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Paul Krugman. Wrong. Again.

As if Krugman couldn’t be any more of a self-serving arsehole in providing Nobel Laureate cover for people who think that extra state spending somehow stimulates and economy, people who call themselves ‘Keynsians’ but who would never advocate running a surplus during the good times as Keynes thought necessary for a stimulus to work during recession; now he’s giving ammunition to the people who are advocating the policy that caused the Great Depression: Protectionist trade war.

China is following a policy that is, in effect, one of imposing high tariffs and providing large export subsidies — because that’s what an undervalued currency does.

Of course what this also does is deny Chinese labourers the benefits of their labour. They are kept poor, so that Americans can have cheap TVs.

That should be a violation of trade rules; it might in fact be a violation, but the language of the law is vague on the subject. But leave aside the fine print of the law for a moment: what China is doing amounts to a seriously predatory trade policy, the kind of thing that is supposed to be prevented by the threat of sanctions.

That’s only a problem if you think a trade deficit is a major problem.

Yet the Chinese have taken our measure, and decided that we won’t act. Until or unless that changes, we’re just whistling in the wind.

Again, the losers of this policy are the Chinese people, not Americans.

I say confront the issue head on — and if it leads to trade conflict, bear in mind that in a depressed world economy, surplus countries have a lot to lose from such a conflict, while deficit countries may well end up gaining.

It wasn’t the Wall St. crash of 1929 which caused the depression, it was protectionism. It wasn’t stimulus that pulled the world out of it, countries which kept budget deficits under control fared better than the USA during the 30’s. Krugman has that special form of leftist idiocy which imagines that the economy is able to be controlled and steered by the state. Idiocy here being defined as doing the same thing over and over again, and expecting a different result. Deficit spending stimulating the economy may be OK in theory, but in practice it just hasn’t worked. Ever.

A trade deficit is not in and of itself a bad thing, because the buyer benefits from imports. Sure there might be a few people who used to hammer TVs together who are out of a job because they’re more expensive than a Chinese worker, but the US economy until it started running stupid deficits (yes under republicans I know) used to be pretty good at generating jobs elsewhere. A trade deficit might upset some dick-waving Government officials who measure themselves by statistics, but the American people as a whole are better off for the Chinese “unfair trade practices”.

There’s a chap, Paul, called Adam Smith, you might have heard of him? Didn’t he point out that the buyer AND seller benefit from trade? Americans getting goods cheap, not only keeps things cheap, and therefore Americans richer, it also depresses inflation, meaning interest rates can be kept lower. Hoarding gold – what mediaeval kings thought riches were – leads to inflation. I believe it was called the “mercantilist fallacy” or something.

Or to put it differently, right now we’re in a world in which mercantilism works.

Oh. I see. So the insights of Adam Smith are worth spit are they, Paul? Now that’s hubris, Nobel Prize for economics or not.

In the long run we’ll emerge from this kind of world; but in the long run …

It will be the long run if anyone listens to Paul Krugman, Nobel Laureate, rent-a-gob for the profligate big state, tractor production statistics-spouting left.

Torture Enquiry.

Some people don’t think this New government is much better than the old one.

Yesterday Britain’s Tory prime-minister did what Barack Obama has so far failed to do. Live up to campaign promises and hold an enquiry into allegations of Torture: specifically that British officials looking the other way while other country’s agents (ahem, American agents) did unspeakable things to potential terrorists. It’s to be a judicial enquiry to ensure maximum public confidence in the outcome. The US insisted on Trials for the leaders of the third Reich, because America then stood for something. Now some Pakistani goatherds are apparently so dangerous that the rule of law needs to be suspened rather than let them out. Now most of the people who think Obama’s the best thing since slice bread are turning a blind eye to his staggering hypocrisy.

Two years on, he’s still not closed the Git’mo camp.

“In war, the Moral is to the the physical as three is to one” Naploleon Dyanamite Bonaparte.

As yet Obama has not had the guts to stand up to the Savage loons who STILL think Guantanamo bay is anything other than a massively counterproductive recruiting sergeant for global Jihad. He apparently regards this concentration camp for people against whom we have insufficinet evidence to bring a prosecution as being a price worth paying for “security”, and practices like waterboarding as not being a standing retort to the rule of Law, and so deserving of punishment.

If we are not better people than the people we’re fighting, then what are we fighting for? Let’s shine some sunlight into the darker things done in our name, and see if the Public like it. Let’s hope the light’s bright enough to reach into the oval office, and persuade Obama to come clean about the abuses perpetrated under his predecessor.

What… you mean it’s still going on? You mean Obama’s no better than Bush? You’re shitting me! There are still 181 people in Guantanamo bay, and he’s been shipping people about to avoid the rule of Law, at potential cost to his alliances.

America is Closed for Business.

What is true for people is also true for the other tax-paying entity, the company. And what Barack Obama has done yesterday, in arbrtiarily confiscating assetts without due process or any form of contract, is to raise the fear of arbritary confiscations from other businesses which may displease the mob in the future. This is contrary to the principles of the rule of Law. This is not a defence of BP, who appear to have been reckless, but no-one thinks they are not already doing everything in their power (they are of course denied some assets for political reasons) to clean up the mess, and they have paid nearly all the claims for compensation they have already received. BP was emphatically NOT shirking its responsibility, and has endured a politically motivated lynch mob mentality orchestrated from the White house. Obama knows what he is doing is illegal and unconstitutional. BP could demand that its contracts are met, that Haliburton and others pay their share, but this would destroy them politically.

The conclusion is clear, whatever Fishermen from Louisiana think, Obama is abusing his office.

The risk of doing business in the USA is already great, and has got much, much worse. Many non-US companies already refuse to have a US shareholder on their books (next time you receive a prospectus, look for the words “not for distribution in the USA” on the front). Thus the capital markets of the world are closing to US interests. Soon internationally minded US companies will start moving their brass plaques from Delaware to London, Frankfurt, Dublin, Dubai, Hong Kong or other more kindly jurisdictions. Americans may not notice this while their domestic capital markets are wide and deep, but they may find their next recession deeper and longer as the once great nation slides back into the protectionism that caused the last depression.

Obama. By pandering to the mob by offering to keep his “boot on the throat” of BP and demanding extra judicial compensation (which WILL be used as a political slush-fund) has become the worst president in American History. And given who he followed, that was always going to be tough. A president of less historical renown (no peace prize for Mr Coolidge), but much greater stature said “the Business of America is Business“.

Not any more.

Skimmer ships

After Hurricane Katrina, George Bush suspended the Jones Act which requires that ships plying trade between US ports must be US registered and have 75% US crews (unionised, naturally).

Obama has NOT suspened this act meaning dozens of Skimmer ships – a type of ship designed to clean oil from the sea, the best of which are European are unavailable to help contain the Gulf of Mexico spill. Dutch ships are standing by. These have not been allowed to enter US territorial waters, despite the requests of a number of locals politicians from the affected area Republicans. The answer given will be because these ships don’t perfectly clean the water, and leave small residue with the water they pump back out of the storage tanks. The real reason, of course, will be union pressure to sustain a despicable piece of typically American protectionism.

I told you he’d disappoint.

Poor regulation.

Just like sub-prime, if you dig, then you find stupid regulation behind, or at least contributing to, every disaster.

Ask yourself 2 questions:

Why is the gusher so difficult to cap? Because it is in deep water.
Why was BP drilling in deep water? Because they were not allowed to drill in shallow water.

Whilst ultimate responsibility clearly rests with BP who could have run multiple pipes, which I’ve read somewhere is industry best practice (I don’t know – I’m not an oil engineer), the US Government too is partially responsible for its knee-jerk, reactive and slapdash approach to regulation, which puts political concerns and pork-barrell politics above environmental and economic concerns.

Every regulation has a cost, and it is rarely borne by the people the framers of the regulation intend it to be borne by. In this case, Louisiana shrimpers and British Pensioners have paid for the poor regulation of deep water drilling and the ban on shallow water drilling.

Governments: Fucking things up since 5,000 BC.

Strategic Failure

The most tactically perfect army ever to take the field was the Wehrmacht of WWII. German soldiers (and often their equipment too) was so consistently superior that they could be relied upon to defeat any adversary, given roughly equal numbers. Thence sprang the belief that if you look after the battles, the war will win itself and the German army found itself fighting in North Africa, Greece, Cyprus, Norway, the Atlantic, in the Air over Germany and disastrously, Russia; all simultaneously. In losing sight of what the third Reich wanted to achieve (or never having a realistic vision of such) the supreme competence of the Wehrmacht led directly to overstretch and then being confronted by OVERWHELMING force deployed by countries who had thought strategically enough to deliver numerically superior, but technologically and motivationally inferior, forces in a hammer-blow which came quite unforeseen.

Nazi Germany thought tactically. Churchill was tactically naive, but strategically sound. Biff the Nazis where they can be found, in order to keep the Soviets onside and the Germans on their toes until we’ve gathered enough strength (ie get the USA into the war) to deliver the coup de grace in Normandy.

The strategic failure of Nazi Germany is similar to the that of ‘the West’. Western soldiers (since Korea, when the US at first fielded the worst army ever deployed by a democracy) have been better trained and equipped than any army or group they are likely to face. British, American, Dutch, and even French soldiers can be relied upon to prevail in any shooting match they go into.

As a result – a direct result – of this competence, the British Government for example though that fewer than 10,000 soldiers could pacify a querulous Afghan province, and NATO in General has completely lost sight of what it wants to achieve from its military adventure in Afghanistan in a global context. We’re bogged down in Tactics, as was the US in Vietnam, focusing on tactical-level measures and losing sight of the strategy. The AfPak ‘strategy’ for example is more a mantra than a reality.

Whilst this is of no great import when the maximum downside is the appearance of getting kicked out of a broken 13th century country, but in a dangerous world, if we lose sight of what the point of acting as a world policeman is, then the downside and cost could be much greater – catastrophic military defeat. Like it or not, we’re in a toe to toe fist-fight with radical Islam. To continue the boxing analogy, the Islamists are the smaller and less skilled fighter, but with an Iron jaw, he keeps getting up. Oh. And he fights dirty.

Thinking strategically, Iran’s nuclear bomb is a far bigger threat. If there’s a country asking to be invaded, like right now, it’s North Korea. But our armies are bogged down in Iraq (90 -odd thousand US troops) and Afghanistan (100-odd thousand Nato forces). That’s as near as damn it a quarter of a million fighting men who could be saving the world from a nuclear armed Iran or North Korea.

And the sad thing is that they would be better providing the means to deal with this threat with their feet up in Minnesota or Surrey than eating dust in Southern Afghanistan. After all, what’s scarier to Kim Jong Il: An Army at war in Central Asia, or an Army who could be on his border in 2 weeks? Whilst I have confidence the of the Strategy of ISAF in Afghanistan with respect to that conflict, in the big, global picture, that’s Tactics. We’re bogged down and overstretched and cannot therefore threaten great violence to those who deserve it. That is why nation building is so dangerous. It’s a nebulous concept, there’s no finish line where you can declare victory so it ties up troops, money and resources; and it stores up just as much resentment as colonialism. The temptation is to outstay your welcome.

The fact is the Neo-Cons were right. We shouldn’t do nation-building. We should go in, shock and awe, biff those we don’t like and then leave; leaving the aftermath to the locals and do-gooding NGOs to rebuild. Take sovereign bases if desirable, but otherwise fuck off once the shooting stops. American and British forces shouldn’t need to stick around to provide targets to suicide bombers, and so shouldn’t be in a war with anyone who can’t surrender on the deck of a battleship. If I was convinced that Iraq and Afghanistan were ‘clearing the decks’ before a Pincer-move on Iran, I could be persuaded, but I don’t think there’s the stomach for the fight.

That’s the reason the Boys should come home. Not because they “can’t win”, they can; but because they are better unused except as a threat.