Weekly Letter to President Obama
Copyright © 2010
ofthisandthat.org. All rights
INAUGURATION, January 20, 2009
Drunk in its stale air
For two hundred years.
Fettered in mind and body,
The soul, the safe escape
To let me breathe the cries
Of my heart singing
Tears of mel-an-choly.
The tears flow free today
Washing the stains of blood
And sweat in brotherhood.
Raise the curtain then an'
Let the world look in
On this promised land --
We breathe free today.... almost.
--- Arshad M. Khan
We will be known forever by the tracks we leave.
--- Native American proverb
January 2, 2015
Mr. President: A happy new year to you and your family.
The holidays are over and people are back at work. In Germany, they have twice the
holidays, a half more higher wages and better benefits, yet still manage through
quality and innovation to be a leading exporter of manufactured goods. We export
German companies are required to have equal labor representation on their
governing boards where critical, strategic decisions are taken, and workers'
representatives do not allow their own jobs to be spirited abroad at the cost of broken
lives and a hollowed out economy as in the US. The high levels of inequality here,
worse than some developing countries, is the unfortunate result.
However, the eurozone is now expected to slide back into recession. At its Fall
summit, the IMF conceded its forecasts since the financial crisis have been
overoptimistic. While far from the 4 to 5 percent postwar boom of the fifties, the days
of 2 to 3 percent growth enjoyed by advanced economies for the three decades prior
to the 2008 crisis are gone. We have entered an era of 'secular stagnation'; in other
words a fundamental structural defect. But here's a question: if the populations of
most advanced countries is stable to falling, why should we have perpetual growth? If
the earth is a finite resource, when will enough be enough?
The stock markets, however, continue their bull run fueled by central banks,
particularly the Fed, throwing money out like confetti. Yet the seeds of the next crash
might already have been sown. In the December budget bill was a provision allowing
banks to trade risky credit default swaps using FDIC insured deposits. While swaps
constitute a very small percentage of total derivative trading, it still leaves the
taxpayer exposed to about $3 trillion, and the banks are freer to gamble knowing the
ultimate responsibility for unpayable losses has been transferred to the public. It was
a provision heavily lobbied for by Jamie Dimon, the head of JP Morgan Chase, who
has been frequently complimented by the president. His successful lobbying effort
means credit default swaps will no longer be subject to the Dodd-Frank Act's 'swaps
push-out-rule', which had required banks to set up uninsured (by FDIC) subsidiaries
to conduct their speculative trading.
Among our wars of choice, the most dangerous has been Ukraine. Which was a
bigger prize to integrate into Europe ... Russia or Ukraine? We have chosen Ukraine,
organizing a coup, threatening a NATO presence on Russia's doorstep. The
subsequent events have lost Crimea, destroyed the Donbass region creating
hundreds of thousands of displaced persons many seeking refuge in Russia, with no
end in sight. Congress voted to send US weapons to the Ukraine government to help
recapture the east. More killing. Question: Will Mr. Putin sit back and wait? He has
been cautious and effective. Will he now be pushed into accepting Donbass into
Russia as with Crimea? So far he has avoided the hassle but if the Ukraine
government wants to play Georgia, perhaps the Russian army will oblige.
We, the poor citizens of the 'good ol' USA', who used to think the threat of nuclear war
was long gone, are being forced into a confrontation with Russia thanks to neocons
gone wild. Meanwhile, the Russians who tried so very hard to play ball with the west
(even to the extent of permitting and accepting Libya's destruction) have started to
look east towards the world's largest economy (purchasing power parity terms).
China need Russian gas to abate the world's worst pollution in cities affected by
coal-burning. Its rising middle class demands a cleaner environment. Given the
deals signed by Russia, will 2014 be remembered by historians, a decade or so
hence, as the year when the Russian economy became synthetically embedded with
the east? Then the question will be who lost resource-rich Russia.