Speaking Diplomatically

I have a strong distaste for what we might call "Cowboy Politics." It's one thing to believe that a foreign nation is acting in a way that is adverse to our nation's interest and another to publically call them part of an "axis of evil", for one thing. Tough talk sounds great in movies and, to some extent, presidential debates, but in the end, we live in a world with shades of deep grey in our international relationships. We have to live with the world community when all is said and done - we can't simply ignore or bomb them into agreeing with us.

So, when a top candidate for the Republican Party's nomination calls the Palestinian people an "invented" people[1], he is treading on thin ice. Many countries strongly disagree with the sentiment, including many of the fledling democracies rising from the Arab Spring. Now is the time to be focussing on constructive conversations with the nations risinig from decades of oppressive rule, not to give them more reasons to hate us and shun our counsel.

Some people may decry this as appeasement and too soft a stance - after all, we're the world's only superpower, right? As a student of history, I would respond that nations rise and fall, and our time as the sole mega force may be waning. China and India are certainly on the rise. The Eurozone, though in dire financial straits and unable at present to form a tighter union, is still not to be discounted. Russia still weilds great influence, if dimished from their USSR heights. If we act brashly now, who will stand by us when next we experience disaster, natural or manmade? Make friends before you need them, before it's too late.

If only the politics of moderation were more in vogue - it seems that each of the two major parties becomes more and more polarized as time goes on. Centrist candidates for congress have been thinned by those more on the extremes, thus leading to stalemaes multiple times this year as representatives refuse to compromise. Shooting from the hip and appearing strong do not make us so. Our leaders need to be careful what enemies they make, both for themselves and the rest of us. Gingrich - I ask you to recant and temper your language. If you seriously want the nomination, you must act presidential. That means you must always put the nation's best interest before your own personal whim and desire.

[1] Palestinians Bristle At Gingrich Comments

Disingenuity

I believe most politicians get where they're going by obfuscating the truth. This could include selective truths, omitting facts that run counter to the desired argument. It might be through use of deceptive statistics (e.g. choosing to use percentage versus numerical volume or vice versa - if you say only 1% of Americans it doesn't have the same impact as saying "3 million people", for example). Perhaps they intentionally misquote or take out of context the words of their opponents.[1][2] They might even simply lie.[3]

Yet, politicians continue to bend the truth to try to make their case stronger. The media often buys into it, repeating their assertions and using them as counterweight to opposing viewpoints. Some of this is in the interest of appearing to be non-partisan, but it simply detracts from the level of debate.

It's wonderful that in this day and age we can use sites like Snopes, PolitiFact, and FactCheck, among others, to help sort fact from fiction. However, that requires time and effort. Why go to the trouble of validate all the numbers we hear from politicians, reporters, and the various spin doctors when we can just take their word for it? That's not to mention all the data we receive from coworkers, friends, family, and everyone else we happen to know who got their information from who knows where. We could spend all our time checking facts and never get anything useful done.

The intensity of the arguments I've read about whether or not there actually existed a surplus in the late nineties is remarkable, for example, particularly because the main ones both got their data from the Congressional Budget Office. When two people look at the same data and arrive at different conclusions, who do you believe? Do you trust the person with the right degree? The person who says what you want to hear? How do you choose?

If only there were a way to know whether the person actually believed what they're saying instead of simply listening to them. Certainly, two people might believe completely incongruent facts, or even one person might have a set of beliefs that are not consistent, but at least that way we would know that they're not trying to deceive us.

Then again, is it just as bad to be unintentionally led astray as if it were planned?

Who do you trust?

[1] Lipstick on a Pig had nothing to do with Palin
[2] Governor Perry's calling President Obama a "dark cloud" hanging over the economy is racist?
[3] Jon Kyl claims Planned Parenthood services are well over 90%

In Debt We Trust

How do we avoid default at this stage as a nation? Can the two parties arrive at a reasonable solution that not only gets us past this crisis but also leaves us with a better balance sheet than before?

I just read an interview over at Global Post[1] that makes a lot of sense. Unfortunately, it does sound like a two phase solution would be most fruitful at this stage since tempers are so high after weeks of negotiating. The current proposals by Senator Reid and Speaker Boehner are farther from the compromise solutions than is resolvable in the time we have before default. The markets are already reacting and are likely to continue suffering so long as no clear path emerges.

One proposal I've read about is a clean bill including nothing but a debt limit increase. At this point, there would still likely be bipartisan support for such a bill and it would buy time to continue negotiating the finer points of deficit reduction without the stress of a looming deadline. Is this workable? Perhaps, though as the ratings agencies stated it might still result in a rate reduction and thus higher cost for future borrowing.

[1]Debt Crisis interview

Ready to debtonate

Have you heard of the debt ceiling debates? Yes? Okay - skip to paragraph two. So there's this limit called the "debt ceiling" that defines how much money the treasury can borrow via bond and similar instruments to pay for the programs and spending authorized by congress and signed into law by the president. We keep having to raise this limit because we're spending money faster than we're taking it in. On or around August 2nd we will reach the current limit and then be able to pay for about half of the stuff that we're currently doing without any new borrowing.

The debate has faltered numerous times over the last few months. There are several sticking points, or lines in the sand. Most revolve around a strong desire to reform our country's financial situation as a stipulation for raising this debt ceiling. Here are the two main issues I see at the moment:

1. Tea Party Republicans insist the limit be raised only with spending cuts attached, not with any increased tax revenue from current levels
2. President Obama, Senator Reid, and now Representative Pelosi, among others, want the limit raised enough that we won't have to debate this again before the 2012 election

The first has been a major problem for negotiations. Both the President's commission on the deficit and the recent "Gang of Six" proposal formed by three senators from each of the major parties includes additional tax revenue. When you have a cash flow problem, there are two options - reduce outflows and increase inflows. You can do one, the other, or both.

The second issue means that the volume of the money being discussed is very large, potentially up to $4 trillion over the next ten years. The driving force behind this requirement could be political - not wanting to have this issue come up again closer to the election. It could also be an efficiency argument - why have the same debate multiple times? Perhaps it's also tending on the perfectionist side - let's get the right answer rather than the quick one. In any case, I do believe that it is in the country's best interests to have a broader solution than a hack job, but the partial step is better than nothing at this stage.

In the case of a balance sheet as large as our nations, it's very difficult to choose only one of revenue or spending cuts without significantly changing the playing field. Rather, making smaller changes to both outflows and inflows helps keep the system more predictable and allows us time to see the impact of the changes. Several polls have shown that the majority of U.S. citizens favor a compromise that includes some of both. It really depends on the wording of the question, of course.[1] Still, the polls I've checked have shown that Democrats and independents are largely agree that tax increases should be part of the package. Republiicans are generally more in favor of cut only, but not by a large margin.[2]

How will this play out? In one scenario we could get a debt limit increase with only minimal cuts and some ongoing debate on the overall debt. In another, the negotiations that have been underway somehow reach a compromise in time for a vote before the deadline. It's also possible that the limit isn't raised in time and some payments stop going out. The investment world is getting more and more worried about this third option if quotes from economists and fund managers are any indication. Legislators are scrambling over the weekend to come up with something solid to avoid a massive negative market on Monday.

Can they do it? We've seen eleventh hour deals already this year and might be able to get one again. Still, you won't find me playing Russian roullette any time soon.[3]

[1]Poll divide

[2]CNN/ORC July 18-21 poll

[3] "The Tea Party is effectively playing Russian roulette with the bond market and they will, with certainty, lose," said Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies & Co. Jefferies is one of 20 primary dealers that trade with the U.S. Federal Reserve.

A perspective on death

I'm guessing you've heard that Osama bin Laden is dead. What does this mean? What comes next? How do we react?

As we just celebrated the Jewish holiday of Passover, a quotation comes to mind. After Pharoah's army was drowned in the Red Sea, the angels began to rejoice. The Almighty chided them, saying, "My creatures are dying and you're singing songs!"

Note, though, that this reprimand is not directed at the Jews who are also celebrating on the far side of the banks. I see this as a distinction in what is being celebrated. On the one hand, the angels have the perspective to see the event from an uninvolved position. It is their responsibility to take the good of all into account. The Jews, on the other hand, are celebrating their freedom and the inability of their former masters to take it away from them.

So - are we the angels or the Jews in this story? Or are we some of both?

As for how the world will respond, I predict this will make the odds of a Republican presidential candidate beating President Obama nearly insurmountable, barring an event of the magnitude of Katrina or a double-dip Great Recession. I also predict a small contingent of conspiracy theorists who will be reported on, of course, since they make the event seem controversial in a way that makes modern media salivate.

Pakistan will face many questions, some insightful and some downright silly, over how bin Laden could have be hiding so close to a training base. My coworker rightly points out that, perhaps, there are a great many fortified mansions in Pakistan given the tribal war lords common in politics of the region. Perhaps the Pakistani intelligence even provided critical assistance in the gathering of knowledge and planning that led to the raid. We as civilians will likely never know the truth.

In the meantime, let us not rejoice in death but rather in a respite from the slavery of hatred. Perhaps it will be short lived though I hope it will lead to an end to hostilities on all sides.

In peace,
Adam