Let the Appeasement begin

Oh, how history repeats itself.  I just read an article that stated President Obama suggested a deal to eliminate the proposed missile shield deployment in the Czech republic and Poland for help with Iran’s nuclear program.  WHAT!  Why would one do such a thing?  Actually, I think I know why but that is not the point.  The key here is judgement.

So the new administration has decided to make a deal with the devil… I mean the former Soviet Socialist Republic.  As we know, the best indication of future behavior is past behavior, so what can we expect?  Well the last time we had a significant relationship with this government was prior to the second Iraq war.  Remember the whole “Oil for Food” program scandal?  That’s the one where both Russia and France set up intricate webs of companies and individuals stretching from Europe to Asia in order get money from Saddam.  Going back a little in history, one might recall the fact that we spent a significant part of the twentith century in a nuclear standoff with this communist nation.  From the 60s through the early 80s, Americans were inclined to build bomb shelters because of this new “partner”.   During the cold war, the missile shield was the one thing that got a reaction out of the Soviet regime.  Have they changed?  They still sell lethal weapons to many of our enemies as well as nuclear secrets to Iran.  Russia has had a nuclear cooperation agreement with Iran since mid to late 2002, allegedly for a civilian reactor.  Do you trust either of these two parties?

Let’s look at Iran for a moment.  A country who’s government absolutely hates the U.S. and would seize any opportunity to get the upper hand on Israel.  Now that the U.S. is making deals with Iran through Russia to reduce our influence in Europe.  Such a deal proposed by the Obama administration would be perfect!  Isolate Israel, reduce influence in Europe, and reduce influence in the Middle East.   

One field of engineering involves controls and control networks.  We seek to design systems that require single degrees of control or Single Input Single Output (SISO) control networks to reduce the complexity of the control network.  One thing you always try to avoid are control problems with two or more degrees of freedom that cannot be decoupled.  A U.S. deal with Russia to control Iran is exactly that, an impossible control problem.  Decoupling a relationship between Iran and Russia when money and nuclear materials are involved sounds nearly impossible to me.  Additionally, like the appeasement  deals of the past between the free world and Stalin, a single deal with a regime like the current one in Russia or Iran alone is ill advised.  With two degrees of America hating, we are guaranteed to loose!

GREAT DEPRESSION

The news regarding the proposed stimulus plan is depressing.  The president has said: 

” failure to act on an economic recovery package could plunge the nation into a long-lasting recession… if we don’t move swiftly to put this plan in motion, our economic crisis could become a national catastrophe.  Millions of Americans will lose their jobs, their homes, and their health care.  Millions more will have to put their dreams on hold.. [it would be] inexcusable and irresponsible to delay this economic recovery legislation..  The bill before Congress isn’t perfect, but it is absolutely necessary…”

So let me see if I got this right, The federal government is choosing to spend my children’s money on pork to solve a perceived problem.  The money has to be spent now!  We don’t have time to debate the fundamentals of what the money is to be spent on or how it will be spent or look at long term effects.  We are told a select group of government hired economist have shown, using models allegedly adapted to our current situation, that we are headed for a great depression if we don’t act and act big.     

Does anyone besides me see the massive problems with this string of underlying assumptions?  Lets look at the first assumption in this chain.  They have assumed that they are the only ones capable of solving this problem.  The current package is the equivalent of giving just shy of $3000 to everyone in the country.  Why not do that?  At this point I would rather give$3000 to some not paying taxes in stead having a group of politicians come up with a nonpartisan spending package.  A package that includes giving $1B to CDBG,which would directly flow to ACORN.  Or give $4B to Rezko like slum lords for renovations.  After the President’s failed experience in Chicago, I am surprised to see stuff like this in this stimulus package.  I don’t understand why no one has a problem with this unfocused redistribution of wealth.  Just give us our money back!  So what if we pay off credit cards with it, half of us will become more comfortable buying that new car or HDTV.  The other half will actually pump it back into the economy.  It looks to me like the President wants to use this crisis to pump money back to all those that helped him get elected.

The second assumption is that we don’t have time to debate the fundamentals.  I hear Obama stomp his feet and imply that because he won the election he has an referendum to do as he pleases when he pleases.  I guess this includes picking and choosing who he listens to.  Have you noticed that the actual group of “sky is falling” economist are never named.  The model they are using is never mentioned nor the assumptions for their predictions.  I had a great visiting professor in a Sloan course named Dr. Ralph Katz .  He said and I have always found it to be true, “If there is one thing you know absolutely for sure, its that a prediction or estimate will be wrong.  How wrong is a function of the knowledge and competence of the estimator.”  Well I have a great deal of uncertainty given that it appears to me that the administration has failed show “transparency” here.  It also does not help that the bailout funds, yeah remember those, have been absurdly mismanaged.  The government doesn’t know what nearly half that money is being used for.  It also does not help that the congressional budgeting office (CBO) has said that a such an unfocused stimulus (spending)  package will actually hurt the economy .  Why are we in such a rush.  I feel like someone is trying to sell me a $800B+ used car.  What’s an extra two weeks to sort things out?  Any bells going off out there?

The third and perhaps most important assumption and error with President Obama’s rhetoric regarding the stimulus package is that he thinks “…a stimulus bill, is a spending bill.  What do you think a stimulus is?”  What an ignorant statement!  You don’t stimulate the economy by moving money around, which is essentially what this bill does.  Stimulus implies that by spending, or better yet investing, a higher economic output is achieved.  I know of no example of this but imagine that government money could be used as a catalyst to foster private investment and thus inspiring higher economic output.

We are having a horrible bill RAMMED down our throats by a bunch of political rookies.  If you don’t know what is in this stimulus plan then you are not fulfilling your patriotic duty to stay educated.  In the first three weeks all I have seen from the administration is disarray.  They call press briefings and are late, they nominate tax cheats and lobbyist for cabinet positions and recant campaign promises of transparency.  Well America you asked for change, now you got it.  Open wide and get ready to eat whatever Nancy Pelosi, Harry Reid, and the administration are serving.  Oh yea, and keep a journal so you can explain to your children why they must endure the same experience.  Wouldn’t this be considered taxation without representation… that’s another post.  The only way I can stay sane is to think that if enough people get up off their mental couches and look at this, we can assist our rookie politicians.  Or are there just that many stupid, brainwashed, lazy, or subsidized people out there.

Reference

In order to determine how well we are doing under President Obama we must have a reference of where we were on 19 January.  We were at roughly 7.2% unemployment,  oil was selling at about $40, interest rates are in the 5s, and we have been relatively safe from terrorism for the last 4 years (duration chosen to coincide with presidential term).

The pic is a snapshot of the dow over a period around the inauguration.  The DJIA was around 8275 or so just before the opening bell on the 20th of January.  There is no time to mention every metric one could find to mark the state of the union but you get the picture.  We must know where we are in order to determine if we are doing better or worse in the future.

Just out of curiosity, do you know anything about the first actions of our new executive?  You can read a little about two of them here.  When you actually drill down into each of the orders and memorandum he signed, it does not appear they actually direct immediate change but do signal to others, both in and outside our boarders, where he would like to go with respect to  Guantanamo Bay and abortion.  He also instituted new limits on lobbyists and froze the salaries of some aides and attempted to improve transparency in government.  More words than anything with real teeth at this point.

Happy New Year – Now lets turn some things around

Last year was a rough one and this year is loaded with tough decisions for our legislators.  One thing is for certain, they must do better than last year.  I read an editorial a couple of weeks ago complaining that congress did little more than rename a bunch of post offices.  Just out of curiosity I decided to go to Thomas and search all bills passed by the 110th congress to find out just how much real work was done.  The first thing I learned is that they passed less legislation than those before and of the bills passed in 2008, very few actually made a difference.   I find it a little hypocritical that Congress would spend so much time grandstanding and complaining about CEO bonuses then turn around and vote themselves a raise.  A raise for what I ask?  For passing less legislation, less relevant legislation, spending less time in DC?  All while their constituents are loosing jobs or taking pay cuts.   If congress were held to the same standards they attempt to hold “big business” to would they get a raise?  One would expect that considering the country is still at war and in an economic crisis that they would be a little busier.  From what I remember, of the 350 bills or so that made it into law, over 150 were naming buildings, streets or waterways, over 50 were fixing minor technical problems with prior bills, and 20 had to do with minting special coins.  I could only find 50 or so that actually made a difference to a significant number of people.  If you added up all the congressional salaries our tax dollars pay and divide that by the number of real bills passed you will get a representation cost per bill.  In order to get an actual number you would have to make a number of assumptions that we may or may not agree upon.  Regardless, I’ll bet you that a CEO of a major corporation and the board of directors would be fired for similar performance.  Well, there is a bi-annual review coming up in less than 2 years, hope they turn things around.