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US Debt and Reason for Optimism April 20, 2011

Posted by Afflatus in Economics, Politics, World Affairs.
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On Monday morning, April 18, the ratings agency Standard & Poor lowered its outlook on American debt from “stable” to “negative.” The change in S&P’s outlook on America’s credit worthiness signals that there is a one in three chance S&P will downgrade America’s credit rating (currently AAA) by 2013. The pundits, news anchors, and politicians went almost haywire over the announcement. The markets? They hardly budged. The Economist reports: “The market reaction has been about as benign as one could hope for; relative to the Friday close, equities are higher, bond yields are lower, and the dollar is basically flat. Markets shrugged.”

In a fantastic piece on the reality of America’s debt crisis, “American Government Debt: What, US Worry?”, The Economist’s Free Exchange blog provides logic and level-headedness throughout. The article clearly shows that America has a debt problem, but not an absurdly bad one. “America’s ratio of gross government debt to GDP currently stands at about 99%. That’s not an absurdly high level for a rich country at the present time. It’s about 24% above Germany’s ratio and 20% above Britain’s. It’s 82% of Italy’s debt ratio, 66% of Greece’s, and less than half of Japan’s.”

The problem is that America’s debt-to-GDP ratio is projected to continue growing for the foreseeable future, whereas many of those large European countries are expected to have falling debt-to-GDP ratios by 2013.

However, there are some truly optimistic signs of hope when one seriously looks at America’s debt situation. America’s projected economic growth is strong; by 2016 the IMF believes America will grow at twice the pace of the German economy. America has better demographics than countries in Europe or Japan. America’s population is generally younger and immigration flows are higher (Immigration is good for long-term growth!) Additionally, America issues the world’s dominant reserve currency and the most plentiful safe asset. This means the dollar will remain strong and America will be able to continue borrowing at low interest rates.

Additionally, the article points out that there are clear routes forward to solve its fiscal situation, both on the taxing side and the spending side. The Economist supports low taxes but still recommends comprehensive tax reform which would marginally raise taxes on all individuals while broadening the tax base substantially. This is common sense and it is what President Obama has proposed.

Further on the optimistic front: “it was scarcely a decade ago that America was running actual surpluses and not long before that that bitterly opposed politicians were cutting deals that made those surpluses possible.”

Without question, America requires action on fiscal matters. But it’s delusive for two reasons to suggest that America must make imminent budget cuts to discretionary spending programs to solve its long-term debt problem. One: the problem is not an imminent crisis. Two: cuts to discretionary programs mathematically cannot solve the debt problem.

In fact, the cuts made in the FY2011 budget compromise made last week will hurt the economy. Unfortunately, politicians on both sides of the aisle grandstand as if deficit reduction has begun in order to capitalize on the country’s budget-cutting mood. Meanwhile, objective economists on both sides of the aisle state that the economy will suffer as a result of these cuts. Consumer spending will decrease, and some jobs will be destroyed or not created.

To solve America’s long-term debt problem, maturity and cool heads must prevail in Congress. Bipartisanship has always taken place in the past, and it will take place in the future. While America’s political system is at times maddening, it was designed to produce compromise. During the course of America’s history, congressional leaders and presidents have generally risen to the challenge when crises were in fact imminent. If America’s debt problem becomes a crisis, it can be resolved. Until then, America should focus on rebuilding its economy, and structuring it to compete successfully in the future.

Video’s from America’s Future Now Conference June 16, 2009

Posted by Afflatus in Politics.
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Finally I have tracked down the elusive videos from the conference I attended two weeks ago.

Here are the videos. Most are short (less than 10-15 minutes).

Be sure to check out # 23 William McNary’s energetic and inspring speech on Healthcare.

#22 is a great speech by a young and extremely bright doctor. She gives interesting insight to the healthcare problem from a doctors point of view.

#14, the Closing Plenary Brunch features Naomi Klein and the presentation of the Maria Leavey Tribute Award.

#13 is an excellent speech by Senator Sherrod Brown, worth checking out.

#11 was a fantastic panel discussion on Immigration reform. Some interesting questions and answers follow at the end.

And #1, Jared Bernstein, is definitely worth watching considering his current employer.

Many of the others are good, but not as good. Others I didnt get to see, but I assume they are equally interesting.

Stimulus Chart April 11, 2009

Posted by Afflatus in Education, Energy, Healthcare, History, Politics.
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Here is a chart that nicely breaks down the recent stimulus bill. I stole it from my friend Rob’s blog TheStocksBook.com which I’ve also added to our blog roll. You can click the photo to make the image larger.


New York Times – April 3, 2009 April 3, 2009

Posted by Afflatus in World Affairs.
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There are some great articles in today’s New York Times, especially in the international section. First of all there are two articles about the G-20 summit. One clearly summarizes more or less how the meeting went,  and what the countries pledge to do. It looks like Obama did well, winning high praise from Angela Merkel. “He pushed very hard to come to concrete solutions and to have a fruitful discussion,” she said. Economists and other experts from MIT and Harvard were quoted in the article. For the most part they believe the meeting was a success, especially for Obama. However, they did have some reservations, and suggestions of how the G-20 could have improved. As an indicator of the overall success, stock markets around the world spiked, reflecting the investors’ optimistic response to the meeting. For more on this topic check out these two articles: $1.1 Trillion is Pledged and Obama Ties U.S. to World.

A third article that I found very interesting was about a recent terrorist attack in a West Bank settlement. The article was captivating because it addresses the attack, and the recently sworn-in (and right-wing)  government’s response. Here is the article.

Perhaps the most interesting article reported on a recent decision from a federal judge about the legality of detaining prisoners in Bagram, America’s Afghan detention center with twice as many detainees as Guantanamo. It details many interesting facts, some of which follow:

– “The importance of Bagram as a holding facility for terrorism suspects captured outside Afghanistan and Iraq has increased under the Obama administration”

– “The United States is holding about 600 people at Bagram without charges and in spartan conditions.”

– Some analysts expect Judge John D. Bates’ decision to be appealed by the Obama Administration because the ruling “gravely undermines the country’s ability to detain enemy combatants for the duration of hostilities worldwide.” Yet other experts praised the decision as “a very good day for the Constitution and the rule of law.”

The article provoked this idea in my mind: what if we detained people that we believed to be dangerous, but instead of torturing them, we educate them? After a few weeks we allow them to have some contact with the outside world. Instead of dark, clammy detention centers where brutal torture takes place, the prisoners are allowed outside. And, eventually (maybe 6 months after internment begins) Habeas Corpus must be granted to all detainees, by US and international law. In other words, we change the goal of the detention centers from torturing in order to elicit intelligence, to instead focusing on rehabilitation of the indoctrinated “terrorists.” Torture is not proven to be productive to our ultimate goal of reducing terrorism; in fact, in some cases, it has been proven to be counter-productive to this aim. Does torturing exacerbate the problem, more than it mitigates it? If so, we should totally re-think our means of achieving a more peaceful world, with less hate and terrorism. My plan would obviously cost more money to run the prisons, but maybe it would be money better spent.

Thoughts on my idea? Is it incredibly idealistic?

Everyone should check out the article. Here is a link to the article. And here is a link to the wikipedia page for reported Bagram torture abuse.

The wikipedia page shows the 15 US soldiers who have been charged with crimes related to torture and abuse of prisoners in Bagram, only from 2004 – 2006. This stuff goes on, but not everyone is aware of it.