Continued Legacy of the War on Terror

This week, a Sunni jihadist group, the Islamic State of Iraq and Syria (ISIS), stormed the cities of Mosul and Tikrit while ill-prepared Iraqi police and military dropped their weapons and retreated. Taking advantage of their success, ISIS continued its drive by instigating sporadic attacks using weapons seized from Iraqi military installations that were once held by US military units.

Since the US withdrew from Iraq in 2011, violent attack on civilians and military installations have increased. The ISIS conquest is a reflection of the popular discontent that Sunni Muslims have for the central government under President Nouri Al-Maliki. Al-Maliki, a Shia Muslim, has put no effort into welcoming Sunni Muslims into his government. His government has faced blistering criticism from his blatant attacks on Sunni members of Parliament, including an incident where a Sunni MP was arrested at the request of the administration. He has also faced charges of corruption and nepotism.

The ISIS action is reflective of a larger legacy that started with the second Bush Administration and inherited by the current administration. The so-called "War on Terror" has transformed geopolitical conflict across a vast swath of land from the Middle East to Africa to Eastern Europe. ISIS is one of many groups that were formed to take advantage of unstable regimes to spread their jihadist message. Here are some regional highlights:

• In Africa, groups like Boko Haram in Nigeria and Al Shabab in Somalia have carried high profile acts of terror that have left hundreds dead or wounded. Boko Haram continues to be a thorn in the side of the Nigerian government as it continues its attempts to rescue over 200 school girls kidnapped by the group.  
• A sustained rise in extremism in former Soviet territories led to one of the worst attacks on US soil since 9/11 - the Boston Marathon bombing. Fighters from jihadist groups in Uzbekistan, Turkmenistan and other Eastern European countries have joined the fight against Assad in Syria and have joined up with groups in Yemen to attempt to topple the government. 
•  ISIS has been considered so extreme that even elements of the rebels fighting Assad (who are aligned with Al Qaeda) have decided to fight them in addition to battling the government. ISIS continues to impose its extremist views on areas it controls in both Iraq and Syria, including carrying out executions for apostasy. 
• Western governments are facing the terrifying reality that those who were radicalized in their home country and decided to join the extremist side in Syria might return with those views. Belgium experienced its first incident when a French-born jihadist who had been fighting in Syria killed three people at a Jewish Museum. 

The War on Terror has grown exponentially in scope from its inception as a way to find and uproot the terrorists who were responsible for the 9/11 attacks. It now extends from the former fiefdoms of dictators in the Middle East to the skies over Yemen and Pakistan to the streets of Boston and Benghazi and the Museums of Belgium. The US and its allies must maintain a military presence in order to ensure that the fledgling democracies in areas once controlled by dictators (including Sadaam Hussein) do not slip into complete chaos. It is through that necessity that the War on Terror continues to proliferate. 

The War that Will End War - 100 Years On

In 1914, Author and Commentator H.G. Wells published a number of articles in London newspapers that eventually ended up in a anthology called The War that Will End War. In his commentaries, Wells blamed the Central Powers for instigating World War I and that their defeat and a stop to German Imperialism would bring about the end of war. The statement was picked up by Woodrow Wilson as a way to characterize both the effect and brutality of WWI.

Industrialized warfare and the destruction of entire generations left the United States questioning its exposure to Europe. Entangling and anachronistic colonial alliances brought world powers into a intractable conflict that only led to mass slaughter. Two months after sending the military into Europe, President Wilson lamented the colonial ties that created the conflict and appealed for a settlement and a "peace without victory."

WWI introduced the world to mechanized warfare. The human element was washed away under the repeated firing of machine guns, the explosions of grenades and tanks, the sickly smell of mustard gas and the anonymous destruction brought by the millions upon millions of artillery shells fired and bombs dropped on either side of the endless labyrinth of trenches. Trench warfare was a zero sum game where one side gained ground only to lose it again.

The kinds of experiences that soldiers brought back from the front lines scared and appalled the public. The president who had won re-election on keeping the United States out of the war had to head overseas to negotiate its end. In the short time that the US took part in WWI, it sustained over 320,000 casualties. In all, casualties from the war topped 37 million.

Out of the conflict came a framework and a start to the end of total warfare. Wilson, with the backing of the country, went to Paris to negotiate a peace. Wilson's 14-points included some of the most innovative and progressive post-war solutions that still hold as much legitimacy today as they did 100 years ago. Ideals like freedom of the seas, self determination for all countries and the formation of a unified body of peacekeeping countries were all included in Wilson's plan.

But, much like the war dead, his points became victim to colonial revenge and entitlement. Britain, France and Italy all exacted revenge on the Central Powers by slapping Germany with $300 billion in reparation payments, sending its already tattered post-war economy into a tailspin. The rise of extreme nationalism and Nazism can be directly connected to the effects that the war debt had on the country. While the US-made Dawes Plan tried to strike a compromise for repayment, the extreme deflation of the Deutschemark had done enough damage to the economy.

Despite the toll of the war, the roots of peace and open trade were fostered in Versailles. The League of Nations was created, which eventually spawned NATO and the United Nations. The Allied powers worked together to pass armament reduction treaties which included the Geneva Protocol banning chemical weapons and a limitation on the number and size of warships. The Allied powers also signed the well-intentioned, yet ineffective, Kellogg-Briand Pact which renounced war as an instrument of national policy.

Wilson, who failed to get the United States Senate to ratify the Treaty of Versailles, tried to sell the League of Nations to the people. Opponents of the League of Nations, the "Reservationists" and the "Irreconcilables," fanned the flames of isolationism and the loss of American sovereignty. They only had to point to the violence of the war and the "pound-of-flesh" that colonial powers exacted from Germany to turn the Senate against the treaty. Wilson's uncompromising push to include the US in the League of Nations blinded him to the less controversial points of his plan and he eventually sold them away only to see the US turn towards isolationism and anti-European sentiment.      

100 years on, the effects of the Treaty of Versailles that ended the war are still pervasive. The rise of National Socialism, the beginning and end of the Soviet state, the Great Depression, the United Nations and Middle East conflicts can all trace their roots back to the splitting up of the Central Powers' colonial holdings after the war and the investment that the US made in European powers to rebuild their post-war economies. Borders were drawn without regard to ethnic, racial or religious ties, leading to future conflict. Post-war investment in Europe employed for debt repayment instigated the beginning of a World Depression.

On the Centennial of the Great War, Europe and the US should return to some of the lessons of Versailles and the messages ingrained in the 14-points, especially when current conflicts reflect both the legacy and the failure of the treaty.

Hobby Lobby, et al vs. Its Employees

Next week, the Supreme Court will take up the next challenge to Obamacare - Hobby Lobby, et al versus the Contraception Mandate. At the center of the their argument lies one dangerous point - do corporations have religious rights? Hobby Lobby, et al argues that the contraception mandate violates their corporate religious conscience. If the Supreme Court were to rule in their favor, it would have wide-ranging consequences.

The right to free exercise of religion, enshrined in the first amendment, was created to ensure that the government or some sort of governmental entity (local, national, state, etc) does not favor or impose on its citizens one religion over another. It is the great equalizer when it comes to free expression of religious values. Corporations do not have the characteristics of an entity that would be able to express religious beliefs. As Davis Gans wrote in the LATimes this week - corporations do not express religious sentiments, no matter what form they come in. Corporations do not pray, they do not show devotion to a higher power and they do not have religious conscience. The major characteristics of a corporation, like limited liability and the going concern (unlimited life) make it characteristically (and legally) separate from the owner. To apply this religious protection to a secular, for-profit corporation would, as David put it, simply make no sense.

Beyond religious rights, the case will also tackle whether or not corporations have the right to impose their beliefs on their employees, and as a result restrict their access to federal programs that conflict with the owner's religious inclinations. Hobby Lobby, as Gans points out, is a large corporation that hires from all faiths, and to deny any employee access to contraceptives if access to such services do not conflict with that employees faith is, in my opinion, a violation of their rights.

If Hobby Lobby, et al. gets a favorable ruling, who would protect employees from being retaliated against for using services that are in conflict with the corporation's "religious conscience?" Could an employee be fired to not complying with religious-based directives from upper management? These questions must be considered when weighing the rights of Hobby Lobby's employees against the religious inclinations of the owners. Moreover, the Supreme Court should not extend religious rights to the corporation.

End of the Bernanke Era

Early next year, Ben Bernanke will step down as Chairman of the Federal Reserve Bank and for the first time in its nearly 100-year history, a woman will take his place. Janet Yellen, Berkeley Professor, and former president and CEO of the Federal Reserve Bank of San Francisco, will be handed the reins of an economy in recovery. After clearing the Senate Banking Committee on semi-bipartisan lines, she will be in charge of a Fed that has seen increasing scrutiny and calls for transparency (and abolition - see Ron Paul).

Bernanke's tenure mostly involved facing down the worst recession since the Great Depression. His time was marked by both the unprecedented steps he took to avoid a bigger financial catastrophe and the tools he employed to foster a (albeit slow) recovery. Under his watch, the Fed became more well-known and transparent body, even if pronouncements about the economy remained purposefully vague. In other words, the power of his words moved markets.

Bernanke presided over:

• TARP (Troubled Asset Relief Program, AKA the "Bank Bailout") - Close to $450 billion paid to ailing banks to prop up their balance sheets after disastrous sub-prime mortgage market collapsed. To date, the return for taxpayers has been about 97%. 
• Freddie/Fannie - Fed took control of Freddie Mac and Fannie Mae after they nearly collapsed over their low capital reserves and high amount of liabilities related to defaulted home mortgages. 
• Federal Support of the Auto Industry (AKA, Auto Bailout, or Government Motors) - financial support for a failing auto industry. This program, which was approved by the Bush Admin, injected $25 billion into the ailing auto industry, mostly to the "big three" - GM, Chrysler and Ford. It was highly successful it making the companies profitable and all lines of credit extended have been paid back. 
• Quantitative Easing (AKA, QE or Operation Twist) - Traditional monetary policy (keeping interest rates near zero) was not enough to stimulate the economy or grow employment, so the Fed decided to buy up government bonds to lower market interest rates. At the moment, QE3 involves buying up $85 billion/month. 

The significance of the steps that Bernanke took are embodied in both their immediate impact and their legacy. The policies, while necessary in staving off the worst effects of the recession, have left the recovery on such a dependency that any hint of easing monetary reforms have led to isolated market shock. Politicians and financial professionals have long held that bailing out institutions has brought an issue of dependence - if a bank can depend on a bail out even after risky, isolated behavior that does not benefit the public, there is no incentive to curb such activity. It is the quintessential problem that has defined "too big to fail." 

It will be up to the new chairwoman and the Fed to guide new policies on the risky behavior of banks. But, more importantly, Janet Yellen will have to make measured judgment about how and when to taper QE in a way that does not throw the US and the world back into uncertainty and recession. 

Guns, Democracy and Rule of Law in CO and NY

Guns, and the right to own them, is an American tradition, enshrined in the Constitution and upheld by the Supreme Court. The National Rifle Association rivals the American Medical Association and the AARP in it's lobbying power and spending. Bombastic language around revolutions and the supposed surreptitious government takeover of arms have been the justification for a massive stock up of weapons during the Obama Administration. At the fringes of the gun culture, the Administration has been compared to Nazi Germany.

Gun culture in the purple state of Colorado and the staunchly blue state of New York has created anti-establishment heroes out of law enforcement agents and the recall of state legislators. In Colorado, the passage of gun control laws instituting universal background checks and limiting the size of high capacity magazines to 15-rounds (size of clips that CO police carry) have led to recall efforts against Senate President John Morse (D-CO Springs) and Senator Angela Giron (D-Pueblo). In NY, Sheriffs and gun owners in rural, conservative parts of the state are refusing to comply with the Safe Act, the country's strictest gun control law which bans the sale of assault rifles and banana clips.

Colorado Recall

The Colorado recall effort is a waste of taxpayer money. But, more dangerously, it is a perversion of the Democratic process. The gun owners who started the campaign to recall the two Senators say that the legislation passed is a violation of their second amendment. Besides the fact that these people are highly unequipped to judge the merits of the law via-a-vis the right to bear arms, they are turning democracy in the state into an Egypt-style "boot the unpopular dictator" out because they did not get their way. One of the primary criticisms of the coup that ousted Mohammad Morsi in Egypt was that it delegitimized democracy. If you elect someone you don't like, just oust them by force or recall (in this case).

There is an appropriate time and place for recall efforts. Just because a legitimately elected official does not vote in congruence with a specific ideological orthodoxy does not mean they should be recalled. Recall should be reserved for nearly the same reasons as impeachment: high crimes and misdemeanors. In Democracy, the way to influence the policy direction of your state or country is purely through the ballot box during elections. In this case, the best way to ensure that gun rights are preserved is to challenge the law in court, not recall the people who wrote it.

New York - Safe Act

The New York Safe Act controversy is purely political grandstanding on the part of Sheriffs. Six sheriffs in northern counties of the state have flatly refused to enforce the law. Some, like the County Sheriff in Eerie County, call it an act of civil disobedience. Much like the Colorado gun owners, they believe it is violation of second amendment rights. Their constituents, who hate the law, voted them into office, so they must oppose the law too.

The simplistic calculus that the Sheriffs have applied leads to the worse violation of the oath to protect and serve - enforcement of the law. If a law is passed in the state, it is the duty of the Sheriff (and police) to enforce the law, no matter what their personal feeling are on the matter. Not only must they enforce the law, but they should be obligated to require that every sheriff and anyone responsible for law enforcement at every level enforce the law.

Let Experts Handle It

Those who oppose the new gun law restrictions, whether they are constituents of State Legislators or County Sheriffs, should allow the laws to be reviewed for their constitutionality. Once challenged in federal court, these laws will most likely be found unconstitutional. That duty is left to the courts and judges who have the expertise to apply judicial review to these laws. Assuming you have the authority to judge the law on its constitutional merits and acting on that judgement, especially if you are responsible for upholding the law, is a perversion of Democracy and the justice system.

Are They Ready for Democracy?

In 2009, the UCLA School of Public Policy held a panel on the politics and environment in the Middle East. The panel, made up of mostly academics from the school, was asked about the future of Middle East politics. One Adjunct professor made a remark about the rising tide of discontent among regular citizens. She said that we can speculate on a macro scale, but the environment on the ground, in the streets and in the mosques is much different. And, that is something we needed to pay attention to.

To say she had a crystal ball would be an understatement. In the last 4 years, the Arab world has experienced uprisings fueled by the desire to popularly elect leaders. The reaction of governments in the countries besieged by calls for democracy have ranged from immediate reforms (Morocco, Jordan, etc.) to civil war (Egypt, Libya, Syria, etc.). A 3-year civil war in Syria still rages on, with civilian and combatant casualties reaching over 100,000 and millions displaced.

While some of the countries have avoided long, drawn out conflict, the ones who have displaced their leaders by force (Tunisia, Egypt, Libya) still face an uphill battle towards full institution of a popularly elected government. And the ongoing civil war in Syria presents an age-old conundrum of choosing between the protection of civilians and democracy and the possible arming of future enemies.

Beyond the regional issues created by the Arab Spring, there remains a burning question about the Middle East: Are the countries of the Arab world ready for a Democracy?

Egypt

Egypt remains the most volatile of the Arab Spring countries, post-revolution. The Egyptian people popularly elected a government represented by the supposedly moderate Muslim Brotherhood, under the leadership of Muhamed Morsi. As the interim government rewrote the constitution and installed a Parliament, the Military moved aside and allowed for a peaceful transition of power. One year later, in response to another popular uprising, Morsi was deposed by the Military and the Parliament was dissolved. Morsi, who had promised a government that would represent the people who had struggled under the yoke of former president Mubarak, did the exact opposite. He installed Brotherhood members to cabinet positions and pushed aside secular opposition parties.

What is most disturbing about the plight of Egypt is that those who voted and elected Morsi will not see the Democracy as a legitimate means of governing. The consequences of electing an unpopular leader in a Democracy should always be resolved through the ballot box. In Egypt, that is not the case. The current environment bodes unfavorably for a country struggling towards a peaceful resolution. As Morsi supporters hold demonstrations (some peaceful, some not), members of the police and military fire live rounds into crowds, killing both the armed and the innocent.

Syria

Syria presents the Obama Administration with a conundrum: armed support of rebels against the Assad regime may lead to weapons falling into the hands of groups connected with terrorist organizations. A couple of the more effective rebel groups have already pledged allegiances to terrorist groups working in the Arabian Peninsula. This trade-off seems almost irrelevant when considering the amount of bloodletting and acts of barbaric savagery that have been perpetrated by both sides. But, taking the short view in a humanitarian crises only works in complement to the long-term perspective. And, the prospects for having a stable country following the end of the Civil War are low.

Democracy in Syria will never take hold because sectarian loyalties have crossed international borders and seeped their influence into the conflict. Iranian military units, Hezbollah militias and Russia have provided weaponry and support for the Assad regime and the Brotherhood, Qatar, Saudi Arabia, Jordan, Turkey and the Emirates have stepped up financial support for the Rebels. Syria has become less of a opportunity for Democracy and more of a laboratory for testing the extent of sectarian influence in the region.

Common Threads - Tyranny of the Majority

The Egyptian and Syrian conflicts represent a common threat in the region - uprisings, whether they supported by sectarian regimes or a result of popular protests, will not spawn a peaceful transition of power unless there is an assurance of complete representation. In the Federalist Papers, James Madison warned against the "Tyranny of the Majority" as an obstacle to the creation of a Democratic Republic. "Different interests necessarily exist in different classes of citizens. If a majority be united by by common interest, the rights of the minority will be insecure." Creating a will, or a central form of power, according to Madison, is the instrument of governments ruled by "hereditary or self-appointed authority" (Egypt pre and post-revolution).

It is only when you create a government that is represented by a variety of viewpoints, whether they be secular or religious, you foster the seeds of a representative democracy. In Egypt, secular and Coptic representatives were pushed aside for a largely Islamist government. Instead of voting that government out, protests led to a military overthrow. In Syria, a splintered Rebel group backed by Sunni-majority countries is fighting a regime backed by Shiite-majority countries. These conditions will only lead to either the installment of a self-appointed leader (Egypt) or the continuation of sectarian violence that has plagued the Middle East (Syria). In both cases, Democracy is far from certain.

Policing the World In a Nutshell

American foreign policy, when it comes to foreign intervention in conflict zones or war torn countries, is deeply rooted in a mentality established at the turn of the 20th century. In fact, one can argue that interventionism has its ultimate precedent not in American adventurism overseas, but the protection of our Manifest Destiny in our own, domestic sphere of influence.

If you don't like a history lesson, go to the bottom of the blog post...

President James Monroe penned the Monroe Doctrine in in 1823 as a veiled threat to colonizing European nations that they could not set up camp in United States' territory. While both sides claimed victory in the War of 1812, the United States emerged from this era (The Era of Good Feeling, as it has been called) with a sense of birthright to the entire continent, and no matter how powerful a colonial force was, we could muster the might to defeat them. We had beat back the British twice (debatable), stared down European impressment (kidnapping of US sailors) and even took out some Barbary pirates ("shores of Tripoli."). In summary, we had a big head about ourselves. 

Fast forward eight decades later, President Theodore Roosevelt (TR) updated the Monroe Doctrine with the Roosevelt Corollary. Deeply rooted in a policy of International Progressivism (not the progressivism of this era, although there are some similarities) expanded the US "sphere of influence" to include South America. In TR's humble opinion, chaos caused due to recent interventions in South America by European colonials seeking payments from debt heavy countries lead to hemispheric disarray. If the US was the arbiter of regional disputes and protector of the Western Hemisphere from wandering Europeans, all things would remain calm. Like former president William McKinley, TR was a fan of Alfred T Mahan and his book The Influence of Sea Power on History. He mixed the need for naval bases and international trade (as the book instructs) with Progressivism to create a foreign policy that helped user the US onto the world stage militarily and economically. 

During McKinley's presidency, the US declared war on, and defeated Spain. In doing so, the US received temporary control over Cuba and the territories of Guam, Puerto Rico and the Philippines. TR, against his own aversion to chaos, agreed (early in the 20th Century) to foment a popular revolution in Panama to obtain the land to build the Panama Canal. TR also employed JP Morgan to intervene on Venezuela's debt problem with Germany (and other European nations) and negotiated the peace treaty between Russia and Japan (after the defeat of Russia in the Russo-Japanese War) in front of the US Navy in Portsmouth Harbor (he won a Nobel Peace Prize for that one). All of these events cemented the role of the US as both an expansionist power and a believer in interventionist foreign policy if there was a benefit or threat to the country. 

Subsequent presidents, from Taft to FDR would have to deal with the consequences of being involved in South America, Philippines and eventually Europe. President Taft used Dollar Diplomacy to exert US military might to protect trade routes (rooted in Roosevelt Corollary), Woodrow Wilson used his "14-points" to form the League of Nations (the US did not join), President Coolidge became the first president to visit Cuba, Allied powers passed the Kellogg-Briand Pact outlawing war (that went well), went through an era of isolationism and eventually intervened in Europe to stop Nazism and in the Pacific to stem Japanese Imperialism. 

During the Cold War, the US viewed the world as split between the powers of Freedom (The US and European Allies) and the evil, monolithic, socialist states led by the Soviet Union and China. Foreign policy during this era was represented by proxy wars of various sizes and clandestine operations under the guise of Gunboat Diplomacy. We intervened with military might or CIA operation to stymie the supposed spread of socialism and the "falling of the dominoes" in Europe. If socialism was able to get a foothold in Europe and South America, the rest of the world would fall like dominoes. This kind of foreign policy was challenged by two dilemmas: Was a socialist leader was a nationalist (Titoism) or were they part of the evil empire (Soviet Union, et al)? How can we harmonize our need to foster democracy when a democratizing state turns to socialism?   

After the fall of the Wall, interventionism was used again to protect national security and, in some cases, as a moral imperative. During the H.W. Bush administration, we intervened in Kuwait to stop Saddam Hussein. During the Clinton Administration we sent troops into Somalia to capture a dictator and intervened in Eastern Europe to stop ethnic cleansing. We did not intervene during the Rawandan Genocide, which is something that Clinton regrets to this day.  

After 9/11 and the beginning of the War on Terror, the Cold War foreign policy of containment and brinksmanship was replaced (and adapted) to fight against terrorists across the Middle East who had no country of origin. Because the United States was no longer fighting a single state, but groups who passed over borders and blended in with the population, security apparatus to ensure against further attacks translated into nearly unprecedented attacks on civil liberties. While we received international support in ousting the Taliban in Afghanistan (perpetrators of the 9/11 attacks), we did not have full international backing when we invaded Iraq to secure WMDs. 

Why is this important? 

The newest challenge the United States faces in the war torn Middle East is the Arab Spring. It combines all the challenges that past presidents of the 20th century faced when intervening in a conflict zone. Dictators, some who are family of US-backed regimes, are being overthrown by popular democratic movements. While we continue to support the spread of popularly elected governments, by the people for the people, we face a challenge of the rising tide of Islamic extremism. In Egypt, the Muslim Brotherhood, who are fervently opposed to the state of Israel, have taken up leadership positions after the ouster of Hosni Mubarak. In Libya, a NATO-backed removal of Muammar Gaddafi has left a power vacuum.

As of last week, the Obama Administration has decided to arm rebels fighting a 17 month war against President Assad in Syria. As of late, the death toll has been over 100,000 with a confirmation that Assad used deadly Serin gas on his own people. Assad is the son of a military dictator in a country created by colonial powers. The rebels are a mix of moderate and extremist Islamic fighters who are fighting for control of their country. But, if control of the country means the installation of an Islamist state with strict application of Sharia Law, the Administration would be held accountable for another regime that is violently opposed to the US and the existence of Israel. Worse yet, the US might lose control of Syria's deadly chemical weapon stockpiles. 

Obama faces a familiar extension of US foreign policy. It is the age-old trade-off between the support of a populist fight against a anti-democratic regime and the consequences of that support. The Administration must prove to the American people that intervention, even if by indirect military action, both maintains our security and is a moral imperative.

Collective Amnesia About Housing Crisis

The Republican response to the State of the Union was peppered with stale Paul Ryan-esque ideas and uncompromising right wing rhetoric. What struck me most about Sen Marco Rubio's (R-FL) statement was his insistence that the housing crisis was caused by bad government policies. After belching out this gem, he goes on to encourage using a non-discriminating chainsaw to the federal budget.

Congressional Republicans seem to have a collective amnesia about what caused the housing crises. Sen Rubio wasn't even in Congress when the Financial Crises Inquiry Commission released a report detailing the causes of the financial collapse. In short, the housing crisis was caused by a mix of high risk investments, a shadow banking system, the proliferation of complex financial instruments and lax oversight on part of government watchdogs in the financial and housing sector. 

High risk investments were concentrated around the obsession by lenders to package risky, sub-prime mortgages into securities, paying rating agencies to slap a favorable rating on them and selling them to investors, both government backed (Freddie and Fannie) and private (WaMu, BofA, Citigroup, etc.). The shadow banking system refers to a proliferation of complex and unregulated financial instruments, like over-the-counter derivatives and credit default swaps. 

Even after a series of economic crises that led to unprecedented government intervention (Savings and Loan crisis, high level defaults, etc), the government had little appetite for continued oversight. Under the leadership of chairman Alan Greenspan, the housing and financial markets were essentially deregulated. Under these conditions, the derivatives market ballooned to a value of over $600 trillion and companies like Freddie and Fannie had trillions in securities investments with little capital to insure against default. 

The securities that some of the entities held were diverse and numerous in nature. Analysts justified their positive review of these assets by relying on the relatively harmless nature of a few thousand defaults in a diversified portfolio coupled with the assurance from the Fed that the economy was on sound financial footing and could absorb a massive default. Greenspan also instructed the fed to inject liquidity into the housing market through interest rates to further grow a bubble that would inevitably burst. 

In short, this was a failure of both the government through their insistence on not regulating complex financial markets and propping up a bubble. But, it was also a failure of the public financial sector by approving mortgages that were below standard, packaging these loans as securities, giving them positive ratings and not ensuring that some of the investor houses had enough capital. 

But all of this information is trumped by emotion. Sen Rubio knows that government failure under both a Democratic and Republican administration contributed to the housing crises. But, by employing the evil "G" word, people will connect the economic crisis and all of its ills to the current president. 

Politicians from both sides of the aisle have not (or do not want to) connect the dots between slashing spending indiscriminately and its effects on the ability of the government to stave off and discourage the type of disastrous and risky speculation that led to the housing downtown. 

By using government policy as a scapegoat for a event that had so polarized the nation, Republicans are assuring a emotional response to the task of deficit reduction. An emotional response leads to what many on the right like to call "starving the beast." The supposed failure of the government will be used as a means to cut the budget of some essential oversight agencies. This creates a self-defeating cycle that will only foster an environment of further reckless risk taking, negligence and crisis. 

Lost in the Fray of the CT Shooting

Once again, we must attempt to explain why a young man decided to pick up a gun and use it on innocent people. Once against we must try to ask, discuss and debate the merits of gun control and the limitations of our mental health system.

Was he insane? What kind of disorder plagued him? How did he get the gun? What kind of gun? Should we pass new gun control legislation?

But, there is something lost in the fray. Something that makes this situation unique. One simple question must be asked: What about the children?

How can we even begin to explain to a 5 year old that his best friend will not be there tomorrow? They won't have play dates, won't each lunch together and won't see each other on the playground. How can we explain to a class of Kindergarten students that their teacher was murdered?

What the children do know is that a man walked into their classroom and killed people. They know who and they know how. But will they ever understand why.

Happy Constitution Day!

225 years ago, a set of principles, set forth by intellectuals, politicians, merchants and statesman became the guiding principle for the beginnings of a great democracy. This document, and it's written and unwritten principles, have survived war, depression and internal strife, only to emerge as a undamaged pillar for the every growing sense of inclusiveness and participation that defines our countries' evolving governance.

Throughout the last two-and-a-quarter centuries, despots, tyrants, revolutionaries and military juntas have challenged and upended their governments, creating chaos and uncertainty. Those who disagree were thrown in jail, tortured or killed. Religion was used as a tool for oppression and disenfranchisement. When the United States faced a crisis, our Presidents, statesmen and leaders did not abandon our democracy. They debated and discussed how we could maintain a Union. And, they did this by consulting and interpreting the Constitution and the principles therein.

We have proven that key tenets of our democracy, like freedom of the press, assembly, speech, religion and petition are essential for both our survival and our evolution as a country. While many will disagree on how these principles are afforded, they will defend to the end our right to have them. It is a tradition, set in precedence, that is uniquely American.

As Supreme Court Justice Oliver Wendell Holmes said, "the law, wherein, as in a magic mirror, we see reflected, not only our own lives, but the lives of all men that have been"

Post-War America?

Today marks the 11th anniversary of the attack on the World Trade Center. Over 2,700 people lost their lives and and the U.S. was once again mobilized for war. This anniversary is not a time to debate the justification behind going to war in Afghanistan or Iraq. This anniversary is a time for mourning, but also a time for inward looking.

Each passing year, Americans are given the chance to re-evaluate the first major epoch of the new Millennium: The Post-9/11 Era.This re-evaluation should consider something that the Romney campaign has been asking in the last couple months: are we better off? Is our continued presence in Afghanistan a symbol of our enduring fight against terrorism, or an unrealistic nation-building project that will never take hold?  Given the implications of a war on terrorism, will we ever be a post-war nation?

When President George W. Bush stood on the ruins of the World Trade Center, he vowed to hunt down the perpetrators of the horrendous attacks. We searched for terrorists and their sympathizers in caves, city streets, village squares and urban homes. With bomb, missile, artillery and gunship, we collapsed networks and disrupted cells.

That was Iraq. That was Afghanistan.

Now, it's Yemen. It's Somalia. It's Pakistan. It's Karachi, Mogadishu, Tehran, Sanaa and Aleppo. It happens on subways in London and Madrid, hotels in Mumbai and secret compounds in Pakistan. It is disruptive, unstable and unending.

This War on Terror is a misnomer: it is not a war.

Wars end.

Deficits or Jobs, Deficits and Jobs

According to Republican talking points, a high deficit means that less jobs will be created.

According to LSAT Logic Reasoning, when making an argument you have to an unwritten assumption that connects the conclusion (no jobs) to the evidence (high deficit). You can also make assertions about statements through formal logic. For example, if there is high deficits, then there will be no job creation. An equivalent statement would  be the contrapositive, or if there is job creation, then there are no high deficits (or a balanced budget). You can also say there will be job creation unless there is a high deficit (taking the double negative of "if not high" to mean low or balanced).

Republicans in Congress and the Romney/Ryan ticket have not budged from the idea of renewing the Bush tax cuts without an end date. The tax cuts, in their current form lower the marginal tax rate for the highest income earners. Passed during the first Bush, Jr. Administration, these tax cuts have been a significant drain on government coffers. Along with a prescription drug rebate that borrowed against 26 years of Social Security, you end up with quite a deficit.

They charge that the Obama Administration has ballooned the deficit to such a point that the economy is slowing that jobs are not being created. While Romney and Ryan might not agree on how to slow the increasing cost of the some of the highest additions to the deficit (Medicare or Healthcare, in general), they do have a plan to create jobs. This plan includes keeping the Bush Tax Cut and lowering tax rates to give businesses certainty about the way they can spend their capital.

According to LSAT Logic Reasoning, when you are looking for an assumption, the best strategy is to find the "rhetorical jump" (my characterization). In other words, find out where the argument added a word or concept in the conclusion that was absent from the evidence (IE, if you are talking about dogs and the conclusion says something about Dobermans).

The plan's conclusion is that it will result in the creation of jobs. But, one cannot divorce the deficit from job creation, according to the talking points. This is where the rhetorical shift comes in. Can you use policies like those in Romney's plan to create jobs AND reduce the deficit, or do you have to separate your strategy and create jobs OR reduce the deficit.

But, the ticket has a response the charge that lowering tax rates and keeping the Bush Tax Cuts will not reduce the deficit. Their plan is to eliminate certain tax breaks and/or loopholes that will balance out the gaping hole in the treasury caused by the lower revenues. But, Romney has yet to reveal which tax breaks and/or loopholes he wants to eliminate. Political poison pills like the home mortgage interest rate deduction and renters credit are all fair game, but not expected to be on the chopping block.

In the LSAT Logic Reasoning section, you can strengthen an argument by adding facts that support the conclusion or you can weaken an argument by inserting something that might undermine the conclusion. Oftentimes you can weaken a causal argument (x is related to y so x caused y) by showing that there is an alternative explanation (x is related to y, but q can cause y).

Was it the deficit that is causing significantly low job creation, or is it something else? Could it possibly be that gridlock in Congress over a certain debt ceiling debate created something called a "sequester," whose diversified cuts could lead to a sharp increase in unemployment and a significant decrease in GDP growth? Could it be a possible EU-wide recession? Both of these events could create so much uncertainty over growth and tax rates that businesses might be reluctant to hire.

For some reason or another, regular citizens have become so passionate about kicking out the current Administration that they have a near contempt for logic reasoning or the truth. I heard an interview on the radio recently where a Romney supporter was enraged about the Administration taking out the work requirement for Medicare. After hearing that the Administration was not going to take out that requirement, she responded by saying, essentially, that the truth has become relative and that she trusted Romney more than Obama.

Anecdotal or not, the ticket has used this point and many other selectively edited statements, stamped them on campaign material and spewed them out from battleground to battleground, effectively skewing the truth to whatever the ticket endorses.

Let's Talk About the Market

Presumptive Republican presidential nominee Mitt Romney has leveled various accusations against the Obama Administration's policies on energy and the economy. He has called the administration out on everything from failed solar companies to failed Stimulus Packages. For Romney, and a lot of the Republican base, the president has chosen "winners and losers" in the market, thereby propping up failing industries that will inevitably go belly up. They believe that the administration's policies towards the economic recovery have failed solely because they were inadequate at lowering the unemployment rate and only added to a ballooning deficit. They assume, wrongly, that the administration is solely responsible for the current freeze in hiring and general economic malaise.

For a party that lionizes the free market, they have taken a very narrow view of it's area of affect. They have assumed, for political reasons (most likely), that commodities that are traded on the international market that often portend trends in international economic growth or stagnation do not apply to US markets. Do you remember when Newt Gingrich said he would magically create $2.50 gasoline?  Derp.

The basic assumptions about commodities like coal, natural gas, oil, oil-based products, corn, soybeans, jet fuel and every other internationally traded commodity is that all countries who trade in those goods are affected by price fluctuations. In a recent interview with Platts, two international economists pointed out that the shale gas boom in the United States (and abroad) has been pushing lower quality Atlantic metallurgical coal into the international market, which has depressed the price of that commodity. Coupled with an overproduction of steel and piling surpluses of coal, production companies are experiencing depressed prices and lower profits. This, in part, led to the bankruptcy of Patriot Coal, whose reserves are heavy in eastern Atlantic met coal.

What does this all mean?

It means that the price and use of coal power is subject to the whims of the international market. It has entered a cycle whereby lowering domestic use of coal in the US is pushing surplus to the international market which is depressing the international price. This is not the result of the so-called "War on Coal."

Do you remember Solyndra?

Romney and Congress have used Solyndra as a way to target the Administration and it's use of tax-payer money. They believe that companies like Solyndra (and Renewable Energy, in general) are only propped up by political nepotism and government largess. Again, they fail to realize that the market had a big play in the failure of the company. At the time that Solyndra failed, the market was being flooded with cheap solar panels from China. Domestic solar panel companies could not compete and many, including Solyndra shut their doors.

While Republicans hammer at the Administration for the Solyndra failure, they do not point to the cost overruns of the coal-gas, carbon capture Taylor Energy Station (DOE - Private partnership), the nuclear guarantees to build reactors in South Carolina and Utah that have cost an extra $2-4 billion (That is nearly 4-6 Solyndras) and the failure to create a utility scale coal plant with Carbon Capture and Sequestration technology, despite millions of government funds for so-called "clean coal." In the same vein, they criticize the Administration for not creating jobs, yet they are willing to eliminate tens of thousands of jobs in the Wind industry by not approving the Production Tax Credit. I digress...

Romney has been hammering the Administration's policies on the economy since he announced his bid for president. For every month that the US has released a sub-par job report, the Romney camp has attacked. For every bankrupt company, depressed mill town and broke farming community, Romney has towed the line that the President is the sole creator of the Recession and the current slow recovery.

Here is what is happening in the international market:
1. Greece Bailout
2. Spanish Bailout
3. LIBOR rate fixing
4. Portugal and Ireland economic troubles
5. Electoral uprising in EU (France, Greece, etc)
6. Chinese economic slowdown
7. EU recession
8. US "fiscal cliff" (Sequester cuts, Payroll tax expiration, Bush Tax Cut expiration, etc)

What does this mean for the US and the "small businesses" that Romney loves? Uncertainty. It means uncertainty in the rate of exports to China. It means uncertainty in EU bond markets. It means financial uncertainty in the EU economy. It means uncertainty in the international market.

When businesses are uncertain, they will retain cash and forego hiring until things are certain. But, there is one certainty about the international market: No matter what the Administration does, it cannot affect the long-term health of the EU or China. If these economies falter, our economy falters.

Congress has the power to institute measures to improve job growth and soften the effect of the slow recovery on the economy. But, what did Congress do this week instead of looking at stimulative measures? They repealed Obamacare...for the 33rd time...

I suppose we will all have to wait until November...

The EU and Greece

The most recent edition of The Economist had a good amount to say about the future of Greece, the European Union and the Euro. Most of the coverage of Greece and the EU in the United States has been from the usual doom-and-gloom political statements from Republican presidential candidates about excessive government spending. While the charge may be true relative to the large size of the public sector in bailed out Greece, Portugal and Ireland, the crises in Europe requires a deeper and more nuanced review of the Union.

The EU, while united under one currency (The Euro) and a few policy authorities (Council of Ministers and European Council), is still a hodgepodge of countries of various sizes, cultures and political persuasions. From the 1992 Treaty of Maastricht to the current banking crises, many of the EU nations have taken fiscal governing  of such a large body with a less than adequate level of seriousness. That is, rules set out to avoid a crises of this nature took a back seat to the financial interests of some of the larger economies (France, Germany, etc). The article in the Economist highlights this problem with an anecdote about France's view of budget cuts:

 In 2002, Francis Met, newly installed as French Finance Minister dismissed commission requests for budget cuts to comply with the stability and growth pact by saying that "France has other priorities."


The article rightly states that the current finance minister under newly elected French president Francois Hollande would quickly lose his job if he were to dismiss EU fiscal responsibilities in the same manner. While some nations ignored the fiscal pacts of the Union, many still believed that a region united under one currency would facilitate political integration through fiscal unity and stave off a crises. But, as the article points out: They did not foresee that it [financial/political unity] would do so by throwing the continent into crises.

The EU is also facing a crises of democracy. Smaller countries with smaller economies (like Greece) are becoming less relevant in a growing Union. Once a country feels that their electorate and local issues are being ignored in favor of a Union controlled by the larger economies, a sense of resentment grows. When the fiscal crises in Greece came to a head, many in the country protested to the Austerity Measures because they believed that it was a problem that they did not create. Overspending by the Greek government after the conversion to the Euro that led to massive deficits and lack of a voice among bigger economies like Germany and France created a disconnect between the electorate of Greece and the wider Union.

The result of increased austerity measures has been political and financial turmoil. In elections, citizens increasingly voted for extremist candidates who opposed or favored a renegotiation of the terms of the Euro bailouts. In Greece, nearly 7% of the vote went to the ultra-right wing Golden Dawn Party, whose party platforms are anti-immigrant and anti-bailout. Their party symbol resembles the swastika. There was also no consensus candidate, which sent the election to a runoff, taking place on June 17th. In France, the Conservative party under incumbent Nicholas Sarkozy was ousted by the Socialist candidate Francois Hollande.

One major problem remains for the European Union: there is a disconnect between the larger and smaller economies, fostering disillusionment with the Union and individual country's national governments. Germany's chancellor Angela Merkel (Christian Democrats) has shown visible disappointment with the way that Greek government has managed it's finances. She is reluctant to continue using German banks to prop up failing economies. At the same time, voters within Greece have become weary of their technocratic governing coalition and have voted in droves alongside anti-immigrant, nationalistic parties on the right and left. Continued entrenchment by larger economies like Germany will only foster nationalism and hatred towards the Union, leading to a possible exit by Greece. Once this happens, any country with the same sentiment might use that precedent to also leave the Union.

There is a way out of this crises for the EU. Direct election of members of policy making bodies in the EU by member countries can bring more democratic power to smaller states. Currently, the leaders of the European Council and Council of Ministers are appointed by member states. But, the Union must provide an efficient, enforceable method to institute fiscal policies in order to reign in on indebted countries and stave off future crises. In this way, smaller countries get more say in the inner governance of the Union while larger economies prevent having to bail-out smaller economies. But, above all, it keeps the Union intact without having to face the international consequences of a bank run or an exit.

During the debate over the ratification of the U.S. constitution, larger states wanted representation in Congress based on population (Virginia Plan). Smaller southern states proposed equal representation, as they would be less relevant under the Virginia Plan (New Jersey Plan). Congress created a compromise (Connecticut Compromise) that created a bicameral legislature whereby the House of Representatives would be based on population and the Senate would have two members elected from each state.

The EU should take note of this idea, giving equal representation to smaller economies, while redefining their ultimate goal of unified stability and fiscal control.

Note About Orthodox Gathering in Brooklyn

Articles have been popping up all over the web about a recent gathering of 60,000 Orthodox Jews (40,000 men in Citi Field and 20,000 women in a nearby location). The purpose of this meeting was to discuss the internet and how it has and will affect the Orthodox Jewish Community.

A group of "counter-protesters" gathered across the street, rallying against the supposed unreported acts of child abuse and molestation. They believed that a gathering of the Orthodox Community to discuss the internet was not important when these disgusting acts were being perpetrated and not reported.

The media response ranged from subtle understanding to sympathy to complete ignorance. A piece by Paul Miller at The Verge fell into the latter category. Paul describes his confusion over why members of the Orthodox Community attending the rally were reluctant to speak to him. This theme characterizes a major shortcoming of this article - lack of perspective. Paul is not a member of the Orthodox Community and only knows what most outside of the community understand - they keep to themselves. While he does admit that he is definitely out of his element and is ignorant to the nuances of the community, his lack of understanding makes his conclusion seriously flawed.

The most egregious part about the article is when he brings up the idea (not his idea) that limiting the internet in the Ultra-Orthodox community is akin to the internet controls in China and North Korea. The point of the gathering was to discuss the internet and how it has affected the lives of the community. The rally was closer to a family discussing a new obstacle than a synod of the powerful in an oppressive regime. His claim that limiting information in a so-called "information age" is hypocritical is a generalization. Again, the purpose of the rally was to discuss the internet and it's affects on the traditions of the community.

Then, there are the protesters. The purpose of their protest was seriously flawed. A gathering to discuss the affects of the internet on the Orthodox Community and allegations of sexual abuse are not intertwined. The proliferation and cover-up of molestation is a problem that must be addressed. But, the restrictions that the community wants to put on the internet for IT'S MEMBERS has nothing to do with these allegations. So, their protest is irrelevant.

The reason I specifically picked on Paul Miller was because his article is a good example of a misguided, outside perspective. While, he goes into details about his experience and admits that his outsider status limits his ability to gain credible information, less detailed articles (or more user-friendly, depending on your attention span) claim that the community thinks the internet is evil.

It may seem to outsiders that the Orthodox shun modernity and try to live much like the Amish. It is true that the Ultra-Orthodox and the Amish have a lot in common (they even met up in Brooklyn a couple times). While some in the insular community reject the internet because of their beliefs, many look to integrate it into their religious lives. They turn off their phones for Shabbat, unplug the ethernet cable or wireless router and actively restrict what they deem inappropriate for their children.

For a nice, and short, debunking of myths about Orthodox women and the community from an Orthodox Jew, click HERE.

A couple notes for context: When I say "Orthodox" or "Ultra-Orthodox," I mean it to be all-encompassing. There are various sects of Orthodox, some of which are much stricter than others.While I defend the purpose of this rally against attacks by outsiders who lack perspective, I do not agree with a lot of the doctrines of the Orthodox Community regarding the rejection and treatment of Jews of non-Orthodox status.

TEA Party 2012: Reality Bites

The TEA Party is a hodgepodge of conservative activists who support a range of ideologies from pro-life guerrilla warfare against Planned Parenthood to legalization of marijuana and everything in between. Their ranks waffle between purist libertarians and social conservatives. One of the many goals of the TEA Party was to "change" spending in Washington and make it leaner and more efficient, the latter description being a nice way of saying complete obliteration of all social services.

In 2010, they decided to vote with their feet and mobilized candidates all over the country to challenge mainstream party congressmen and congresswomen. Establishment Republican Senators like Bob Bennett (UT) and Lisa Murkowski (AK) were defeated in their respective primaries by TEA Party backed insurgent candidates (Murkowski won back her seat in a rousing write-in campaign). Veteran Democrat Representatives like Jim Oberstar (17 terms from Michigan) were defeated by unknown and inexperienced TEA Party backed candidates.

Then...their legislative champions failed.

In the ensuing debates in Congress over the debt, taxes, the War in Afghanistan, the War in Iraq, abortion and women's rights, the Congress did not improve. Intransigent lawmakers, taken hostage by their own selfishness slowed the pace of government to the speed only seen on a plate tectonic scale. Traditionally bipartisan issues were bathed in partisan rhetoric and riders, left to be killed on the Senate floor. Budgets to fund essential government services were loaded with non-germane amendments, which elicited veto threats from the President and an assurance of no-progress from a divided Senate. Speak of the House John Boehner was constantly forced to cow-tow to a far right extremist ideology before supporting or rejecting even the most basic bills.

Now that the 2012, elections are approaching, the TEA party is once again geared up for a fight. While many of their freshman allies in Congress are not up for a vote, they will invariably try to challenge Washington insiders and establishment candidates.

Here are some numbers for the TEA Party: 

Congressional Approval rating 10/04/2010: 20.5%
Congressional Approval rating 04/19/2012:  14%

It is my hope that the TEA Party will be forced to face reality in 2012. The reality is that their extremism will only hurt the party and alienate veteran lawmakers who have spent most of their political lives drafting keystone legislation that changes how America treats its environment, economy and citizens. This reality has already taken its toll, as many veteran lawmakers are deciding to leave Congress in 2012. Centrists like Ben Nelson (D-NE) and Olympia Snowe (R-ME) look at the partisanship and the lack of progress as a reason to jump ship.

The worst side of the TEA Party and the extreme rightward shift of the Republican Party is demonization of political experience. Someone who understands the dynamics of Congress, like a Ted Kennedy or a Orrin Hatch, will become anomalies. They have been replaced with the inexperience dunce who can only make progress by screaming the loudest and complaining the most.

Something about Oil...

If you drive down the 405 Freeway from Los Angeles towards Orange County, you will invariably see a large American Flag draped over a industrial expanse. Among the smoke-stacks, economizers, tubing, flaring, iron and steel is a oil refinery. These refineries take in oil from Alaska and refine to use in various products that range from plastics and nitrogen-rich fertilizers to gasoline or diesel for your car. This is how the business of oil becomes the business of American (and Californian) consumers.

If the price of oil spikes, the cost for nitrogen-infused fertilizers goes up, which leads to an increase in the cost of production for farmers who use that fertilizer, which forces them to charge higher prices for their goods which leads to higher costs at the supermarket. While this may not be the main driver for an increase in food prices (salmonella outbreaks, weather, pests, etc. aside), it is still a way your average Whole Foods or Trader Joes shopper can connect the price of oil to the price of produce.

If a refinery shuts down for maintenance, and the market for the oil that comes from that refinery becomes tight, the price of oil from that refinery will go up. If a bunch of oil refineries shut down for maintenance, then the region that receives oil from those refineries will go up in cost. This will lead to higher prices at the pump, assuming a good portion of that oil is refined for gasoline and diesel.

If an oil producing country experiences social or political upheaval that paralyzes their oil production, then the global cost of oil will rise. The United States imports nearly half of the oil it consumes (in one way or another). If the global cost of oil goes up, the price at the pump will surely be affected.

Each of these situations have occurred in some capacity during the current Administration. The price of oil on the global and domestic market spiked during the Arab Spring (Libya), we are entering a phase where refineries are shutting down for maintenance and higher commodity prices have been a result of an increase in oil prices and the recession.

There are a couple factors that are leading to higher oil prices, which are translating to higher prices at the pump. But, let's look at a parallel economic universe to give you a perspective.

Coal...

Domestic coal consumption has been dropping over the last 5-10 yrs. At the same time, the price of coal has been steadily rising. Demand from Asia (China, South Korea, Japan), South America (Brazil, Colombia) and Europe (Germany) has grown. Traditional sources of coal for the international export market (Australia, Indonesia) have been hit with weather events and supply constraints. So, the US has stepped in to cover the gap. This has led to an increase in the price of coal on the international market for thermal (steam generation for electricity) and metallurgical (steel making) purposes. At the same time, coal companies have been cutting domestic production due to lower demand which has been caused (mostly) by a precipitous drop in the price of natural gas, an alternative to coal power. While the US is far from exporting more coal than it burns, many analysts from major coal companies (Arch, Peabody, Alpha Natural, Patriot, Cloud Peak, CONSOL, Arcelor Mittal, etc) are seeing a robust export market into the near future. Even though domestic consumption is low, production in places like the Powder River Basin is set to increase as more domestic and international partners buy up mine expansions.

Oil...

For the first time in decades, the US has become a net exporter of oil. Demand from developing countries for US oil exports has grown dramatically in the last couple of years. Domestic oil production has increased (instigated during the last Administration), but domestic consumption has gone down. This has been due to the recession and an increase in the average fuel efficiency of autos sold in the US. While we have enough oil to satiate our consumption, the drop in demand coupled with increased exports has led to an increase in price. Refineries are also shutting down for maintenance and moving towards higher cost blends for certain regions (see CA gas prices). And, threats from Iran on closing the Straits of Hormuz are not helping.

The Point: There is no Administration policy that could alleviate the increasing price of oil in the short term. If Obama approved the Keystone XL pipeline tomorrow, the price of oil and gas at the pump would still be high for the short term. Republicans have been criticizing the Administration for what they characterize as overreaching regulations and stalling on the exploration of new oil and gas fields. Putting aside the exploratory well will be drilled in the Arctic in the next few months, if the Administration approved a good amount of onshore and offshore wells, the price of gas would remain relatively high. As long as we are connected to the international market for oil, we will be subject to it's fluctuations. The Administration can do nothing to influence that.

So...why, with all this information in mind, are the Republican nominees blaming the Administration's policies, talking about offshore oil exploration, and promising far-flung dreams of $2.50/gallon gas?

Political gain. Pure and simple. Their assertions are nowhere near the universe where fact resides.

And a point on the Strategic Petroleum Reserves...If the Administration were to release oil from the SPR, it would send a price signal to the market that we are in a dire situation in regards to oil supply. But, we are not. We have plenty of supply. We are just exporting more and consuming less and feeling the effects of the international market.

Gingrich/Romney and the Art of Buzzwords

When the TEA Party anti-Obama, anti-tax rhetoric was making it's way from one state to another ala TV personalities like Glenn Beck and Sean Hannity, the art of the buzzword was revitalized.

A buzzword is a polarizing statement or word that is meant to radicalize or motivate a political base. During the Bush Administration, many on the left compared Bush to Hitler, which made their arguments both polarizing and illegitimate. During the current administration, talking heads like Rush Limbaugh and Glenn Beck compared Obama to Hitler, Rev Jeremiah Wright and radical William Ayers.

The problem with buzzwords is ingrained in their simplicity. The average person listening to talking heads absorbs buzzwords more readily than nuanced details. When Sean Hannity criticizes the Obama Administration by using the graphic of the "apples" of security, industry and commerce "falling" into the "basket of Socialism," viewers will make their own conclusions based on vague and often simplified concepts. Hannity's viewers will, more often than not, have a completely misguided understanding of both the Administration's policies and the tenets of modern Socialism. But, the words evoke an ideal of a bygone era where Socialism and Communism were the antithesis of American.

Prospective Republican presidential nominees Newt Gingrich and Mitt Romney have stepped up their buzzword attacks on the Administration. I am going to break down some of the buzzword attacks of recent:

"Bureaucratic socialist" (Gingrich)

These two words slyly evokes the characteristics of someone who supports an inefficient government and is anti-American. Those who rail against the government use "bureaucratic red tape" as a reason to cut funding from programs that range from Nuclear Energy to regulations covering farm dust. Socialism is something that is considered, Prima Facie, anti-American.

"Kenyan, anti-colonial behavior" (Gingrich)

This statement covertly revives the "birther" issue without explicitly supporting it. Gingrich would lose the race immediately if he overtly supported the deranged conspiracies of the Birthers. But, by adding in "Kenyan" anti-colonial, he is bringing up the idea that Obama was born in Kenya. The anti-colonial part of the statement has many implications, none of which are elaborated on by the former Speaker. It could refer to Kenyan nationalism in the colonial and post-colonial era, it could refer to the Mau-Mau Movement or it could be veiled racism.

"...takes political inspiration from Europe" (Romney), "...must choose between a European-style welfare state and a free land" (Romney), "I am for the Constitution, he is for European socialism" (Gingrich)

Calling Obama a "European" seems to be all the rage among the potential nominees. By evoking Europe, Romney and Gingrich instill fear into voters that the U.S. will end up like the faltering economies of Ireland, Portugal and Greece. What voters see in the media is that these governments have failed because of their bloated public sector. So, they make the assumption that if we cut from our public sector and elect a president who will work to shrink the government, we will not end up like Greece, Portugal or Ireland. Even mentioning the word Europe implies high government wages, high debt, socialism, anti-Americanism and economic failure.

"I am for the Declaration of Independence, he is for the writing of Saul Alinsky." (Gringrich)

Gringrich seems to be giving the average American more credit. I know many educated people who have no idea who Saul Alinsky is. This one, while not apparent to most, brings up the same effects as comparing Obama to Rev Jeremiah Wright or William Ayers. Alinsky was a community organizer who taught minority communities how to gain political power through organizing. While he was not a socialist or a communist, mentioning him brings up the Palin-made criticism of community organizing and its connection to socialism. Alinsky's "Rules for Radicals" was very confrontational. According to psychologist Drew Westen , the combination of a "Jewish-sounding" last name the idea of radicalism could appeal to the antisemitic voters.

What I despise most about buzzwords is that it polarizes voters instead of informing them. Those who support the existence of the Electoral College often point to a popular vote that assumes, to a certain extent, an informed voter. By listening to the nominees and the talking heads, an average voter would come up with the assumption that socialism will and always has been Anti-American, the government is inefficient and the European governments of Ireland, Portugal and Greece failed because they had a bloated public sector. They will also think that Obama is a Kenyan socialist who values European-style democracy over the basic tenets of the Constitution.

This kind of conspiratorial hogwash should have no place in electoral politics. And, mudslinging is ineffectual once elected. If you don't believe me, just look at the effectiveness of the Freshman TEA Party class in the House.

Prop 13 Has and Always Will Be a Problem

There is a trend among Californians these days: We love to think of progressive ideas, but rarely have the will to get them passed. Some examples:

1. We love public transit, but will never amend the constitution to make sure gas tax goes to public transit projects (currently it is required, but law, to go to maintaining roads and highways).

2. We love public transit, but we will never pass a tax to pay for it.

3. We love clean air, but our largest public utility is having trouble with divesting from coal power

4. We love that our public universities are top in the country in academics and athletics, but our legislators would rather cut hundreds of millions from them instead of pass a tax to support them.

5. We love our K-12 education, yet our legislators are unwilling to pass a tax to prevent cuts to the school year

6. We love our public services, yet complain about high taxes

7. We complain about high taxes and bad schools, but still overwhelmingly support Proposition 13

The last (and bold) point is what this blog post is about. Some controversial points about Prop 13 are:

1. Maximum value-based tax on real property shall not exceed 1% of the value of the property.

2. Decrease in property taxes by assessing the real value of a property at its 1975 price and restricting assessment of annual increases to an inflation factor not to exceed 2%. Reassessment of a new value can only happen under an ownership change or completion of construction.

3. Requires a 2/3 majority of both houses of the CA Legislature to increase tax rates or collect revenues.

4. Requires a 2/3 majority in local elections to pass an increase in special taxes

The passage of Prop 13 was a result of the "Taxpayer Revolution" headed off by anti-tax people like Howard Jarvis. But, Prop 13, which is considered to be the third rail of CA politics, has caused decreased tax revenues for localities, which have been forced to find creative ways to recapture those monies.

Here are some supportive arguments for Prop 13:

1. It creates certainty for Homeowners

True. But, it created uncertainty for localities and pegs a portion of their tax base to the rise and fall of the real estate market. This is especially bad in coastal communities, where home ownership and prices are higher. These localities must find creative ways to recapture tax money. They become dependent on state block grants and look to "use fees" and higher sales taxes. Cities have begun to decrease services and increase fees to compensate for that move.

2. The acquisition-value assessment provides property tax equity

Suspect. The scheme is good for taxpayers if you look at the prop as a whole. But, it's condition that the value be reassessed for change of ownership highly favors commercial properties. If a commercial property is owned by one company and it sells, but continues to be deeded to that company, they are exempt from the reassessment condition in Prop 13. This works well for those who own big box stores and shopping malls.

3. Decreases volatility for funding of municipalities

True. But, it also decreases that funding. It creates certainty, but in a negative way. See my answer for #1.

Some negatives:

1. Sales disincentives

Because of the condition that the house value will be reassessed upon change in ownership, there is a disincentive towards upward mobility or selling of a home. There is also a disincentive to build more homes.

2. Loss of Revenues to local government

The 2% maximum has under paced the Consumer Price Index, giving local government less money to collect against the 2% levy or when the price of a parcel is reassessed. Translation: less tax money to the coffer. Result: find ways to recover that loss money through creative means (see #1 under "Arguments for Prop 13").

3. Bubbles and Ownership/Renting volatility

When housing bubbles occur, taxes collected increase due to increase in housing values. Once the bubble bursts, downward pressure is put on collected revenues, creating a tax deficit. Trends in ownership/renting follow these bubbles creating both rigidity and friction in the housing market. This can attributed to Prop 13.

4. Price Increase for New Developments

Because there is a disincentive to move out of a home due to the reassessment condition, older homeowners are not selling and younger prospective homeowners are increasingly renting. Finding new places to build homes in a constrained market also leads to higher prices. Adding in environmental, geographical and development limitations only makes prices for development even higher.

When Gov. Schwarzenegger was elected governor in a recall, his financial adviser Warren Buffett told him that Prop 13 needed to be repealed or changed in order to cover the widening state budget deficit. The governor said it was no politically possible. Current governor Jerry Brown has openly criticized Prop 13 and it's negative affects on the power of local governments. Part of Brown's initial budget was to return power back to local governments and away from Sacramento.

With the partisan gridlock in Sacramento holding back any modification to Prop 13, these inequities, high sales/use taxes and uncertainty will only persist.

Mississippi Amendment 26: Knowing What's Right Since Jesus Rode Dinosaurs

Let me first explain the title of this blog:

Whenever I ridicule the religious right for thinking the federal government (or state government) should be a lightning rod for Christian morality, I always include a statement about the ridiculousness of creationism. Creationism, and Intelligent Design, are anathema to rationality and the scientific method. Based on observations made by paleontologists, anthropologists, planetary scientists, geophysicists, archaeologists, cosmologists, evolutionary biologists and geneticists, the earth is 4.54 billion years old, humans evolved from apes and the universe is expanding at an ever increasing rate. Saying that the earth is around 6,000 years old is as rational as saying that Jesus rode dinosaurs.

The underlying message is that the religious right, with enough support, can turn these superstitions into law. I will defend to the end of my life someone's right to be religious and to follow the doctrines supported by whatever church, synagogue, mosque or holy pillar that is the center for their beliefs. But, the law of the United States of America, and it's many states, should not include the moral inclinations of any single religion. The whole reasoning behind the 1st Amendment's religious protection clause was to make sure the country did make any law "respecting the establishment of a certain religion, or prohibiting the free exercise thereof." Jefferson's purpose behind including the freedom of religious clause was to make sure that there was a "wall of separation" between church (any religion) and state. I interpret this protection as a law that makes sure no law is established on the basis of the core beliefs of one religion.

This brings us to Mississippi, and it's Amendment 26 "Personhood" legislation. This law, if passed, would define "personhood" or "life" as starting at the time of conception. This will effectively outlaw abortion (in ALL cases), birth control, morning after pills and in vitro fertilization. Haley Barbour, governor-extraordinaire, said that he supports the law, but is hesitant because it includes ambiguous language like "life begins at fertilization, or cloning, or the functional equivalent thereof."

Here is my beef:

1. It is based on religious inclinations: Most Pro-Life (whatever that means) believe that life starts at conception because they follow the religious (Catholic mostly) idea that sex is purely for procreation. Keep that belief to yourself and out of our statehouses.

2. It casts the government as a moral crusader: It makes the Mississippi government an enforcer of anti-abortion morality. No government should make laws to enforce the moral inclinations of one group.

3. It translates unanswered ethical questions into law: It essentially settles an ongoing ethical debate, de jure. The definition of "personhood" and "where life starts" has been debated for decades, and there are good arguments on both sides. But to make a law that forces the debate to a conclusion is unbelievably premature.

4. It defines life: No one has the right to define where life starts. Not Haley Barbour, not Mississppi, not Barack Obama...no one.

5. It gives the Mississippi government too much power over the bodies of women: Women have the right to choose what they want to do with their body. Simple as that. No state has the right to legislate that choice. This is why the Federal Government has the Hyde Amendment. It makes sure that the government does not meddle with the abortion debate.

The encroachment of any government on the rights of individuals should stop when it comes to legislating abortion. This amendment goes a step further by defining life, and thereby expanding the definition of murder. This will not only have implications for women's rights, but will also impact family planning and restrict access to in-vitro fertilization for Mississippians who cannot conceive.

What disturbs me most is the quote by obstetrician Dr. Freda Bush:

"In rape and incest, the life that has created during that has done nothing to deserve death. The mother is a victim and there is no reason to make a victim a murderer."

This scary, sick and demented logic is common, unfortunately. This Amendment will only encourage this kind of view, while setting women's rights back to the age of back alleys and clothes hangers.