The all-important question of egress

"I always liked the probably apocryphal tale of a Gurkha Battalion asked to undergo airborne training. A surprisingly small number of volunteers climbed rapidly when it was explained that parachutes would be provided."

-- From a discussion at Small Wars Journal about David Kilcullen's statements regarding AFPAK to the Senate Foreign Relations Committee

If the acronym is new to you, get used to it because you'll be hearing a lot of it. It stands for "Afghanistan-Pakistan" but more specifically it's shorthand for the emerging consensus in the defense establishment and Congress that the U.S. military and NATO need to think of the security problems in both countries as one and treat them as such.

To pinpoint AFPAK even more precisely, it's The Great Game spelled backward only this time instead of different countries vying for power in the region, it's different factions of the U.S. military and NATO establishments vying over which strategies they think best for routing terrorism from the region.

Why not simply let General Petraeus do what he was sent to Afghanistan to do?

No no that would be the rational decision.

Boiled down, it's a new U.S. President, and everyone wants to test how much they can get away with around him.

So, ladies and gentleman, we have officially arrived at the Tweet Chirp era in U.S. defense thinking. Parachute, anyone?

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This entry is crossposted at RBO, with pix, of course.

Should the U.S. negotiate with the Taliban?

Writing on his blog on Saturday John Batchelor playfully asked whether President Obama's words on Friday were the first time he'd "ever acknowledged the Petraeus surge plan in Iraq was a 'success'."

I am pretty sure that was the first time, which The New York Times reported on in a March 7 report titled Obama Ponders Outreach to Elements of the Taliban. The Times quoted Obama as saying:

“If you talk to General Petraeus, I think he would argue that part of the success in Iraq involved reaching out to people that we would consider to be Islamic fundamentalists, but who were willing to work with us because they had been completely alienated by the tactics of Al Qaeda in Iraq.”

If Obama's observations sound familiar, reference my March 4 post about Fareed Zakaria, Newsweek, and Fareed's GPS show last week on CNN.

Yes; by amazing coincidence, just days before Obama's public announcement that he was considering reaching out to the Taliban, Fareed decided to discuss the subject of whether "the international community should have the same policy for the Taliban as it does al Qaeda."

I refused to link to the Newsweek article, which rehashes points Fareed brought up in the GPS program, but I finally broke down and read the thing. Here's the link and the key quote from the article -- a quote that Fareed did not think to bring up on the GPS program:

[...] David Kilcullen, a counterinsurgency expert who has advised Petraeus, says, "I've had tribal leaders and Afghan government officials at the province and district level tell me that 90 percent of the people we call the Taliban are actually tribal fighters or Pashtun nationalists or people pursuing their own agendas. Less than 10 percent are ideologically aligned with the Quetta Shura [Mullah Omar's leadership group] or Al Qaeda."

These people are, in his view, "almost certainly reconcilable under some circumstances." Kilcullen adds, "That's very much what we did in Iraq. We negotiated with 90 percent of the people we were fighting."

Very few of that 90 percent were Islamists. They were for the most part Baathists/ex-Baathists and tribal chiefs -- a distinction that even Fareed mentions in his article.

Kilcullen is saying that we need to distinguish between the Taliban and other Afghani factions -- the same point I made in my March 4 post.

His observations are a far cry from saying that the US negotiated with the Islamists in Iraq. His words shouldn't be twisted to serve the argument that we should consider negotiating with the Taliban.

Obama straddles the fence by saying that we should think about "reaching out to people that we would consider to be Islamic fundamentalists."

Let's dispense with the word games. It would folly for the U.S. or NATO to negotiate with the Taliban or try to 'turn' them. The Taliban's unbroken record of breaking their agreements with Pakistan's government demonstrates just how much folly.

Kepler lifts off

The most fortunate people in the world were at Cape Canaveral last night, when at precisely 10:49 PM Eastern Time they watched a Delta II rocket lift humanity's hopes into the heavens. John Batchelor was not at the Cape, but he had been waiting for the moment all his life; he wrote about it here, with accompanying pictures, of course.

Pondering the launch of Kepler's historic mission against the backdrop of a gathering global economic depression, I found myself recalling something that Les Brown, the great motivational speaker, said many years ago. He observed that often, just as we're making great progress in our lives, we're hit with a host of problems. He made a gesture with his hand to emulate a plane climbing in altitude and said, "It's just normal turbulence that can occur when you're moving to a higher level."

Humanity is now officially launched on a search for planets like Earth. Will we find them? The odds are good that we will.

Countdown to disaster: Massive U.S. borrowing knocks other governments and private borrowers out of capital markets, skyrockets the cost of money

"As I got out onto the promenade deck, I saw a large gray, what looked to me like a building, floating by. But that building kept bumping along the rail and as it bumped it sliced off bits of ice that fell all over the deck. We just picked up the ice and started playing snowballs. We thought it was fun. We asked the officers if there was any danger and they said 'Oh, no, nothing at all, nothing at all, nothing at all.'"
-- From Titanic first-class passenger Edith Russell's account of the immediate aftermath of the ship's collision with the iceberg

At Davos, former Mexican president Ernesto Zedillo warned that heavy U.S. borrowing was starting to crowd developing countries out of the capital markets. On February 8 I passed along Zedillo's warning. After I snapped and growled for several paragraphs about the need to work out a plan for orderly borrowing, I had a sort of Edith Russell moment. I decided that the G7 nations would somehow keep the poorer nations above water while they borrowed themselves away from the cliff.

Last week came another shower of ice on the deck. I was walking by the TV set and lo and behold, there was Niall Ferguson on the Glenn Beck show. Just a few days before I'd read his There will be blood interview with Canada's Globe and Mail about the financial crisis. It seemed Beck had also read the interview. I plopped down to listen to the discussion.

At one point Ferguson said almost in passing that Britain couldn't borrow because it was crowded out by the massive U.S. borrowings.

I sat for a moment, trying to digest the enormous implications of Ferguson's observation. Britain wasn't a developing country, and with all its problems it was still a finance powerhouse. If they were being crowded out of the capital markets --

The rest of the thought trailed off, my mind refusing to finish it.

Yesterday, after hearing that Gordon Brown's speech in Congress had mentioned the dangers of protectionism, it struck me that the most serious issue connected with financial crisis was being dodged.

Borrowing wars, not trade wars, are the gravest danger.

Yet eerily, as I'd noted in the February 8 post, there was almost no public discussion about the impact of massive U.S. borrowing on other countries trying to borrow.

Turning to the internet I looked for mentions of the borrowing issue. That's how I found Warren Buffet's warning that government borrowing was crowding out private borrowers. From his new annual letter to Berkshire Hathaway shareholders: (H/T Gurufocus)

[...] Funders that have access to any sort of government guarantee -- banks with FDIC-insured deposits, large entities with commercial paper now backed by the Federal Reserve, and others who are using imaginative methods (or lobbying skills) to come under the government’s umbrella -- have money costs that are minimal.

Conversely, highly-rated companies, such as Berkshire, are experiencing borrowing costs that, in relation to Treasury rates, are at record levels. Moreover, funds are abundant for the government-guaranteed borrower but often scarce for others, no matter how creditworthy they may be.

This unprecedented “spread” in the cost of money makes it unprofitable for any lender who doesn’t enjoy government-guaranteed funds to go up against those with a favored status. Government is determining the “haves” and “have-nots.” That is why companies are rushing to convert to bank holding companies, not a course feasible for Berkshire.

Though Berkshire’s credit is pristine -- we are one of only seven AAA corporations in the country -- our cost of borrowing is now far higher than competitors with shaky balance sheets but government backing. At the moment, it is much better to be a financial cripple with a government guarantee than a Gibraltar without one.

Wednesday also saw the news that China's government was launching their own domestic stimulus plan. The news gave a boost to the Asian financial markets and was met with relief in the USA.

There was also concern here that Beijing might cut back on their purchases of T-bills in order to fund their spending program. Yet by the evening Bloomberg had reported that China's finance ministry would be selling bonds to raise the $29 billion needed for the economic stimulus programs.

$29 billion is a drop in the bucket next to the borrowing that the United States is doing, but if you add the drops from all the governments competing to borrow --

Titanic buffs correct me if I'm wrong, but I seem to recall a theory that it was the sharp turn to avoid the iceberg that spelled doom for the ship. If they'd let the ship crash head-on into the iceberg, the ship would have been badly damaged but would have taken the hit without sinking.

Whether or not the theory is right it might be applied to the cascading mortgage/banking/credit crises. It's possible that the governments that reacted first to the crises by borrowing huge amounts didn't factor in that the sheer size of their interventions was creating secondary effects that could be worse than the original crises.

However, by now it's clear that the massive amounts of money that need to be borrowed are creating unprecedented competition between borrowers for scarce funds, driving interest rates through the roof -- and crowding out all but the wealthiest governments.

The secondary effects are already emerging:

After first striking the advanced economies and then emerging markets, a third wave of the global financial crisis has begun to hit the world’s poorest and most vulnerable countries, threatening to undermine recent economic gains and to create a humanitarian crisis, IMF Managing Director Dominique Strauss-Kahn said in Washington DC. [...] financing problems are also beginning to affect developing countries, Strauss-Kahn stated. Foreign direct investment is expected to fall by 20 percent this year. The cost of borrowing has risen significantly, and in some cases may be unavailable.[...]

If we stay with the Titanic metaphor, what is it about a financial crisis that's analogous to the submerged part of the iceberg?

I think that the submerged part is called reality. To show you what the IMF thinks of reality:

[...] Strauss-Kahn said the IMF hopes to have in place shortly the capacity to make concessional loans of $11 billion over the next five years, about twice its current ability.

But the main responsibility for meeting the financing needs of the poorest countries lies with donor countries, he said. The donor countries must find some room to help poor countries in stimulus packages they are putting in place and must live up their 2005 commitment to double annual aid to Africa to $50 billion by 2010 and raise it to $75 billion by 2015.[...]

How are donor countries going to come up with that kind of money, on top of increasing their financial commitment to the IMF, when they're having to borrow heavily just to keep their own economies afloat?

They'll have to borrow it. As he said, the money to help the poorest countries will have to be included in the donor countries' stimulus packages, which they're having to borrow to create.

Has Messr Strauss-Kahn got any idea how to manage all that borrowing without touching off global hyperinflation?

That's an off-limits question because it's a reality question, which doesn't actually exist until -- well, until the ship is sinking.

Fareed Zakaria's next cover story for Newsweek: ALIENS KIDNAPPED MY DOG AND I HAVE THE PICTURES TO PROVE IT

When I checked my email a while ago my eye was caught by one that was titled: "Cover of Newsweek says we must live with radical Islam"

I thought, 'Huh. Must be Fareed shilling for advertising dollars again. Don't you dare waste your time on that.'

I don't know how you get along with yourself but I hate it when I boss myself around. So I clicked open the email, just to see if my hunch was right about the author of the piece. I was right but now here I am, trying to figure out how to justify the time I wasted falling once again for that rag's supermarket-tabloid tactics.

Remember last year? Remember all the outrageous Newsweek covers?(1) The magazine was so in the tank for Barack Obama, and so determined to foment class warfare in the USA, that their covers had a ghoulish lure. But reading the stories that went with the covers was like giving into the temptation to read about the two-headed woman who gave birth to a healthy one-headed baby; once you get it out of your system, you're supposed to spend your time in the checkout line in more productive ways.

I'm happy to report that Newsweek, as we know it today, is going out of business this year. Their readership tanked and their owner, The Washington Post Company, can't carry the dead weight anymore --- not in the magazine's present format. Couldn't happen to a more deserving editorial board.

What will rise out the newsmagazine's ashes is planned to be -- I kid you not -- a “thought leader" aimed at an "elite" audience. I don't know what kind of elite enjoys being thrown up on:

“I think a weekly magazine is a standing dinner date, or the fourth person in your bridge game,” said Jon Meacham, editor of Newsweek. “Sometimes they’re the most delightful person in the world, sometimes they get drunk and throw up on you. But enough times in a year, when something happens, that’s the first place you want to go to hear what they have to say.”

I venture that sensible people take the view that if you throw up on them once, you'll never get the chance again.

Already aware that their rag was headed for extinction, Newsweek's editors spent 2008 petulantly throwing up on their American readers. The topper was Fareed's cover story, lifted from his book The Post-American World. Not since Clare Booth Luce announced that Harry Truman was finished politically has a prediction been so wrong, as the present economic crisis demonstrates. The reality is that when the United States gets a bad cold, the rest of the world gets double pneumonia.

Miffed, perhaps, that reality snubbed their editorial viewpoint, Newsweek's cover story this week by Fareed ("Radical Islam is a fact of life. How to live with it.") suggests that the magazine intends to spend its final days in an orgy of regurgitation.

I seem to recall that in 2005 Charlie Gasparino did great reporting on the Hurricane Katrina crisis for Newsweek. The magazine's been around a long time; it's a shame they're going out with no dignity left.

The next incarnation of the rag will attempt to compete with The Economist, which is becoming popular among American news readers. I doubt the British publication is quaking at the thought.

Beneath The Economist's heavily ironic tone is a fiercely nationalistic outlook, which editorial boards for major U.S. news publications don't have in their DNA.

No matter how much The Economist might criticize their government's policies, their writers project the certainty that the British way is best for the world. The certainty is the reason for the magazine's enduring transnational appeal. No matter whether you agree or disagree with their views, you always know from reading The Economist where the British stand.

In place of certainty, America's major news publications have the desire to be fair, with the result that America's way of doing things is read as a blank slate, on which its enemies write anything that suits them.

As for Fareed's titillating cover story this week -- I don't know what he wrote. I ain't gonna be suckered again into reading another Newsweek article. But the opening segment of Fareed's "GPS" show last week for CNN was a teaser for the article. It was the first time I'd seen the show.

Fareed brought together Christopher Hitchens, Asra Nomani, Bernard-Henri Levy and Fawaz Gerges to "argue if the international community should have the same policy for the Taliban as it does al Qaeda."

Here's the link to the video of the segment.

Fareed and Gerges took the position that the U.S. has to make a distinction between Islamic fundamentalists who are simply cruel to each other and ones who threaten transnational terrorism. Levy was having none of the hair-splitting. He said they were all a bunch of fascists and as such represented a serious threat to civilization.

Gerges kept talking over him and even grabbed his arm in the attempt to restrain him long enough to get in more of his own argument. It was hilarious. But Levy had one point, and by gum he wasn't going to let it get buried by sloppy reasoning. There's nothing like a French philosopher on a tear against fascism.

Gerges and Fareed got their facts on one point. They used the U.S. command's cooperation with Iraqi Sunnis to shore their argument that the U.S. in Afghanistan might find cooperation among the Taliban if they would stop lumping them with al Qaeda.

True, the U.S. military made great progress in Iraq when they stopped treating the Sunnis as the enemy. But those Sunnis are 'traditionalist' tribal Muslims, not fundamentalists; indeed it was their disputes with al Qaeda's brand of Islam that started the rift between the two groups of insurgents. The Sunnis became horrified by al Qaeda's atrocities against other Muslims in the name of the Islam.

In the same manner, the Taliban's brand of fundamentalism is not 'indigenous' to Afghanistan's Muslim tribes. The Taliban are a Cold War creation of Pakistan's ISI with help from the Saudis and with American encouragement.

So while none of this was brought up during the debate, Bernard-Henri Levy was correct to dismiss the argument that the Taliban's fundamentalism could be accommodated as a means to help the U.S.-Nato efforts in Afghanistan.

If Gerges and Fareed want to revise by saying it's possible to peel away from the Taliban those Afghanis who joined because they hate Karzai's faction and/or want the foreign troops out at all costs, that would be another story.

Yet the real story in that part of the world is not Islamic radicalism. In Afghanistan we're facing not so much the classic insurgency we found in Iraq as a mix of tribal rivalries, stateless actors, and a fabulously lucrative illicit drug industry that's global in reach.

In other words, in one of the world's most 'undeveloped' regions, we're up against the cutting edge of the modern 'black' or 'deviant' globalization phenomenon that Nils Gilman has talked about. As if to underscore that, the people recently caught smuggling heroin from Afghanistan, via Pakistan, via India, are not Afghani, Pakistani, or Indian. They're West African.

Black globalization is the nut that General Petraeus and his team have to crack; doing so could require an approach that differs considerably from the 'social workers with guns' one that racked up successes in Iraq.

1) RBO has dug up some of those covers for their crosspost of this entry.

Barack Obama, Gordon Brown, and the rise of Pussyfoot Totalitarians

Prime Minister Gordon Brown's planned speech to the U.S. Congress on Wednesday will extol the virtues of what he terms the "global society" and the benefits of globalization. David R. Henderson, a research fellow with the Hoover Institution and associate professor of economics at the Naval Postgraduate School, is decidedly unimpressed with Mr Brown's praises for globalization.

Writing yesterday for Forbes, Professor Henderson shrewdly speculated that during their meeting President Barack Obama and Brown might "cook up" a global tax cartel. If that sounds vaguely unsettling, wait'll you learn exactly what a global tax cartel is. Henderson explains:

[...] Various European governments want to "harmonize taxation," their euphemism for agreeing to keep tax rates high so that high-income workers and investors have less incentive to seek out countries with low tax rates.

This high-tax strategy is hampered by small countries, often former British colonies, that have the gall to keep tax rates low. In the past few years, the OECD has pushed vigorously to blacklist such countries, with the idea of imposing sanctions on them.

In their book, Global Tax Competition, Cato Institute economists Chris Edwards and Daniel J. Mitchell write that Gordon Brown "has a long track record of undermining the interests of the U.K. territories that are on the OECD blacklist."

Edwards and Mitchell also point out that in 2000, when Lawrence Summers was President Clinton's Treasury secretary, he claimed that tax competition among governments was "the dark side to international capital mobility."

Fortunately, with the Clinton administration on its way out, Summers put little effort into supporting the OECD's anti-tax-competition agenda. But now Summers is President Obama's main economic adviser. In case you think Summers has forgotten his agenda, he hasn't.

In a paper published in January, Summers and co-author James Hines recognized that the increasingly global economy makes people and capital more mobile and, therefore, will make government hesitant to increase corporate and individual tax rates. But they identified a way to avoid this problem: reduce tax competition between countries. They wrote:

"International agreements have the potential to play significant roles in these strategies. It is already the case that governments cooperate in international settings such as the World Trade Organization to promote international trade and investment, and bilateral and multilateral tax agreements and initiatives serve the function of facilitating tax enforcement and avoidance of double taxation of international income. Doubtless governments will come to rely more heavily on international agreements in the years to come, but it remains to be seen whether they will accelerate or offset the recent trend in the direction of expenditure taxation."

It does remain to be seen. Will the meeting on Tuesday be the opening round in a discussion of a tax cartel? If it is, will we find out?

As you can see 'harmonization,' of the type Henderson discusses, is actually an inversion of globalization -- yet that's not clear from Gordon Brown's calls for cooperation and international coordination in the globalized era.

But now go back and re-read Brown's column for The Times, which I posted yesterday, and which is a clue to what he'll say to the Congress. Henderson's explanation is Open Sesame; suddenly the meaning of Brown's words about the global society is revealed in a completely different light.

Of course tax competition between countries is a very good thing -- the one and perhaps only thing that can keep national governments from taxing their citizens to death.

Globalization, which simply means the free movement of people, goods and services around the globe, has made it possible for workers to relocate to countries where tax rates, wages, and living conditions are better than they find in their native country. For decades this has often worked against citizens whose countries have attractive salaries, etc. But now the shoe might be on the other foot.

Hands up how many American readers would consider working in another country and relocating their family there, if Mr Obama's Marxist revolution takes hold in the USA?

Sure, you can try to fight it, but if you have a young family to raise and you can sell your work skills in a country with a fair tax rate and decent salaries, why stay here and beat your head against a wall during your most productive years?

That's how many people think, all over the world, and they always have. Globalization in the modern era makes it easily possible for such people to cast their vote on their government's worst policies by relocating to another country and with a minimum of hassle.

This won't stand, from the viewpoint of government social engineers. You just can't allow citizens to high-tail it to another country if they don't like being engineered and heavily taxed. But the Stalinist solution is a little hard to pull off in these days of cell-phone cameras and internet communications. It's not longer easy to hide death camps. And thus, the rise of Pussyfoot Totalitarianism, cleverly concealed behind the mask of globalization:

If every nation's government can harmonize their taxation rates and methods of social engineering, the slicks who thought they could escape by going to another country will have nowhere on earth to run.

A German tourist explained it all quite wonderfully to me in 2003: "No one will have much but everyone will have the same."

Can they get away with it? They'll keep trying. For more on how they're trying read Global Tax Competition. But the MO boils down to:

> Incrementalism: Introduce regulations slowly, and make sure no one regulation reveals a big picture.

> Debasement of the language: Fiddle with definitions of words or think up terms that only the initiated can clearly understand.

> Sneakiness; e.g., bury key passages in the middle of 1,000 page documents that only an attorney can decipher.

In other words, the European Parliament way of doing things. Welcome to the globalized era in smoke-blowing.

How likely is it that during their meeting Messrs. Obama and Brown will get around to discussing a global tax cartel?

One minister [in Britain's government] sketched the skein of long-standing political contacts that Brown has in Obama's administration, including Larry Summers, Robert Reich and Timothy Geithner:

"I think Obama will feel very strongly drawn to back Brown ... you can't underestimate how much the development of the new Democrat projects and the new Labour projects of the early nineties are intertwined. Many of Obama's closest advisers are Brown's mates - they have looked up to Gordon for a long time. I think there will be a lot of pressure to help Gordon's position."

Given that Brown and Summers are committed to quashing tax-rate competition between countries -- I'd say its likely they'll bring up the topic, if not during this meeting then at the G20 Summit next month.

Gordon Brown proposes U.K. and U.S. create global New Deal. Pundita proposes U.K. and U.S. first learn to chew and walk.

Prime Minister Gordon Brown is scheduled to arrive in Washington today for a three-day visit that will include a meeting with President Barack Obama, then on Wednesday he'll address the U.S. Congress. However, Washington is in the midst of its first major snowstorm of the year. Now there's a cosmic comment.

Mr Brown decided to test drive his planned speech by writing what is surely a draft for yesterday's (London) Sunday Times Online (Posted below.)

From the first 60 comments The Times posted from around Europe, the United Kingdom, the U.S. and even Japan, the consensus is that the circular file is the best place for Mr Brown's plan for a "global new deal" in which America plays a big part. There's so much sputtering indignation from mostly sensible people that my blogging task should have been easy: just publish the comments.

However, the views of sensible people don't count for much here in Washington, DC. It's the Congress, President Obama and his administration that Mr Brown will be addressing.

There are many Members of Congress, on both sides of the aisle, who will see business and political opportunities oozing from Mr Brown's every declaration.

So while Brown's planned speech sounds a crock it's shrewdly crafted to be catnip to every business and socio-political view in the US: From the one-world government advocates to the environmentalist radicals, to those who just want to make a buck from global trade, to the commies who have been waiting a century for just this opportunity, to those who want to stamp out all poverty and everything else bad that besets humanity, to the Anglophiles who reside most of the year on another planet and so don't know that Britain's part of the Anglosphere is now run by Arab bankers.

And all this overlaid by an appeal to those who are just plain scared to death of the global recession, which economists are inching toward pronouncing a depression.

Mr Brown's thought is if we would all band together and institute some form of FDR's New Deal at the global level, we can save the world. The catch to the Kumbaya is obvious in yesterday's big news from the G20 Summit pre-summit meeting in Brussels

(AP) — German Chancellor Angela Merkel and other EU leaders flatly rejected a new multibillion euro (dollar) bailout for eastern Europe on Sunday, suggesting that additional aid be given to struggling nations only on a case-by-case basis.

Germany had been under rising pressure to take the lead in rescuing eastern EU members staggering from sinking currencies, shrinking demand for exports and rising debt, but Merkel insisted a one-size-fits-all bailout was unwise.

"Saying that the situation is the same for all central and eastern European states, I don't see that," said Merkel, adding "you cannot compare" the dire situation in Hungary with that of other countries.

That tough stance came even as Hungarian Prime Minister Ferenc Gyurcsany warned that the global credit crunch was creating a widening economic chasm in the 27-nation bloc which threatened to rend Europe. [...]

So much for a coordinated effort to bail out the world. The Europeans can't even agree on how their own should be helped. Yet Gordon Brown wants to usher in globalized government. And the EU wants the United States to hurry up and back whatever plan for saving the world they bring to the G20 summit next month.

In this case speed is disastrous. Scare up money to throw at the IMF so they can continue to bail out the basket-case governments. Then slow down and look more closely for the causes of the financial meltdown, which seem to be a perfect storm of several convergent factors.

There's no way to solve a problem before it's correctly defined. And right now we don't have the definition. We have pieces of data. Last week Dave Schuler at The Glittering Eye turned up a piece -- about computerized trading programs.

How much did that play into creating the crisis? It might have been a significant factor in the blinding speed with which the crisis became full blown. We just don't know at this point, but we need to find out.

So until we know exactly what happened, what use is it to devise a plan for saving the world from a future financial markets meltdown? All you'll get is a host of regulations that would be counterproductive if they don't address what actually happened this time around.

As for Mr Brown's desire to save the world from global warming, listen to Marc Marano's discussion last night with John Batchelor. Mr Morano sits on the U.S. Senate Committee on Environment and Public Works. From every quarter scientists are clearing their throats to explain that the models used by Al Gore and others to argue that high CO2 levels create global warming are hoodoo.

(The interview is found in hour three of the podcast.)

We also need to think hard about globalism, a point that Dan Riehl stressed last week in his essay Can the American Spirit Be Tamed?

In his guest column for The Times Gordon Brown used the term "globalization" for what he clearly intends to mean globalism: the application of nationalist principles of democratic government to the entire world.

But again the current economic crisis has underscored that the European Union is having a hard time getting its act together.

And one look at the current problems in California and several other U.S. states suggests so much mismanagement at the state levels of government that only the vastness of this nation and its mega-population have staved off disaster.

I am reminded of Ivan Illich's harsh criticism, decades ago, of the U.S. He said that Americans were not even able to deal with the problem of their big-city ghettos, yet they presumed to tell Latin America how to live.

Granted, when you're much better off than the other fellow, as the U.S. was then in relation to our southern neighbors, that gives you rights to advise. But that doesn't overturn Illich's basic point, particularly as it can be applied to globalism.

Not to be unkind but just glancing through the first 60 comments in response to Brown's column for The Times underscores that over several years he and the rest of the Labor government made one serious mistake after another.

Not the least of the mistakes was putting too many eggs in the basket of the global banking industry. The upshot was that Britain is suffering with the banking crisis in the way a Banana Republic does when the price of their one major export commodity tanks.

The British didn't think to diversify enough. And yet their prime minister wants to take the lead in telling the world how best to run its affairs. And he proposes that we Americans, who stupidly borrowed against our mortgages to fuel a consumption boom, sit at the right hand of the British throne atop the globe.

Please. First we learn to chew and walk. Then ponder how to save the world. And before that, Americans need to think on the points about globalism and the American way that Dan Riehl raised.

A cynic might observe that Brown's goal has as much to do with saving the world as the Democrats are interested in stemming the banking crisis. Yes, one could argue that both find the crisis a convenient excuse for promoting socialist government.

But the thing about going over the cliff, it really doesn't matter how you came to fall off the edge once you're on the way down. We're in a lot of trouble and to avoid making the trouble worse we need to stop and think about how we got to this point -- and where we're going.

We also need to admit to ourselves that Mr Obama's financial advisors are out of their depth. The by guess and by golly triage measures of Paulson and Bernanke last year averted a total collapse of the financial markets and the banking industry; since then things have been bumping along without a resolution to the banking crisis.

So it's time to consider the advice of Steve Forbes, who popped up Saturday night on Geraldo Rivera's show for Fox News Cable. Taken by surprise -- I'd tuned in looking for breaking news -- I grabbed pen and paper and scribbled as fast as I could. I didn't get down every word but I got the key points and the money quote:

"Banks have more money than ever before but they won't lend because regulators come in and make them take book losses. These are not money losses."

From that, clearly Steve sides with veteran Wall Street traders who have been urging a suspension of mark-to-market accounting.

More points:

> The Obama stimulus plan: it's not geared to creating wealth.

> Steve's view is to focus is on creating wealth rather than redistributing it; a better approach than printing/borrowing mountains of money to throw into the bottomless pit of the world's economic slowdown.

Additional advice:

> Cut payroll taxes to put more money in the pockets of Americans to spend as they please.
> Lower corporate tax rate to bring more US corporations back to the US.
> Bring down health care costs by making health insurance a truly free market enterprise.

What chance do we have that Mr Obama's team and the Congress will follow the advice? The ship has left the pier with the trillions of dollars committed to the Obama team's plan. But the Congress may be forced to swallow much of Steve's prescription because reality is bearing down, in the form of investors who are so mad they're sitting out every market but gold.

Who'll blink first? I venture it depends on how low the Dow goes during March. If it loses another thousand points I think that'll boost the practical solution.

The special relationship is going global
By Gordon Brown
March 1, 2009, The Times Online

Historians will look back and say this was no ordinary time but a defining moment: an unprecedented period of global change, and a time when one chapter ended and another began.

The scale and the speed of the global banking crisis has at times been almost overwhelming, and I know that in countries everywhere people who rely on their banks for savings have been feeling powerless and afraid. But it is when times become harder and challenges greater that across the world countries must show vision, leadership and courage – and, while we can do a great deal nationally, we can do even more working together internationally.

So now is the time for leaders of every country in the world to work together to agree the action that will see us through the current crisis and ensure we come out stronger. And there is no international partnership in recent history that has served the world better than the special relationship between Britain and the United States.

It is a relationship that has endured and flourished because it is based not simply on our shared history but on the enduring values that bind us together – our countries founded upon liberty, our histories forged through democracy and an unshakeable belief in the power of enterprise and opportunity.

But if it reflects our values and our histories, this special relationship is also a partnership of purpose, renewed by every generation to reflect the challenges we face. In the 1940s it found its full force defeating fascism and building the postwar international order; in the cold war era we fought the growth of nuclear weapons and when the Berlin Wall fell we saw the end of communism. In this new century, since the horrors visited on America in 2001, we have worked in partnership to defeat terrorism.

Now, in this generation, we must renew our work together once again. A new set of challenges faces the whole world, which summons forth the need for a partnership of purpose that must involve the whole world. Rebuilding global financial stability is a global challenge that needs global solutions. However, financial instability is but one of the challenges that globalisation brings. Our task in working together is to secure a high-growth, low-carbon recovery by taking seriously the global challenge of climate change. And our efforts must be to work for a more stable world where we defeat not only global terrorism but global poverty, hunger and disease.

Globalisation has brought great advances, lifting millions out of poverty as they reap the benefits of economic growth and trade. But it has also brought new insecurities, as this – the first truly global financial crisis – underlines. Globalisation is not an option, it is a fact, so the question is whether we manage it well or badly.

I believe there is no challenge so great or so difficult that it cannot be overcome by America, Britain and the world working together. That is why President Obama and I will discuss this week a global new deal, whose impact can stretch from the villages of Africa to reforming the financial institutions of London and New York– and giving security to the hard-working families in every country.

I see this global new deal as an agreement that every continent injects resources into its economy. I believe that central to this new investment is that every country backs a green recovery for the future, that every country that wishes to participate in the international financial system agrees common principles for financial regulation, coordinated internationally, and changes to their own banking system that will bring us shared prosperity once again. And that, together, we must agree to reform the mandate and governance of global institutions to recognise the changing shape of the world economy and the emergence of new players.

It is a global new deal that will lay the foundations not just fora sustainable economic recovery but for a genuinely new era of international partnership in which all countries have a part to play. This programme of internationally coordinated actions includes six elements:

First, universal action to prevent the crisis spreading, to stimulate the global economy and to help reduce the severity and length of the global recession. Second, action to kick-start lending so that families and businesses can borrow again. Third, all countries renouncing protectionism, with a transparent mechanism to monitor commitments. Fourth, reform of international regulation to close regulatory gaps so shadow banking systems have nowhere to hide. Fifth, reform of our international financial institutions and the creation of an international early warning system. And last, coordinated international action to build tomorrow today – putting the world economy on an economically, environmentally and socially sustainable path towards future growth and recovery.

I have always been an Atlanticist and a great admirer of the American spirit of enterprise and national purpose. I have visited America many times and have many friends there, and as prime minister I want to do more to strengthen even further our relationship with America.

Winston Churchill described the joint inheritance of Britain and America as not just a shared history but a shared belief in the great principles of freedom and the rights of man – what Barack Obama has described as the enduring power of our ideals – democracy, liberty, opportunity and unyielding hope. Britain and America may be separated by the thousands of miles of the Atlantic, but we are united by shared values that can never be broken. And as America stands at its own dawn of hope, I want that hope to be fulfilled through us all coming together to shape the 21st century as the first century of a truly global society.

See February 25 Pundita post for additional comments on Mr Brown's address to Congress.

This entry is crossposted at RBO.

Gasp! The Washington Post headlines an Obama mistake!

Where are my smelling salts? Not stuck back on Page A20 but on the front page, above the fold, under the headline Economy Shrinks At Staggering Rate:

By Annys Shin and Neil Irwin
Washington Post Staff Writers
Saturday, February 28, 2009; Page A01

The prospects for an economic recovery by year's end dimmed yesterday, as government data showed that the economy contracted at the end of 2008 by the fastest pace in a quarter-century. The worse-than-expected data fueled doubts about whether the Obama administration had adequately sized up the challenges it faces in trying to pull the country out of recession. [...]

Of course it was the Saturday edition -- The Washington Post's Siberia. But that the editor okayed a discussion of doubts for the front page -- I repeat, above the fold -- might indicate the shortest honeymoon period ever for a U.S. president.

They could have reported just the hard data on the front page then stuck the discussion about the bad judgment of Obama's administration somewhere else; what passes for a shrieking headline for the paper suggests that the editorial board was a tad upset to learn that President Obama leaped before he looked. Returning to The Post report:

The revised GDP figure helped stoke skepticism among economists who say the White House's projections for the nation's recovery are too rosy.

Based on those projections, Obama said he would slash the deficit in half by the end of his term. In its budget outline, the administration predicted that the economy would shrink 1.2 percent this year and grow 3.2 percent next year. By contrast, the consensus among private forecasters is that the economy will shrink 1.9 percent this year and grow 2.1 percent next year.

"It's just premature to expect the economy to be recovering," said Joshua Shapiro, chief economist at MFR, a forecasting firm. He said he expects the recession to drag into early next year.

"If you looked at the Obama administration's forecast, it's very much at the optimistic end of the spectrum. There's a whole 180 degrees between us and them," Shapiro said. "That doesn't guarantee they're wrong and the pessimists are right. But they are making pretty optimistic assumptions right now to hit even these terrible numbers for deficits."

Christina Romer, chairman of the White House Council of Economic Advisers, told reporters yesterday that the administration's growth projections were made weeks ago, before data showed an even deeper recession, and noted that it is normal for an economy to bounce back fairly sharply after a major downturn.

Speaking at a monetary policy conference in New York yesterday, she said the first quarter "is going to be bad," but the government stimulus package and other efforts would eventually bring healing. [...]

I hate to be the bearer of bad news, Ms Romer, but there is nothing normal about this recession. Economists are famously myopic about predicting recessions and their duration but the situation this time is so extraordinary that most economists are sensibly practicing caution in their predictions. Not so for Mr Obama's economic advisors, who committed him to a projection and stimulus strategy that do not fully take reality into account.

Were the advisors pushed to wear rose-tinted glasses so that Mr Obama's first speech to Congress could be 'sensitive' to complaints from the media that his earlier announcements about the economy sounded apocalyptic? I hope not, although that would be consistent with the political-campaigning style he's carried into the White House.

Worse than misapplied style, however, is blindness to the goal posts. To return to The Post report:

Whether their outlook is bleak or hopeful, analysts agree on one thing: The most serious threat to the economy is the credit crisis. Until banks are healthy enough to begin lending more, the economy is not likely to see sustainable growth, even with the massive stimulus package approved this month by Congress.

"Until you get the banking sector going, all the stimulus can do is provide a brief reprieve," said Bernard Baumohl, chief global economist at the Economic Outlook Group, a forecasting firm in Princeton, N.J. "Otherwise we could be condemned to a period of anemic growth or slip back in to recession in 2010 once the stimulus dissipates."

Yet it's beginning to look as if President Obama sees his agenda for "spreading the wealth around," as he's put it, as having equal importance with battling the credit crisis.

Er, is President Obama proposing geriatricide as a means to reduce America's budget deficit?

Yesterday New York Times columnist David Leonhardt took a stab at deciphering President Obama's proposed budget. Usually I don't mention a columnist's credentials but in this case I think it's helpful to know that Leonhardt didn't fall off the back of a potato truck. He studied applied mathematics at Yale and he's been writing about economics issues for The Times since 2000. So I think he's reasonably qualified to comment on the proposed budget. I was struck by this part of his explanation:

Mr. Obama would try to lift the incomes of the middle class and poor through two main channels, administration officials said. The first is an overhaul of health care, meant to reduce the insurance premiums now taking a large bite out of many families’ paychecks.

The details remain vague, but the budget begins paying for investments that would eventually allow Medicare officials to refuse to pay for medical treatment that does not show evidence of improving health. If successful, that change would vastly reduce the government’s long-term budget deficit. It is also likely to bring down private health costs, since insurers typically follow Medicare’s lead.

Small wonder the details are vague; many of the medical conditions that beset the elderly, including aging, do not improve with medical treatment. The best that can be hoped for is management of symptoms for a host of illnesses, such as Alzheimer's and COPD, which are typically associated with aging.

Of course the same holds true for many illnesses that not are age-specific, such as AIDS and asthma, and which can only be managed, not improved.

I have a hunch that the AARP would have something to say about a backdoor proposal to slip geriatricide policy into Medicare reform.

I hope that I've misunderstood Leonhardt's analysis or that he's misunderstood what he read of the proposal. Yet on the chance we've understood perfectly it's time to review a few basic points:

Granted, the Social Security problem is now at crisis proportions as the post-WW2 generation approaches retirement. But any solution that encourages involuntary manslaughter of the elderly is out of bounds in a civilized society.

I would remind President Obama that America's medicine fields have grown into mega-industries because of research and treatment methods aimed at helping people manage incurable illnesses and the wages of aging.

I also remind House Speaker Nancy Pelosi that allowing elderly people who cannot afford private insurance to die from medical neglect is not a humane way for a government to reduce humanity's carbon footprint.

There is a simple means to bring down Medicare costs and that's to omit Medicare fraud. For reasons I don't understand our government has made only the most cursory attempt at stopping the massive fraud.

Ah yes, the detail about interest charges

I wish I hadn't visited Reuters this morning:

Think the U.S. deficit is bad? Check out the interest payments

Posted by: Jeremy Pelofsky
February 26th, 2009
Front Row Washington Blog, Reuters

For those who are worried about the $1.75 trillion deficit that President Barack Obama projected the government would run in fiscal 2009, wait until you see what the interest on the growing U.S. debt will be.

The U.S. debt is roughly $10.6 trillion and the government spent $253 billion servicing it last year. With the mounting yearly deficits, that cost is skyrocketing.

During the debate over the $787 billion economic stimulus plan aimed at pulling the U.S. economy out of its downward spiral, Republicans argued that the cost was really over $1.1 trillion because of the cost to service the additional debt.

Lest folks think that current low borrowing costs would make the burden a little lighter, Obama’s fiscal 2010 budget projected that during his upcoming four years in office the cost will run roughly $1 trillion.

How does spending $447 billion just in interest payments on the debt in 2013 sound? And $694 billion in 2019 alone? If you want to see those shocking figures in black and white, see page 117 of Obama’s budget. [...]

The world is not high school, Mr Obama

My greatest concern at this time is that the leaders in the European Union are trying to rush the Obama administration into making far-reaching decisions. My second greatest concern is that Mr Obama is rushing because he doesn't want to be unpopular.

I have noticed that President Obama has a tendency to confuse the world with high school. The EU is going to have a lot of fun with his view of the world if he doesn't wise up fast.

The goal for the U.S. President is not popularity. The goal is to act in the best interests of the United States, which is the economic engine of the world. No amount of U.S. popularity will save the world if the U.S. falls.

But since the rise of the EU, every time a U.S. administration doesn't do exactly what the EU leaders want, suddenly all over Western Europe half the population turns into streets and shouts Down with the USA.

And the BBC is always on the spot to record the protests for the evening's broadcast, which is global.

Then -- and this is the part I love -- they send armies of Talking Heads to appear on U.S. TV shows, to explain to Americans what steps we can take to stem the tide of anti-Americanism sweeping the world.

Get used to it, Mr President.

A wag observed recently that the economic crisis is "Obama's Iraq." I think the better comparison is the immediate aftermath of 9/11. So much is happening so fast in this war on the global economic meltdown, and on so many fronts, it harks to the storm of government activities here and abroad that arose in the wake of al Qaeda's attack on America.

The comparison falls apart, however, if you consider that the Bush administration was well-settled in place when the attack occurred, whereas Barack Obama moved into the White House in the midst of the financial meltdown.

So I am not happy that the EU -- poked and prodded by our dear allies, the 'Big Three,' Germany, France, and UK -- has chosen the April 2nd Group of 20 summit as the drop-dead date for the United States to have in place a plan for sweeping new regulations. Regulations meant not only to stem the present global economic crisis but also any future ones. And for the US to decide whether to accept the EU plan, in which Gordon Brown has a big part, for saving the world.

Gee, why not also make April 2 the drop-dead deadline for getting a space station on the moon, finding the cure for AIDS, and ending global poverty?

Of course there needs to be an international, coordinated approach to dealing with the crisis, and yes we know that Europe is being hit even harder by the economic crisis than the United States.

But this 'hurry up and sign on the dotted line because the sky is falling' -- c'mon guys.

If there was ever a time for a U.S. President to invoke the raw power of America's hyperpower status, the G20 summit is it. This should be a working summit, a discussion summit, and not the place to agree to regulations that will have a profound affect on the entire world for many decades to come.

Yet not 24 hours had passed since President Obama's address to Congress (and my post warning that something was afoot with Gordon Brown) that he announced the U.S. is preparing sweeping new regulations with the entire globe in mind:

President Obama outlined broad plans on Wednesday to revamp the nation’s financial system.

Obama is seeking a host of new regulations amid a historic meltdown to prevent a future financial crisis.

“We can no longer sustain 21st-century markets with 20th-century regulations,” Obama said following an Oval Office meeting with his top lieutenants and the chairmen and ranking members of the House and Senate panels overseeing the financial industry. [...]

Obama has said he would like to complete an outline on future regulation by a G-20 heads-of-state meeting in London in early April.

Moving legislation through Congress, however, could take more time. House Financial Services Committee Chairman Barney Frank (D-Mass.) has laid out a two-stage process for regulatory legislation that will be a lobbying bonanza, with outside think tanks, advocacy groups, government panels and watchdog offices weighing in with stacks of reports.

Obama, who also met with congressional leaders on his budget Wednesday, said he is trying to avoid both “an oppressive government-run economy” and “a chaotic and unforgiving capitalism.”

The definition of "low-information American" is "Democrat politician." So I'll cut President Obama slack and assume he really doesn't know that if only we'd had an unforgiving and chaotic capitalism, the global economic crisis would have been over by now.

There has been so much government intervention in financial markets here and abroad that it'll be a miracle if the world pulls out of the worst part of the economic crisis by the start of the next decade.

There is no solution for this problem until everyone throws in the towel and finally admits that Ayn Rand was completely right; that will happen only with a profound transformation in consciousness that might be slated for the year 3,001 CE.

Until then, we'll have to bump along with governments playing mechanic whenever their regulations produce economic chaos. Of course this always results in more government regulations. But we're trying for least harm here. And that means the United States shouldn't rush to do things the EU way.

I want to show you something. Here is the list of the G20 members. (There are two G20s -- one is the "major economies" and the other is "developing nations;" the meeting taking place in London on April 2 is the G20 major economies.)Watch carefully; don't blink:

In 2009, there are 20 members of the G-20. These include the finance ministers and central bank governors of 19 countries:

Argentina
Australia
Brazil
Canada
China
France
Germany
India
Indonesia
Italy
Japan
Mexico
Russia
Saudi Arabia
South Africa
South Korea
Turkey
United Kingdom
United States

The 20th member is the European Union, which is represented by the rotating Council presidency and the European Central Bank.

So that's why they don't describe the G20 members as "nations;" it's because the European Union is a bloc of nations.

Looking at our map of the world we see that Italy, France, Germany and the United Kingdom are in Europe and the EU. That means the EU Big Three are twice represented at the G20 summit, which gives them tremendous clout.

If you say, 'Hey, no fair' -- there is no 'fair' from the EU point of view when it comes to wringing concessions from a hyperpower. That's their excuse and they're sticking to it: the USA is a hyperpower and so we need to eke out a little patch of bipolarity in the world.

The EU viewpoint studiously overlooks the fact that the big bad hyperpower has made it possible for Western Europe to recover from two world wars in relative peace and raise a very powerful trading bloc that is America's biggest trade competitor.

I think even before he was in office President Nicolas Sarkozy proposed that the EU nations take on responsibility for defending themselves. The proposal went over in Europe's major capitals (including Paris) like bacon at a bar mitzvah. Why spend money on defense when those governments can rely on the USA for defending them, which frees up the European governments to support massive social welfare programs?

So I don't want Democrats writing me to complain that not all their politicians are low on information. Virtually every Democrat politician points to Western Europe's social welfare programs as a model for the United States.

Earth calling Democrats: You want the European Social Welfare model applied to the USA? In that event, who's going to take on the responsibility for defending the US -- not to mention Europe and the Middle Eastern oilfields -- if the US follows the European welfare model? China? Guatemala? Or should we ask the EU and their flotilla of rubber duckies to patrol the oceans?

Where was I? The Hill's report on the Obama administration's scurrying to concoct new regulations is a handy guide to the kind of regulations being considered.

With regard to the EU plan, a UK Guardian report from February 16 sketches the broad outline of Gordon Brown's plan for saving the world from economic catastrophe, present and future. I suggest you use the report, which I have posted below, as a handy program guide for Brown's speech to the U.S. Congress on March 4.

Is it a good idea to give more funds and power to the IMF? There's no choice about adding to their coffers. They're having to bail out a number of European nations and before the global downturn is over they'll probably have to bail out half of Africa.

With regard to increasing the IMF's power: I would rather see the IMF take the heat than the USA for the mistakes and friendly fire that are to occur in the fog of war against the global financial crisis.

So while I want to see all the details before saying yes, I am in favor of handing the IMF some I repeat some regulatory powers.

As for the rest of Mr Brown's proposals: he's trying for more integration and control of the globalized financial markets so to prevent another falling-dominoes scenario. This, on the argument that all the markets are inextricably entwined.

But you can argue, as Phillip Blond has (see my post of yesterday), that it was the lack of firewalls to protect domestic financial markets that turned the housing mortgage crisis into a global series of cascading catastrophes.

How to set up firewalls for markets that trade both globally and locally? That question should be the top one for Obama's regulatory team, the Federal Reserve, and Congress. The answers they come up with should be America's top contribution to the G20 summit.

As for Gordon Brown's plan to give the G20 a permanent secretariat -- you gotta think like a bunko squad cop to fathom Mr Brown's machinations.

Gordon Brown seeks sweeping reforms to give IMF global 'surveillance role'

By Patrick Wintour, political editor
Guardian; February 16, 2009

Gordon Brown is making reform of the International Monetary Fund, its governance, funding and powers of surveillance, the centrepiece of a 45-day diplomatic drive in an attempt to make the G20 summit in London a turning point in remaking the international economic order.

Brown, in alliance with the Australian prime minister Kevin Rudd, wants to increase the funding of the IMF, speed up a review to give China and India clearer voting rights, and also give the fund powers to direct nation states to respond to its surveillance reports.

He also wants to give the G20 a permanent secretariat, so making it a powerful body overseeing finance and largely eclipsing the G8.

The prime minister is meeting the IMF managing director, Dominique Strauss-Kahn, on Wednesday, the pope on Thursday and the Italian prime minister, Silvio Berlusconi, on Friday, before joining a mini-summit of European G20 members France, Italy and Germany in Berlin hosted by Angela Merkel, the German chancellor.

No 10 angrily denied suggestions that Merkel is lining Brown up to be a new IMF super-regulator. Some officials believe a cabinet member leaked the suggestion.

Britain is chairing the G20, with a summit in London on 2 April to be attended by Barack Obama, and Brown is using the event to advance his long-nurtured plans to reform the IMF. It is a huge test of his diplomatic skills as he seeks to weld conflicting goals and ensure practical proposals emerge rather than rhetorical bombast that fails to assure the markets.

On the IMF, Britain wants to expand its existing lines of credit, so giving "emerging market economies" an opportunity to contribute. Brown has also considered a loan or bond facility funded by Arab states, Japan and China.

He and Rudd also want allocate additional special drawing rights (SDRs) to the IMF's newer members, as agreed in 1997, so giving them access to foreign exchange. SDRs are an official international reserve asset issued by the IMF to its members, who can exchange them for freely useable currency.

Strauss-Kahn has called for the IMF's resources to be doubled $500bn. Brown is also interested in the IMF supporting – through expertise and financing – the creation of a network of national "bad banks" to take on toxic assets.

Finally, he wants to give the IMF a strengthened mandate to provide early warning of weaknesses and advice on remedial policies, similar to those provided by a central bank.

At a seminar on the G20 summit last week Brown argued: "The world lacks a proper early warning system. There is the Bank for International Settlement, there is the Financial Stability Forum, but we have never given anybody sufficient teeth so that their views are treated so seriously that people will immediately have to act when that early warning is given. We still lack the means for financial supervision." The International Monetary Fund, he said, "cannot have a role that is simply commentating on the global economy, it must have a surveillance role that is effective".

He added: "If people feel that the IMF is simply the representative of the richest countries with very little say for the poorer countries, if people think that the World Bank is similarly constructed, then people are going to either seek to have other institutions or going to reject the existing institutions, and of course the danger of that at this time is protectionism."

The aim appears to be develop a "grand bargain" in which there is a greater role for emerging economies such as China in the IMF, and easier access to its financial assistance, in exchange for such countries playing by the global rules and not trying to build up surpluses and reserves as an insurance policy.

Other issues to be addressed include whether hedge funds and shadow banking are brought within the remit of regulation and Brown has also asked Pascal Lamy, the head of the World Trade Organisation, to compile a report for the G20 on the threat posed by protectionism.

Brown now reckons that unless new credit lines are opened, as many as 100 million people will be driven into poverty as a result of the global financial crisis. He has been struck by figures from the International Institute of Finance which said two years ago net flows to the emerging markets were nearly $1 trillion, but that in 2009 this figure will be $160-170bn – a 700% fall in two years.

President Barack Obama's speech to the U.S. Congress

"The question is: will the U.S., the biggest financial player in the world, ever agree to the binding international regulation the Europeans seek?"
-- TIME

I did not watch President Obama's appearance before Congress because earlier in the day it was announced that Britain's Prime Minister Gordon Brown would be addressing Congress on March 4. This meant I had to place myself in the proper state of mind to analyze the reasons for Brown's visit, which I did by watching a Dirty Harry movie -- Magnum Force, to be exact -- that aired on cable at the same time as Obama's speech.

The scheduling conflict was unfortunate but of the two addresses to Congress, Brown's speech will be far more important. However, I did read the prepared text of Obama's speech and William Kristol's Washington Post analysis of it.

Kristol complained that if you blinked you missed Obama's mention of foreign policy/defense issues:

You’d never know from the one-sentence discussion of Afghanistan that just last week the president had ordered an additional 17,000 troops there.

Obama doesn’t seem to think his responsibility as commander in chief is in any way special. He certainly felt no responsibility even to begin to educate the public about this theater to which he’s committing additional American soldiers.

Instead, both the wars in Iraq and Afghanistan were treated as sideshows to “a new era of engagement” that Obama claims has begun.

The only particular place mentioned by Obama, in addition to Iraq and Afghanistan/Pakistan, was Israel: “To seek progress toward a secure and lasting peace between Israel and her neighbors, we have appointed an envoy to sustain our effort.” The Israeli-Arab dispute and its envoy merits a mention. Yet Iran and its nuclear program does not? [...]

This was not the speech of a man who thinks of himself as a war president.

But he is.

Now, now; we must take our cue from Britain's Labor government and not fling around inflammatory terms. The U.S. is not at war; we're engaged in peacekeeping endeavors.

With regard to Iran, here we must take our cue from Secretary of State Hillary Clinton. Last week she argued, in essence, that neither she nor anyone else had ever actually seen North Korea's nuclear enrichment program; ergo, there's no way to tell whether any such program exists or ever existed.

Now do you see how simple life becomes when you don't have to go blind poring over intelligence reports and endlessly weighing their conclusions?

So there's the answer to Kristol's complaint: have you ever actually seen the Iranian nuclear enrichment program? What about Iranian nukes? Do you know anyone who has seen an Iranian nuclear weapon? Then why bother to bring up the subject during a presidential address to Congress?

I note from the text of the speech that President Obama gave much discussion to America's financial situation, which makes sense. I do have one point in response to his statement:

I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you — I get it.

I'm not sure what Obama thinks he gets. Just to make sure that what he thinks he's gotten isn't the idea that free markets caused the crash in the banking sector, here's a quick review of reality courtesy of Spengler's December 9, 2008 column for the Asia Times (H/T Mark at Searock)

[...] In Congressional testimony this autumn, former Federal Reserve chairman Alan Greenspan notoriously admitted that his free-market philosophy was inadequate. Yet nothing that occurred under Greenspan's tenure had to do with freedom.

Banks that enjoyed a monopoly due to their federal charters were permitted to transfer assets away from their balance sheets to other entities, allowing them to use much less capital to support assets than in the past.

Even worse, the Federal Reserve allowed larger and more sophisticated banks to put less capital against assets that bore a high rating from Moody's and Standard & Poor's -- the agencies that later owned up to having sold their souls to the devil for revenues.

Greenspan, it turns out, presided over a bubble manufactured by the most-regulated private companies in the world, the large commercial banks, who operate with the implicit guarantee of the US Treasury.

When the banks got into a hole, the Treasury guarantee became explicit, and floated the banks out of the hole with several trillions of dollars of actual and prospective taxpayer money.

Private interests appropriate a small but noticeable fraction of America's wealth, emulating in a very small way the behavior of private interests in Argentina, which typically steal all the national wealth as well as whatever they can borrow from foreigners.[...]

That's the half of it; the other half, which Phillip Blond spells out in his Rise of the red Tories, explains why the United States was swept into a situation that cascaded into a full-scale crisis because of the devastating speed of events:

[T]he great housing crash is primarily the result of the absorption of all local, regional and national systems of credit into one form of global credit. The world's financial system lacked the firewalls needed to separate local from national and international capital. Unduly reliant on one source of credit supply, the residential asset market collapsed when this supply was compromised.

I disagree with Blond's next statement:

The housing bubble was just the last and most notable piece of neoliberal speculation to burst.

Or rather I would disagree if any two people could agree on a definition of the term "neoliberal." But in the context of his argument clearly Blond thinks of neoliberalism as supporting 'free' financial markets. As Spengler pounded home, it's a myth that the markets are free.

Without knowing exactly what he "gets," how to sum President Obama's speech -- or rather the prepared text, which is stripped of the drama of Obama's address?

The text was short on details regarding plans for the banking sector; as such it can be read as more dithering, of the kind that Treasury and Federal Reserve have excelled at during the past month.

Aside from that I think the speech was constructed to mean different things to different people. As for me, I see the speech as a warm-up act for Gordon Brown's address to Congress.

So I wait and watch, in the manner of a cop on a stakeout.

Mr Brown and Britain's Labor Party are fighting for their political life. I'd say that Labor is bent on extracting as much help as possible from Washington in exchange for -- what? That's what I'm trying to figure out.

One thing is certain: Mr Brown has not earned the honor of speaking before both sitting houses of Congress. And at this point there is no discernable reason why the U.S. government provided him that venue.

What is widely known is that Brown and other EU leaders are pitching a coordinated financial recovery plan that will be formally introduced at the Group of 20 Major Economies meeting in April. The plan, as reported by TIME magazine, calls for the introduction of sweeping international regulations, which a professor at the London School of Economics cuttingly observed will upset America's "Joe the Plumber types."

All that explains nothing about Brown's appearance before Congress -- although it might explain why dithering has become the byword for the Obama administration's approach to the banking crisis. It could be they've just been marking time, waiting to learn how Europe plans to handle the crisis.

(As to whether the European leaders decided to present the plan to the United States as a fait accompli -- either that, or the U.S. involvement in working out the plan has been low-profile.)

One thing is clear: the American people will learn soon enough what Gordon Brown and his political party want from our "special relationship" with the British.

And if my hunch is right, Brown's address to the Congress will put President Obama's speech last night in a clearer context.

Got all that? If not I can boil it down to advice from Dirty Harry Callahan:

"A man's got to know his limitations."

Laughing at the Four Horsemen

When I was seven I was approached on a school playground by a classmate who'd not spoken to me before.

He announced without preamble, "It's all going to die."

When I asked what he meant he swept his hand to take in the playground, the trees and sky, and replied, "Everything. It's all going to be killed, everything that's alive. There's a weapon; it's called an A-Bomb. It's going to kill the world."

America in the 1950s.

I snapped, "Who told you the world was going to die?"

The boy replied, "My father."

"How does he know this?"

"He's an engineer. He knows these things."

I studied the boy's solemn face, the grave look in his eyes.

The passage of time has not dimmed my memory of the anger that came over me. That a grownup would place the weight of the world on a child struck me as horribly cruel.

I was new to the school. "What is your name?"

He replied, "Bill."

I drew myself up to my full height and with all the certainty I could muster I said, "Bill, I am telling you that the world will not die."

He turned over my words in silence.

Finally he asked, "How can you be sure?"

Thinking fast I replied, "Because my father is a scientist and scientists know more than engineers and my father says the world is not going to die."

I was winging it; I figured that if the world was going to die I would have overheard the news. Some of my earliest childhood memories are of creeping back down the stairs after I'd been put to bed, then hiding behind an armchair to listen to the debates among the stream of scientists and mathematicians who visited with my father.

Bill did not seem persuaded by my assurances but from his frown of concentration as he walked away, he was at least thinking about what I'd said.

That was not enough for me.

When my father arrived home that night I flung at him, "Is it true?" Then I blurted the story.

The atom bomb caused great destruction but it was unlikely that it would kill all living things, my father told me.

"Then you must explain this to Bill's father," I pleaded. "And he must explain to Bill."

I gave my parents no peace until they agreed to speak with the school principal about the situation. There followed a meeting between my father and Bill's, who'd had no idea that his son was expecting the world to die at any minute.

A few days later Bill hailed me on the playground. The sorrow had left his face. He related that his father had told him that what my father said about the bomb was true.

"I'm going to be a scientist or engineer when I grow up. I want to stop all the bombs," he added with confidence.

I cannot recall that we ever spoke again and I did not return to the school the next year. Yet the childhood encounter returns to mind sometimes when I contemplate situations that threaten to doom the human race.

I thought of Bill on Sunday when I checked Google News. At first I thought I'd misunderstood the headline: Team finds secret that could stem flu viruses. So I took a moment to gird myself against unwarranted exuberance before reading the article.

I had not misunderstood. The research results give hope that scientists have beaten the influenza virus at its own game. The game includes H5N1 and any of its possible recombinations.

We're not out of the woods yet. The most feared recombination could be drawing nearer with the recent outbreak of Ebola-Reston virus in pigs in the Philippines. Ominously the pig form of the virus has already been transmitted to humans, although the few who are known to have contracted the virus did not die from it.

How the Ebola virus jumped from monkeys to pigs is still unknown. But if the Ebola pig virus should recombine with H5N1 to produce a highly infectious deadly influenza for which humans have no antibodies, the consequences are almost unbearable to think about.

If the research pans out it could be years before a super-vaccine is ready -- a vaccine you take once in your life, and which is good against influenza in any form. Yet we now have a fighting chance to ward off a global killer pandemic that would be devastating to modern societies. I hope Bill has lived to hear the news.

Humanity will not go the way of the dinosaurs. We will not fail. Who dares say this? The daughter of a scientist.

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Crossposted at RBO with accompanying artwork.
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Emailed comment from reader:

"Yes, laughing is the correct tone
also plenty of bullets"

That's the spirit. We'll be ready for them when they show.
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Crossposted at Uppity Woman with a great introduction that invokes the era in America when schoolchildren routinely dived under their desk when the air raid siren went off. For anyone looking for reminiscences about life in Cold War USA, Uppity's comments (and those of a number of her reader's in the comment section) are the bomb, if you'll pardon the expression.

California's water mismanagement disaster UPDATED April 5, 2105

April 5, 2015 UPDATE
There's been so much interest in this old post I'll mention that starting in the spring of 2014 I began a series titled "Water Crises Gordian Knot."  After a hiatus of several months from water topics I returned to the fray in 2015 with so many posts on California's water shortages and shortages around the world that I've lost count. In these I've focused on illustrating the incredible scope and complexity of problems connected with the shortages, whether it's water toxicity, land subsidence, flooding, and so on -- and their sameness across the USA and around the world.  Talk about everyone being in the same leaky boat!

Here are my four latest water posts; all but the last are specific to California -- but again, all can apply to water problems across the USA and the world.

April 4
California Hydropolitics: Pure Poison
Waiting on the course of California hydropolitics
April 5

Easter Deluge in North California: File under Signs and Portents
Risen

Now to return to 2009,,,,,,

Best regards to all,
Pundita
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February 23, 2009 UPDATE
Kindly note the exchange in the comments section and the link I provide there to a New York Times article on California's drought. I'll be putting up a post that expands on the comments but for now: California's bout of plentiful rain does not mean the end to the drought there.
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"[If] there's a third dry year, permanent crops such as orchards and vines are going to either be removed completely or kept barely alive..."

The situation for California, as it enters its third year consecutive year of drought, is grim, and with the additional burden of the financial crisis, nearing the brink of catastrophe.

In the 2005 post Another Kind of Darkness, I discussed the water wars that took place in 1900's California between the fledgling City of Los Angeles and the farmers of Owens Valley. The city won, and the megacity of Los Angeles was the result, but not without the cost of desertification in the valley.

It's a story that has been repeated countless times around the globe during the past century. But one would think that California's modern-day government had absorbed lessons from Owens Valley. It didn't.

After decades of California's inadequate water policies and studiously short-sighted hydropolitics (the politics of water and water resources) the only hope left this year is ample rain and snow. If the miracle doesn't materialize in a year expected to be dry, there's just simply not enough water to meet projected demands.

Will they ever learn? Let me put it this way. The drought could turn out to be for California what Hurricane Katrina was for the City of New Orleans.

Decade after decade thousands of people resided below sea level in that city, all the while knowing that it was certain death to stay there if a strong hurricane hit.

Decade after decade, Californians have surveyed their parched lawns during a drought and said, We really need to solve the water problem because one day there's gonna be a really bad drought.

The answer is of course they won't learn until they're forced to by a dust bowl covering much of the state. That's human nature; deal with it because you have no choice.

But here's a tip for Nancy Pelosi and the rest of the U.S. politicians who lecture about saving the planet from global warming: if you want to save the planet, why not try something new for a change? Start small and work up to the big stuff.

Learning to walk: practice. Learning to talk: practice. Saving the world: practice. But practice on your own neck of the woods before you inflict your half-baked ideas on the rest.

I do not want to hear that California's water crisis is the result of global warming. It's the result of human nature compounded by stupidity. And three guesses who'll have to pick up the tab for rescuing Californians from that much stupidity.

RBO's report, which I republish here, is a window on the latest California water 'war' and the state's hydropolitics:

The California Water v. Delta Smelt War
by Procrustes, February 21, 2009

Before we get to the nitty gritty of this post, let's contemplate a few bits of data first.

Water, like air, is a necessity of human life. It is also, according to Fortune magazine, 'One of the world's great business opportunities. It promises to be to the 21st century what oil was to the 20th.'--CBC (Canada).

There are those in Iran who must abandon their homes due to lack of water; they are known commonly as 'water refugees'. In Gaza, less than 15 gallons of water a day are available to each Palestinian (opposed to each American who has 800 gallons of water available a day). If you think things couldn't get worse in the Middle East, look to the foreseeable future, when usable water will be far more precious than oil.--Susan Williams, Indiana University, October 12, 2002.

By 2015 nearly half the world's population—more than 3 billion people—will live in countries that are 'water-stressed'—have less than 1,700 cubic meters of water per capita per year—mostly in Africa, the Middle East, South Asia, and northern China. --"Global Trends 2015," CIA Report (2000).

Global water consumption has risen almost tenfold since 1900, and many parts of the world are now reaching the limits of their supply. World population is expected to increase by 45% in the next thirty years, whilst freshwater runoff is expected to increase by 10%. UNESCO has predicted that by 2020 water shortage will be a serious worldwide problem.

One third of the world's population are already facing problems due to both water shortage and poor drinking water quality. Effects include massive outbreaks of disease, malnourishment and crop failure. Furthermore, excessive use of water has seen the degradation of the environment costing the world billions of dollars.--SaveWater.com.

This is not a very pretty picture. Fortune magazine got it right. Keep in mind. Inhabitants on our big blue marble could manage to survive without oil and natural gas but nothing will survive without water, which is a diminishing natural resource.

This takes us to the reason for this post, an article published December 17, 2008, in The Bakersfield Californian. Staff writer Courtenay Edelhart reported on a U.S. Fish and Wildlife Service decision regarding water districts that "rely on the San Joaquin-Sacramento Delta (left) for much of their water supply" and that "could potentially hike water rates for consumers and hurt farmers already smarting from a drought."

In 2007, a federal judge ruled state and federal pumps sending some 6 million acre-feet of delta water south to Kern County and other users each year could wipe out the endangered smelt, a tiny silver fish. The court ruled pumping had to be curtailed by about a third until the U.S. Fish and Wildlife Service could weigh in on the problem.

On Monday, the federal agency submitted a 400-page "biological opinion" to the U.S. Bureau of Reclamation on the effects of pumping by the Federal Central Valley Project and the California State Water Project. The agency concluded pumping was "likely to jeopardize the continued existence of the delta smelt (right) and adversely modify its critical habitat," and offered a plan to mitigate damage.

The plan would keep current restrictions in place, and even more limits could kick in under certain conditions. Further cuts would be triggered in a variety of scenarios, including limited rainfall during key periods in the fish's spawning cycle.

^{Robber's Roost, Kern Co., Calif.}

Jim Beck, general manager of the Kern County Water Agency, which contracts for water on behalf of agricultural, municipal and industrial water districts in Kern, said "Implementing the plan would reduce water supplies from San Diego to San Jose by 20 to 30 percent on average, but up to 50 percent in some years."

As always, this is not the end of the story. Other water districts, which "have long argued that pumping isn't the real culprit in the smelt's demise," are "gearing up for a fight."

Invasive species, pollution and greater municipal and industrial uses of delta water are important factors that have not been given enough attention, said Robert Kunde, assistant engineer manager for the Wheeler Ridge-Maricopa Water Storage District.

"There are a number of good reasons to believe that even if State Water Project pumps were cut entirely, the delta smelt may very well go extinct," Kunde said.

Al Donner, assistant field supervisor for the Sacramento field office of the Fish and Wildlife Service, said all that has been looked at, but pumping cannot be discounted.

"The indices that track the smelt show the last couple of years, they've been at their lowest numbers ever," he said. "The species clearly is in trouble."

Back in June 2008, the Bakersfield paper reported on the second year of drought problems for farmers who once grew such products as cotton, pistachios, almonds and alfalfa.

Faced with too little rain and restricted pumping to protect an endangered fish, farmers and ranchers in and around Kern County are facing tough choices. In a typical year, 850,000 acres are irrigated, according to the Kern County Water Agency.

This year, about 45,000 of them will be idle at a cost of $46 million. In addition, 100,000 acres will be "underirrigated," causing a $59 million loss.

Also in June 2008, the Bakersfield paper reported that the U.S. Bureau of Reclamation was "further shrinking the amount of water allocated to farmers subject to the Central Valley Project contract, which regulates water use on many farms in the Kern County area."

"It's not a pretty year," said Fred Starrh of Starrh and Starrh Farms, ... "There's just not a lot of water around. It's almost like gasoline for us. The price of water has almost tripled."

^{A mile high plume of dust over Bakersfield, Calif., December 1977}

In October 2008, the Bakersfield paper reported on "plans to cut water allocations to cities and farms to the second lowest level since it began making deliveries in 1962, which local growers said could push farmland out of production and boost already soaring grocery prices higher."

The California Department of Water Resources says that after two consecutive dry years and court-ordered restrictions on pumping from the environmentally sensitive Sacramento-San Joaquin Delta, the State Water Project will deliver just 15 percent of the water that water agencies across the state have requested for next year.

That's down from 35 percent delivered this year, and so low that officials warned some cities may be forced to ration and make voluntary conservation efforts mandatory. [...]

Without court-ordered restrictions to protect the threatened Delta smelt from pumping, the state's water allocation would have been 20 percent, 5 percent more than what's been predicted.

Additionally --

Kern County Water Agency general manager Jim Beck said between the smelt and explosive Central Valley population growth, there is far more demand for water today than during the last major drought of 1988 to 1992.

That means farmers are going to have to add to the 20,000 acres left fallow this year for lack of water. Beck estimates 90,000 acres in Kern County will be affected next year, including 50,000 not planted at all, and 40,000 acres of permanent crops watered enough to stay alive but not enough to bear fruit. [...]

Also, the drought has mostly affected annual crops, which are much easier to take out of production for a season or two. But if there's a third dry year, permanent crops such as orchards and vines are going to either be removed completely or kept barely alive...

Now, you ask, what makes this a "water war"?

Would it interest you to know that as recently as October 2005 "agriculture" had finally "won" a 50-year water war in this same part of California -- with the Bush administration "driving the trend?"

Central Valley irrigation districts are signing federal contracts that assure their farms ample water for the next 25 to 50 years. [...]

In the western San Joaquin Valley, a desert is blooming with cotton and produce, all sustained with water from California's northern rivers.

But in the places where this water once flowed -- the delta of the Sacramento and San Joaquin rivers, the Trinity River in the far north state -- fisheries have declined drastically. That's a direct result, biologists say, of water diversions to the south.

First among the winners of the water wars is the Westlands Water District (right, 2001) southeast of Fresno -- the nation's largest irrigation district.

Pancake flat, this 600,000 acres of arid alkali dirt is one of California's most desolate regions.

Yet Westlands is growing riotously: not in homes or shopping malls, but in melons, tomatoes, almonds, cotton and myriad other crops. Its fields produced about $1 billion in food and fiber last year.

And there's more:

Westlands gets its water from the federal Central Valley Project, which supplies water to a third of California's cropland and about 50 cities, including Sacramento, San Jose and several in the East Bay and on the Peninsula.

The district's annual allotment of about 1.15 million acre feet -- enough to supply about 2.3 million families -- dwarfs those of all other project participants. The next biggest, the Contra Costa Water District's, is only 185,000 acre feet.

An acre foot is the amount of water that covers an acre a foot deep.

Now, Westlands and other districts are successfully renewing their long-term contracts at current levels and at prices far below those paid by the state's growing cities, despite protests that pumping large volumes of water south is killing Northern California's fisheries.

Westlands is singled out for particular criticism because of its size and the amount of water it receives, but also because the irrigation of its fields produces toxic drain water, threatening state waterways. Some critics say much of its acreage should be taken out of production.

So far, about 200 contracts have been approved, and 80 more are pending, including Westlands'. About 6 million acre feet of annual water deliveries is at stake.

Farmers who get federal water are generally charged a fraction of the free-market rate.

Then along comes a two-year drought and the tiny silvery endangered delta smelt that sends up a red flag about the whole thing.

On July 10, 2008, the U.S. Fish and Wildlife Service changed the status of the "critically imperiled delta smelt (Hypomesus transpacificus) from threatened to endangered" under the federal Endangered Species Act. However, the Bay Institute, Center for Biological Diversity, and Natural Resources Defense Council had "petitioned the Service in 2006 requesting a change in the federal listing. The finding is 25 months late, and a final listing determination is already 13 months overdue."

"We are seeing a cascading series of crashing Delta fish populations – delta smelt, longfin smelt, chinook salmon, steelhead trout, green sturgeon, Sacramento splittail, striped bass – the warning bells are ringing loud and clear," said Jeff Miller with the Center for Biological Diversity. "The ecological collapse of the Delta threatens more than just our native fish since millions of people depend on the Delta for drinking water, agriculture, and fishing."

Delta smelt are an indicator of the health of the San Francisco Bay-Delta ecosystem, and the smelt population has plummeted since 1993 when it was listed as threatened. Smelt abundance this summer is the fourth lowest on record since surveys began in 1959. Federal and state agencies have allowed record levels of water diversions from the Delta in recent years, leaving insufficient fresh water to sustain native fish and the Delta ecosystem.

Not only that, the situation was further threatened by the Governator:

"The governor's proposal to build more dams, as well as regulatory efforts to continue to allow record freshwater diversions from the Delta when most of our native fish species are struggling to survive, makes no sense," said Miller. "The state and federal water projects need to change their operations to eliminate reverse flows in Delta channels and prevent further losses of fish at the pumps."

So, this is the end of the story, right? Nope. Time for a lawsuit.

On December 9, 2008, State Water Contractors, a statewide organization of 27 public water agencies, filed a lawsuit

...against the California Fish & Game Commission and the California Department of Fish & Game challenging the Commission's recent decision to potentially impose substantial cuts in State Water Project (SWP) water deliveries to much of the San Francisco Bay Area, the San Joaquin Valley and Southern California in an effort to protect the longfin smelt. The lawsuit asserts that the Commission's November 14, 2008 decision opens the door for dramatic new restrictions on SWP and Central Valley Project (CVP) water pumping operations out of the Sacramento-San Joaquin Delta (Delta) without any significant corresponding benefit to the fish species and, in so doing, violates key elements of the California Endangered Species Act. Last month, the Commission approved these regulations as a precautionary measure in its desire to protect the longfin smelt, a fish species found in estuaries from Monterey Bay to Alaska.

Bottom line? In addition to current drought conditions, decrepit infrastructure, invasive species, and the water quality itself at risk, that is? Reduced water deliveries and negative "economic impact" to the SWP and U.S.-operated CVP. M-O-N-E-Y.

This is only one little piece of a country - and worldwide iceberg but a good illustration of what lies ahead.

There is a new administration in Washington, with many departments and policies yet to be determined. The reign of the Governator is in peril. So much can change in a very short time -- much like the weather.

As the Bakersfield newspaper articles indicate, there has been a 50-year plus battle in this one part of our country, one which is a major source of our food supply.

Stay tuned. This is one of the most important issues facing us. There'll be more to come.