I’ve been meaning to write about all economic lunacy perpetrated by the Federal Reserve for sometime, but this quote from this weekend’s OPEC summit just floored me:
On Friday, Prince Saud Al-Faisal, Saudi Arabia’s foreign minister, warned that the dollar could “collapse” if the US currency was mentioned in the declaration.
His remarks – made in what was supposed to be a closed ministerial meeting – were accidentally broadcast to reporters.
Al-Faisal is stating that the dollar is is in such a precarious position that even mentioning that OPEC needs to consider the effects of a low dollar on its members could cause the currency’s collapse. This would lead to outright panic here in America, as well as many of the oil producing states, such as Saudi Arabia, which use dollars as the basic pricing mechanism for oil. Because of the fall in the dollar’s value –44% since the last OPEC meeting 7 years ago– a number of the oil states are calling for greater oil prices to offset the devaluation. This, of course, will result in deepening the nascent recession here at home –which will, no doubt, result in the Fed cutting baseline rates again, thus, causing greater devaluation of the dollar.
In other words, under current Fed policy, we’re screwed. The Fed, however, sees it differently. By cutting baseline rates they are funding speculative investing, and keeping the equities and option markets (artificially) high. The Fed seems to be counting on foreign interests to keep the dollar from collapsing. The belief, seems to be, is that China, which holds around $1 trillion in US bonds, and the oil states of OPEC cannot afford to see the US currency collapse, and will continue to invest in dollars. But this is a strategy of russian roulette. Eventually, these states will decide they can no longer afford the losses on the dollar and begin to reinvest elsewhere –China, earlier this year began selling off US bonds at an alarming rate.
Last week President Bush charged congressional Democrats with spending money like “a teenager with a new credit card.” This from a man whose administration shipped360 tons of US dollars to Iraq with no accounting or oversite in place. This from a man who has presided over the greatest increase in national debt in US history; an in increase in spending which has had no positive effects for the majority of Americans. When Franklin Roosevelt and Lyndon Johnson borrowed, they did so to try to enrich the American people. This president has done so simply out of hubris, and has enriched only the wealthy. The American people have found their wages stagnated at levels lower then those 30 years ago. They have found themselves with crumbling infrastructure, a crumbling military, and an inept and crony filled regulatory landscape to protect them.
I don’t generally believe in grand conspiracy theories, but, if I did, I could easily see one here. Thanks to Bush’s tax cuts, and outrageous spending on a never ending war and ‘homeland security,’ coupled with the “spend it now” attitude of the Federal Reserve we find ourselves perilously close to an economic meltdown. When one looks around, one can easily see the ‘free market’ wolves waiting in the wings. They will cry out that the problem with the US is that it spends too much on social programs, like Medicare and Medicaid, and others; that government is too inefficient and we need to privatize more and let the markets run without restraints and regulations. The fact is, they will be responding to a crises of their own making.
This Sunday, 11/18/07, the NorthShore chapter of the Illinois Green Party will be showing Ian Inaba’s film American Blackout at our coffeehouse. The film documents the practices of fraud and voter caging which have occurred in recent elections. There will be a number of Illinois Green candidates attending the showing, as well as people involved in recent suits launched against the Federal Election Commission. We expect an interesting and enlightening discussion following the showing. The film will begin around 4:00 Pm at 1813 Dempster, Evanston, IL. There is, of course, no admission charge — though we’d appreciate it if you bought a cup of coffee or a snack.
I have been asked by some journalists and others to comment on the recent actions taken against Comcast and their policy of interfering with peer-to-peer application traffic. Of course, the problem with journalists and policy makers is that they don’t want to understand the real issues involved; they simply want to setup a black and white polemic and decide which side is right. In this case, everyone is wrong.
The whole thing began about a month ago when the AP reported that Comcast was blocking traffic associated with BitTorrent, GNUtella, and other file-sharing applications. In a semantic parsing that would please even the most jaded pentagon technocrat, Comcast denied that they were blocking any traffic. In actuality, Comcast wasn’t really blocking traffic; they were simply imitating traffic in order to get the sharing computers to ignore the data sent between them. This approach is quite a bit sleazier then actually blocking the traffic, as it forces the hosts to keep establishing their connections to one another. Nonetheless, the die was cast, and consumer groups filed a complaint with the FCC and called for congress to impose Net Neutrality regulations. Meanwhile, hordes of libertarian network operators began complaining about how the government shouldn’t interfere with how they run their networks. Three days ago the story got bigger when a California resident filed suite against Comcast for breach of contract, arguing that Comcast does not deliver the promised Internet speeds it advertises, and actively interferes with the performance of certain applications.
The issues and problems surrounding this debacle are an outgrowth of the severely flawed telecommunications policies of the FCC and the federal government’s failure to deal with those bad policy choices. Comcast should to have the right to regulate traffic allocation on their own network. The nature of the HFC architecture employed by cable Internet providers means that limited bandwidth is shared within local distribution areas. This means that if your neighbor is using huge amounts of bandwidth to download an episode of Lost, there is less overall available bandwidth for you. Cable operators want to ensure that burst bandwidth is available to users, so they set the cable modem’s overall limiting quite high (usually between 4 Mb/s & 8 Mb/s); however, this leads to the problem of active users consuming large amounts of bandwidth for extended periods. In the case of peer-to-peer applications, Comcast was trying to ensure that there was excess burst bandwidth available to more casual users of common Internet applications. However, Comcast should have informed their customers that they were limiting specific traffic and applications. By not doing so, they operated in duplicitous and deceitful manner. This is a clear case of Comcast wanting to have it all: they want to pick up subscribers by touting high bandwidth numbers and then limit the users who actually use the bandwidth they’re paying for.
To allow the federal government, however, to dictate what is valid network traffic could lead to disastrous consequences. To be adaptable to the ever changing applications and protocols on the Internet any legislation would need to be written broadly. This could easily lead to situations in which it becomes technically illegal for service providers to mitigate spam, intervene in a virus outbreak, or prioritize voice or video traffic. For many years the Internet community of operators and developers have done an exceptional job of regulating and expanding the applications and data on the Internet. This was primarily due to the need of numerous network operators being forced to work together to exchange data and adhere to standards. Recently this has started to change; however, as the number of autonomous carriers has begun to shrink. This has placed business pressures on the remaining networks to try to keep more traffic and services on their networks and worry less about exchanging data with others.
The overall problem is that there is a lack of competition in the marketplace. If subscribers had multiple choices of broadband providers they could choose a provider based upon their application needs. Network Neutrality only becomes an issue because last mile monopolies have been encouraged by the FCC. With the loss of data line sharing requirements for copper, coax, and fiber, consumers are left with very few choices between Internet providers. Additionally, the deregulation of last mile data facilities means that no company can enter into the market to satisfy customer demands. For instance, a service provider who wishes to target peer-to-peer users cannot, economically, gain access to the copper or coax wire entering your home. This means that consumers will always be tied to one or two service providers and their policies. If competition was encouraged in this market, questions of Network Neutrality would not even arise. Consumers would simply change providers from those who do not satisfy their needs to those which do. The FCC, with their unique brand of logic, keeps insisting that fewer providers means more competition and better products for consumers. In any other market this logic would be dismissed as laughable: do we really believe we would have better automobiles if there were only two or three manufacturers? But in the world of telecommunications this ass-backwards logic seems to be accepted as gospel –proselytized with massive political contributions.
Without re-regulation of last mile facilities the only hope consumers have is Network Neutrality legislation. Network operators and admins should work with lawmakers to try to ensure that any regulations are adaptable enough to address their concerns. If operators, and the companies they work for, simply continue to oppose Neutrality regulation they will soon find themselves having to interpret poorly written regulation and hope that no one complains when they get it wrong. This is simply a case where consumers are not going to stand for biased monopolies, and the monopolies will have to get used to operating in a more neutral fashion.
One of the great things about running an independent coffeehouse is the variety of people you meet and the movements you become aware of. A year or so ago, one of our regular customers convinced us to become an exchange point and merchant for Liberty Dollars. The Liberty Dollar is a private currency which is backed by, and minted with, precious metals. Carol and I saw the dollars as a type of local currency and worked to get other local business owners to sign up as merchants. This afternoon our original Liberty Dollar customer came by, somewhat panicked, and took all the literature and promotional materials from our shop. He simply told Carol, something bad had happened. It turns out that federal agents raided Liberty Dollar’s headquarters, in Evansville, IN, this morning and seized all their assets –including gold, silver, and platnium bullion–, its records, and its minting dies. At this point, the Western District of North Carolina U.S. Attorney’s Office, which issued the warrants, has not detailed any specific charges against the Liberty Dollar.
There is nothing inherently illegal with private or local currencies — in fact the United States has a long history of alternative currency models. Private currencies, however, cannot be represented as legal, government backed, tender. This point was always stressed to any of our Liberty Dollar users. Most of our users, however, didn’t care, as they saw the coins — made of silver — as having traditional fungible value. Personally, I have some issues with metallic currency standards, and a number of the folks with Liberty Dollar and I had some heated discussions about the topic. However, I always found the Liberty Dollar people to be very thoughtful, well informed, and committed. So I would be surprised to find that there was any real illegality occurring within Liberty Dollar itself.
It does seem odd that the government would choose this time to act against the Liberty Dollar, and in such a heavy-handed fashion. It may be that some in the government are concerned about the perceived value of the US dollar –presently trading at 1.47€ and $1.02 to the Canadian dollar, a drop of 50% in the past 9 months. If even a small percentage of Americans began to loose confidence in the dollar and began to adopt a commodity based currency, the result could be disastrous: we could easily find ourselves in a period of hyper-inflation and economic depression. Of course, eliminating commodity currencies does not prevent this from happening anyway. If such a downturn would occur it would be the result of the disastrous monetary policies followed for the past seven years, far more then it would be the fault of the Liberty Dollar.
Today is Armistice day - Veteran’s Day. A day to try to remember all those of sacrificed their lives and more for their countries. It is a truism that as time passes, we forget the conflicts of the past: the reason’s they were fought and the people who sacrificed for them. For how long will we remember today’s conflicts? How long until we repeat the same mistakes over?
Privacy no longer can mean anonymity, says Donald Kerr, the principal deputy director of national intelligence. Instead, it should mean that government and businesses properly safeguard people’s private communications and financial information.
Safeguard from whom? should be the question that is asked of Mr. Kern. I doubt very much that al Qaeda or Syria cares where our day to day travels take us , but my boss might, your insurance company might, political opponents might. What Mr. Kern is insisting upon is a surveillance state - one in which government collected information is seamlessly shared with business collected data. For instance: you go to an ATM at 8:00 Am, Stop and buy a coffee at 8:30 Am using a discount card, punch into work at 9:00 AM - respond your e-mail & make calls, drive home via a tollbridge at 5:00 Pm, stop off for a drink at 5:30, then go home and read your personal e-mail, visit and adult website, maybe read some blogs; the government would now know exactly where you were during the day, and what you were doing. Perhaps you visited a blog which was critical of government policies; you might now find yourself undergoing additional IRS auditing - after all it’s happened before, or find yourself bared from flying. What Mr. Kerr is suggesting is even a bit more nefarious: a two way street in which businesses have access to to personal data for their own purposes. Perhaps your employer is devout and decides to fire you because you consume pornography — there is currently no law which protects employees for actions unrelated to their work. Perhaps your health insurance company decides you are consuming too much alcohol and decides to raise your premium or drop you. All of these things are more than possible, they are probable outcomes of Mr. Kerr’s policy. Information, it has been said, is power, and once made available those with the information will make the most use of it as possible.
Benjamin Franklin, Alexander Hamilton, James Monroe, and James Madison all published their works under pseudonyms — anonymously. And they all did so at a time in which the future of their country was far less certain then it is today. Mr. Kerr, and the administration, keep arguing that we are in greater peril today then we have ever been before. But there is little to no evidence of this. If our country is in peril, it is from the incompetence and hubris of its leaders, not from any outside force. But these same leaders cry for more power to help assuage the fear their own policies have created. Should Mr. Kerr and his administration get their way, we and future Americans will quickly learn to fear our own government and its powers. To quote a popular film, “People should not fear the government; Government should fear the people.”
At some point today Michael Mukasey will, essentially, be confirmed as the next Attorney General of the United States. Mr. Mukasey’s testimony of blatant evasion and obfuscation regarding water boarding and torture should stand as one of the more shameful moments in our history. But those who defend Mr. Mukasey and the act of water boarding –such as Mona Charen, Andrew McCarthy, and Patrick Buchanan– represent a betrayal of our country’s laws and values which boarders on monstrous.
One can almost hear the glee in their voices when they throw out the patented ticking bomb scenario* to justify their desire to torture suspected terrorists. As these pundits are eager to adopt a tactic pioneered by the Spanish Inquisition and honed by the Khmer Rouge, I would like to know what interrogation tactic would be too immoral, or violate our country’s values, in the ticking bomb scenario? To save the hypothetical city from a terrorist attack would it be acceptable to electro-shock the suspected terrorist? On his chest and extremities? On his genetiles? Would it be acceptable to cut off his digits or limbs while he watched? Could one kill his wife in front of him? Or his son? Could one, in order to save a city from the evil terrorist, rape his young daughter in his presence? Just how determined and macho are you pundits?
Over a hundred years ago Fyodor Dostoevsky asked the very question which I posed above. Ivan Karamozov presents his brother Alyosha with the following dilemma: Suppose that in order to bring eternal happiness to the world, it was essential and inevitable to torture to death one tiny innocent creature, only one small child. Would you consent? How we answer this question defines our humanity and therefore the kind of country we wish to have. People cannot abandon their individual humanity and then claim that their nation is in anyway just or moral. To suggest otherwise is is treasonous to the founding principles of our country.
*The ticking bomb scenario is perhaps the greatest hoax perpetrated in the debate on torture. Outside of a concocted television plot, the possibility of the scenario –in which the government captures a single terrorist who has specific location of a ticking bomb which will detonate, causing massive destruction, in a short time– actually occurring is so infinitesimal it should be dismissed as implausible. The scenario, however, provides the crucial exception to the prohibitions against torture for those who seek it. Since this scenario never occurs, the exemption is constantly extended. Instead of torturing only the terrorist with direct knowledge of the plot, interrogators now extend the act to those they believe have second or third hand knowledge. Eventually, they are torturing suspects who know suspects who are related to terrorists who may know the leader of a plot to detonate a bomb in the United States. This is the reality of torture. This is the reality of what the United States is engaged in.
corruption, Economy
