Dear friends and loyal readers,
Thank you for your patronage and interest in the blog Beyond the Cusp. This is to inform you that the time has come to put Beyond the Cusp to bed. There were times in the past where taking a couple of weeks off were enough, not this time. What I see coming would not make for good reading and I would be writing articles while praying that I be wrong, not a comfortable position. The e-mail address will remain for some time for any who wish to continue contact with me.
Thank you again for your patience and patronage through the last three plus years. I wish you all happiness, joys, and good health. May our futures be bright and free of troubles. My best wishes to all.
Thank You,
Beyond the Cusp
Friday, May 29, 2009
Friday, May 15, 2009
Watchwords on Pakistan
Pakistan is quantitatively and qualitatively stepping up production of fissile material in preparation of upgrading and enlarging their nuclear arsenal. When considering their record of proliferation and security breaches in their past nuclear dealings makes this all the more menacing. Now add into the mix the very possibility of imminent control of these armaments by al-Queda and the Taliban and you get a very nervous India. This is exactly what sparked India's Prime Minister Manmohan Singh this week making an ardent plea to President Obama and the Washington politicos. Despite the credible threat revealed by Indian intelligence backed up and confirmed by Israeli intelligence, there has been no sign of concern coming out of Washington. Apparently, the fact that a major nuclear power in the Middle East is precipitously close to falling into Islamist hands while also building new and more powerful nuclear weapons does not call for even the slightest wariness from the new American President. This is definitely a “What the heck are they thinking?” moment.
Another question that has avoided discussion in most circles in Washington is exactly how far has the ISI, Pakistan’s secretive security agency, been infiltrated by Islamists and Taliban. Often left from the discussions of Afghanistan and Pakistan is the fact that the Taliban was originally formed by Pakistan’s ISI to implement a pro-Pakistani government in Afghanistan. Another question would be how much of the military has also come under such control, specifically the parts of the nuclear command structure. This used to be a very guarded group under the rule of President Musharraf, but now this is a question that requires answering. Unfortunately, there does not seem to be any more importance placed on these issues under President Obama than there was under President Bush. This is one area of apparent disregard that has carried over from the past Presidency to the present one.
Satellite images taken recently show Pakistan building two large new plutonium production reactors in Khushab area of Pakistan. These reactors are of a purely military purpose without even the slightest inclination to have them at least appear as power generating reactors. Given Pakistan’s past record on nuclear proliferation, this should be raising at least a few eyebrows. With this coming barely subsequent to the release from house arrest of Dr. A. K. Khan, one cannot help but express concern over any furtherance of Pakistan’s nuclear capabilities. With Iran and North Korea seemingly in total cooperation on the two fronts of nuclear arms and ballistic missiles, it begs the question of how much interest does Pakistan have in these developments and what are Pakistan’s plans for the future? Could these new facilities be the first signs of another round of Pakistani nuclear proliferation? Even if these new facilities are purely for internal Pakistani nuclear use, with the current political upheavals taking place within Pakistan this does not bode well. But, why should we worry, it must be all Kosher as the Administration of President Obama, as with Bush before him, does not appear to feel any urgency or concern. Everything must be normal and not worth further inspection or wariness.
Beyond the Cusp
Another question that has avoided discussion in most circles in Washington is exactly how far has the ISI, Pakistan’s secretive security agency, been infiltrated by Islamists and Taliban. Often left from the discussions of Afghanistan and Pakistan is the fact that the Taliban was originally formed by Pakistan’s ISI to implement a pro-Pakistani government in Afghanistan. Another question would be how much of the military has also come under such control, specifically the parts of the nuclear command structure. This used to be a very guarded group under the rule of President Musharraf, but now this is a question that requires answering. Unfortunately, there does not seem to be any more importance placed on these issues under President Obama than there was under President Bush. This is one area of apparent disregard that has carried over from the past Presidency to the present one.
Satellite images taken recently show Pakistan building two large new plutonium production reactors in Khushab area of Pakistan. These reactors are of a purely military purpose without even the slightest inclination to have them at least appear as power generating reactors. Given Pakistan’s past record on nuclear proliferation, this should be raising at least a few eyebrows. With this coming barely subsequent to the release from house arrest of Dr. A. K. Khan, one cannot help but express concern over any furtherance of Pakistan’s nuclear capabilities. With Iran and North Korea seemingly in total cooperation on the two fronts of nuclear arms and ballistic missiles, it begs the question of how much interest does Pakistan have in these developments and what are Pakistan’s plans for the future? Could these new facilities be the first signs of another round of Pakistani nuclear proliferation? Even if these new facilities are purely for internal Pakistani nuclear use, with the current political upheavals taking place within Pakistan this does not bode well. But, why should we worry, it must be all Kosher as the Administration of President Obama, as with Bush before him, does not appear to feel any urgency or concern. Everything must be normal and not worth further inspection or wariness.
Beyond the Cusp
Tuesday, May 12, 2009
Dollars and Doughnuts
Money is sometimes called dough. This begs the question of which will soon be worth more, dough as in money or dough as in doughnut. The way things are shaping up it is quite likely that dough for making bread will be worth more than dough and the slang bread meaning money. The problem for most people is that the combinations of macro and micro economics that go to making up the entire economy is oft well beyond the average person’s understanding. We all have a basic understanding when it comes to the simple concepts and rules that directly affect our lives. But beyond basic supply vs. demand and their relationship with prices and the idea of interest as applied to savings or car loans, mortgages, and credit cards, we are totally lost behind glazed eyes when the discussions turn to GDP, GNP, marginal investments, inflation, deflation, selling short, ARM, Retail Price Index, and a cornucopia of other equally mystical terms. This is behind why the various spokespersons speaking about economic policies can say almost anything as long as they muddle the text with a number of obscure economics terms to both baffle and pretend expertise. This is particularly true of many of our elected officials who simply parrot what their teleprompter tells them, while adding a few gruff throat clearings to sound so very deadly serious.
Fortunately, the main part of our economic future does not take a degree in economics to understand. It does take a small amount of knowledge and the time to sift through all the confusing verbiage behind which the truth is hidden. What everything breaks down to is a few simple facts. At the head of our problems is the sufficient number of loans that turned sour when the housing market initially leveled off and then began a correction for the overly inflated price of its markets. Housing prices had been driven by easy financing that allowed loans for up to 100% and even beyond to be granted with minimal oversight. Along with these speculative loans that were dependent on the continued increase in housing prices were another sector of loans that had been issued to high-risk people who ordinarily would not have qualified for any house loan. These loans were forced to be made by a Federal Government program called the Community Reinvestment Act (CRA). This was passed way back in the late 1970’s and signed by President Carter. The idea behind these loans was to make home ownership viable for lower income people by requiring banks to issue a set percentage of home loans to be CRA loans.
One might ask if this law had been in place since the 1970’s, why did it take until after the year 2000 to become a problem. There are two reasons behind this remaining dormant for so long. The first cause was during the Clinton Presidency the CRA was broadened such that more people would be made eligible for such loans and banks were pressed to make even a higher percentage of their loans as CRA loans. With the one two punch of the overheated speculating market and the higher percentage of marginal loans being made at the same time, a time bomb had been laid for the housing mortgage market. The fuse to this bomb was lighted when housing prices stagnated then fell approximately 10% at the same time as the economy took a slight downturn. This caused numerous defaults from both ends of the market; the high-end speculative loans and the low and low-to-middle end CRA loans. When these loans defaulted it made for a glut of available housing on the market, which immediately forced prices downward, that pesky supply and demand thing. With that further downturn coming before the market could ratchet back up from the correction, causing another round of failures almost immediately behind the first wave, the collapse was set in motion. Where the finance companies could probably have handled the initial failures, even including those from the two separate causes, they were unable to recover when another wave hit, causing the doubling up like a series of punches leading to a knockout.
Now we were looking at the potential collapse of some of the major financial institutions that were left holding worthless mortgage papers. Government changes in regulations meant to make the CRA loans able to be melded into larger financial packages that were given higher credit ratings that they deserved now were near to worthless thus knocking much of the underpinning out from the financial tables. Since it was the lax credit requirements imposed by the government that caused a sizeable percentage of the defaulted loans, the government hurried to cover their complicity by offering bailouts in exchange for silence on their complicity. Now the piper has come for his payment and the cupboard is bare. So, what to do?
The initial response from our government, surprise, surprise, was to turn to other countries to acquire loans to cover the further bailouts that were necessary. Guess what? With our economic house in such disarray, no country rushed forward to loan us the needed monies. What a surprise. This left only a few bad choices from which to pick. The lending institutions could be allowed to default, the absolute worst choice. The Federal Reserve could force interest rates way down to try and give some cover for the failing companies to dig their way back to solvency. Tried this, failed. Or the last choice, start up the Government Printing Presses and make bales and bales of money. There is one very large problem to printing money for the sake of printing money. This makes every single dollar worth less by an amount equal to the percentage of the money supply being printed. If they print money equal to 25% of the money supply, then each dollar you hold is immediately worth only seventy-five cents. Instant inflation.
This also will lead to even less desire by other nations to lend America money as it makes our money a liability to hold. This could lead to a rush by other nations to dump their dollars. Should this occur we would have little choice but to do whatever it takes to buy those dollars in order to salvage any value for the dollar. This is where we currently stand. Any further deficit spending will only exacerbate the problem. Despite the fact that only through financial restraint can we fully recover from this assault upon our money supply, the government is cruising ahead as if there has been no crisis. With the government setting to implement federalism health care, a money drain unlike anything we have ever seen, we are creeping closer and closer to an event horizon to an economic black hole. Once we go beyond that singular point of no return, America will face a slow and final economic death that will drag even a super power into the depths of despair. If you want to see what our leaders are gambling on doing to our economy, look no further than Zimbabwe where if you take too long to cash a paycheck it halves in value. We need to impress upon our governing leaders the necessity to show fiscal restraint until we have sufficiently recovered from the shock to our financial markets. There is no way to spend your way out of this economic dilemma. It is time to freeze spending, not to look to federalize 17% of the American economy, the percentage taken up by our health care industry. But then, if the governing aim is to force us into economic fascism where the government and industry rule and the citizens obey, then by all means, spend us all the way into serfdom.
Beyond the Cusp
Fortunately, the main part of our economic future does not take a degree in economics to understand. It does take a small amount of knowledge and the time to sift through all the confusing verbiage behind which the truth is hidden. What everything breaks down to is a few simple facts. At the head of our problems is the sufficient number of loans that turned sour when the housing market initially leveled off and then began a correction for the overly inflated price of its markets. Housing prices had been driven by easy financing that allowed loans for up to 100% and even beyond to be granted with minimal oversight. Along with these speculative loans that were dependent on the continued increase in housing prices were another sector of loans that had been issued to high-risk people who ordinarily would not have qualified for any house loan. These loans were forced to be made by a Federal Government program called the Community Reinvestment Act (CRA). This was passed way back in the late 1970’s and signed by President Carter. The idea behind these loans was to make home ownership viable for lower income people by requiring banks to issue a set percentage of home loans to be CRA loans.
One might ask if this law had been in place since the 1970’s, why did it take until after the year 2000 to become a problem. There are two reasons behind this remaining dormant for so long. The first cause was during the Clinton Presidency the CRA was broadened such that more people would be made eligible for such loans and banks were pressed to make even a higher percentage of their loans as CRA loans. With the one two punch of the overheated speculating market and the higher percentage of marginal loans being made at the same time, a time bomb had been laid for the housing mortgage market. The fuse to this bomb was lighted when housing prices stagnated then fell approximately 10% at the same time as the economy took a slight downturn. This caused numerous defaults from both ends of the market; the high-end speculative loans and the low and low-to-middle end CRA loans. When these loans defaulted it made for a glut of available housing on the market, which immediately forced prices downward, that pesky supply and demand thing. With that further downturn coming before the market could ratchet back up from the correction, causing another round of failures almost immediately behind the first wave, the collapse was set in motion. Where the finance companies could probably have handled the initial failures, even including those from the two separate causes, they were unable to recover when another wave hit, causing the doubling up like a series of punches leading to a knockout.
Now we were looking at the potential collapse of some of the major financial institutions that were left holding worthless mortgage papers. Government changes in regulations meant to make the CRA loans able to be melded into larger financial packages that were given higher credit ratings that they deserved now were near to worthless thus knocking much of the underpinning out from the financial tables. Since it was the lax credit requirements imposed by the government that caused a sizeable percentage of the defaulted loans, the government hurried to cover their complicity by offering bailouts in exchange for silence on their complicity. Now the piper has come for his payment and the cupboard is bare. So, what to do?
The initial response from our government, surprise, surprise, was to turn to other countries to acquire loans to cover the further bailouts that were necessary. Guess what? With our economic house in such disarray, no country rushed forward to loan us the needed monies. What a surprise. This left only a few bad choices from which to pick. The lending institutions could be allowed to default, the absolute worst choice. The Federal Reserve could force interest rates way down to try and give some cover for the failing companies to dig their way back to solvency. Tried this, failed. Or the last choice, start up the Government Printing Presses and make bales and bales of money. There is one very large problem to printing money for the sake of printing money. This makes every single dollar worth less by an amount equal to the percentage of the money supply being printed. If they print money equal to 25% of the money supply, then each dollar you hold is immediately worth only seventy-five cents. Instant inflation.
This also will lead to even less desire by other nations to lend America money as it makes our money a liability to hold. This could lead to a rush by other nations to dump their dollars. Should this occur we would have little choice but to do whatever it takes to buy those dollars in order to salvage any value for the dollar. This is where we currently stand. Any further deficit spending will only exacerbate the problem. Despite the fact that only through financial restraint can we fully recover from this assault upon our money supply, the government is cruising ahead as if there has been no crisis. With the government setting to implement federalism health care, a money drain unlike anything we have ever seen, we are creeping closer and closer to an event horizon to an economic black hole. Once we go beyond that singular point of no return, America will face a slow and final economic death that will drag even a super power into the depths of despair. If you want to see what our leaders are gambling on doing to our economy, look no further than Zimbabwe where if you take too long to cash a paycheck it halves in value. We need to impress upon our governing leaders the necessity to show fiscal restraint until we have sufficiently recovered from the shock to our financial markets. There is no way to spend your way out of this economic dilemma. It is time to freeze spending, not to look to federalize 17% of the American economy, the percentage taken up by our health care industry. But then, if the governing aim is to force us into economic fascism where the government and industry rule and the citizens obey, then by all means, spend us all the way into serfdom.
Beyond the Cusp
Monday, May 11, 2009
Death Watch Over Israel
The past few weeks have been full of articles decrying the coming demise of the Israel-American alliance in favor of a troika of Europe, the Arab/Muslim States, and America. The virtually universal phrase has been the “Throw Israel under the bus” phrase that caught on during the campaign as candidate Obama disposed of those who became a liability during his run for the Presidency. Truth be told, there have been numerous warnings and ominous threats reported to have come from different White House sources. The question that will be answered is whether these threats have been issued to lower expectations, or sent to make a wary and cautious Israel and those supporting them within the United States, or actual premonitions of a new tact in American policies pertaining to the entire Middle East.
I have no doubt that the Obama Administration would dearly love to lower the level of support for Israel enabling significant cuts in expenditures supporting Israel, both politically and militarily. This would be a natural extension of President Obama’s plans to emphasize butter over guns. There is a definite push to spend more on domestic agendas while taking the needed funding from military proposals. The canceling of the Raptor F-22 and proposed cuts in a now proven missile defense systems are just the tip of the iceberg. Slashing military support for Israel could be seen as savings in military budgets with little or no pain at home. But that takes the position that Israel is not a needed cog in American foreign policy. Time will tell if changing our alliances will be a boon or a bust in Middle East relations or if it will lead to more violence and possibly ignite open warfare in one of the most volatile areas in the world.
The truth of the matter is Israel still has many supporters in the Washington power structures. These supporters will still have their say and will have some direct influence on whether or not President Obama will be allowed to throw Israel under the proverbial bus. The one reason for keeping some fair degree of influence through continued support of Israel would be to avoid forcing Israel into a position where they feel betrayed and totally on their own. Such a situation could force Israel to take measures that would be counter-productive to American interests, a major one being avoidance of the frictions of the Middle East bursting into the fires of open warfare. If the predictions of President Obama turning America’s back on Israel prove valid, then all bets are off and further negotiations by the rest of the world with Iran over their nuclear program may prove futile. The only view that may end up being crucial regarding Iran and their presumed nuclear weapons program will be the Israeli opinion towards the use of a military solution. There is an old proverb that nothing is more dangerous than a mother protecting her children. In this case, Israel would be that mother and her citizens the children she would protect. As the old threat goes, “We truly live in interesting times.”
Beyond the Cusp
I have no doubt that the Obama Administration would dearly love to lower the level of support for Israel enabling significant cuts in expenditures supporting Israel, both politically and militarily. This would be a natural extension of President Obama’s plans to emphasize butter over guns. There is a definite push to spend more on domestic agendas while taking the needed funding from military proposals. The canceling of the Raptor F-22 and proposed cuts in a now proven missile defense systems are just the tip of the iceberg. Slashing military support for Israel could be seen as savings in military budgets with little or no pain at home. But that takes the position that Israel is not a needed cog in American foreign policy. Time will tell if changing our alliances will be a boon or a bust in Middle East relations or if it will lead to more violence and possibly ignite open warfare in one of the most volatile areas in the world.
The truth of the matter is Israel still has many supporters in the Washington power structures. These supporters will still have their say and will have some direct influence on whether or not President Obama will be allowed to throw Israel under the proverbial bus. The one reason for keeping some fair degree of influence through continued support of Israel would be to avoid forcing Israel into a position where they feel betrayed and totally on their own. Such a situation could force Israel to take measures that would be counter-productive to American interests, a major one being avoidance of the frictions of the Middle East bursting into the fires of open warfare. If the predictions of President Obama turning America’s back on Israel prove valid, then all bets are off and further negotiations by the rest of the world with Iran over their nuclear program may prove futile. The only view that may end up being crucial regarding Iran and their presumed nuclear weapons program will be the Israeli opinion towards the use of a military solution. There is an old proverb that nothing is more dangerous than a mother protecting her children. In this case, Israel would be that mother and her citizens the children she would protect. As the old threat goes, “We truly live in interesting times.”
Beyond the Cusp
Subscribe to:
Posts (Atom)
