened by this election and sow the seeds of eventual big presence in Parliament. It was all about future. But with Tories as the senior partner, LibDems may have to be content with their current clout only for some time to come.

What about progress in governance or addressing myriad challenges which UK is facing? Since contemporary Tory Party being unlike their counterpart in USA nor Cameron as fiscally irresponsible as like Bush; chances of this government avoiding UK Financial Crisis are good. They may not be able to solve it fully or thoroughly; but they should be able to avoid 'run on Sterling Pound' and that in itself will be a big achievement for British People. There will be across the board suffering for British people and potentially continued bickering about that from LibDems; but it is not unrealistic to hope that Cameron Government would avoid Greece like situation and would make some sincere efforts in revitalizing British Economy. Beyond that, it all could be a mixed record; quite difficult to speculate in any rational manner.

As profuse praise from Obama shows (to both incoming and outgoing PMs); Obama was waiting for the transfer of power to shower his 'love' on UK. Earlier, it was typical of Obama not to waste any of his 'praise' on a spent force like Gordon Brown. Anyways, better late than nothing when Obama is hinting for more entrenched relationship with UK's new government. Obama should enjoy time with Cameron since he will be able to show case a Liberal (in American sense) Conservative compared to stupidity of our Party of No and Tea Party. So expect many more occasions where Obama will make the point of using Cameron as a proxy in implying nudging for our Republicans to move towards political center. This is easier to do since Cameron Tories are so Left of American Republicans on so many issues.

So now the long and hard journey of governance starts for Cameron Tories. One wishes best for this honest young man in his endeavor.

Monday, May 10, 2010

Why not learn few tricks from India?

Telegraph, London Times, Andrew Sullivan and many other British Media Stalwarts are frustrated with Gordon Brown offering his resignation and challenging LibDem-Tory coalition plans. They are calling this as a 'bleak day' of either British Democracy or British Tory Party (pick any one you like). I guess these folks need to learn some lessons in Democracy from country like India where such things are very normal. (I thought someone would hire Sharad Pawar as a special consultant in these matters.) In fact for this India originated blogger, it was a natural scheme of things; very much expected. What do you think is happening in Iraq when Ayad Allawi is essentially denied the PM position by a Shitte coalition? Yup, I am deliberate here and trying to rub salt in wounds by giving examples of younger democracies which Britishers might have helped to start in first places. So in that sense, it is time for British Democracy to learn from its students.

Those who think Lib-Lab coalition will be losers coming together, conveniently ignore the fact that David Cameroon could not carry the day - either by % votes or by seats won. So what authenticity and what mandate are we talking here? 'Interpreting mandate' in Democracy is like 'beauty in the eyes of beholder'. In other words, it is fools errand to worry about legitimacy here because the verdict is so fractured. We all must know - campaign stops at voting and after election results it is all Politics.

So what if Liberal Democrats will become king makers when proportional representation system is adopted? So what if Conservatives are unlikely to get majority in that world for long? And who is saying that eventually British People would not become wise enough 'to see' through all that and even give 50% votes to Torries as and when British Public and Conservatives are on the same wavelength?

This despair does not make sense. On one side people are ready to be patient for the 'learning curve' of young democracies like Iraq whereas there is no such patience when it comes to British People. Look, running Democracy for centuries does not mean 'learning stops'. We all know the history of Britain, so why do we think that they will not be able to force their 'politicians' to behave and come together just because those are elected via proportional representation system? This is like saying Germany would not make any progress because it had had coalition governments for most years. Is it true? Have not modern Germany Politicians solved some of their core problems? Is their performance any less authentic, more corrupt and less effective than Britishers?

Question is why do we assume that 'first past the pole' is a necessary condition for creating Winston Churchill or Margaret Thatcher? That is to have 'too condescending' view of common folks.

So let these political games of Brown and Lib Dems play out. Who knows these moves may not turn out to be any games, but political maneuvering with far reaching consequences. Equally, that should not despair Tories and they will get many opportunities down the line too.

Sunday, May 09, 2010

Shock and Awe

When these Establishment guys hit, they can blast you; they can be brutal:
- First around $700 Billion dollar or more bailout package from Europe.
- Next, ECB deciding buying of bonds in secondary market.
- Now, Fed extending dollar 'swap lines'. The news is Central banks extending swap lines meaning not just Bernanke but possibly other Central Banks too. I suspect that is the case because they had G20 Central banker / Finance Minister meeting on Sunday. This is the proverbial 'financial cavalry' the world has been waiting for.
- And on top of all that Obama declaring his Supreme Court nominee - Elena Kagan - to divert attention of American Media and Right.

This is the 'shock and awe' from the Establishment. Fortunately, this run of the mill blogger is neither short on Euro nor have shorted American or European stocks. So he will not endure the fate of 'shorts' tomorrow.

We all hope this counter-attack from Establishment will finally start addressing some of the core issues which have spooked Capital Markets so far.

Update - If these Capital Market moves succeed for Establishment along with all the regulatory reforms which are pregnant in American Congress and elsewhere also come to the day light; you are looking at a fundamental, paradigm shifting change in global power. It will be decisively transferred from 'Masters of Universe' to Politicians. As long as these politicians are representative of their People (except China, in most of the cases that is true for G20 group), these moves can be manifestation of what is good for People.

Think of what has been going last few weeks and months as equivalent of George Soros attack on Sterling Pound. The way Soros single handedly broke the Bank of England; Capital Markets were essentially on that road for Euro if European Politicians had refused to change their way. But it seems that not only European Politicians are finally come to their senses, rest of the world (in the form of G20) has also recognized this crisis as a common danger which needs to be fought collectively instead of thinking this as an opportunity to take down one of the dominant currencies. If the initial reports are correct, what is important is rest of the G20 Central Banks have realized that saving Euro is in the benefit of global economy. Such a realization and concrete actions based upon that realization is a big deal, true harbinger of co-ordinated global economy. If all these market interventions by Establishment work out, this will be a game changer; a pivotal moment of 21st century politics.

European TARP and Politics

So if indeed Europeans start putting such an all encompassing package, at least one core part of the current crisis will be addressed - market rejecting partial and half cooked bailouts. Then the only problem that will remain unattended will be competitiveness of weaker European economies. I guess thinking must be 'time bought' by such a big bailout would either give enough time for these weaker economies to become competitive or would give time for power houses Germany & France to 'easy out' exit of these weaker economies from Euro. But all in all if indeed such a large package is in works and Europeans are able to pull out this one, at least the immediate danger may start receding. We might have seen the 'high water mark' of European Crisis last week.

On the other hand anything less than this will be disastrous since Market expectations have been elevated by now and failing those will be back to 'snake and ladder' game.

Politically, if such a package do materializes, there will be lot of repercussions. To start with super power lady Angela Merkel is thoroughly chastised here. First, she has to sustain internal criticism of 'hesitant' handling of Greece Crisis. Next, she will be blamed for the loss of NRW state election. Finally, her earlier explicit and implicit 'rebuke' of American TARP and Obama Stimulus Package is fully falsified by now. These German Politicians tend to shore up their at home credentials by opposing American Presidents vocally and opportunistically but many times loose on such gambles in the end. Socialist Gerhard Schroeder very badly tried to rub off George Bush, but apart from temporary political benefits; he failed to en-cash anything longer term. Angela Merkel essentially joined the solidarity club with American Republicans (and Tea Party) critics of Obama. She came from standard Right side and criticized Obama, despite on progressive side she wanted to rub Obama as much as possible to get the star dust. All that seems like a wash now. No matter which way one looks, this week has seen the 'end' of super power lady of Europe. The only good thing is despite all this, there are never any doubts about Merkel's authenticity, her honesty and her credibility as a national leader. One hopes she finds a right way from this mess and leads Germany with more peaceful Europe. She has many mores years of 'leadership' to offer for Europe and the world.

Overall one expects that European wide TARP will give rise to the feeling of 'we all are in the same boat' feeling to Greece, Spain, Portugal, Italy and pot hole filled roads of NRW too. As a result chances of adopting austerity measures all across Europe increase that much.

Domestically, this will help Obama in two ways - foremost by saving 'Europe' one more reason for the 'double dip recession is avoided (it cannot be fully ruled out, it is just that one very immediate and strong reason is removed). The second way is European Establishment, including UK after their fractured verdict, would become much more sympathetic to 'big government' policy of Obama; the one he is forced to adopt due these unusual circumstances. Chances are that defeat of sitting GOP Utah Senator yesterday would again define the peak of 'anti-establishment' voter sentiment.

So all in all if this European TARP indeed fructifies, overall American and Global Economy can resume it's recovery from the housing bubble induced this Great Recession.

Update - The next logical question is whether America and Obama Administration would get time till next year to bring America's fiscal house in order. Conventional thinking is, Obama's Balanced Budget Commission will give the report some time later this year and after November 2010 election, the new Congress will get to the business of cleaning this mess which previous Congresses have helped to create in the first place. Further, conventional thinking goes as Democrats would loose the Congress in November 2010, the jockeying for balanced budget will be primarily dictated by Republicans while Obama will be left with much less maneuvering room. So all in all in the normal scheme of things we are expecting American Politics to deal seriously with the fiscal deficit sometime next year. The Trillion dollar question is whether Market forces will allow that much time for America or not. With European obsession possibly winding down, market forces can start gunning Uncle Sam. There is no telling whether that will happen or will not happen. Question is whether President Obama wants to do anything proactively here or would rather have Bond Vigilante to do the dirty work?

Who is Wolfpack now?

Swedish Finance Minister thunders in the EU meeting that ECB and EU are ready to defend 'Euro' against the 'wolfpack' Market.

Demonizing market - that is a classic ploy of politicians anywhere in the world. The advanced courses of 'market demonetization' are run in America with specialization conducted by Barack Obama's Democratic Party.

See, these politicians think we are fools. Instead of doing their job of 'regulating market'; jaw boning the market hardly serves the purpose. If EU Ministers are so 'worked up' with the 'buff' market is calling of these jokers at ECB; then why can't they legislate and pass the tough market regulations which will stop the so-called speculator attack on that 'poor Greece' and other weaker Economies of Europe? Whom are they trying to fool here?

Even Europeans themselves are not accepting the non-sense of European Politicians - latest is the defeat of CDU and rejection of SPD in North Rhine-Westphalia state elections. Both these parties backed wasting German money on Greece bailout and Germans are rejecting that. Are these German voters supporters of these 'wolfpack' then? That is all non-sense. When will these European Politicians face the reality and stop blaming others? It is the same market which facilitated earlier Trillions of Euro bonds on the promise of EU keeping their wasteful ways in check. If that end of the bargain is not retained by weaker economies of Europe and there is no hope of repayment of the debt as long as these economies stay in Euro; then why is it wrong for Market to take away its Capital from these flimsy, pyramid scheme European bonds of weaker economies?

I guess when Angela Merkel type of competent European Politician fails to grasp the badly needed bold leadership here; we may want to excuse these lesser mortals like European Finance Ministers and ECB members. With NRW election loss, it is clear that Merkel blew it. If she wanted Germany to bailout Greece, she should have done it in January when it was cheap and proactive. And if she did not want to do it ever, then she should have never participated in April $150 final (but eventually non-workable) bailout package. Rather, true leadership for her would have been to guide Europeans for the orderly dismantling of Euro membership of weaker European Economies. In absence of that what happened in NRW will continue till eventually things break apart totally.

Saturday, May 08, 2010

NeoCon Follies

"During the 1990s, neoconservatives spent an awful lot of energy agitating for the overthrow of Saddam Hussein all while the real threat to the American homeland - al Qaeda - passed completely under their (and everyone's) radar. Now, all the intellectual energy is being devoted to Iran, when far more Americans are likely to be killed as a result of events in Pakistan. Of course, given the track record, I guess we should take comfort that they're not offering up suggestions for Pakistan. But still, this disparity is something to ponder."

--
on The Compass, RCP Blog

Greg is right on money. The question is at what point American neoconservatives will wake from this misguided sleep. Because as Fareed Zakaria says, 'jihadi culture' of Pakistan is unlikely to subside for a while. Or is it that until Hillary walks her talk of 'severe consequences', these conservatives will not look beyond their obsession of Iran? Is it that only when they see an unfortunate repeat of 9/11 originated from Pakistan that they will stop carrying waters for Israel and start focusing on dangers of Pakistan? Will it not be too late by then?

Update - If you want to know the kind of diatribe these Israeli hawks hurl towards President Obama because he is trying to temper 'bomb Iran' campaign, you need to read this article by one Caroline Glick. Here she is flogging Barack because Americans are pursuing the idea that Middle East should be nuclear weapon free on behest of Egypt. She conveniently forgets in this proposal Obama Administration is still coy about Israeli nukes and has not committed explicitly whether those are included or not. If the price of getting rid of Iranian nukes is stopping Israeli nukes with added benefit of no nuclear weapons race in Middle East, any sensible person would say it is worth pursuing. Besides whether Israeli has nukes or not is of less matter so long as USA is committed to Israeli as an allay. These war monger folks are trying to set the disastrous course here - not giving any chance for Obama Administration to systematically corner Iran. The end result will be a catastrophe: provoking Iranian war with possibility of nukes being used. The path Israel is today advancing, it has essentially decided to validate the 'limit of tolerance' for Obama Administration and as a result 'stir' American domestic politics beyond what is usually acceptable.

Friday, May 07, 2010

European Tricks

By now it is becoming obvious that economically things are unlikely to improve in Greece as long as it stays with Euro and be able to repay back all of its debt. Greece is simply not competitive to 'export out' from this hole as long as the albatross of pricey Euro is around its neck while devalued Euro will simply make German exports further competitive at the cost of rest of European Economies. As Paul Krugman says all roads are pointing to Greece default and exit out of Euro. Then why are European Politicians scrambling to still waste $150 Billion on Greece bailout? The answer is they are trying to 'buy time' so that French and German banks will be able to get rid of Greece (or Portuguese or Spanish or Italian) bonds and book losses spread over multiple quarters.

This is chicanery to waste European and Global Capital knowing well that Greece bailout will not work. It is also dangerous since it assumes that market will not call the bluff of ECB and IMF and force them to bailout Portugal, Spain and Italy on top of Greece. No one knows how sound that assumption is and every sign shows that market will indeed make an attempt to force ECB and IMF to bail out rest of the weaker European Economies too. And if market succeeds in that, we are talking around a Trillion Dollar bailout for weaker European Economies. Is there any realistic chance that Germany, French, other rich European nations and rest of the world via IMF are ready to shoulder such a burden; especially knowing that even after bailout these economies are going to remain uncompetitive as long as they stick with Euro?

Question is whether rest of the world sees this trap or not and is ready to side step it or not. Or is rest of the world going to fall for false semblance of stable Euro and in the process spend Trillions of Dollars which otherwise would have been spend on serious development else where?

The right end game for these economies is clear - default and exit from Euro. The question is who is ready to 'bell the cat' or what are the political conditions which will make these European Politicians to face the truth.


Sunday, May 02, 2010

Oily Chernobyl?

That is what at least some folks are describing BP Oil Spill in Gulf of Mexico. ('It's Worse that you think')

It is clear that Obama Administration committed many mistakes:

1. To start with, the endorsement of 'offshore drilling' just to appease GOP without highlighting dangers of it as well as without strengthening needed regulations is inadequate. There is a speculation that Bush Administration relaxed many regulations (like need to install fail safe 'acoustic switch' on offshore wells which apparently rest of the world uses but not in USA to save some money) and if that was the case then Obama Administration failed in re-instituting those regulations back as well as to make them tighter.

2. When the first news of 'oil rig' fire came out, Obama Administration did not immediately start preparation for the worst case scenario as well as immediately putting in gear multiple parallel efforts which are needed to stop the oil flow. Instead of that Obama Administration is spending time and energy in defending that they have not been late. Not only Obama Administration is late here, but it still does not have any control on the situation. The only serious attempt by this Administration is to show 'the message discipline and attempts to control the news media'. It is sad to say but looks like Obama Administration has not learn anything from Katrina tragedy and it is pathetic to see Robert Gibbs defending Administration saying there is no loss of life like how 1800 folks died in Katrina. What about the devastation to livelihood of people and the oily mess till Atlantic?

3. Finally, again Sec. Salazar is all interested in simply reiterating how Fed will not leave BP from the responsibility here. But even if the Fed in itself does not have any worthwhile technology here to stop the spill, Fed does have the power to summon any company or experts who can provide this expertise. There does not seem to be any sign that Fed is doing all that to work with BP. This is not the time to engage in the blame game (that will be after you stop the gushing oil), but that is what Administration is doing whenever it says 'it is BP the responsibility party and BP will pay the bill'. It is shameful that technologically one of the most advanced country cannot muster requisite tools & techniques to stop this mess, nor its government is serious in execution to stop the oil leaks.

4. Hopefully, this will make this Administration and Congress to go away from these 'time bombs' on sea bed (off shore oil rigs) and not to get swayed by faulty oil industry propaganda. Obama Administration should reconsider completely any off shore drilling expansion it wants to support and if possible should stop it altogether.

Saturday, May 01, 2010

Obama and Media

“Still, if you’re someone who only reads the editorial page of The New York Times, try glancing at the page of The Wall Street Journal once in awhile. If you’re a fan of Glenn Beck or Rush Limbaugh, try reading a few columns on the Huffington Post website. It may make your blood boil; your mind may not often be changed. But the practice of listening to opposing views is essential for effective citizenship. It is essential for our Democracy.“

--
President Barack Obama at the University of Michigan commencement ceremony in Ann Arbor, May 1, 2010

What better way than this sensible argument to essentially marginalize Sarah Palin as nothing more than a partisan hack out to make money by inflating people's emotion? Well, not that Americans needs to know it from our President since 'money making' is such an obivious intent with Sarah Palin and she hardly has any grasp of any issue in any serious manner. However, what such a constant 'drum beat' from President Obama and White House achieves is essentially de-legitimization of Glen Beck, Rush Limbaugh and Sarah Palin as any political actors and relegate this gang to a bracket where they rightly belong - media folks out to make money while inflaming American public. This also puts pressure on GOP to try to understand advices of this gang in a context so as it is possible for GOP to distance from these extreme views. Not that GOP is showing in any such promising signs here, but in a way this may turn out to be the greatest help to GOP from a Democrat President - making it politically possible to loosen the vice grip of Beck, Limbaugh, Palin gang.

On another plane, Obama is simply trying to fortify his political defense by undercutting future potential challengers. There has been some speculation in blog sphere about Sarah Palin as a possible candidate to challenge President Obama in 2012. With her caricature as 'no more than a Opinion Media figure engaged in egregious ways to make money', Obama the Democrat Politician is simply slamming the door on Palin's face. Not that Obama has to fear anything with Palin even if she lands up as the GOP challenger, because on policy front and content-wise, she is just an empty vessel. Intellectually she is 'nothing' does not translate negatively in today's America because the party of 'anti Political Correctness' has however made saying 'low on intellect' as politically incorrect and hence impossible! But that is apart, as some have speculated Palin herself may not have any desire to leave the 'warmth of money' to enter the political arena. It is her greed and lust towards material things which made her in the first place quite half way her governor term and start making money in Media profession.

Finally, our President participating in the Media Critique is great because America today is in the vanguard of Politics in the Internet Age. It is hard to find any country with such a vibrant Political Discourse on Web. Our friends in UK are infatuated by their first televised debates of PM and challengers. No doubt UK political discourse is very rich, their parliamentary debates are great; but 'ragging blogsphere war' is probably not as intense as America. (Alas, how can that happen when UK bright minds like Andrew Sullivan and Niall Fergusson all are fully engaged in American Political Discourse? But that is a different matter, I do not mean it seriously here.) So fundamentally it is heartening that President Barack Obama understands the significance and importance of unfolding confluence of Media, Web and Politics. Many years down the line, we all will probably understand how Americans were the first ones to experience across the board influence of this amalgamation of Medium, Political Agenda and sanctity of civil debate. When chips are down for America in so many other spheres, it is not bad at all that from President to common person, Americans are at least contributing to one area - political debate on Web and trying to understand the difference between personal motives and common good as played out in Media.