Custom Maid: Cleaning Up Politics

Writing Volume III

2011-03-02T20:08:00.002+08:00

The Jasmine-Nile Revolutions and standoff in the Wisconsin State Capital have inspired me to finish volume III of the Custom Maid trilogy -- Custom Maid Revolution.

Consequently, no more blog posts for now.

Stay tuned!

Breaking Bread & Rapping

2011-02-02T20:16:00.002+08:00

The private dinner for China’s President Hu Jintao during his recent state visit, in the Old Family Dining Room in the White House residence, illustrated Obama’s careful mix of warmth and firmness for the leader of a nation that is at once the largest U.S. competitor and most important potential partner. It is a complicated relationship between two affectionately competing super-powered partners.

Breaking bread together, over a glass of wine or two, breaks down barriers, allows people to get to know each other, establish a solid foundation on which the partnership can build and brings them closer together. A genuine heart warming reassuring rap enables them to develop a much-needed personal chemistry and connection.

Underscoring the desire for candor, the White House said there were no official note-takers at the dinner and offered no readout of the discussions. Very important considering it will be the last major summit between the two presidents, although not the last meetings before 2012 when Hu steps down from his final term as party chief, and Obama is up for re-election.

Fascinating to hear what they both had to say publicly after their private dinner. On democracy, Hu said China is committed to the development of socialist democracy. “Without democracy, there can be no socialist modernization,” he said.

“We will continue to expand people’s democracy and build a socialist country under the rule of law in keeping with China’s national conditions.”

“We also know this: history shows that societies are more harmonious, nations are more successful and the world is more just when the rights and responsibilities of all nations and all peoples are upheld ─ including the universal rights of every human being,” Obama said.

The fundamental principle of the Marxist party is to “put the people first” and “govern for the people.” Sounds a lot like the U.S. Constitution declaration of “Government of the People, For the People, By the People.” America’s Founding Fathers words had a far greater global influence than most people realize. They even influenced Karl Marx. Sometimes I wish they would influence today’s leaders of the Communist, Democratic and Republican parties in America and China. It is in the interest of all three parties to better realize, safeguard and develop the fundamental interests of the majority of the people ─ We the Maids who have the power to sweep them out.

The D.C. Summit

2011-01-25T06:37:00.002+08:00

Watching the picture-perfect pomp and ceremony surrounding President Hu Jintao’s state visit to Washington on January 18, 2011, was a dream come true. After writing four books that each, in it’s own way, advocates a Sino-U.S. partnership to lead the world through the 21st-century, and having given a talk earlier in the day advocating a Sino-U.S. partnership that is long overdue, I came to the realization that America and China have finally come to terms with each other.

Both president Barack Obama and Hu Jintao understand that a crisis in one will adversely impact on the other. What happens to one affects the other, and why shouldn’t the results be positive? “The China-US relationship is not one in which one side’s gain means the other side’s loss,” said Hu.

“What Deng Xiaoping said long ago remains true today. There are still great possibilities for cooperation between our countries,” Obama said.

The flawless formal highly choreographed red carpet-black-tie arrival, with welcomes from President Obama, Vice President Joe Biden and their wives, and a long line of Cabinet members and Chinese dignitaries was just the long overdue face gaining spectacular and respect that protocol conscious China and Hu craved and deserve. China wanted to see Hu being treated as the respected leader of a nation taking its place at the head of the global table.

What a difference to the snubs president Hu received during his 2005 and 2006 visits to the U.S. The 2006 arrival ceremony was marred by protocol blunders including an outburst from a Falun Gong protester.

The ceremonial pomp-filled 21-gun salute, with full honors and color guard welcoming ceremony ushered in a page-turning “new chapter” with a new play book for the “new era” in Sino-U.S. relations.

The mutual feel-good factor by Americans and Chinese towards each other seemed to overnight replace the mutual mistrust and is on a harmonious trajectory for the prickly growth of bilateral ties. Both countries have recalibrated their tone and direction of their ties. More than 50 percent of Americans and Chinese regard Sino-U.S. ties as “very important,” more than double the 2009 percentage. With the changing of the global political and economic landscape, Sino-U.S. relations now go well beyond the boundaries of bilateral ties and have global ramifications. China and the U.S. share many common interests and both sides must “work together to open a new chapter of co-operation as partners,” said president Hu. The repeated calls for broader cooperation as partners by both presidents was long overdue.

The last 30 years of relations were marked by continued exchanges and increased mutual understanding, Obama said, before adding that Hu’s visit serves to lay the foundation for deeper prosperity between their two nations in the next 30 years.

Mutual Trust, Respect and Benefit

2011-01-15T23:30:00.000+08:00

Before America and China embrace each other, there has to be true mutual respect, as distinguished from politically expedient respect, that is mutually beneficial. This is one critical relationship that cannot flourish by being limited to words alone. It is one that has to be based and developed on geopolitical and economic facts. The domestic political reality of each country ─ verbal and factual ─ are the special national sauces each has to get used to, and trust.

Wikileaks release of U.S. State Department highly classified confidential cables didn’t do much to restore any of the already eroding trust. Accusing China’s Politburo of directing the 2010 cyber intrusions into Google’s computer systems as part of a “coordinated campaign of computer sabotage carried out by government operatives, private security experts and internet outlaws,” something I had warned would happen in Custom Maid War and Feasting Dragon, Starving Eagle, is again shifting blame and responsibility from where it belongs ─ Washington and the Pentagon.

Mutual suspicion gets neither anywhere, especially closer to each other, which is not really surprising. Both have to change politically and meet each other half way, politically and economically. Both have to co-operate and reciprocate more ─ and learn from each other.

Positive reinforcement with co-operative positive acts repeatedly reinforced by each other are a lot more constructive and productive than political duplicity where the cheating by one party results in the other responding in kind ─ tit-for-tat.

American arms deals with Taiwan do not motivate China to restrain North Korea. After all, if America doesn’t listen, why should China? The fact that Obama has met with Hu more than any other foreign leader since the start of his presidency is meaningless if no trust is developed because of the failure of America to listen. China is not receptive to lectures, especially when America doesn’t listen.

America refuses to sell its high tech technology to China. So why is America surprised when China refuses to sell its precious rare earths to Japan?

Presidents Barack Obama and Hu Jintao, can and must turn a new cooperative page They both have to start trusting and respecting each other and their respective domestic agendas as national leaders if they want to leave a legacy of being the builders of the Sino-American bridge for constructive global leadership in the 21st-century.

Balanced Global Leadership

2011-01-03T23:28:00.002+08:00

The New Year and decade will hopefully usher in the peace and prosperity the world has long been craving. The state visit by China’s President Hu Jintau to America this month, where he will finally be feted at the long overdue White House state dinner by President Obama, offers both leaders the opportunity to do just that. Balance their countries mutually beneficial ─ and globally beneficial ─ leadership roles.

America’s economic and financial crisis offers China a unique opportunity to become the new global leader. China can replace the U.S. as the world’s new superpower. The question is will it? China has little debt, enormous savings with huge growth potential. Its’ current per capita income of $3,300 could be raised to $10,000 within two decades through a combination of growth and currency appreciation. At the same time, gross domestic product could rise from today’s more than $4 trillion to $13 trillion in today’s dollar terms. Such an increase could offer plenty to investors who bet on China’s future.

Many countries are retreating from some free market rules that have guided international trade in recent decades and have started playing by Chinese rules. But for China to engineer a new capital and political world order, it has to end the rampant corruption, fraud, intellectual and political misrepresentation, allow its currency to float freely, open it’s capital markets, have a truly independent judiciary that adheres to the rule of law, a free press and a more democratic political system ─ all of which are achievable ─ and a good reason why America should embrace China as its partner and lead the world together to a peaceful and harmonious future, a theme I have repeatedly advocated over the years.

The reality is the world is not anxious to embrace China as the world’s new superpower. The world still looks to America for leadership because of its constitutional ideals and humanity. To continue to lead, America cannot do so alone anymore. It needs a partner. That partner is not Russia, Japan or the EU. It is China.

The Sino-U.S. currency and Korean clashes are good starting cornerstones for both leaders to build their balanced shared global leadership roles at their summit to ensure a mutually beneficial and financially secure and peaceful 21st-century.

MERRY CHRISTMAS and A HAPPY, HEALTHY AND PROSPEROUS NEW YEAR

2010-12-21T19:43:00.000+08:00

Happy Holidays!

“The Moment of Truth”─ A Political Non-Starter

2010-12-13T21:26:00.002+08:00

The Bowles-Simpson bi-partisan National Commission on Fiscal Responsibility and Reform, appointed by President Obama to recommend solutions to America’s dire economic problems and deficit spending ─ did just that. It made very constructive observations and sweeping recommendations in how America spends money and collects taxes and proposed solutions to tackle the U.S. debt by harshly trimming federal spending, especially defense spending, that even the commission recognized were political non-starters ─ even though imperative for America to get back on a sound financial footing. “We’ll… be in a witness-protection program when this is all over,” said former Republican Senator Alan Simpson, co-chair of Obama’s deficit-reduction committee when he and his co-chair Democrat Erskine Bowles, former President Clinton’s chief economic advisor, released a draft of their 59 page report in earlier this month.

The report proposed the cutting of 200,000 federal-government jobs by 2020, roughly 10% of the work force. The proposed plan would achieve nearly $4 trillion in deficit reduction by 2020, reduce the deficit to 2.3% of gross domestic product by 2015, overall the tax code, trim defense spending, cap government revenue at 21% of GDP and reduce debt to 40% of GDP by 2035. “Throughout our nation’s history, Americans have found the courage to do right by our children’s future. Deep down, every American knows we face a moment of truth once again,” the report said.

America needs some big structural solutions and changes to get back on a sustained growth path. The necessary structural fixes can only happen with bipartisan consensus and sacrifice, two political ingredients that have been sorely lacking in Washington.

America milked the stock market in the 1990s to have a good life. When it burst in 2000, the country switched to the property market for another decade of good life. When that crashed, the government decided to print money and suck on the treasury market in a desperate effort to defend America’s lifestyle through government spending. That hasn’t and will not work either. The federal government has more than $9 trillion in debt. If the fed were to buy it all up, it would lead to a collapse of the dollar, and hyperinflation.

The Washington gridlock and bipartisan stalemate has frozen career politicians ability to realistically and meaningfully address the country’s economic problems. America cannot continue its debt-fueled growth model on borrowed money from China for unjustified tax cuts and entitlements without long-term structural changes and investments in new growth enterprises.

Bowles and Simpson, the committee co-chairs, acknowledged that the reality of the Washington Beltway, both of whom are Beltway insiders and know it well, is that their recommendations will never see the light of day because of the built in self-serving interests of corporate America that will be adversely affected by their recommendations and command their lobbyists and supporters in Congress to ensure their recommendations never get to first base. They were right. Congressional leaders from both parties severely criticized their report and recommendations even though what they recommended is exactly what the Tea Party movement and citizen taxpayers want.

Mutual Trust and Benefit

2010-12-08T02:03:00.000+08:00

Before either America or China embrace each other, there has to be true mutual respect, as distinguished from politically expedient respect, that is mutually beneficial. This is one critical relationship that cannot flourish by being limited to words alone. It is one that is based and developed on geopolitical and economic facts. The local domestic political reality of each ─ verbal and factual ─ are just the special national sauces each has to get used to, and trust.

China’s heightened technological capabilities were highlighted when it rerouted massive volumes of Internet traffic from both the U.S. government and military networks, including the Senate, Army, Navy, Air Force, Marines, Secretary of Defense’s office, NASA, Department of Commerce, National Oceanic and Atmospheric Administration and many U.S. companies like Microsoft to China in March and April of 2010. Such actions are anything but confidence builders. The incidents highlight the security vulnerabilities of the public Internet, which uses a trust-based system to route data from one server to another. Information follows the most efficient path, not necessarily the shortest, and servers advertise their ability to handle traffic. There are more than 100,000 routers in the world. Any one of them can be “spooked” to reroute traffic. The majority of Internet traffic in the world is routed through the U.S.

China Telecom sent erroneous messages that led servers around the world to route traffic through China in 2010. The tactic could be used to spy on specific users, disrupt communications or conceal a separate attack.

Wiki leaks release of U.S. State Department highly classified confidential cables didn’t do much to restore the already eroding trust. Accusing China’s Politburo of directing the 2010 cyber intrusions into Google’s computer systems as part of a “coordinated campaign of computer sabotage carried out by government operatives, private security experts and internet outlaws,” something I had warned would happen in Custom Maid War and Feasting Dragon, Starving Eagle, is again shifting blame and responsibility from where it belongs ─ Washington and the Pentagon.

Mutual suspicion gets neither anywhere, especially closer to each other. This is not really surprising. After all, with the inherent built in different political systems, one party openly authoritarian, versus two party authoritarian disguised as democratic, there is bound to be mistrust. Both have to change politically and meet each other half way, politically and economically. America more autocratic and China more democratic. Both have to co-operate and reciprocate more ─ and teach each other how.

Positive reinforcement with co-operative positive acts repeatedly reinforced by each other are a lot more constructive and productive than political duplicity where the cheating by one party results in the other responding in kind ─ tit-for-tat.

American arms deals with Taiwan do not exactly motivate China to restrain North Korea, especially just because America the arms supplier wants and says so. After all, if America doesn’t listen, why should China? The fact that Obama has met with Hu more than any other foreign leader since the start of his presidency is meaningless if no trust is developed because of the failure of America to listen. China is not receptive to lectures, especially when America doesn’t listen. To make matters worse, Obama’s visit to the four largest Asian democracies in November ─ India, Indonesia, South Korea and Japan ─ and skipping China only begs the question of trust more.

Sino Supercomputer, Drones, GPS & Mars Rover

2010-11-30T21:52:00.002+08:00

It is not only on the dollar financial front that the U.S. is getting shellacked. The shellacking it is encountering on the supercomputer, drone and GPS fronts, American pioneering cutting-edge frontiers are heartbreaking ─ and un-American. America’s leadership in the supercomputer technology has been hijacked by China with its new fastest supercomputer in the world ─ the Tianhe-1A that can perform a mind numbing 2.57 quadrillion calculations per second.

The supercomputer is a key research tool in such fields as climate change, product design and weapons development. Any wonder the U.S. is concerned? It is an expensive and serious national security issue for both countries. China is rapidly catching up with the U.S. in the supercomputer installation business. So why not work together on joint aspects that are not security threats in the interest of building mutual trust and respect?

China’s ability to build drones and get a satellite to Mars, and launching satellites that can show people how easy it is to get around on earth, without getting lost and not using GPS, ends America’s role as the sole provider of global GPS services. China is challenging America not only on earth but in the skies.

Unmanned aerial vehicles, commonly known as drones, are considered the future of military aviation and could one day replace the fighter jet. China has developed more than 25 different models that is causing anxiety in the Pentagon because “when deployed, will expand the PLA Air Force’s options for long-range reconnaissance and strike.”

By 2012 China will also have more than a dozen satellites capable of covering the Asia-Pacific region and by 2020 it will have complete global coverage with 35 satellites which will give China strategic independence and another commercial gold mine. The GPS was a navigation revolution comparable with the invention of the compass, except that it is controlled by one power. America is no longer the world’s sole traffic cop in the sky at the dawn of the new space age.

Giving America a run for its money on earth and the skies is not enough for China. It is also reaching out to the moon. China’s lunar probe Chang’e-2 that was launched October 1, 2010, sent dramatic photos of the moon’s surface and areas proposed for China’s first unmanned soft-landing around 2013, which will carry a moon rover and a telescope. The telescope has attracted international attention because it will be the only lunar-based telescope and could lead to new astronomical discoveries.

Corporate Republic ─ Income Inequality

2010-11-22T19:44:00.000+08:00

America has become a corporate hedge fund republic where the richest one percent possesses more net worth than the bottom 90 percent. The top one percent of Americans owns 34 percent of America’s private net worth, according to figures compiled by the Economic Policy Institute in Washington. The bottom 90 percent owns just 29 percent. That also means that the top 10 percent controls more than 70 percent of Americans’ total net worth. Huge concentrations of wealth corrode the soul of any nation. All one has to do is look at Africa and Latin America. The same is now happening to America.

Emmanuel Saez, an economist at the University of California at Berkeley, who is one of the world’s leading experts on inequality, notes that for most of American history, income distribution was significantly more equal than today. And other capitalist countries do not suffer disparities as great as ours. “There has been an increase in inequality in most industrialized countries, but not as extreme as in the U.S.” Professor Saez said.

Yet, career politicians insist on granting $370,000 tax breaks to the richest Americans as a way to stimulate the economy during a recession? I don’t get it. How is that going to stimulate the economy? Do politicians really think these rich taxpayers are going to stimulate the economy by buying fancy cars and yachts and hire more groundskeepers and chauffeurs? Of course not. But they are the people who fund the politicians re-election campaigns.

The unemployed poor who can stimulate the economy with unemployment benefits are given no breaks because they don’t have money to spare on career politicians re-election campaigns. A study commissioned by the Labor Department during the George W. Bush administration makes clear the job-creation power of unemployment benefits because that money is spent immediately. It is pumped back into the economy rather than a savings account or politicians re-election coffers.

Clash of The Currencies

2010-11-15T20:17:00.000+08:00

The “shellacking” Obama and his democratic Congress received was not limited to the midterm elections. They also received a shellacking for their monetary policy at the G20 in Seoul last week..

While America demanded, make that ordered China to revalue the yuan with the threat of sanctions, America decided to print $600 billion to stimulate its economy with the second round of quantitative easing, commonly spun as QE2. The result, a weaker devalued dollar ─ 15-year lows against the yen and an all-time low against the Swiss franc ─ with China taking the biggest hit because of its multi-trillion dollar holdings. The result, instead of China being criticized for its currency policy at the G20 in Seoul last week, it was America that was roundly criticized by world leaders, including China, for its destabilizing currency policy that is causing trade imbalances and disparities not only at home but globally. The U.S criticism of China’s yuan policy and push to revalue the yuan was soundly rejected by world leaders who put the blame for the global clash of currencies squarely on U.S. shoulders.

The biggest force undermining the dollar is the U.S. Federal Reserve’s dollar printing policy, not China. It is time this is acknowledged and that the U.S. reconsider its exchange rate policy in rebalancing the U.S. economy. With the dollar’s interest rates in the U.S. at nearly zero, the country is printing more money and pumping it into the U.S. markets from where it flows to the rest of the world. As a result, the dollar has tumbled; inflation expectations have increased; asset and commodity prices have hit new highs. Even worse, the dollar’s appreciation has negatively impacted other economies and currencies, forcing them to act, either by imposing capital controls or intervening in their exchange rates.

Banks take the U.S. dollars the Fed prints and instead of investing and circulating them in the U.S. economy, look for better returns in emerging countries and create inflation, asset and housing bubbles with their hot dollars that they withdraw when they have maximized their returns, leaving the local economies in shambles as witnessed during the 1997-98 financial crisis. It should therefore not come as a surprise that countries as diverse as Brazil, Indonesia, South Korea, Vietnam and China have imposed restrictions on investment inflows to defuse the danger of hot money.

This is a “beggar-my-neighbor” policy. During the 2008-2009 crisis, the U.S. nationalized a lot of private debt, but in the post-crisis period, it tried to internationalize its public debt. The policy is shortsighted, beneficial to neither U.S. economic growth nor global recovery and stability. Shifting America’s accumulated debt burden across the world by softening the dollar only forces other countries to take action to protect their currencies. That ultimately isolates the dollar and its users. Historical experience shows that policymakers must be cautious about aggressively shifting exchange rates.

In the 1970s, the U.S. pursued a devaluation policy for the same purpose and using the same justifications. It led to chaos around the world and plunged the U.S. economy into a prolonged period of stagflation. Maybe the world can stop the U.S. from repeating the mistake, through currency interventions. This isn’t a currency war, it is good medicine, not only for the countries protecting themselves, but America as well.

The U.S. weak-dollar policy could backfire big time, leading straight to inflation without growth along the way. There is no mileage in politicizing currency management. There are no winners in a clash of currencies.

Dying American Dream

2010-11-09T19:49:00.002+08:00

The American Dream has not only turned into a nightmare but is dying. People the world over dream of coming to America the way millions of immigrants, myself included, did to better ourselves. America was a place where if one worked hard one got ahead and created a better world for their children who in turn did the same for theirs. That was a dream all Americans believed in. Today less than half believe so according to a poll released by ABC News/Yahoo News in September 2010.

This point was brought home to me wherever I came in America in 2010. Homeless people shuffling and pushing shopping carts with all their worldly possessions. As a lawyer who represented mobile home and trailer park developers when I practiced law in California in the 70s, I couldn’t help think, my, mobile home living sure has changed in America these days.

The seeds of today’s global economic disaster were sown in the 1980s. From 1980 to 2005, the U.S. economy, adjusted for inflation, more than doubled. But the average income for most American families actually declined. The standard of living for the average family improved not because income grew but because women entered the workplace by the millions. As hard as it may be to believe, the peak income year for the bottom 90 percent of Americans was way back in 1973, when the average income per taxpayer, adjusted for inflation, was $33,000. That was nearly $4,000 higher than in 2005!

The American dream was alive and well and evidently unassailable. Yet somehow, following the oil shocks, the hyper inflation and other traumas of the 1970s that triggered my protest horseback ride to my Beverly Hills office in 1979, We the Apathetic Maids allowed the oil companies and their extremist career politicians in the Military Industrial Congress to smother the dream.

America can and must restore the American Dream. The dream can be revived. It will take time, courage and sacrifice. The American experiment is alive and although dying, can and must be resuscitated and restored by reaching back to the founding principles of this great republic envisioned by the Founding Fathers and enshrined in the Constitution.

Tea Party Revolt

2010-11-02T20:28:00.002+08:00

What has fascinated and absolutely captivated me during the 2010 midterm elections is the emergence of the anti-establishment tea party movement and its vocal disgust and active revolt at the political process, system, expanding government, rising taxes and the career politicians and bureaucrats for their lack of adherence to the Constitution, who were enriching themselves and their Wall Street financial backers at the expense of America’s founding principles and taxpayers. Career politicians are not what the Founding Fathers had in mind for America.

The volatile 2010 midterm election brought out the angry voters willing to punish career politicians, Democrats and Republicans alike. The anti-incumbent wave went beyond anger at the Democrats, Republicans, Left, Right, Conservative or Liberal. Voters were angry at every Washington career politician and their Wall Street corporate influence peddlers who have hijacked the system and created a corporate welfare state at the expense of hard working taxpayers.

The Tea Party is the new phenom on the U.S. political landscape. It concluded the primary season with eight “citizen” Senate nominations and 33 candidates running in congressional districts, shocking not only the Democratic and Republican establishments, but the political pundits, who again, got it wrong misreading the anger and revolt brewing in America.

The Silver State senatorial race between Senator Harry Reid and Sharon Angle was a nail biting “man up” showdown, the nastiest and highest-profile Senate race that epitomized two of the strongest political trends of the 2010 election year: anger against incumbents and the vulnerabilities of the Tea Party candidates.

Tea Party Express began as a PAC called Our Country Deserves Better that political operative Sal Russo, a long-time conservative Republican ad man, and former California Assemblyman Howard Kaloogian formed in 2008. They were frustrated that Senator John McCain wasn’t drawing enough contrast with Obama during the 2008 presidential election. They rebranded the PAC after CNBC’s Rick Santelli made his famous “tea party” remarks on the air in February 2009 that spurred the protest movement.

Christine O’Donnell, notwithstanding her refreshing frank wackiness and “checkered background,” is on the Tea Party frontline carrying the banner of big business, like her sister Sarah, who told Karl Rove to “buck up,” to his checkered background comment about O’Donnell. It doesn’t matter to the party movers and shakers if O’Donnell loses, as long as she sweeps some like minded people into office elsewhere in the country on her tea leaves.

Destructive Deficit Spending

2010-10-25T22:34:00.002+08:00

The global financial crisis is going to end. The only question is when, not how. The how is certain. With ugly stratospheric budget deficits. Investors will need to be persuaded to hold Himalayan high mountains of debt for decades. The history of financial crisis show that public debt typically doubles, even adjusting for inflation, in the three years following a crisis. America and many rich and poor nations are well on their way to meeting these projections.

Throwing money at the problem and propping up greedy banks that created the speculation is, as Jim Walker of Asianomics says, like trying to put out a fire by pouring gasoline on it. The result will be an even bigger, more searing fire.

The multi-trillion U.S. deficit financing is crowding many emerging economies and their companies out of the international capital markets that only creates more resentment towards America.

The reality is that in order to build America and restore it to its former glory the current financing models have to be torn up and replaced with fiscal prudence. A depression will undoubtedly follow with mass unemployment and wealth destruction. But it can be short and sweet as opposed to the prolonged agony America and the world have gone through the last three years ─ and also lay the foundation for a new era of healthy sustained growth.

A drive to devalue the dollar could spin out of control by eroding confidence in the currency, leading global investors to cash out of assets denominated in the dollar before their losses worsen. The potential for a mass dumping of the dollar, especially by the Chinese, is a very realistic scenario.

No nation has ever devalued its way to prosperity. The Japanese tried and failed in the late 1990s. A weaker dollar, or the mirror image of a stronger Chinese yuan would be no exception to that time-honored premise.

Karate Chop Japan

2010-10-17T01:24:00.002+08:00

The first Karate Kid movie involved Japanese actors and took place in Japan. Karate Kid II took place in China with Chinese actors and Jackie Chan. Isn’t it time Washington dumped a politically broken and economically broke Japan as its major ally in Asia and replaced it with a prosperous China like Hollywood did? I am at a loss as to why America is still allied with Japan, the country that attacked and brutalized Americans during World War II, and continues to do so with its economic policies today, while it shuns China, America’s World War II ally that fought side-by-side America to defeat Japan, that wants to partner with America.

Japan’s continuing economic and geopolitical decline over the last three decades ─ at the expense of China’s ascent ─ was highlighted when China surpassed Japan in the summer of 2010 to become the world’s second-largest economy after the U.S. Some economists predict that China will overtake the U.S. by 2030. China’s growth rate for 2009 was more than 11 percent compared to America’s anemic 2.4 percent.

To make matters worse, China’s expanding economic shadow is buying up small and mid-size Japanese companies and real estate, taking advantage of depressed asset prices ─ the same it is doing in the U.S. China is also now Japan’s biggest trading partner and a bulk purchaser of Japanese government bonds. The bond purchases are helping drive up the value of the yen making Japan’s exports less competitive with China’s.

China’s dominant shadow over Japan was further highlighted in September 2010, after a Chinese fishing trawler collided with a Japanese coast guard vessel off the islands known as Diaoyu to the Chinese and Senkaku to the Japanese. The uninhabited islands northeast of Taiwan are claimed by both countries and are administered by Japan.

Japan arrested the captain of the fishing trawler for illegal fishing but released him after anti-Japanese protestors rallied outside the Japanese Embassy in Beijing and across China and Hong Kong. China also cancelled high level political and cultural exchanges, instructed travel agencies to cancel tours to Japan and withheld the shipment of rare earths used in electronics that posed a significant threat to the Japanese economy. China controls more than 90 percent of the world’s rare earth minerals.

The fact that the captains arrest coincided with the September 18 anniversary of an incident that led to Japan setting up a puppet government in Manchuria in the early 1930s, a date that stirs bitter memories in China of the brutal Japanese occupation of China, stirred China’s nationalistic outburst and effective economic reaction to the arrest.

Japan blinked and China smiled. Japan lost face while China gained big face. Which face makes more sense for America to have in its 21st-century geopolitical picture?

China Bashing Again

2010-10-08T02:46:00.001+08:00

I never cease to be amazed how prevalent China bashing becomes during an election season in the U.S. The midterm 2010 election is no exception. China is again blamed for the low value of its currency, high unemployment in the U.S. caused by outsourcing to China and the bilateral trade deficit. The result was that last week the House of Representatives voted overwhelmingly to impose tariffs on virtually all Chinese imports to the U.S. The threat of putting sizeable tariffs on a country’s entire exports to the U.S. is not only highly unusual, but of dubious legality under international trade law ─ as is the case on China’s currency manipulation which the World Trade Organization does not define as illegal.

A currency fix alone won’t solve America’s problems. A revaluation of the yuan addresses only one of the many pressures shaping the imbalances in the Sino-U.S. relationship, a subject I discuss at length in Feasting Dragon, Starving Eagle.

The Chinese feel that America is trying to curb China’s growth, and thus its power and refuse to assist America in its efforts to isolate Iran and North Korea.

China, as America’s largest creditor, has become more confident in its dealings with the U.S. and on the world stage. Why should China make economic concessions to a country many blame for plunging the world into financial crisis? Why should China make its exports and imports more expensive? Why should China bail America out of its financial abyss at the cost of its exports being more expensive and Chinese factories being shut down and millions of workers becoming unemployed? Would America if the roles were reversed? I for one don’t think so. America should be thankful China is helping finance America’s unjustified deficit spending spree and stop blaming China for the mistakes of Washington career politicians. The alternative is America defaults on its financial obligations, or worse, bankruptcy.

A trade war with China, the world’s leading tea drinking country, does not help U.S. exports or employment in America as members of the Tea Party movement advocate. China can buy from elsewhere hurting U.S. export industries while American consumers pay higher prices for essential consumer items and also have higher tariffs imposed on U.S. products, which China defiantly imposed on U.S. poultry before the House vote. On the day of the vote, China warned of dire consequences and further economic disruptions and let the value of the yuan fall.

Back Writing My Blog

2010-10-08T02:45:00.003+08:00

I have finished writing Feasting Dragon, Starving Eagle which has been a joy! It will be available on Apple's i-Bookstore next week and on Amazon at the end of the month. All my other books will also be available in the e-book format on Amazon and i-Bookstore at the end of the month. I now look forward to getting back to my weekly blog.

Working on new book

2010-06-17T19:45:00.000+08:00

I regret I will not be posting any new blogs until September because I have to spend the summer months working with my editor to get my new book "Feasting Dragon, Starving Eagle" ready for publication. Thank you for your understanding and patience.

Water Wars

2010-05-26T20:22:00.000+08:00

Water is becoming a key security issue in the Middle East and a potential source of bitter discord. Israel and its Arab neighbors already are water-stressed economies.

After a five-year drought, the region is headed toward a water calamity that could overwhelm all peace efforts. The Jordan River now has large sections reduced to a trickle. The Sea of Galilee is at its lowest point ever. The surface area of the Dead Sea has shrunk by a third. Iraq’s ancient marshes are now marked by large swaths of stalks and caked mud. In northern Syria, more than 160 villages in two years from 2007 to 2009 have run dry of water and been deserted by residents. In Gaza, 150,000 Palestinians have no access to tap water. In Israel, the pumps at the Sea of Galilee, its largest reservoir, are exposed above the water level, rendering pumping impossible.

The same holds true for many pumping stations across America’s lakes and rivers. Not only are they running low, but what water and fish remains is polluted with high levels of mercury. The U.S. Geological Survey’s test of fish pulled from 291 streams from 1998 to 2005 found every one of them contaminated with some level of mercury. The study found 27 percent of the fish had mercury levels above the level Environmental Protection Agency considers safe for human consumption. Previous research has found levels of concern in ocean and lake fish. Mercury is a neurotoxin especially dangerous to development in infants and fetuses.

I swam in the Sea of Galilee, the Dead Sea and the River Jordan on several occasions since the early ’60s and enjoyed their refreshing history-soaked waters ─ and did so again this week. Watching the waters at the cradle of Western Civilization and the Tibetan plateau that feeds the cradle of Eastern Civilization gradually disappear before our very eyes as we blindly and idly stand by as the world drowns itself in more wars and sorrow is not only unbelievable ─ but a self-inflicted human calamity. The potential regional and global devastation a water shortage in these seas and rivers can cause is nothing short of Armageddon.

Pigs Get Fat and Hogs Get Slaughtered

2010-05-01T20:33:00.001+08:00

The Senate hearings into Goldman Sachs financial shenanigans highlight how greedy bankers can get slaughtered if there is political will.

America’s bankers ─ the chefs who cooked the global financial meltdown, a dog’s breakfast of thousands of failed companies, millions unemployed and retirees penniless without health care in their wake ─ rewarded themselves with multi-million dollar caviar and champagne-laden golden parachutes and bonuses while taxpayers and their children and grandchildren pick up the tab. They obviously forgot what happened to Marie Antoinette, who had her head guillotined like a sausage because she said of the starving masses who didn’t have bread, “Let them eat cake.”

China is clipping the wings of its high-flying earners in financial institutions to prevent a widening income gap that can trigger social unrest. A concept the Obama administration toyed with and then dropped and appointed a salary czar to address. The Ministry of Finance issued a circular in April 2009 asking state-owned banks, insurers and securities firms to cut pre-tax income by at least 10 percent for top executives from 2007 salaries if the companies were more profitable in 2008 and by 20 percent if company profits declined. The ministry also announced a salary cap for financial services executives.

“The salary reduction is aimed to maintain social equality, protect rights and interests of the nation and shareholders and improve corporate governance,” the ministry said. Why isn’t America doing the same? Governments do need to rebalance the relationship between the state and the markets to create a fairer, more equal distribution of rewards. China did the right thing.

All American bankers have to do is apologize for their mistakes, get their bonuses and go back to business as usual.

“We participated in things that were clearly wrong and have reason to regret,” said Lloyd Blankfein, CEO of Goldman Sachs, issuing an apology for its role in the financial crisis amid public anger over its record bonuses in 2009.

Wall Street’s utter disconnect from the rest of the world was laid bare for all to see when Blankfein was quoted as saying he’s doing “God’s work” at a Chinese business conference in New York. He went on to say that “everybody should be happy” that he and his peers are on track to take home billions in bonuses. People are happy, but not about the bonuses. They are happy to see Goldman Sachs charged with fraud and its greedy executives grilled.

What Climate Change?

2010-04-21T23:46:00.000+08:00

Unprecedented typhoons, earthquakes and volcanoes disrupting people’s lives and some people are still asking what climate change?

America has to lose its appetite and dependence on oil. Some states in the U.S. create more carbon emissions than several developing countries put together. The U.S. Senate cannot be allowed to again hold up legislation mandating the reduction of carbon emissions, as it did with the Kyoto accord. At the time, the Senate would not approve the ratification of the Kyoto Protocol unless it contained binding targets and timetables for developing countries as well as developed nations. The excuse given at the time was that signing Kyoto “would result in serious harm to the economy of the U.S.” It was the only developed country not to climb aboard.

America’s hot-air empty-suit career politicians, especially those from America’s most polluting states, have to acknowledge the urgency for them to act now. There is hope.

America and China must get their scientists to not only address all the ramifications of global warming at the dawn of this new century, but how the two countries can put aside their respective radical notions of how to achieve progress. It’s time that science and the corporate world (sorry Big Oil), regardless of whether they follow the capitalist or Confucian model, begin thinking and acting in ways that can pay huge dividends for the people of the world, not to mention themselves and their shareholders. Otherwise, they will lose it all. Venezuela’s Hugo Chavez is a 21st-century wake-up call.

An extensive study on a breed of wild sheep in Scotland shows that global warming has caused the animals to shrink in size by up to 5 percent, a finding that has frightening implications. Evolutionary theory says wild sheep should “gradually get bigger, as the stronger, larger animals survive into adulthood and reproduce.” But the study shows the “local environment has had a stronger effect on the sheep than the evolutionary pressure to grow larger.” If global warming can do this to sheep, I’m mortified to think what it might be doing to grains, vegetables, fruits, and of course, We Human Citizens. Humanity and the future of the world’s climate rests on the ability of the governments of the U.S. and China to work together as partners, shepherds, leading their flocks.

Rising global temperatures must be jointly arrested by the U.S. and China. Only they have the resources, scientific know how, and combined global number of local and interlocal citizens clamoring for more government intervention and economic stimulus support to ensure their personal and economic survival. China can’t handle this alone, notwithstanding what many countries are asking it to do. It knows its only trusted partner can be America. But the U.S. must meet China half-way.

There Is Only One America

2010-04-14T19:40:00.003+08:00

America is losing its perch of global supremacy. In 2000, U.S. stock exchanges accounted for about half the value of global stock markets; at the beginning of 2008, they accounted for just 33 percent ─and shrinking. The Chinese economy has been doubling in size every 10 years since 1978. In contrast, it takes the U.S. economy about two decades to double in size.

Not all is lost. America is still the head chef, but must now learn to share the kitchen with China if it wants to protect and preserve its considerable global stake holding for not only the country, but for all of its citizens, individual and corporate.

America’s resilience, its fighting pioneer spirit, will-power and determination to win is engraved in the fabric of the country’s inherent makeup and culture ─ the Constitution and Bill of Rights. America’s founding ideals of openness, tolerance, diversity, equality and freedom will allow it to remain the head chef planning future geopolitical menus. No one should count it out because of its current hopeless decline, especially when no one, including China, is willing so far to step up to the plate to replace America. Questioning and challenging America is a far cry from taking over or replacing it. America can still come out of the current crisis on top of the ongoing geopolitical cook-off. The menu of geopolitical issues on the table is extensive and must be addressed honestly and harmoniously.

America’s long-term spirit of determination to win, especially when it comes to dealing with China and its business and political culture, is represented by the National Football League. Despite dropping the China Bowl between the New England Patriots and Seattle Seahawks in 2007 and again in 2009, the NFL ─ which dwarfs other professional American sports leagues in revenues and viewership ─ is still chomping at the bit for the hearts and minds of Chinese sports fans. It is now planning a preseason game in either Beijing or Shanghai in the summer of 2011.

America, like the NFL, can take serious economic, political, military and terrorist body blows and bounce back, thanks to its founding cornerstones. A contemporary reminder is the reopening of the Statue of Liberty to the public on July 4, 2009, eight years after the 9/11 attacks.

Another reaffirming moment for America came when President Barack Obama was awarded the 2009 Nobel Peace Prize.

“Let me be clear,” Obama said when he learned of his controversial selection. “I do not view it as recognition of my own accomplishments, but rather as an affirmation of American leadership on behalf of aspirations held by people in all nations.

“I will accept this award as a call to action, a call for all nations to confront the challenges of the 21st century.”

American power and determination is rooted in the ideals and principles laid down by the Founding Fathers, and that determination is still alive today.

The American Divide

2010-04-08T21:20:00.000+08:00

The final House vote of 220 Democrats to 207 Republicans, and the Senate vote of 56 democrats to 43 republicans, with the Republicans unanimously opposed in both chambers to Obama’s health care bill, highlighted how divided partisan America is.

The vitriolic language of the Republican opponents angered by the procedural tactics deployed to pass the legislation, tactics used by Republicans themselves in the past, was reprehensible. John McCain said that Democrats had "poisoned the well" and they could expect "no co-operation for the rest of the year" from his party. The spectacle of Republican congressmen egging on protestors who shouted vile abuse at black and gay Democratic representatives who supported the legislation and the threats and vandalism to property of relatives that voted in favor of the legislation that played out across America after the bills passage is shocking.

John Boehner, the House minority leader, declared that the passage of health care reform was "Armageddon." The Republican National Committee put out a fund-raising appeal that included a picture of Nancy Pelosi, the speaker of the House, surrounded by flames, while the committee’s chairman declared that it was time to put Ms. Pelosi on "the firing line." And Sarah Palin put out a map literally putting Democratic lawmakers in the cross hairs of a rifle sight.

The stepped up security to protect some congressmen who voted in favor of the bill because of death threats is reminiscent of what happens in fascist states. Is this what America has become? Democracy in America has been undermined, actually sabotaged, by the health care debate and its passage.

"I think people have to realize what it means to say in a Democracy that ‘I will kill your children if you don’t vote a certain way’," said Tom Perriello, a first-term Democratic congressman representing southern Virginia. He is a graduate of Yale Law School who worked on national security issues and conflict resolution in areas like Afghanistan, Darfur, Kosovo and Liberia before he was elected to Congress. "What is at stake here is the sanctity of our democracy."

Obamacare, unlike Medicare, Medicaid and the Civil Rights and Voting Rights Acts of the 1960s that were passed with overwhelming Republican support, was strictly a partisan Democratic piece of legislation. What happened to bipartisanship? How did extremists manage to hijack the American political parties? Can freedom loving democratic America survive with such a political divide? I for one think not. The divide must be bridged.

Blogs back soon...

2010-03-09T05:25:00.000+08:00

Due to the final editing of my new book "Feasting Dragon, Starving Eagle," which will be released June 1, 2010, I need to spend time with my editor and am therefore unable to write any blogs until April 1, 2010.

My next blog will be posted on April 2, 2010.

Chinese New Year and Presidents Holida

2010-02-21T23:25:00.000+08:00

Due to Chinese New Year and Presidents Holiday the next blog will be posted the week of March 22.

Somalia Anti-Piracy & Restoration Task Force

2010-02-05T21:37:00.001+08:00

Hong Kong ─ Why are no navies willing to risk a confrontation on Somalia’s lawless coast despite a U.N. Security Council resolution allowing the use of force in Somali waters? The pirates’ attacks on international shipping are acts of war that justify an invasion of the pirate strongholds and Somalia.

America and China must establish and lead a Somalia Anti-Piracy & Restoration Task Force to defeat piracy and rehabilitate the failed state on the Horn of Africa. China’s military leadership has made known its desire to play a leadership role in defeating the pirates.

Piracy is a renewed scourge from the 19th century that must be dealt with today as it was then, with the U.S. again leading the charge, this time with China alongside, as well as other countries interested in joining the anti-piracy coalition.

During 2008 alone, Somali pirates seized more than 40 vessels and at least 800 seamen, collecting an estimated $150 million in ransom.

What is the point of America and China building state-of-the-art navies, air forces, armies and intelligence-gathering infrastructures to protect their citizens and international commerce on the high seas if they can’t be used against pirates?

It was America that initiated the first campaign against pirates in the 19th century.

In the 18th century, most civilized states accepted the Roman law definition of pirates as “enemies of the human race.” By the end of that century, the rulers of Algiers, Tunis and Tripoli had become notorious for harboring pirates and engaging in piracy and the slave trade in whites, chiefly captured seamen. European countries found it easier to ransom these unfortunates rather than go to war. Admiral Horatio Nelson, commanding the British Mediterranean fleet, was forbidden to carry out any reprisals.

“My blood boils,” he wrote, “that I cannot chastise these pirates.”

By contrast, America was determined to do so. Pirates were the main reason Congress established a navy in 1794. In 1805, U.S. Marines marched across the desert from Egypt to Tripoli, forcing the Pasha there to sue for peace and surrender all American captives ─ an exploit recalled by the lyrics of the U.S. Marine Corps hymn, “From the halls of Montezuma to the shores of Tripoli.” Why not add “and Mogadishu?” Make the hymn ─ and the U.S. Marine Corps ─ relevant to the 21st century.

The daylight helicopter raid in Somalia by U.S. commandos in September 2009 that killed Saleh Ali Saleh Nabhan, the most wanted Islamic militant in Africa, is an example of what America can do when its political and military will are synchronized.

The time is long overdue for America to embrace China as its 21st century comrade-in-arms and lead the world back to basics ─ starting in Somalia.

The Haiti Political Disaster

2010-01-20T22:13:00.001+08:00

In 1804, Haiti became the world’s first independent republic, after a 12-year revolt by slaves to oust their French masters. On Independence Day in 1904, president Rosalvo Bobo told his countrymen that he was "tired...of our stupidities" and lamented "a century of slavery of negro by negro." He urged Haitians to mend their ways, so that by January 1st 2004, their descendants might have something to celebrate on their country’s bicentenary. They didn’t and still don’t.

Haiti is an example of a former colony in the Western Hemisphere that has become a chronic failed state. It is the poorest country in the Americas, one of the poorest in the world, and continuously spirals into mayhem and bloodshed. More than 80 percent of the country’s 10 million people live in poverty and have suffered repeated coups and civil wars. Haiti has been ravaged by AIDS, with a life expectancy of 53 and 80 percent of the population living on less than $4 a day.

Is it any wonder that the shabbily built shanties, Presidential Palace, government buildings, apartment blocks, luxury hotels and villas occupied by the UN, NGOs, charities and infrastructure, including hospitals, bridges and schools ─ lie in rubble?

Who is to blame? Where have the billions of aid dollars donated and loaned to Haiti after the countless natural and political disasters for more than a century gone?

The Haiti earthquake is the latest tragic reminder of how corrupt political cronyism destroys people’s lives. Homeless, hungry and thirsty people are left to mourn their dead and care for their injured as they scramble for food and water while their foreign administrators continue to enrich themselves as they dispense more aid.

Water

2010-01-11T23:10:00.000+08:00

Water makes up 60 percent of our body, 70 percent of our brain and 80 percent of our blood. We humans are essentially made of water. While we can go about a month without food, our body cannot survive a week without water. The same water that existed on Earth billions of years ago still exists today. It covers most of the planet, but just 30 percent is fresh water and most of that is ice, albeit melting. Less than 1 percent of all fresh water is readily accessible for human use. In other words, less than 0.0007 percent of all the water on Earth is available for human consumption.

What is more depressing is that most people are not aware that a quarter of all the clean water that enters their home is used to flush toilets. One toilet flush uses three gallons of water. A single load of laundry uses 40 gallons, a 10-minute shower 50 gallons, brushing teeth with the water running four gallons, and brushing teeth with the tap off a quarter of a gallon.

A water crisis is looming. In the 20th century the world’s population tripled. The use of water grew six times. By the middle of the 21st century there will be an additional 3 billion people. A number that would have been more than triple that had China not implemented a “one child” policy. Most will be born in countries already experiencing water shortages.

What does that mean for water use? Los Angeles County can support about 1 million people with its own water. Remember the movie “Chinatown?” L.A. ain’t seen the half-of-it yet, because by 2020 its population is expected to reach 22 million. El Paso and San Antonio in Texas could run out of water sometime in 2019-2029. Central Florida could run out of water by 2014.

Millions of people in the world live on less than three gallons of water a day. The average American uses about 160 gallons a day. Some sobering statistics to keep in mind:

- 25 million refugees were displaced by contaminated rivers in 2008. That is more than were forced to flee from war zones in the same year;

- One in three people worldwide lack access to safe drinking water;

- According to the U.N., a child dies from a water-related disease every 15 seconds;

- We are going to run out of water before we run out of oil;

- Due to overpumping, the groundwater in several countries is almost gone;

- Depleted aquifers lead to cutbacks in grain harvests which lead to more food shortages and higher prices;

- China is already developing large grain deficits as a result, as are India, Pakistan and Egypt;

- Our water problem is fast becoming a hunger problem.

I ponder these mind-boggling numbers and statistics every time I water my plants or go for a swim in the nearby bay, which is quite often in the hot and humid summer months.

‘Hopenhagen’ Suicide Pact

2009-12-30T01:19:00.001+08:00

‘Hopenhagen’ failed to live up to the pre-conference hype to safeguard the generations of tomorrow. The UN Framework Convention on Climate Change, the fruit of the 1992 Rio summit that convened in Copenhagen in December 2009, hosted 192 nations, joined by Iraq and Somalia ─ one of the largest gathering of world leaders in history ─ with the misplaced hope that a treaty that will protect future generations will be signed. Instead, what was signed was a weak farcical face-saving global suicide pact in order to avoid a complete embarrassing global political collapse. More empty promises by empty political suits.

A non-binding agreement that does not spell out any global emission targets for 2020 or 2050, or set a deadline for transforming the objectives outlined in the accord into a legally binding treaty. All the signatories agreed to was to “take note” of the agreement. “Take note?” They must be kidding. If not, if that is the best they can come up with, it is nothing short of a complete collapse of global political will and leadership that humanity can ill afford.

The lack of sincerity, political grand standing by irresponsible delegates walking out of chaotic meetings and accusatory inflammatory rhetoric, confirmed yet again the U.N.’s incompetence and irrelevance in the new world order. The lack of basic common sense of what must be done today in the scorching glaring face of the apocalyptic fate the world faces because of climate change is beyond comprehension.

China likened rich countries refusal to help poor ones pay for the transition to cleaner economies, with “short-term financial aid” leading to the gradual establishment of “long-term support mechanism,” to people eating at a fancy restaurant who are joined for dessert by a poor friend and then demand he pay a share of the cost of the entire meal.

The 1997 Kyoto Protocol, the world’s only legally binding emissions-curbing treaty, which America did not sign, required rich nations’ emissions to be cut by around five percent from 1990 levels by 2008, but not surprisingly, failed to achieve.

More political hot air was emitted by U.N. Secretary General Ban Ki-moon who after his dismal performance in Copenhagen, dared promise that a legally binding treaty on climate change will be reached in 2010. Not if the U.N. is running the show again.

The U.N. must be taken out of the climate change equation if a treaty that replaces Kyoto is to be signed in 2012. A new environmental organization with political clout and effectiveness headed up by the U.S. and China, together with a manageable group of representatives from the various environmental constituencies represented is long overdue. No more global summits that create more carbon emissions than they reduce.

America’s China Option In Afghanistan

2009-12-17T09:18:00.001+08:00

China shares a 76-kilometer border with Afghanistan and is doing a lot of business there without committing any boots on the ground.

Without China, Afghanistan will become America’s worst military quagmire ─ making Vietnam and Somalia look like a traditional U.S. family picnic in a local park.

China and America have agreed to cooperate on ensuring that neither Afghanistan nor Pakistan is used as a terrorist base. Because of China’s long border with Afghanistan, it fears Islamic extremism is bleeding into its Western frontier which has been racked by unrest.

Beijing is also discussing intelligence cooperation with the U.S. of the sort that took place in the ’80s, when America, China and Pakistan worked together to boot the Soviets out of Afghanistan.

The original goal of America when it launched “operation Enduring Freedom” in Afghanistan in 2001, was to capture Osama-bin-Laden and other al-Qaeda leaders and bring them to justice after the attacks of 9/11. Meanwhile, they have moved to the Pakistan side of an un-patrolled border.

While America is squandering billions on the war in Iraq, after its fleeting shortsighted victory of routing the Taliban in Afghanistan in 2002, the Taliban has returned with a vengeance, and now has a presence in 80 percent of the country. Of the 42-nation International Security Assistance Force, 56 percent want their troops back home ─ and that includes America. After eight years, more than 1,500 ISAF soldiers have died. Meanwhile, China Metallurgical Group paid $3 billion in 2008 to prospect for copper deposits worth some $88 billion in Afghanistan’s Logar province. So who is really winning and why isn’t America engaging China?

With al-Qaeda leaders urging Uygurs to launch a holy war against oppressive China is there any doubt in any political realist in America, regardless of party affiliation, that this is America’s best Afghanistan option?

Party Split

2009-12-09T23:49:00.000+08:00

The Internet is fueling the rumor mill about the division within the Communist Party that threatens to rupture the party. China’s one-party Communist system is gradually splintering into two-party factions ─ that look to become two parties ─ within the Party. The Shanghai faction of elitists, including the princeling children of high-ranking officials, favor an increase in coastal development and place a far greater emphasis on economic growth and free trade, is headed by former President Jiang Zemin. It is lined up against the populist nationalistic faction headed up by President Hu Jintao, who favor improving China’s social safety net, introducing greener policies, and balancing development between the wealthy east coast and the poor western hinterlands.

The two factions are divided by geography and by real economic and political issues. The Shanghai faction favor market and trade liberalization and pursuing China’s export-driven economic model which tends to favor the cities and its big factories at the expense of the rural areas. The populist faction is more nationalistic and if it consolidates its power, it could auger a more prickly economic relationship with the U.S.

To avoid the appearance of a party split, the party declared at a 2009 Central Committee plenum, “intraparty democracy” is the party’s “lifeblood.”

The split between the elitists and populists has resulted in brutal criticisms being leveled against each other and party officials being arrested and jailed for corruption. In 2006, Shanghai’s party secretary became the first Politburo member in years to be purged and imprisoned for corruption. His arrest helped Hu Jintao consolidate populist influence.

The Chongqing Party Secretary, a princeling identified with the elitist bloc, declared war on the deeply entrenched Chinese crime syndicates in Chongqing in 2009. He arrested more than 2,000 people, including the city’s former deputy police chief, three billionaires, 50 government officials, six district police heads, two senior judges, and more than 20 triad bosses. One of those bosses is a local parliamentarian.

Both factions recognize that their differences have to be contained and compromised for the Communist Party to remain in power. Both sides are mindful it was the open confrontation between conservatives and liberals in 1989 that led to the Tiananmen demonstrations and bloodshed. Neither faction wants to risk an open rupture in the Internet age. They are keenly aware of how People Power can be galvanized by mobile internet technology and social networking sites. The People Power movements in nearby Philippines, Thailand, Japan and South Korea that brought about political change at the top is not an option.

There is increasing reflection and criticism in China today that the price of China’s progress and economic success has been inequity ─ especially towards the peasants and workers ─ and entrenched corruption.

Reform within the party system and aggressive crackdown on corruption are preferable to revolution. That is the only way the Communist Party can remain in power.

Hot Danish

2009-12-04T22:43:00.000+08:00

It doesn’t look like a climate change agreement will be reached in Copenhagen next week. All the more reason the U.S. and China have to work together to save the world from the looming climate crisis that knows no borders. Science dictates action now. Political rhetoric of future mid-century intentions is not good enough or acceptable to prevent a global warming apocalypse.

America’s will to cut carbon emissions by only 17 percent by 2020 from 2005 levels, when compared to the European Union’s 20 percent, Japan’s 25 percent and China’s 40 to 45 percent, is shortsighted and shameful.

Just cutting greenhouse gas emissions is not good enough either. China and the U.S. have to lead the world and get it to place a greater focus on the reduction of deforestation and on research for new clean technologies.

Reducing deforestation is the cheapest way to mitigate climate change in the short term. If we stop cutting and burning tropical forests in Brazil and Indonesia we can eliminate 17 percent of all global emissions. But to do so requires putting in place a whole new system of economic development that makes it more profitable for the poorer, forest rich countries to preserve and manage their trees than chop them down to make furniture and toys. Without a new system for economic development in the timber-rich tropics, the rain forests are doomed.

Brazil’s President Luiz Inacio da Silva wants “gringos” to pay Amazon nations to prevent deforestation as a price for their environmental sins of the past.

Laser Inertial Fusion Energy, or LIFE, is a new clean cutting edge technology worth pursuing. It is a controlled nuclear fusion ─ fusing nuclei rather than splitting a nucleus, as happens in existing nuclear-fission power plants ─ can produce an endless supply of safe, clean energy. In a fission reaction, the nucleus of a uranium atom is split into two small atoms, releasing energy in the form of heat. The heat is used to make steam, which drives a turbine and generates electricity. In fusion energy, the second half of this process, that is heat makes steam makes electricity, remains the same. But instead of splitting the nucleus of an atom, you’re trying to force a deuterium nucleus to merge, or fuse, with a tritium nucleus. When that happens, helium is produced that throws off energy.

Scientists at Lawrence Livermore National Laboratory in California have been given $3.5 billion of taxpayer money to develop this new fusion technology in a commercially viable way. It involves a small pellet that contains a few milligrams of deuterium and tritium, isotopes of hydrogen that can be extracted from water that is blasted with a powerful laser that creates a reaction like the one that takes place at the center of the sun. Harness that reaction, and you’ve created a star on earth, and with the heat from that star you can generate electricity without creating any pollution. It is real solar power that can replace nuclear, coal and oil power plants.

LIFE would produce energy with no carbon emissions, from a fuel that is cheap and abundant. Ten gallons of water could produce as much energy as a supertanker of oil.

Scientists believe utility companies could be building prototype “LIFE engines” by 2020, and have commercial plants up and running by 2030

China is also pursuing nuclear fusion energy. Why don't China and the U.S. develop fusion technology together? Fusion energy is a potential solution to a looming crisis.

China, the front runner in the fight to address climate change, is prepared to lead the climate change charge alone or with the other BRIC countries. It certainly has the money to do so. If it does, it will literally leave the U.S. in its dust.

The Banquet of Great Expectations

2009-11-28T00:30:00.001+08:00

President Obama’s November 2009 state visit to China gave him a first hand opportunity to see the human face of China as he tried to convince Beijing that Washington is its partner, not its rival. It was the most important political “chewing the fat” banquet on earth as Obama’s low key approach promised to achieve a lot more than America’s traditional swaggered lectures. Bringing a carrot without the stick to stir up any contentious issues was sweet.

“The United States does not seek to contain China, nor does a deeper relationship with China mean a weakening of our bilateral alliances,” Obama said. “On the contrary, the rise of a strong, prosperous China can be a source of strength for the community of nations.”

What impressed the Chinese public the most about Obama was the report that he had insisted on paying for his own hamburger at a Washington restaurant and the fact that he carried his own umbrella when he got off Air Force One in Shanghai.

The unrealistic expectations, and unfair criticism, of Obama’s China November summit by the western media and American talking heads of all political hues, for its lack of concrete accomplishments, reflects America’s lack of understanding of the inherent distrust both countries have towards each other.

How can China trust the U.S. overnight when the U.S. National Intelligence Strategy 2009 identifies China as a “global challenger” on par with the so-called axis of evil to U.S. interests? This on the heels of U.S. Secretary of Defense Robert Gates saying China’s ever-advancing arms would create a “new threat” to the U.S. army and weaken its military power in the Pacific region? America’s determination to sell more advanced weapons to Taiwan, coupled with its increased surveillance activities of China’s military expansion, as it increases the volume of its accusations that China is expanding its espionage activities in the U.S. ─ and protectionism ─ are not endearing gestures of trust.

The question on the Chinese minds is whether America was being capricious because of its economic difficulties, which force it to be nice, or is this a genuine change of U.S. attitude towards China?

Sino-U.S. Relations, Chop Suey Style

2009-11-12T22:40:00.000+08:00

Chop Suey is an Americanized Chinese dish that cannot be found in China. America has to come up with a new political chop suey style recipe for its relationship with China. Hopefully, Presidents Obama and Hu will during Obama’s upcoming trip to China.

America must wake up to reality. The finance, banking, insurance and real estate sectors together rose to represent more than a fifth of U.S. gross domestic product, while once mighty American manufacturing contributed less than 13 percent. Millions in China had work and Americans’ purchasing power was artificially boosted as they bought cheap Chinese-made goods and ran up more debt.

America may be waking up. The U.S. trade deficit shrank 28.7 percent in November 2008, the biggest contraction in 12 years, as weak consumer demand and plummeting oil prices caused a record drop in imports, according to the Commerce Department.

A treaty formalizing biannual meetings between the leaders of the two countries is long overdue. Any treaty with China requires a two-thirds vote by the U.S. Senate, a potential hurdle with Democrats retaining their overwhelming majority in both houses. Thirty years after diplomatic relations were established between the two countries, there is still an overwhelming lack of trust in China by the American Congress.

Hopefully, Congress will listen to an American public that favors co-operation and engagement with China. A poll conducted by the Chicago Council on Global Affairs in the summer of 2008 showed that 64 percent of Americans favor “friendly cooperation and engagement” as the appropriate response to China’s rise. America and China are interlocally connected and dependent on each other. The sooner America embraces this reality, the quicker the Sino-U.S. relationship will blossom into a pragmatic and constructive one that is mutually beneficial and rewarding.

America cannot afford to risk a trade war with China while it is in the economic danger zone just because Congress yields to powerful lobbyists from the producers and manufacturers association, labor unions and business. U.S. business and labor groups are pushing lawmakers to take a harder line with China. Not when America is trying to spend its way out of a recession with Chinese financing. America needs more than $2 billion a day just to stay afloat. It’s not smart to bite the hand that feeds America. Political chop suey is a much more pragmatic solution.

Climbing the Climate Hurdles

2009-11-05T22:22:00.001+08:00

The U.S. and China got over their first joint climate hurdle by signing their first bilateral memorandum of understanding between Beijing and Washington on climate change in early 2009 in preparation for the Copenhagen climate change conference in December 2009. Hopefully, their agreement will become the template for the other nations attending in the hope of reaching an agreement to succeed the Kyoto Accord to which the U.S. is not a signatory. The U.S. and China are responsible for 40 percent of the world’s greenhouse-gas emissions and can lead their respective developed and developing world constituencies to the dotted signature lines.

Twenty percent across-the-board cuts in emissions is an excellent starting point. The target was first set by Governor Arnold Schwarzenegger in California, an average of 6.2 liters per 100 kilometers for all cars and light trucks by 2016, has now been adopted by President Obama for the entire country. That will eventually cut U.S. vehicle emissions by 40 percent. It also means that U.S. oil imports may fall up to half by 2019.

By the time the U.S. reaches its 6.62 liters per 100 kilometers target in 2016, most other countries will have moved on to an average of 5.2 liters per 100 kilometers or better. China’s current requirement is 5.5 liters per 100 kilometers. The U.S. is playing catch-up. But at least its back in a game it can easily win and lead with China that has clearly demonstrated it’s willingness to partner to make sure the rest of the world follows.

With the sun missing its spots, the solar cycle is speaking volumes of the impact of climate change. Ever since Samuel Heinrich Schwabe, a German astronomer, first noted in 1843 that sunspots grow and wane over a roughly 11-year cycle, scientists have carefully watched the sun’s activity. In the latest lull, the sun reached its calmest whitest, least pockmarked state in the autumn of 2008.

For operators of satellites and power grids, that is good news. The same magnetic fields that generate sunspot blotches also accelerate a devastating rain of particles that can overload and wreck electronic equipment in irbit or on earth. A panel of 12 scientists assembled by the National Oceanic and Atmospheric Administration now only predict only 90 sunspots during the peak month of May 2013. That would make it the weakest solar maximum since 1928, when there were 78 sunspots. During an average solar maximum, the sun is covered with 120 sunspots.

Some global warming skeptics speculate that the sun may be on the verge of falling into an extended slumber similar to the so-called Maunder-Minimum ─ a period of several sunspot-scarce decades during the 17th and 18th centuries that concided with an extended chilly period. Another ice-age? C’mon, if anything it will be the Ice Age in reverse. More like the “Roaster Age,” “Hell’s Age,” “Fossil Age,” or destructive “Human Age.”

The U.S. House of Representatives in Washington unveiled four bills in 2009 to foster closer relations with China on climate change, trade, energy and boost teaching of Chinese in the U.S. The 55 member congressional U.S.-China Working Group is finally tackling climate change as seriously as China. It is about time America acknowledge reality and stopped blaming China and its requests for an industrial development break as it is developing and weathering the current financial and economic meltdown, not to mention the nuclear one with Iran and North Korea.

America and China have to get their scientists to not only address all the ramifications of climate change the last century and next, but how they compromise their respective radical extremes on getting there, primarily because of Big Oil. It is about time science and the corporate world, regardless of whether they followed the capitalist or Confucian model, start thinking about the various ways and means their scientists can start helping the majority of the world’s citizens, as well as themselves and their shareholders. Otherwise they will lose it all.

Global Tidal Waves

2009-10-29T19:52:00.001+08:00

The Intergovernmental Panel on Climate Change, an international group of scientists, says that by 2080 as many as 3.2 billion people ─ one-third of the planet’s population ─ will be short of water, up to 600 million will be short of food and as many as 7 million will face coastal flooding.

Security experts fear that the tidal wave of forced migration will not only fuel existing conflicts but create new ones in some of the poorest and most deprived areas of the world. “A world of many more Darfurs is the increasingly likely nightmare scenario,” claims the report.

Since 1965, a volume of water equivalent to the Great Lakes has melted in polar regions and flowed into the world’s oceans, making them less salty. China is at risk from global warming as the Tibetan glaciers that feed and regulate many of China’s rivers begin to melt, and the country’s agriculture becomes vulnerable to even small changes in temperature. The Intergovernmental Panel on Climate Change has projected that sea levels will rise up about 0.91 meters by 2100.

The U.N. estimates that by 2025, two-thirds of the world’s people will be living with water stress, with North Africa, the Middle East and West Asia hit the worst. Regions that get more rainfall may get it in the form of fierce rainstorms that cause flash floods rather than a useful drizzle that soaks into the ground.

People who live within 97 kilometers of a shoreline, or about one-third of the world’s population, could be affected if sea levels rise as expected over the coming decades, possibly more than 1 meter by 2100. Flooded homes and crops could make environmental refugees of a billion people. Living on a bay that floods my street whenever there is a direct typhoon hit that brings with it high tides and ferocious winds that turn the street into a kayaking paradise beach for the neighborhood kids as the winds subside, I have personally experienced the growing peril on a small scale personally and am naturally very concerned.

“The culprit responsible for warming has been identified. As far as I am concerned, the debate’s over. What we need to be debating is what we’re going to do about it,” said Tim Barnett, an oceanographer at the Scripps Oceanographic Institution in San Diego. The Pentagon agrees.

A study commissioned and suppressed in 2005 by the Pentagon warns that major European cities will sink beneath rising seas and Britain will be plunged into a “Siberian” climate by 2020. Nuclear conflict, mega-droughts, famine and widespread rioting will erupt across the world. This threat to global stability vastly eclipses that of terrorism, say the few experts privy to the report. “Disruption and conflict will be endemic features of life,” concludes the Pentagon analysis. “Once again, warfare would define human life.”

The major threat of mayhem comes from large populations simply upping the stakes and moving into other people’s territories. I don’t know which way global warming will run, but won’t it be interesting if the zones that suffer most are Europe and North America and the ones that remain or indeed become more habitable are in Africa and the southerly Asian lands. Colonialist imperialists on the move again ─ firing as they go.

Politically Hungry America

2009-10-19T19:48:00.000+08:00

America’s hunger and appetite is metaphorically exemplified by the public’s obsession of where foodie President Obama and his wife Michele eat out. How’s this for a healthy political appetite: pizza in Saint Louis, pancakes in Pittsburg, soul food in Chicago, and chili dogs and cheese fries in Washington? But, hey, that’s America and that’s what it takes to get elected and hold onto high popularity ratings while America is starving. Any wonder Gourmet magazine, long considered the Grande Dame and dean of culinary publishing went out of business? What is more amazing, is that P.F. Chang’s simple Chinese recipe for profits, actually features ingredients that wouldn’t be found in Chinese restaurants, like chocolate, cheese, melon balls and that the “P.F.” stands for company founder Paul Fleming. A smart Yankee that others should take note of, especially career politicians in Washington.

China certainly offers America ─ and the world it leads ─ the most diversified, phenomenal and constantly changing cutting edge nourishing and delicious cuisine. The same holds true on the political front. China is again moving to center stage as it returns to the historical norm in which it is the world’s largest economy as it was for 1,800 years. The New World Disorder created by America needs to be reorganize with a fused Chinese recipe.

Chinese recipes are very healthy ─ yes I know about MSG, but having been raised on the Mediterranean diet, I also know and appreciate the pure organic taste of exotic Chinese dishes. I am constantly disappointed and angered when I dine in Chinese restaurants in America and experience America’s food fusion movement’s Americanizing Chinese food in an unhealthy way. As more Americans go Chinese with their dietary appetites, my hope is their hunger to better understand China is also satisfied and that China’s rich history, culture, capitalist and political development is correctly digested.

The time for a new eating and political order in America is long overdue.

Let’s start with food for now. Dr. David Kessler, the former commissioner of the U.S. Food and Drug Administration has no kudos for mass-produced American cuisine. He is highly critical for its nutritional imperialism. Americans steal Asian cuisines, import them with fanfare, and then absolutely destroy them with harmful additions and additives. He trashes Americans’ penchant for large quantities of mayonnaise-topped tempura shrimp wrapped evilly in rice as a faux sushi roll. He says Americans imperialize so many world cuisines that they should be ashamed of themselves. “American Chinese food is not Chinese,” he complains. I agree wholeheartedly. The classic dish General Tso’s chicken, after mass-Americanization, is poisoned with sugar: “Hunan cuisine is not sweet,” Kessler rails. The same applies to Chinese politics which is misrepresented in America.

Fast-Chinese-food chains like Panda Express, corrupt otherwise healthy Chinese dishes with piles of sugar and fat. Across America, trendy fused pan-Chinese restaurants, well marketed and much ballyhooed by the media systematically slaughter every cuisine they touch.

Fusion cuisine, like fusion geopolitics, can be good for everyone’s health, but only depending on how skillfully and carefully it is all put together. The trick is to take the best of China and combine it with the best of America. Continue going the other way around ─ with the worst of America ─ and you have a major mishmash and nutritional meltdown. Much like the economic and financial meltdown-tsunami the world has been force-fed by Washington politicians and their bankers.

Cooking With Biogas and Planting Trees

2009-10-15T06:04:00.001+08:00

Farmers in China are turning to biogas for their home cooking and lighting needs because of government initiatives and incentives that encourage farmers and rural dwellers to switch from coal. According to national statistics, 26 million households in China were using methane from biogas sources for cooking and heating by the end of 2007. That number rose to 31 million by 2008. China has invested more than 10.5 billion yuan from 2004 to 2009 for construction of biogas projects in rural areas, including 98,600 villages.

Animal and crop wastes are processed in biogas digester pools into clean methane that can be used for cooking, heating and lighting and replace carbon emitting coal. After five years of research, the Ministry of Finance and the Asian Development Bank initiated its Efficient Utilization of Agricultural Waste Project in 2003. The ADB offered $33 million in loans targeting rural Shanxi, Hubei, Henan and Jiangxi provinces. The provinces put up matching funds that trained thousands of farmers, biogas facility experts, construction workers and managers in the construction and operation of communal and home biogas facilities.

China encouraged the development of biogas as part of the Renewable Energy Law, which became effective last year, and also as part of the country’s Mid-and-Long-Term Development Program for Renewable Energy.

In America, the government has decided to plant 18 million acres of new trees ─ roughly the size of West Virginia ─ by 2020, replacing both pastures and farm fields under a bill passed by the House of Representatives in June 2009. The bill gives financial incentives to farmers and ranchers to plant trees, which suck in large amounts of carbon dioxide. The trees not only lower carbon dioxide levels, but they would improve the water quality because they need lower levels of fertilizer and pesticides.

Cooking With Explosive Gas

2009-10-07T23:00:00.000+08:00

Both the United States and China are actively seeking solutions to curb emissions of carbon dioxide generated by burning fossil fuels. Some are more fanciful than others and frankly non-starters. The carbon capture and storage initiative being explored by the Obama administration tops that list ,in my book. The idea is to siphon off the carbon dioxide from the smokestacks of power plants and pump it into deep underground storage tanks before it enters the environment and warms the atmosphere. The government is spending $2.4 billion from the U.S. stimulus package on carbon capture and storage projects.

“A mere down payment…the administration may be digging a very expensive dry hole. I mean it literally,” wrote Washington columnist Eugene Robinson in a June 2009 column. I agree, but I would add that it is not only expensive, but explosive.

Scientists and engineers will have to prove that the possibility of a sudden catastrophic carbon dioxide release from a storage site is impossible. “Catastrophic” because carbon dioxide is heavier than air, and a ground-hugging cloud would suffocate anyone it enveloped. That is what happened in Cameroon in 1986, when naturally occurring carbon dioxide trapped at the bottom of Lake Nyos erupted and killed 1,746 people in nearby villages.

China, unlike the U.S., is looking at building more nuclear power plants to meet future energy needs as it struggles with what to do to minimize carbon dioxide emissions generated by power plants that are dependent on fossil fuels. Now that it has become the top greenhouse gas polluter, China is trying to grapple with U.S. and international pressure to curb its rising CO emissions. The dilemma Beijing faces is that its leadership does not want to be distracted from building its economy by accepting a ceiling on greenhouse gas output, which even optimistic mainland experts expect to keep rising until around 2030.

Now that there is new evidence that the planet itself has begun to contribute to global warming through fallout from human activity, time is of the essence. Huge amounts of gases such as methane ─ an even more powerful greenhouse gas than carbon dioxide ─ trapped for millennia in the Arctic permafrost may be starting to leak into the atmosphere, speeding up the warming process. The March 2009 IPCC report calls on policymakers to take urgent steps to keep average global temperatures from increasing more than two degrees Centigrade, compared to pre-industrial levels. The time for action is upon us.

“Rapid, sustained, and effective mitigation is required to avoid ‘dangerous climate change’ regardless of how it is defined,” the report says. Achieving this goal, the report concludes, would require industrialized nations to slash greenhouse gas emissions by 25-40 percent from 1990 levels. Deep emission cuts are essential.

By 2030, annual emissions of carbon dioxide could reach 8 to 10 billion tons a year, unless tough action is taken, said He Jiankun, a professor at Tsinghua University who advises the government on emissions. “Ultimately, there will have to be compromise in Copenhagen, because these negotiations can’t be allowed to collapse,” He said. “If they do fall apart, that will be devastating, and nobody will be spared the repercussions.”

Why don’t the Chinese and U.S. governments spend their money and energy on solar, wind and other renewable energy sources instead of trying to deal with pollutants from nuclear and fossil fuels?

Come Together on Climate Change

2009-09-25T00:24:00.001+08:00

It was heart-warming to hear former China-human-rights-basher, House Speaker Nancy Pelosi, express in Beijing in June 2009, high hopes of co-operation between the United States and China, the two biggest emitters of greenhouse gases, ahead of President Obama’s visit to China in November and of the 192-nation UN Framework Convention on Climate Change in Copenhagen in December 2009. “We believe China and the United States can and must confront the challenge of climate change together…We have a responsibility to ourselves, to our country, to our people and to the world to work together on this.” Her change of tone exemplified how the two chefs can cook together instead of throwing boiling water at each other. Hopefully, the U.S. and China can lead their respective global constituencies to cook up a cooling climate recipe to replace the Kyoto Protocol when it expires in 2012.

In her meeting with China’s President Hu Jintao, he told her the differences between the two countries could be handled through dialogue and consultation, and that mutual efforts should be based “on equality and mutual respect.”

“I think this climate crisis is game changing for the U.S.-China relationship. It is an opportunity we cannot miss,” Speaker Pelosi said at the U.S.-China Clean Energy Forum. “I am very optimistic about the cooperation…as a great deal of work between us has been done,” Pelosi added.

Her optimism in Beijing was shared by Congressman Ed Markey, who co-sponsored the draft U.S. Waxman-Markey climate bill and chairs the Select Committee on Energy Independence and Global Warming. He was “encouraged because of movement that was being made in a significant way in China on energy intensity, energy efficiency and fuel economy standards.” Hopefully the U.S. and China will sign that treaty that will propel the U.S. and China to explore new green recipes to create and cook clean green energy together.

“We are in the process of working on a deal the U.S. president will sign when he visits China in November,” Stan Barer, co-chair of the forum said.

U.S. Senate Foreign Relations Committee Chairman John Kerry, who was in Beijing at the same time as Pelosi and Markey to attend the forum, after high level meetings in Beijing on energy co-operation, including scientific research, investment and technology transfer said: “I have been involved in this issue for 20 years… This has been the most constructive and productive discussions I’ve ever had with Chinese officials.”

Todd Stern, U.S. climate change chief negotiator, confirmed Kerry’s opinion at the conclusion of the U.N. climate conference in Bonn: “I think what China has already done ─ the 20 percent energy efficiency target for the current five-year plan, renewable energy and nuclear power targets ─ is all very impressive.”

The U.S. bill aims to cut green house gas emissions by 17 percent from 2005 levels by 2020, falling short of a European Union pledge to reduce carbon dioxide emissions by an average of 20 percent from their 1990 levels by 2020 and boost renewable energy sources by 20 percent. In a position paper on the Copenhagen Conference, China urged developed countries to reduce greenhouse gas emissions by 40 percent by 2020 from 1990 levels. Let’s hope America and China can come together to lead the world through the pending global abyss.

Dying Fossil Fuel

2009-09-16T19:20:00.001+08:00

The end of oil reserves is a lot nearer than expected according to the International Energy Agency in Paris. The day we will see the end of the oil era can best be described as an oil-bomb implosion ─ more powerful than anything humanity has seen, and less than a few decades away. That is why it is imperative to pursue alternative energy options, something China recognizes and is addressing. It is a country shifting from a society built on oil looking at development beyond the “age of oil.” That is why it is so heavily invested in renewable energy.

On the other hand, Big Oil renewable divisions are being scaled back as the oil companies retreat to their core business in oil and gas. The sad reality is that Big Oil is not going to be in the forefront of new technologies. Their dinosaur fossilized corporate culture space that has evolved in spacious over-sized energy wasting venues is much too comfortable and familiar for them to seriously explore alternative renewable energy. Just thinking of the headaches they get about hearing the difficulties trucks carrying parts for wind turbines are confronted with because of government bureaucratic rules, regulations and inertia brings a smile to my face that quickly turns to anger when I think of the global taxpayer subsidized pipelines, refineries, tankers and politicians that their Big Oil Exec idiotic apathetic attitude and irresponsible dereliction of duties to their shareholders and public if they really had any sense of corporate responsibility and didn’t just think their expensive advertisement media spins will continue to blindside public citizens anywhere.

It doesn’t make sense to allow oil companies to make record profits from the public’s dependence on oil and then allow them to use those profits to find more oil with polluting technologies to continue the public’s oil-addiction as they are now doing with tar sand, coal to liquid and carbon capture and storage. That is why I renewed my 1979 horseback ride ─ protesting oil profits and urging alternatives to oil be developed ─ in 2006 and 2008.

Trucks carrying silvery blades nearly 150 feet, or 45 meters, long have been trucking through mellow New England in the summers, backing up traffic as they slowly leave the main roadways. Huge, tubular chunks of tower also pass through. Tall pieces of machinery looking something like jet engines travel at night because they require special routing to avoid overpasses. As demand for clean energy grows, towns across America are finding their traffic patterns disrupted by convoys carrying pieces of tower that will reach more than 250 feet in height, as well as motors, blades and other parts. Escorted by police, patrol cars and gawked at by clueless citizens, the equipment must travel long distances from ports or factories to the remote, wind destinations where the turbines are erected. The reality is this fossilized thinking must be disposed for remade socially responsible attitude and approach that is relevant to all interlocal citizens. Even though Big Oil doesn’t get it, it’s a good thing other politically-connected U.S. corporate iconic cowboy-pioneers sort of do, but at least go with the flow. General Electric being is one such example in the “scandalous” corporate and personal culture of its corporate capitalist guru Jack Welch. It has decided to develop its water purification business, from a drop in the corporate bucket of earnings to a major growth driver within years, just as its wind unit did. “What GE tries to do is to align the company with some of the mega trends, the mega challenges of the world. Energy is one, healthcare is the other, and the third one is water,” said Heiner Markhoff president and chief executive of GE Water & Process Technologies.

Let’s not forget that GE corporate executives for the most part, granted not all, are made out of the same cookie cutter that their counterparts in Big Oil are. This is best exemplified by what GE Executive Jeff Immelt said in 2001 when wind turbine executives pitched him to get GE into the business. He dismissed the technology as a “hula hoop.” Immelt later changed his mind when Enron’s bankruptcy provided a cheaper way into the business, and wind turbines in 2008 generated almost $6.5 billion in revenue.

Pacific Plastic Patch

2009-09-03T01:28:00.001+08:00

The Great Pacific Garbage Patch is a marine plastic soup that may be twice the size of France, is contaminating the Pacific Ocean and its ecosystem. It is an environmental catastrophe that has received limited political or media attention because of the billions of dollars the plastic industry ─ and its petroleum based oil producing supporters ─ have spent in the form of political campaign contributions and media advertising.

The Pacific Plastic patch was first discovered in 1997 by California sailor, surfer and volunteer environmentalist Charles Moore who was heading home with his crew from a sailing race in Hawaii on his catamaran. For the hell of it, he decided to turn on the engine and take the short-cut across the edge of the North Pacific subtropical gyre, a region seafarers have long avoided. It is a perennial high pressure zone, an immense, slowly spiraling vortex of warm equatorial air that pulls in winds and turns them gently until they expire. Several major sea currents also converge in the gyre and bring with them most of the flotsam from the Pacific coast of Southeast Asia and North America. In the 1950s, nearly all that flotsam was biodegradable. Today it is 90 percent plastic.

Floating beneath the surface of the water, to a depth of 10 meters, was a multitude of small plastic flecks and particles, swirling like snow-flakes or fish food. The world’s navies and commercial fishing fleets make a significant contribution, throwing some 639,000 plastic containers overboard every day. Eighty percent of marine plastic was initially discarded on land according to a variety of studies. The wind blows plastic rubbish out of littered streets and dumps, trucks and trains on their way to landfills. It gets into rivers, streams and storm drains and then rides the tides and currents out to sea. Beaches are also a major source.

Plastic does not biodegrade. In other words, no microbe has yet evolved that can feed on it. But it does photodegrade. Prolonged exposure to sunlight causes polymer chains to break down into smaller and smaller pieces, a process accelerated by friction, such as being blown across a beach or rolled by waves. This accounts for most of the flecks and fragments in the enormous Pacific Plastic Patch and most beaches and seashores. On most beaches today, even Hawaii’s pristine beaches, there are now more plastic particles than sand particles until one digs at least a foot down. I experienced this first hand on the pristine beaches of Palau when a chemical engineer, working for a Taiwanese businessman trying to set up a plastic factory there, who was drunk and heartbroken and couldn’t bear the thought of how polluted Palau would become ─ and at the risk of getting fired ─ educated me in the basics of plastics and their long term devastation of the environment. The Great Pacific Garbage Patch has an average of 46,000 pieces of plastic per square kilometer of the world’s oceans according to a U.N. report.

Worldwide, plastic is killing one million seabirds a year and 100,000 marine mammals and turtles according to the United Nations Environment Program. Many chicks die every year from eating pieces of plastic their parents mistake for food and bring back for them.

China Bubble

2009-08-28T22:26:00.000+08:00

The China stimulus package has forced banks to force-feed the economy with liquidity. The purpose of the so-called “quantitative easing” was to generate domestic demand while exports slumped. But much of the liquidity has flowed into property and stock markets instead ─ and has partly become government fiscal revenue.

Stocks and properties in China may be 100 percent overvalued. Only two decades of relatively high inflation can justify their prices. However, persistently high inflation leads to currency devaluation, which triggers capital flight and, eventually, an asset market collapse.

The stories coming out of China of millionaires losing their deposits in financial institutions, corrupt, fast and loose lending by rural credit cooperatives and bankrupt consumer lending institutions hollowed out by employees and borrowers make me shudder at the thought of the lending bubble being blown by Beijing. Kickbacks to officials who review and approve loans regardless of the borrowers credit worthiness is a replay of what happened in America.

Beijing’s decision in 2008 to embark on a monetary easing policy in tandem with its stimulus package, encouraged financial institutions to grant loans to fund infrastructure projects ─ Confucian capitalism at its worst because most of the money was spent on personal businesses, stock market and real estate. Worries are mounting that the lending spree will lead to a mountain of bad assets in the banks as well as the misuse of funds. Mainland financial institutions extended a record 7.37 trillion yuan of loans in the first six months of 2009, nearly three times the amount a year earlier.

Official statistics show that rural credit co-operatives had piled up about 590 billion yuan in non-performing loans by the end of 2008. Bad loans at rural commercial banks stood at 19.28 billion yuan at the end of the first half of 2009.

Having started a few thrift and loans, savings and loans, federal and state banks in California in the 1980s go-go years both as a lawyer and a principal, I can relate to how financial institutions get hollowed out by owners, shareholders, employees and borrowers.

John Greenwood, an adviser to the former Hong Kong monetary authorities and who still advises the HKMA, also known as the “father of the peg” in Hong Kong, was back in July 2009 and warned that China’s massive stimulus package could cause serious trouble for the mainland economy within two years. “If China continues with the current rate of money and credit growth, there is an inflationary danger,” warned Greenwood. When something seems to good to be true, it is. World trade ─ the engine of global growth ─ has collapsed. Employment is still contracting throughout the world. There are no realistic scenarios for the global economy to regain high and sustainable growth, which means the China stock market and property bubble inflated by the government’s massive stimulus plan will burst.

Water Wars

2009-08-19T22:41:00.001+08:00

Water is becoming a key security issue in Sino-Indian relations and a potential source of enduring discord. China and India already are water-stressed economies. The spread of irrigated farming and water intensive industries, together with the demands of a rising middle class, have led to a severe struggle for more water. Bhopal, India’s “City of Lakes,” where water was always plentiful, has become a parched wasteland of high and dry lakes where water shortage has turned deadly as residents fight to the last drop. Both countries have entered an era of perennial water scarcity, which before long is likely to equal in terms of per capita availability, the water shortages found in the Middle East.

Tibet and Xinjiang, China’s two westernmost regions, are not only in the forefront of China’s ethnic conflict, but climate change. While Tibet is getting mired in a deepening drought and declining water resources in future years, the water table in Xinjiang is on the rise and the dry climate is gradually becoming more humid. While Tibet is drying up, Xinjiang’s water reserves are growing at a rate equivalent to a rise in rainfall of 10mm per year.

Glaciers in Tibet have been melting for decades. From 1971 to 2002 they shrank by 5.3 percent, and between 2003 and 2008 they shrank a further 10 percent. Between 2002 and 2007 Tibet had suffered a drop in total water resources ─ ice, snow, surface and underground water ─ equivalent to a 30mm reduction in rainfall. Tibet experienced a drought in 2009 with some monitoring stations not recording rainfall for more than 200 days, and temperatures up to 2.3 degrees Celsius higher. The Tibetan plateau is the source of China’s major waterways, the Yangtze, Yellow and Lancang (Mekong) rivers.

Tibet is the source of most major Indian rivers. The Tibetan plateau’s vast glaciers, huge underground springs and high altitude make Tibet the world’s largest freshwater repository after the polar icecaps. Indeed, all of Asia’s major rivers, except the Ganges, originate in the Tibetan plateau. Even the Ganges’ two main tributaries flow in from Tibet.

China is now pursuing major inter-basin and inter-river-water transfer projects on the Tibetan plateau that threaten to reduce international river flows into India and other riparian states. The seeds of a potential water conflict have been sown. Water is now a political tool, not only on the Tibetan plateau, but globally.

It’s the same story in the Middle East. After a five-year drought, the region is headed toward a water calamity that could overwhelm all peace efforts. The Jordan River now has large sections reduced to a trickle. The Sea of Galilee is at its lowest point ever. The surface area of the Dead Sea has shrunk by a third. Iraq’s ancient marshes are now marked by large swaths of stalks and caked mud. In northern Syria, more than 160 villages in two years from 2007 to 2009 have run dry and been deserted by residents. In Gaza, 150,000 Palestinians have no access to tap water. In Israel, the pumps at the Sea of Galilee, its largest reservoir, are exposed above the water level rendering pumping impossible.

Sino-U.S. Century

2009-08-12T22:05:00.001+08:00

America and China have elevated the bi-annual Strategic Economic Dialogue meetings to bi-annual S&ED meetings. The inaugural meeting took place in Washington DC on July 27-28, 2009. The meetings are no longer limited to financial and economic matters discussed between the U.S. Treasury Secretary and his Chinese counterpart, but now include the U.S. Secretary of State and her Chinese counterpart to also address global geopolitical issues.

“The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world,” president Obama said in his opening remarks that kicked of the S&ED. Serious words to digest, but the perfect antacid to unnecessary repeated burning economic, financial, ethnic, terrorist and military indigestion attacks. China’s Hu Jintao sent a message to the meeting in which he said China sought a “positive, constructive and comprehensive relationship.” He went on to add: “As two countries with significant influence in the world, China and the United States shoulder important responsibilities on a host of major issues concerning peace and development of mankind.”

The S&ED should be elevated to include at least one annual presidential level meeting. Why not make them even stronger? America and China must step up their dialogue and cooperation in areas of trade, energy, environmental protection, food safety and military cooperation and sign a mutually beneficial bilateral treaty governing their relationship in these areas.

A comprehensive bilateral treaty that brings the two countries closer together would be just as miraculous as Obama’s election victory was. The China challenge is, first and foremost, really about money and military might. Energy and the other geopolitical issues are secondary. The other side benefits of a bilateral treaty are that it would allow U.S. firms to invest in China’s industrial sector and allow U.S. firms in China to settle disputes by international arbitration rather than subject them to the arbitrary rule of law that currently exists in domestic Chinese courts. In turn, China would have an incentive to improve its legal system and to better protect private property rights and intellectual property.

Presidents Hu and Obama agreed in April 2009 at the London G20 to combine the unheard of Strategic Dialogue with the SED into one S&ED. A naturally challenging dialogue in the interlocal global web both countries have spun themselves and each other into in the last 30 years. Nothing of significance came out of the meeting except for the very significant memorandum of understanding between the two regarding global warming, energy and environment that they are both pushing each other from radical extremes. That is one issue they really have to duke out honestly and harmoniously as the cornerstone pillars of their future continuously bonding relationship depends on it. If they can’t solve this one, then humanity is doomed.

Smoked Meat

2009-08-05T20:25:00.001+08:00

China is the world’s largest producer and consumer of tobacco. It is a country that sees about a million tobacco-related deaths a year, a quarter of all such deaths worldwide.

China is a signatory to the World Health Organization’s Framework Convention on Tobacco Control, which aims to reduce global demand for tobacco products by encouraging developing nations to adopt anti-smoking measures that are now commonplace in developed countries. China signed the convention in 2003, ratified it in 2005 and became a full member in 2006.

The mainland is home to about 350 smokers, with about 3 million people taking up the habit annually. Nearly 60 percent of males aged 15 or above are smokers. More than one million Chinese die each year ─ one every two seconds ─ from smoking related diseases. And 540 million people suffer from passive smoking. China’s culture of cigarette smoking runs very deep and is very pervasive. Most of the founders of the People’s Republic, including Mao Zedong and Deng Xiaoping, were chain smokers.

One of the biggest difficulties the country faces in banning smoking is the fact that 56.8 percent of male doctors are smokers ─ the highest ratio in the world. The government only plans to ban smoking in all hospitals in 2011, when the convention’s timetable kicks in. According to the convention, China is required to ban smoking in all indoor public venues, office buildings and public transport from 2011.

The central government did not ban smoking in public entertainment venues, including movie-theatres, stadiums and bookshops until 1991, nor in airport terminals until 1997.

The nation grows a third of the world’s tobacco crops and manufactures a third of its cigarettes according to WHO. The State Tobacco Monopoly Administration has more than 500,000 employees in more than 1,000 companies across 33 provinces. China’s massive tobacco industry employs more than 20 million farmers and more than 10 million retailers. Pre-tax revenues from the tobacco industry amounted to 388 billion yuan in 2008 and accounted for about 8 percent of the country’s fiscal revenues. Any wonder Chinese are smoked meat?

I agree with professor Zou Fangbin, an economics professor at the Guangdong University of Business Studies who has proposed the scrapping of the state monopoly and allow companies in the private sector to compete in this lucrative deadly sector. How can the government regulate an industry it owns and controls? It can’t. The commercial and regulatory arms of the industry have to be separate. China is the only one of the 164 signatories to the WHO convention to have a monopoly.

China’s Ethnic Violence

2009-07-21T22:25:00.000+08:00

Tibetans and Uygurs chose the 2008 Olympics as the event to highlight their plight and heat up Beijing’s political kitchen.

Uygur militants gained international attention in August 2008 after an attack on a police station in the Silk Road city of Kashgar killed 17 police on the eve of the Beijing Olympics.

The Muslim Uygurs, who like many Tibetans are seeking independence, opted to also heat up Beijing’s political kitchen on the eve of the 60th anniversary of the Founding of the People’s Republic to publicize their grievances against China’s rule. The massive parade and pageantry planned for the commemoration in Tiananmen Square is set to eclipse the opening ceremony of the 2008 Olympics. On such occasions Beijing likes to make a point of celebrating its ethnic minorities, who it says have benefited greatly from the economic and social progress that has been brought to China by the ruling Communist Party.

The riots in Urumqi and other cities across Xinjiang were triggered by the sexual molestation of Chinese Han women by Uyger workers in a Hong Kong-owned factory in Shaoguan, northern Guangdong that ended with two Uyger workers being killed.

The resulting explosive ethnic violence in Urumqi, that killed at least 156 and left more than 800 injured, the worst known bloodshed in China since June 4, 1989, was another reminder of the widespread social vulnerabilities and concern confronting the Communist Party ─ shared with the world when China’s Hu Jintao left the G8 summit in Italy before it started ─ an unprecedented move by a Chinese leader. Never before has a Chinese leader shortened an overseas trip because of domestic concerns.

China cannot afford a restless Xinjiang because the resource rich region makes a significant contribution to the mainland’s energy security. The province sits atop as much as 20 percent of domestic oil reserves and is expected to account for one-fifth of the mainland’s coal output. Xinjiang’s long borders with oil-producing Central Asian countries is what differentiates it from Tibet.

Beijing’s aggressive and ambitious plans to construct refineries, pipelines and power grids across the region could backfire if these facilities became terrorist targets. In addition, much of the oil and gas extracted in Kazakhstan is transported inland via a 3,000 kilometer pipeline that passes through Xinjiang.

Such has been the scale of the influx that Han, who accounted for just six percent of Xinjiang’s population in 1949, now make up more than 40 percent of the total population. Uygur resentment has grown increasingly nationalistic and separatist, emboldened by the defeat of the Soviet Union in Afghanistan and the independence granted to three neighboring Islamic soviet republics.

Uygurs seeking independence used the Guangdong factory incident as the spark for the unrest in restive Xinjiang, an energy and resource rich province which accounts for one-sixth of the country’s territory, where the majority Uygurs feel exploited because the Han Chinese dominate economic and political life ─ a good reason for Chinese president Hu Jintao to leave the G8 summit in Italy before it started ─ to tend to the melting tip of the explosive ethnic iceberg in Beijing’s kitchen.

The G8 Wake

2009-07-15T18:40:00.001+08:00

The annual G8 summit meeting started out in France in 1975 as a “fireside chat” with French delicacies and wines known as the G7 for the leaders of the U.S., Canada, France, Germany, UK, Italy and Japan and became the G8 when Russia joined in 1997. The “G” stands for group. The July 8-10, 2009 G8-plus-5 that took place in L’Aquila, Italy ─ the five being Brazil, China, India, Mexico and South Africa ─ plus Australia, Indonesia and South Korea who belong to the Major Economies Forum, Egypt and another 22 from Africa, Asia and the Middle East for a “Grand” total of 39 proved its outdated desperate efforts to remain relevant.

The so-called cordial chat around a fire turned into a talkfest around a bonfire in military barracks in the worst performer country in the G8 that failed to meet its commitment made in 2005 at the UK-chaired summit in Gleneagles to double aid to Africa by 2010, in an earthquake shattered city hosted by Italian Prime Minister Silvio Berlusconi, embroiled in a very public divorce and lurid sex scandals ─ all very appropriate metaphoric backdrops of the rubble of the G whatever outdated irrelevant numbered structure it is for the 21st century ─ just as the irrelevant dated definitional classifications of so called “developed” and “developing” countries are today.

C’mon, how can a three day “chat” with 39 ego-maniacs and their “sherpas” devote the time needed to address a daunting agenda that included the worst global economic and financial crisis since the Great Depression, climate change, energy security, food security, terrorism, nuclear proliferation, resuscitation of Doha, development and elimination of poverty ─ with special emphasis on Africa and world trade ─ not to mention Afghanistan, Iraq, North Korea that surely had to be discussed, be properly addressed, especially when the host nation did not prepare an agenda that was hijacked by the U.S. in China’s absence?

I agree with Nick Deardon, director of the London based Jubilee Debt Campaign, who says the G8 “should by rights be dead and buried, [It] harks back to the days when a handful of countries could happily control the world economy without interference.” He accurately described the summit in L’Aquila as just an “annual photo shoot.” Commitments made at the last few G8 meetings didn’t last the time it took the leaders to make it to the airport to leave. Their rapid ascent and departure from L’Aquila in helicopters means the 2009 promises will be broken quicker.

The 2009 G8 in earthquake scarred L’Aquila should be remembered as the groups wake.

Yellow Bric Road

2009-07-06T23:59:00.002+08:00

When the leaders of Brazil, Russia, India and China ─ known by their acronym Bric ─ held their first standalone meeting in the Russian city of Yekaterinburg on June 16, 2009 it was a wakeup call ─ and a shake down for the dollar and global financial system. On the second day of the summit, the U.S. dollar fell sharply indicating the Bric nations had found the magic power of making the dollar ride a roller coaster with only a few words.

The Bric leaders proposed investing their reserves in each other’s currencies, settling bilateral trade in domestic currencies and striking currency swap agreements. It was even suggested to include the five central Asian states of Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan within the framework of using the yuan as a settlement currency, which some point to as an attempt to create a miniature European Union type of arrangement in Central Asia.

The idea of replacing the dollar as a global currency with the yuan or other currency does have some significant traction. “The Bric countries can lead the world towards global monetary stability by supporting the researching and planning for the next global currency to replace the U.S. dollar,” said Morrison Bonpasse, president of the Single Global Currency Association, a U.S. think tank. Mr Bonpasse believes that “when such a single global currency supports a number of countries with 40-50 percent of the world’s GDP, the ‘tipping point’ will have been reached, and other countries will join quickly.”

The handwriting of the new global currency menu is on the Bric wall and road. Bric nations already account for 50 percent of world growth, based on purchasing parity power. While collectively their gross domestic product amounts to only 14.6 percent of the $60.7 trillion
global economy, within 20 years, it is estimated that it will reach 50 percent. Their collective populations account for 42 percent of the world’s total and 26 percent of the world’s landmass. Goldman Sachs now predicts that in 20 years, the four could together, dwarf the Group
of Seven leading industrial nations, and that China’s economy will overtake that of the U.S. in size.

Overcooked Insects

2009-06-29T23:40:00.000+08:00

The Lancet medical journal declared in a May 2009 commentary that “Climate change is the biggest global health threat of the 21st-century.” As someone who has eaten more than my fair share of insects in China where they are treated and considered delicacies, I was fascinated to read how they actually are the carriers that spread human diseases because of climate change. Tree-munching beetles, malaria-carrying mosquitoes and deer ticks that spread Lyme disease are three living signs that climate change is likely to exact a heavy toll on human health. As it becomes hotter, the air can hold more moisture, helping certain disease-carriers, such as ticks that spread Lyme disease spread.

Pine bark beetles, which devour trees in western North America will be able to produce more generations each year, instead of subsiding during winter months. They leave standing dead timber, ideal fuel for wildfires from Arizona to Alaska, said Paul Epstein of the Center for health and the Global Environment at Harvard University. Having personally fought a forest wildfire when I lived in the former Will Rogers guest house near Will Rogers Park in the 1980s ─and being the father of a former U.S. Forest Firefighter who fought forest fires across the Western United States in the 1990s ─ I shudder at the thought.

History offers many lessons that we ignore and unfortunately, as a result, repeat in updated modern variations. One of my favorite, as a photographer and agricultural high school graduate ─ and of course English born writer ─ is what happened in England during the industrial revolution. Compare modern day photographs of colleges in the English university city of Oxford, with those taken as recently as 50 years ago, and one can’t help but notice the remarkable difference. Today the picturesque sandstone buildings are a near pristine golden yellow in colour. However, before the passage of the Clean Air Act in the United Kingdom in 1956, they were more or less uniformly black.

Years of chocking fumes from open fireplaces and filthy emissions from cars in a country that was the cradle of the industrial revolution using coal as the primary source of energy, came consequent damage, not only to buildings, but the environment and human health.

One of those consequences for a particular life form can be found in the history of the peppery moth, as taught in biology classes to children learning about Darwin’s theory of natural selection. Before the industrial revolution began in earnest, in the 18th century, most of these moths in Britain were a light color. However, some possessed mutated genes that made them much darker. These latter were fewer in number, it has been suggested, because it was easy for birds to spot and eat them. Then the environment changed and soot blackened the trees so that the lighter moths were more easily spotted and eaten while the darker moths blended better with the soot. The latter soon outnumbered the former.

This story illustrates the dilemma humanity faces with climate change, but especially China. No country has managed to boost its economic growth substantially without a consequential effect on the environment. America, like Britain before it and China today, have paid the same price and caused the same damage to the environment. Fortunately, today the world is aware of the price the planet and human health has paid and is prepared to tackle the issue to make sure there are no more innocent victims.

As the global mean temperature rises, expect more heat waves. The U.N. Intergovernmental Panel on Climate Change projects 25 percent more heat waves in Chicago by the year 2100; Los Angeles will likely have a four-to-eightfold increase in the number of heat-wave days by century’s end. These “direct temperature effects” will hit the most vulnerable people hardest, according to the U.S. Environmental Protection Agency, especially those with heart problems and asthma, the elderly, the very young and the homeless.

People who live within 97 kilometers of a shoreline, or about one-third of the world’s population, could be affected if sea levels rise as expected over the coming decades, possibly more than 1 meter by 2100. Flooded homes and crops could make environmental refugees of a billion people.

More Sanctions? Fugetaboutit

2009-06-19T19:30:00.000+08:00

Forget about the stalled six-party talks or the five working groups aimed at ending North Korea’s nuclear program. Forget about more useless sanctions. Forget about bipartisan recriminations. Forget about the blame game ─ especially picking on China and Russia. Forget about a nuclear East Asia.

The universal opposition and condemnation of North Korea’s nuclear tests ─ the first in October 2006 and the second on May 25 of this year ─ demands an urgent alternative solution to the rehashed and recycled proposals that have been tossed around since the 1953 Korean armistice took effect.

China and Russia, which like America opposed the North Korean tests, have been humiliated and desperately want a solution they can jointly embrace with America. Kim Jong Il’s nuclear bluff must be called. The Dear Leader crows that he is ready for war. Bring it on and let’s end the Korean War once and for all.

The Korean armistice signed on July 27, 1953, between North Korea and the U.N. Korean forces led by the U.S. remains in force. No formal peace treaty was ever concluded. People have forgotten that more than 84,000 soldiers from 16 countries serving under the U.N. flag died during the conflict. More than a million Korean civilians also died, as well as an estimated 900,000 Chinese troops fighting with the North Koreans. A peace treaty is long overdue.

Why should China and Russia go along? Because the U.S. will agree that Taiwan is a province of China and that America will not defend Taiwan should it declare independence. The U.S. settles two thorny issues simultaneously. China and America have a lot to offer Russia to come along.

America, China, Japan, Russia and South Korea must initiate five- party talks without pre-conditions or sanctions, which only hurt and subject the majority of North Koreans to more misery and suffering because of their self-centered sycophant authoritarian military leadership.

The five-party talks should explore how best to find an honorable face-saving exit for Kim and Co. This is a negotiating tactic America has perfected with several Haitian dictators over the years, allowing them to live comfortably in exile.

North Korea borders economic powers China, Russia and South Korea. Japan is nearby, across the Sea of Japan. These four economic superpowers could set up cooperative cross-border economic zones on their mutual borders, the kind Kim has visited and admired in China, and is hopelessly and helplessly trying to emulate.

These special economic zones would transform Pyongyang’s central planned Stalinist communist economy into neutral economic buffer zones in the potentially explosive area and stop the accelerating destabilization rippling through the region and beyond. It is the only feasible way to bring stability to East Asia.

It is in the world’s long-term strategic interest to neutralize North Korea’s nuclear capability, create a North-South confederation and eventually a unified Korea that enjoys prosperous cooperative economic zones with its neighbors.

Economic prosperity also would prevent a massive refugee exodus and ensuing crisis that China and Russia are concerned about, especially if American and European corporate citizens embrace the economic zones the same way they did in China. This would allow North Korea to finally sign a peace agreement that allows it to be gradually reunited with the South. The cost of reunification, unlike the case in postwar Germany, would be shared by the five parties looking out for what’s best for all humanity.

The five-party effort could transform the secretive and isolated Hermit Kingdom and its crippled economy into open, vital, sunlit renaissance model for basket cases like Zimbabwe and other failed states.

What is the alternative? More crippling sanctions, nuclear one-upmanship and political threats that can only lead to conflict, and potentially, Armageddon?

GM’s Future Is In China

2009-06-15T22:47:00.000+08:00

With America’s automobile industry fighting for survival as it depends on government lifelines, China’s automobile industry is thriving. It wasn’t long ago that China produced only 5000 cars a year. Today it is the world’s largest car market. No one expected China to be in first place in the global auto market race until 2020. The pundits and experts were wrong again. China’s stimulus package with more than $733 million in tax breaks for rural buyers of small cars drove sales through the Middle Kingdom’s sky. Let’s not forget China also allocated $220 million to fund and upgrade new green automotive technologies, especially in alternative-energy vehicles that are the wave of the future. To help offset the high cost of buying clean-energy vehicles, subsidies of nearly $8,800 are being offered to local government agencies and taxi fleets in 13 cities for each hybrid vehicle purchased.

Beijing’s 2009 car sales target is 10 million units, an increase of 10 percent from 2008, and a figure that will cement its position as number one with an estimated 1 million more unit sales than America. China’s dominant role will allow it, rather than Detroit and Washington to dictate world fuel consumption and emission standards, including fuel efficient Hummers. The deal needs to be approved by both Washington and Beijing. The U.S. Department of the Treasury must give their nod to the deal, as must the Committee on Foreign Investment in the U.S. and Beijing’s policy for a “green and environment-friendly vehicle industry” poses a hurdle for the buyer Tengzhong Heavy Industrial Machinery.

The five top-selling brands in China are Volkswagen, Hyundai, Toyota, Honda and Nissan, in that order. No American car there.

The two Chinese joint ventures of bankrupt General Motors reported record monthly sales for May 2009, the month before GM filed for bankruptcy. Shanghai GM, said vehicle sales jumped more than 50 percent from a year earlier to 56,011 cars, buoyed by the top selling Buick brands. GM’s minivan joint venture sold 100, 258 cars, the first time that a Chinese automaker sold more than 100,000 cars in one month. GM’s total vehicle sales in China surged 75 percent from a year earlier to more than 156,000 in a month. This was in stark contrast to its performance at home where sales plunged 50 percent in the first quarter of 2009.

The carmaker, which sold its first car in China in 1920, sold 1.09 million vehicles in China in 2008, and said it expected to double annual sales in the country to more than 2 million cars over the next five years.

Hummer and Sickle

2009-06-06T02:43:00.001+08:00

For someone who started their working career in America in machine shops in Detroit and Pontiac, Michigan in the 1960s, and legal career in the secured lending arena representing corporate America in the 1970s, who for several years worked his way through the bankruptcy court system representing secured lenders, creditors committees, trustees and receivers, including Detroit’s giants and America’s leading financial institutions, watching General Motors seek refuge in bankruptcy court is not only a sad epitaph of an era, but a double dose of nostalgic memory lanes. First as an auto parts worker in who made parts for what became America’s automobile dinosaurs, and then as a lawyer representing the corporate-financial institutions whose shenanigans lead America to be technically bankrupt.

Living in China and reading that GM’s gas guzzling Hummer brand is being sold to a Chinese company for an estimated cool $500 million, even though the purchaser has assured it plans to keep production in America, so that 3,000 workers and 100 dealers can retain their super-sized burger diets, was a symbolic reminder of how China’s Confucian capitalism is devouring America. After all, the Hummer is different from other American car brands because it invokes a sense of American pride. A Hummer is readily associated with American soldiers dashing around in Humvees in Iraq and Afghanistan. Hummer is symbolic of Americanism.

With America’s automobile industry fighting for survival as it depends on government lifelines, China’s automobile industry is thriving. It wasn’t long ago that China produced only 5000 cars a year. Today it is the world’s largest car market. No one expected China to be in first place in the global auto market race until 2020. The pundits and experts were wrong again. China’s stimulus package with more than $733 million in tax breaks for rural buyers of small cars drove sales through the Middle Kingdom’s sky. Let’s not forget China also allocated $220 million to fund and upgrade new green automotive technologies, especially in alternative-energy vehicles that are the wave of the future. To help offset the high cost of buying clean-energy vehicles, subsidies of nearly $8,800 are being offered to local government agencies and taxi fleets in 13 cities for each hybrid vehicle purchased.

Beijing’s 2009 car sales target is 10 million units, an increase of 10 percent from 2008, and a figure that will cement its position as number one with an estimated 1 million more unit sales than America. China’s dominant role will allow it, rather than Detroit and Washington to dictate world fuel consumption and emission standards, including fuel efficient Hummers.

Chinese Navy a Threat?

2009-05-27T19:05:00.002+08:00

The PLA navy was founded in Taizhou, Jiangsu, on April 23, 1949, bringing together vessels acquired from the Kuomintang and left behind by the Japanese after World War II.

China’s state of the art nuclear submarine the Type 094, also known as Jin Class kicked off the PLA Navy’s three day 60th anniversary party celebration in the northeastern coastal city of Qingdao last month. Naval vessels from 14 countries, including the U.S., and naval representatives from 25 countries, joined in the celebration. Conspicuously absent was the Japanese navy. Japan was not invited for fear it might anger the Chinese public, still deeply scarred by the military invasion in the 1930s and its attendant atrocities.

The idea of inviting an international array of naval personnel was to build foundations for further exchanges and the PLA Navy’s integration with the international community.

Chinese nuclear submarines cruise the western Pacific and share the waters with the U.S. Pacific Fleet. China still has a long way to go as a naval power, but it is only a matter of time before Chinese warships routinely deploy to the Middle East and Africa, where over 75 percent of China’s vital oil imports come from.

China’s first aircraft carrier doesn’t even begin to match the 12 carriers the U.S. has. The U.S. carriers do not operate by themselves, but with powerful and capable escort ships in carrier battle groups.

China needs a reliable infrastructure for projecting and sustaining naval and air power. The U.S. is the pre-eminent exponent of this strategy. It has a long head-start over China. Its 5th Fleet is based in Bahrain, in the Persian Gulf, drawing ships on rotation from both the U.S. Pacific and Atlantic fleets.

U.S. defense spending equals the defense budgets of the next 15 countries combined and will soon exceed all other countries combined. In 2008 the General Accounting Office said cost overruns for the Pentagon’s 95 biggest weapons programs ─ just the overruns! ─ added up to $300 billion, more than double that of China’s $70 billion and Russia’s $50 billion combined military budgets.

With an overall military budget of more than $655 billion in 2009 – almost 10 times that of China’s, not counting the overruns – the U.S. is unmatchable.

Human Capital

2009-05-21T02:43:00.000+08:00

The 624,000 international students attending U.S. colleges and universities in 2008 contributed $15 billion to the U.S. economy. The majority come from India and China. For every 100 foreign students who received an American Ph.D in engineering or the physical sciences, the U.S. got 62 patent applications. As for the students who returned home, many took with them warm feelings toward America, democracy and free enterprise. Do the math. Yet, since the Patriot Act was enacted, all foreign student applications have to be screened by the Office of Homeland Security, which gets bogged down, forcing students to defer their studies for a year.

University presidents are justifiably outraged. “We don’t want our students saying we might as well go to Britain rather than the U.S.,” Yale University President Richard Levin said during a student recruitment visit to China in 2007.

While the enrollment of foreign students is just now rebounding in the U.S. in the wake of 9/11, it is increasing dramatically at universities in Britain, Germany, Australia, New Zealand and Singapore. The European Union is even considering offering citizenship to foreign students who complete their doctorates at European universities.

Technological leadership is the key to prosperity and security, and America remains the world’s technology leader – for now. But, as highlighted by a 2005 report from the National Academies, the U.S. lead in science and technology is not guaranteed. America must now “prepare with great urgency to preserve its strategic and economic security,” the report said. Asian universities now produce 47 percent of engineering graduates worldwide and foreign-born inventors account for nearly half of all U.S. patents.

China has moved up to third place in the world after Japan and the U.S. in the number of patent applications filed. According to the World Intellectual Property Organization, Chinese inventors submitted 173,327 patent applications in 2005, a 33 percent increase over the previous year and the biggest leap in submissions of any country that year. Japan had the most filings followed by the U.S.

More than half of the high-technology startups launched in America between 1995 and 2005 had at least one founder of overseas origin, a 2007 study by Duke University in Northern Carolina found. It revealed that in the Silicon Valley, 52.4 percent of startups in the past decade had at least one founder of foreign origin, significantly higher than the California average of 38.8 percent and the national average of 25.3 percent. Sergey Brin, from Russia, co-founded Google. A German, Andy Bechtolsheim, and Vinod Khosla from India founded Sun Microsystems. Jerry Yang, a Chinese, co-founded Yahoo.

The result is that the U.S. is losing its dominance in critical areas of science and innovation, as evidenced by the rise of foreign patents. “The rest of the world is catching up,” said John E. Jankowski, a senior analyst at the National Science Foundation, the federal agency that tracks science trends. “Science excellence is no longer the domain of just the U.S.” This is best exemplified by the number of patents registered today. Asians, most notably Chinese and Indians, have become more active and in some fields have taken the innovation lead. The U.S. share of its own industrial patents has fallen steadily over the decades and now stands at 52 percent.

China has invested heavily in human capital that promises to sustain growth and create greater prosperity. Parents in China spend $90 billion a year on their children’s education. This is over and above what the government spends. Government and families constantly increase their investment in primary and secondary education. Elite English private schools are setting up campuses in China to capitalize on the educational opportunities. Given the excellent core curriculum available across China to its 230 million students, the country is well positioned to continue to upgrade its human capital over the next decade. Shouldn’t America be doing the same?

China at Crossroad

2009-05-15T19:36:00.001+08:00

China is at a political and economic crossroad that few in America or the West fully appreciate. For the first time since China embarked on its economic reforms in 1978 and lifted hundreds of millions of people out of poverty, China’s political leadership is faced with its greatest test of political survival. President Hu Jintao has gone so far as to say that turning the challenges posed by the global credit and economic crisis into opportunities will be a test of the Communist Party’s capacity to continue to govern. China recognizes it needs to stand on its own two feet and not rely on exports.

The task is daunting. Household consumption in 2007 made up just 35.3 percent of China’s gross domestic product, a record low for a major country in peacetime. In the 1980s, it was over 50 percent. By comparison, household consumption in the U.S. in 2007 made up 72 percent of GDP.

China must make radical spending changes from infrastructure to social investments which requires giving people more disposable income. More household subsidies, especially in the areas of health care and education, is what is needed. The problem, believe it or not, is that China does not have the bureaucratic infrastructure in place to minimize waste and corruption.

The other reality is that returning money to the people through lower taxes or spending on social programs is not a high priority in China because its leaders do not have to run for re-election. In China, officials are held accountable to their superiors, not voters. Hence most officials are afraid to make a mistake and take the same bureaucratic road as their counterparts in America. They just want to make it to retirement without taking any risks that could cost them their job.

Thus, Chinese citizens who are unable to vote out their leaders or collect compensation from the courts express their rising anger in protests, riots, strikes and political demonstrations that are unnerving the Communist Party leadership. One must keep in mind that public demonstrations are not permitted in China. So when people do take to the streets at great personal risk, they do so because they want their leaders to notice and do something about it, or lose their “mandate from heaven.”

Millions of laid-off workers and Chinese investors in the local stock market who lost trillions of yuan ─ Shanghai was the worst performing market in 2008 ─ across China are protesting, smashing windows, offices, overturning police cars and scuffling with police. Even police have gotten into the act. Auxiliary officers in Hunan Province surrounded a Communist Party office in December 2008 to demand higher wages. Chinese investors in China’s collapsed market are also demanding an American-style bailout.

Pax Americana is Passé

2009-05-12T20:32:00.001+08:00

The U.S.-led, post-World War II world is done and over, thanks to America’s failure to adhere to the principles of the Founding Fathers. Compromised national and global leadership, more than $10-trillion in debt and the ignition key that sparked the global financial crisis in its hands, have all contributed to America’s shining city upon the hill losing its luster.

The world’s sole superpower abused its global sheriff’s role with unnecessary wars, failed financial instruments and basic misreading of people’s needs ─ at home and abroad. America is no longer the Mecca of modernity, innovation and economic prowess. The era when America was the global locomotive that dictated the rules of international trade, finance and political affairs is over.

America is now perceived as a moral and political failure, as well as a financial and capitalist catastrophe by the developing world. China, on the other hand, because of its centrally controlled prudent fiscal, development and capitalist model that endowed it with more than $2 trillion in reserves, is fast becoming a viable and more acceptable alternative model. Cash-rich China is in a much stronger geopolitical position than cash-strapped America to move aggressively in the developing world and gain access to their commodities and natural resources.

The new world order that will succeed Pax Americana is one in which China will play a dominant and leading role, if for no other reason than it is the biggest holder of U.S. government bonds, accounting for more than 35 percent of the total held by foreign central banks. It is common knowledge in any bankruptcy proceeding that the lead creditor has a lot to say and the debtor has to listen, whether they like it or not. Taken with China’s model of centrally managed mercantilism which is a preferred model for developing countries, especially dictatorships, America must accept the fact that its failure to heed the admonitions of the Founding Fathers of the Republic has rendered it morally impotent.

Most people in Japan, South Korea and China favor a Northeast Asian free trade area including the three countries. Most Americans, on the other hand, are opposed to regional or bilateral agreements.

China must be viewed as a partner, not a competitor. If America insists on viewing China as a competitor, it will lose the competition. It already has. America has to accept China as a willing collaborative partner. America can no longer ignore the more than 230 years of U.S. business success in China and the political collaboration that goes hand in hand with that success. U.S. exports to China have grown much faster than to any other trading partner. In 2007 they grew by 18 percent and since 2000 they have grown by 300 percent. The U.S. is enjoying a resurgence in exports to China, which are driving productivity gains at a time when the U.S. economy critically needs it. The good Sino-U.S. relationship that exists today is a Bush 43 foreign policy success, built since January 1, 1979, when the two countries established diplomatic relations.

The Beijing 2008 Olympics showcased China’s ascendancy, not only as a sporting powerhouse with their record haul of gold medals, but in the global competition for economic supremacy. The Wall Street financial meltdown that cast its depressive shadow on the global economy has made capitalist America a “bailout nation” as communist China has become the center of U.S. capital and the new Confucian capitalism. China is fast becoming the world’s economic leader.
America is losing its perch of global supremacy. In 2000, U.S. stock exchanges accounted for about half the value of global stock markets; at the beginning of 2008, they accounted for just 33 percent ─and shrinking.

America can only help itself by helping China embrace the future with it as a partner. There is no more room for fear-mongering or bashing of China. The reality of modern China has to be accepted for what it is. America must broaden and deepen its ties with China into a concrete partnership with meaningful economic and military alliances. America must accept the fact that China is part of the solution and not the problem. America must start, sooner rather than later, taking the long-term view of its beneficial relationship with China.

The Great U.S. Recession

2009-04-30T22:05:00.001+08:00

The 2008-2009 financial meltdown in the U.S. is shaping up as the Great Recession. With job losses rising, credit facilities diminishing and the billions of rescue dollars to save the pillars of capitalism failing, it is the longest U.S economic recession since World War II ─ and the worst may be yet to come.

This recession, which officially began in December 2007, is not only the longest and most severe, but the most devastating. More than half a million Americans, from financial analysts to factory workers, lost their jobs in November 2008 alone. Another 681,000 were added to the jobless rolls in December. Rarely has a labor downturn affected such a broad swath of income levels ─ and the worst is continuously coming in slow kill mode in 2009. Some economists predict that the U.S. economy could lose as many jobs in the first six months of 2009 as all of 2008. Nearly 2 million jobs have been lost since the start of the recession in 2007, two-thirds of them since September 2007.

The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The Great Depression lasted 43 months from August 1929 to March 1933 and the world experienced a two-thirds shrinkage in trade in that period. The combination of housing market, credit market and financial market collapses is a rare and unprecedented combination. Unemployment topped 8 percent in February 2009.

How do the two countries with the most to lose cooperate to make sure they and the rest of the world minimize the financial pain and make sure everyone benefits globally? They cooperate more with each other in the lead of global and regional organizations ─ and in bi-lateral dialogue ─ to learn from each other and build together as partners.

The fact is that China is already helping the global financial situation by holding onto U.S Treasury debt. Not only holding on, but also continuing to quietly buy, even as late as September 2008, knowing full well that doing so could bring great losses. This is solidarity. China’s foreign reserves have already been invested ─ more than half in U.S. Treasury issues and other American bonds and much of the rest in euro-denominated assets ─ and it isn’t easy or practical to transfer hundreds of billions, or tens of billions of dollars without causing serious disruption to the currency market, which wouldn’t be in China’s self-interest either. If it sells the U.S. Treasuries it holds, global interest rates would go up and the dollar would collapse. On the other hand, the fewer Treasuries China buys as a result of the 2008 financial tsunami, the sooner America will see the end of its money-printing spree.

Confucian Capitalism

2009-04-25T20:57:00.000+08:00

America and China have more in common than either side wants to acknowledge. Neither trust freewheeling capitalism and when it comes to the crunch, both governments take over industries for the political protection of the governing parties and the economic stability of their countries. Government intervention and ownership of private companies is very Confucian ─ a belief that public-private partnership of the wise ones will benefit the people. I don’t for a moment believe in this model as I believe government should be kept out of business and should be shrunk, not expanded by getting involved in the private sector. Getting government involved in business only benefits greedy self serving capitalists at the expense of the people.

Before I address Confucian capitalism, I want to give an example that best supports my argument to keep government out of business at all costs. I’m not referring to the fact that they can’t run a government profitably and without deficits, but a business that is easy to make a profit in America ─ a legal whorehouse and bar.

The Mustang Ranch in Nevada is a legal whore house and bar that is very profitable. It was busted for a variety of racketeering charges and the government took over its daily operations. After trying to run the whore house that sold sexual services and a lot of liquor to its clientele for a couple of years, the ranch was put into receivership because the government operators lost money. Now I don’t want to speculate as to what happened with the profits, but if the government can’t run a simple whore house and bar how the hell is it going to run the complicated financial services industry of America?

I personally witnessed and lived through a sneak preview of the U.S. government intervention and bailout of the pillars of U.S. capitalism during the Hong Kong stock market crash of August 1998. On a much smaller and broader scale, to counter the short sellers and speculators that had battered Hong Kong stock prices, the Hong Kong government, with China’s approval, decided to intervene in the battered stock market ─ and I want to emphasize stock market and not individual companies or the financial sector ─ with public money. It spent $15.1 billion to acquire 7.3 percent of the companies in the blue-chip Hang Seng Index. At the time, the Hong Kong government was severely criticized by free-market advocates for its intervention as a dangerous precedent. The fact is, it helped stabilize the market and then sold the stock at a substantial profit once the speculators left.

Seeing that the U.S. model of capitalism has bankrupted a few countries, Iceland and Hungary being the only two willing to admit to that fact by the end of 2008, there is no reason to believe developing countries will even attempt to embrace Western capitalism anymore.

The Hong Kong example of Confucian capitalism is a far cry from the U.S. quasi-nationalism with taxpayer dollars of the world’s bankrupt leading banks, insurance companies and automobile industry because of institutional incompetence. What is clear is that America’s corporate democratic capitalists who repeatedly lecture China on how to run its Confucian capitalist economy, have capitulated to Confucian capitalism on a humongous hypocritical U.S. scale.

G-20 Just Another Expensive Talkfest

2009-04-01T20:46:00.001+08:00

The G-20 summit in London on April 2 is a $30 million taxpayer paid extravagant talkfest. The G-20 was created in the wake of the Asian and Russian financial crisis of 1998. It is a group of developed and developing nations that coalesced to prevent future global financial crisis from developing ─ something they have obviously failed to do.

Because China holds the biggest inventory of foreign exchange reserves in the world, and because it looks to be one of the few major economies to show significant growth in the near future, it is being urged to boost the resources of the International Monetary Fund. Pressure was brought to bear on China because Japan, which holds $1-trillion in foreign reserves ─ the second-largest cache of foreign reserves ─ pledged $100 billion in loans to the IMF.

China is reluctant to give huge loans to the IMF because some of the European countries that would benefit from China’s contribution have been outspoken critics of China.

China is ranked 100 out of 192 U.N. members in terms of per-capita GDP despite the fact that it is the third biggest economy in the world after the U.S. and Japan. Many of the troubled countries the IMF wants to rescue have a per-capita income that is much higher than the average Chinese. They have also enjoyed at least one decade of economic prosperity and their living standards are still far higher than China’s. Even if China decides to inject a large sum of money, it is pointless to merely increase its weight in the organization. That is because the U.S. still holds veto rights in the decision-making process of the IMF. That has to change.

The voting rights of Brazil, Russia, India and China in the IMF are 9.62 percent of the total, together accounting for about half of the voting rights that the U.S. holds in addition to its sole veto power.

The IMF, like the World Bank, is a relic of World War II, created at the Bretton Woods conference in 1944, as the foundation cornerstones of the postwar world financial system. I advocated the abolition of both bodies along with the United Nations, or at the very least, their restructuring in my last book Custom Maid Knowledge, to give China and other developing countries greater say than the founding European nations and America now dependent on China have. The bank’s management structure reflects the world of the 1950’s, with Belgium having more voting power than China.

A new global central bank relevant to the 21st-century is long overdue. The world can no longer depend solely on the U.S. Federal Reserve to single-handedly micro-manage the global financial system with the IMF and World Bank playing second and third fiddle as its sidekicks. That is the only way to make sure that financial institutions doing business globally never again accumulate debt that is more than 30 times their capital and to make sure all central banks impose rational leverage ratios on their national banks.

Education Stimulus Bar

2009-03-26T04:15:00.001+08:00

China has called for the formulation of an education reform plan that will focus on improving rural education, vocational training and teachers’ welfare, citing the global crisis as a call to arms to bolster education. The 2009 to 2020 evolving educational plan, will take into account the nation’s evolving population structure, rural-urban wealth gap and rural-urban migration, and meet the talent requirements for industrialization, urbanization and modernization.

The central government will create 50,000 teaching jobs in the country’s backwater regions in a double-barrel effort to help fresh graduates get jobs and improve educational standards in rural areas. The 50,000 posts, for “special vacancy” teachers, are in addition to a three-year initiative from 2006 to send 60,000 young college graduates to teach at grass-roots schools to bolster the level of teaching. Shouldn’t America be doing the same?

Students in rural areas in China, like America, have been increasingly failing to get access to quality education as the widening gap between urban and rural salaries and better working conditions lure many qualified rural teachers to more promising jobs in the cities.

Premier Wen Jiabao said educational planners must be prepared to shatter old mindsets and structures and be daring in exploring reforms in school management, pedagogy and assessment. “Education will take a prominent position as we seek to mitigate the impact of the global financial crisis on our economy,” Mr. Wen said. “Education has become the cornerstone of national development” ─ music to my ears. I advocated America do the same in my 2007 book Custom Made Knowledge. Why isn’t America? Why isn’t America, like China, investing in an education stimulus program that educates Americans in the ways to acquire the knowledge and the tools necessary to compete in an Interlocal economy.

War or Economic and Financial Stability?

2009-03-20T19:37:00.000+08:00

Beijing and Tokyo have reached an agreement concerning permitted naval activity in exclusive economic zones, which reach 220 nautical miles from shore. Shouldn’t Washington and Beijing be doing the same?

President Eisenhower apologized for the flight of captured American spy pilot Francis Gary Powers over Russia and ended the U-2 flights over that country. Why couldn’t President Bush do the same when the U.S. reconnaissance plane crash-landed on Hainan Island in March 2001? Why couldn’t he just pick up the phone and discuss matters amicably with Jiang Zemin? Why was the first American spokesman Admiral Dennis Blair, commander of U.S. forces in the Pacific? Why did the U.S Ambassador in Beijing, Adm. Joseph W. Prueher, handle the negotiations? Why was the U.S. defense attaché to Beijing, Brig. Gen. Neal Sealock, wearing his military uniform at his first press conference? Was this diplomacy or a constant subtle unnecessary military reminder and threat?

When a Russian pilot defected with his MiG-25 in 1976 to Japan, American experts spent nine weeks stripping the plane and examining every part. The Russians eventually got the plane back in boxes. Why was the U.S. surprised then that the Chinese examined the U.S. spy plane? Isn't that part of the risk in the espionage game? Besides, if all the hardware and software was destroyed per the "checklist" as claimed by the American crew before the Chinese got access to the plane, what is the big deal? It is face. Symbolic value ─ it is just as important to the U.S. as it is to China.

What is the point of America pairing and starting to operate radar-evading B-2 bombers and F-22 fighters in the Pacific for the first time in February 2009? More to the point, what is the point in sending USNS Impeccable, a surveillance-spy ship with 2-km-long underwater receiver and source cables, off Hainan Island to gather underwater acoustic data of China’s submarine movements from its main submarine base on Hainan earlier this month? Whether the ship was in China’s exclusive economic zone or in international waters is secondary and irrelevant. The end result is the same ─ an unnecessary confrontation with five Chinese vessels that was luckily contained without any casualties, but triggered the U.S. to send warships to protect its "surveillance" vessels. China responded by sending its largest "fishery patrol ship" China Yuzheng 311 "on a routine mission" in the South China Sea and decided to convert mothballed naval vessels to fishery patrol ships ─ all this at the dawn of a new U.S. presidential administration. It was a similar provocation to what happened with the spy plane that crash landed at the dawn of Bush’s first term in office. Why does the U.S. military insist on provoking China while the White House and State Department are trying to get the two countries to work closer to resolve the global financial crisis?

English Is Not Enough

2009-03-10T20:11:00.000+08:00

English is the national language of America. However, it is important to be bilingual or even trilingual in the New World Order. Learning a second and third language is more important for American children than any other subject ─ especially if America wants to continue to be a global leader in the 21st century. All high school and university graduates should be required to speak, read and write either Spanish or Chinese fluently, preferably both. Admittedly, once students have had a brief look at what is involved in each, there may be an overwhelming choice for one option, amigo. Only then will Americans be true global citizens able to survive in the 21st century.

Chinese officials are prepared to learn English to better serve their country ─ and do. Norman Pritchard is an English teacher living in China who has produced multimedia teaching materials at China Central Radio and TV University and Beijing Foreign Studies University for more than 10 years and has the privilege of teaching Chinese officials English. One characteristic that he observed that was shared by the Chinese officials he taught, all of them I might add, is their enormous intense motivation, 15 hour a day motivation to work hard and learn English. “Westerners have a generally cynical view of politicians, and here in China sometimes the phrase ‘officials’ is more often described with adjectives like ‘greedy’ and ‘corrupt’ than ‘sincere’ and ‘diligent.’ I did not expect to be touched at the emotional level by a group of trainees at the National School of Administration” said Pritchard who spent an intense three months teaching government officials. “I think I learned more about China and the Chinese in the last three months than I had in the previous 10 years as a teacher in China” Pritchard added. “I think my fellow foreign expert and I were privileged to gain an insight into the quality of some of the people who govern China in a way that only a few foreigners share, and the West in general is completely ignorant of. These were valuable men and women. They were cultivated and honorable, diligent and sincere. They represent truly the ideal of the good public official. I came to a closer understanding that this belief in education for its ministers is a central tenet of the Chinese government,” Pritchard continued unabashedly. “China demands excellence in their officials, and they are prepared to invest heavily in it. There is no analogue to this practice in Western democracy that I know of. I think China is the stronger for it, and the West the weaker for its absence,” Pritchard concluded.

The Pentagon is including Chinese studies in its long-overdue 21st- century linguistic arsenal ─ the National Security Language Initiative ─ which also includes Arabic, Farsi, Korean and Swahili. Students who take the Chinese course are paid a $1,000 stipend and competition for admission is fierce. More than 1,000 students apply for 69 places.

The languages involved skew heavily toward current or potential global conflict spots. The initiative aims to direct U.S. foreign language education away from European languages towards languages that are perceived to be more useful in the 21st century. At the U.S. Military Academy, where future Army officers are educated, the number of students taking introductory Chinese has steadily risen, from 65 in 2000 to 94 in 2007. The Pentagon has identified about 5,000 service members who speak Chinese in 2007, up from just 1,400 in 2000.

China-Australia Relationship One America Should Emulate

2009-02-26T23:30:00.000+08:00

The rapidly growing economic cooperation between China and Australia is breathtaking. The state visits of Australian Prime Minister John Howard to China, and Premier Wen Jiabao’s visit to Australia in 2006 cemented the relationship. They are partners in a $25-billion natural liquefied gas project in Guangdong, China. Beijing is also set to become a key buyer of Australian uranium. Australia has the world’s largest uranium deposits.

Prime Minister Kevin Rudd, a Mandarin speaker, is aggressively pushing Australia’s relationship with China and the region beyond the economic and strategic. He strongly believes Australia’s future lies predominantly in developing deep relationships with China. “Will China democratize? How will China respond to climate change? How will China deal with crisis in the economic and financial systems? How will China respond domestically to the global information revolution? And how will Chinese culture adjust to the array of global influences now washing across its shores?...How China responds to these forces will radically shape the future course of our country,” said Rudd. He added, “I am committed to making Australia the most Asia-literate country in the collective West.” He is hitching his horse to the rising wagon, make that dragon. Why isn’t America?

Granted the task of getting average Aussie Joe six pack to speak fluent Putonghua and watch Chinese movies is no easy challenge. Australia is a country of 21 million people, most of whom are racist and xenophobic towards China. Sino-Australian relations hold promising prospects for mutual prosperity. China’s soft approach is not limited to Asia or Australasia. It is reaching out of the region to Europe, Africa and Latin America as well.

The Politics of Art

2009-02-18T06:14:00.001+08:00

Museums, opera companies and charitable arts foundations in America, like Wall Street and the U.S. economy, have nearly killed themselves because of their failure to keep their eyes on the bottom line instead of their art. The Museum of Contemporary Art in Los Angeles, one of the most dynamic museums in the country ─ the opening of which I attended in 1979 ─ is a prime example. MOCA, and all artistic groups in America should emulate the partnership between the World Monuments Fund, a private non profit New York-based preservation group and China’s Forbidden City Palace Museum to restore the Juanqinzhai studio ─ “Studio of Exhaustion From Diligent Service” ─ a two acre retreat in the northeastern corner of the Forbidden City that was built in the 1770s by Qing dynasty Emperor Qianlong for personal use after his retirement. In fact, it is the cooperative model America and China should adopt on the political front as well.

The emperor personally oversaw every inch of design and creation and issued an edict that nothing could be altered by future generations. Few had set foot in the studio since 1924, when Puyi, China’s last emperor, vacated the palace and locked the door behind him. The studio was used as a warehouse.

The $3-million restoration, which took nearly a decade to complete, marks an extraordinary partnership of Chinese artisans and American expertise to refurbish one of the historically important interiors to survive from China’s imperial period. It was the first time the Palace Museum cooperated with a foreign organization. Palace officials visited the Peabody Museum in Washington D.C. to view firsthand U.S. techniques of restoration. Both sides are satisfied with the results and looking forward to more collaborative restorations.

The refurbishing partnership can and should be emulated on the economic and political front in the 21st-century. Just as China’s outreached hand in the arts has been clutched by America, China’s repeatedly outreached political hand to the U.S. must also be grasped. Global economic and political leadership by America and China can bring about global peace and harmony and an end to global conflicts sparked by religion, ideology, ethnic conflict and nationalism which are taking the world to the precipice of Armageddon.

Sino-US Relations Starting Gate

2009-02-14T02:35:00.001+08:00

The environment and climate change are two areas America and China can team up to address. Time is of the essence because if each Chinese was to consume the same amount of energy as each person in the U.S. does ─ the equivalent of 7.82 tons of oil ─ then China alone would consume nearly as much energy as the entire world does today. That is a very scary and dangerous scenario. To avoid it, China is forging ahead in developing renewable energy and is urging America to do the same. China is a signatory to the Kyoto Protocol and, like America, is spending billions on development of alternatives to oil. China is a world leader in harnessing renewable energy, particularly hydro, wind, solar and biomass power.

China gets eight percent of its energy and 17 percent of its electricity from renewable ─ shares that will rise to 15 percent and 21 percent respectively, by 2020, if the government’s targets are met. America can help China achieve that goal and do the same for itself. All it takes is political will power to work together.

China’s opening invitation to America and other rich countries to commit one percent of their economic worth to help poor nations fight global warming is a start. China is aggressive in pursuing renewable energy sources and will press for a new international mechanism to spread green technology worldwide.

China has pushed its emissions of greenhouse gases above those of the U.S. which had long been the world’s biggest emitter, according to many experts. Under the Kyoto Protocol, China and other Third World economies have no required goals to contain emissions. The U.S. refused to ratify the Kyoto pact, saying that the lack of caps on China and other big developing emitters make it ineffective. China and America should start working together to come up with a mutually acceptable framework that both countries can live with for the treaty that will replace Kyoto when it expires in 2012.

Working with China and giving it greater recognition would also send a strong signal that the U.S. is not opposed to China’s peaceful rise, prosperity and ability to invest in or buy U.S. energy companies the way it attempted to do in 2005, when China National Offshore Oil Corp tried to acquire Unocal, a U.S. oil and gas company for $18 billion, much more than it was eventually sold to Chevron for. America would also affirm its confidence in a policy of engagement and its distrust for protectionism. Chinese reformers would also benefit and gain a stronger hand that would be good for America, China and the world.

China’s Military Transformation

2009-02-05T21:59:00.001+08:00

China, the world’s largest military force, has been transforming and modernizing its military capabilities from a land-based infantry-centered army into a fully mechanized, nimble active defense and rapid response fighting force capable of dealing with diverse security threats. According to China’s defense policy white paper released in January 2009, the Peoples Liberation Army will pursue a three-stage development strategy for its military reform. The first step is to “setup a solid foundation by 2010, accomplish mechanization and make major progress by 2020, and reach full modernization by the middle of this century.”

The air force and navy will take on the primary military roles and the massive Soviet style army structure is reduced to smaller fighting forces organized in brigades and battalions. A new Air Force Military Professional University was established in July 2008 to study new training methods suited to the weaponry and battle environments of the 21st-century.

China is catching up fast on the military technology front with the U.S. China debut its most advanced fighter plane at the 2008 China Air Show. The J-10 is the centerpiece of China’s military aerospace program ─ China’s answer to the Pentagon’s F-16, 150 of which America sold to Taiwan in 1992. Meanwhile, the U.S. is arming itself with more F-22s. An arms race is clearly developing faster than many pundits anticipated. The show also featured various anti-ship missiles like the C-602 and C-705 which have a range of 200 kilometers and can easily be used to deter any U.S. naval interference in the Taiwan Strait.

The 21st century opened with the U.S. Air Force and the Space Warfare Center in Colorado staging their first military war game in space. The imaginary enemy in the conflict was China. The scenario was 2017 with both combatants playing star wars. Is this how America really wants to start the new millennium? Hopefully, former NASA astronaut Lee Morin’s prediction of congenial relations between the Chinese and U.S. space programs will be correct. I am not optimistic.

Beijing sees the U.S. as a waning superpower, according to a Department of Defense report titled Dangerous Chinese Perceptions: The Implications for DOD. This report was submitted in the wake of an earlier report concluding that the U.S. would lose a naval confrontation with China in the region. Knowing this, why provoke one, especially when the Rand Corporation forecast for the DOD a cross-strait war by 2012?

Resentful Arrogant Perceptions

2009-01-30T22:06:00.001+08:00

Long resentful that America and the West never treat them as equals the Chinese are determined to control their military destiny in cyber space as well as on the ground, sea and air. They want to match the U.S. on the world stage and dominate their hemisphere in the same way Washington dominates its own. China’s approach to international relations may seem crude, but it underpins the deep anger with which China has greeted the string of American embarrassments: charges of campaign-financing corruption, the rebuff to Premier Zhu Rongji’s concessions to win WTO endorsement, NATO’s assault on a sovereign Yugoslavia and the bombing of the Chinese Embassy in Belgrade, which no Chinese citizen believes was accidental. The downing of the Chinese fighter jet after colliding with a U.S. surveillance plane added to the perception of American determination to subjugate China. Moving weaponry and equipment based in Germany and Italy in the last half of the 20th century to Asia at the dawn of the 21st century to contain China only magnified the perception.

The outrage, fear and concern expressed by America when China admitted in December 2008, it was seriously considering building its first aircraft carrier to protect its national interests and as a symbol of national strength, is hypocritical political spin. How can America be so disingenuous, when at the same time President George W. Bush commissions America’s newest aircraft carrier named after his father which carries a lot more planes, is much bigger and is the 10th nuclear-powered Nimitz-class carrier to enter service with the U.S. Navy? Even though they are the world’s largest warships, they will be replaced by 2015 by even bigger and more advanced nuclear powered class of carriers. Former Vice President Dick Cheney said in 2006 these ships will help ensure the sea power of the United States for the next half century.

To defend its interests in Asia and contain China, the U.S. has been steadily transferring more aircraft carriers and other warships from its Atlantic fleet to the Pacific. The result is that of America’s 280 ships in the navy, the Pacific fleet’s share has risen from 45 percent to 54 percent and continues to increase. The fleet now includes six of the navy’s 11 carriers, almost all of the 18 Aegis cruises and destroyers that have been modified for ballistic-missile defense operations, and 26 of the 57 attack submarines.

To counter, China is not just getting into the aircraft business to compete. It is also developing ballistic missiles with non-nuclear warheads and guidance systems to hit moving surface ships at sea in the Western Pacific before they can get within range of Chinese targets. If they can develop technology that can shoot down satellites in space, it won’t be to long before they perfect their anti-ship ballistic missiles. They would have a range of up to 3,000 kilometers and be equipped with maneuverable re-entry vehicles designed to hit moving warships at hypersonic speed after being launched by rocket from land. This is a new technology and one the U.S. has never faced. If successful, the carriers that are the potent symbol of U.S. naval power will become sitting ducks in the opinion of Michael Richardson, a visiting senior research fellow at the Institute of Southeast Asian Studies.

It was therefore no surprise that China decided in January 2009, to honor the scientific team from Dalian University of Technology that came up with the satellite zapper that can destroy a satellite nearly 1000 kilometers above earth with the 2008 State Top Scientific and Technological Invention Award. What was a surprise is that it was a very public grand ceremony in the Great Hall of the People. China is definitely becoming more open and assertive. It is estimated that in a few years China will have more than 100 satellites in space.

Pork and Grains

2009-01-22T03:41:00.001+08:00

The cost of Thai rice, the world benchmark, more than doubled in price in 2008. The price of pork also more than doubled. Many Chinese prefer to be paid with bags of rice than cash, a common practice historically. Arable land has given way to growing urbanization which has left millions of unemployed migrant workers with no farm to return to. China now imports more than 75 percent of its soya beans for domestic consumption. The most populous nation in the world has the most severe imbalance between population and land. As the population grows, grain production and the supply of pork are dropping.

Pork is a mandatory common staple in China. Sixty five percent of the meat Chinese eat is pork. The Chinese are hooked on pork the way Americans are on oil. Pork has been a mainstay of the Chinese diet for millennia. Beijing maintains vast warehouses where it stockpiles of frozen carcasses, which operate much like America’s strategic oil reserve. The government releases stocks onto the market during natural disasters crisis points in the hog cycle, and whenever it needs a political boost. China’s hunger for meat will have global financial ramifications, just like America’s hunger for oil has.

China’s leaders are well aware of this and would rather deploy their foreign exchange reserves to buy any food or commodity the country is short of on the global market ─ especially as commodity prices bottom-out. Especially, after the Food and Agriculture Organization of the United Nations said in 2008 food prices will stay high well into the teens of the century. China will then have to spend more on food subsidies to keep prices down and its citizens properly fed. In 2008, China had stockpiled between 150 million and 200 million tones of grain as well to keep prices down. China can afford to feed its people. Can America?

Extended Support Network

2009-01-13T20:58:00.000+08:00

China is not only concerned, focused and pre-occupied with the needs on the home front during the global financial and economic meltdown, but the needs of Hong Kong, Macau and Taiwan. China liberalized yuan trade rules to bolster Hong Kong’s economy during the global meltdown. China adopted a 14-point plan which allows companies to conduct cross-border trade between the mainland and Hong Kong using yuan, set up currency swap facility, encourage mainland financial institutions to develop international services via Hong Kong, support more mainland firms listing in Hong, encourage the early start of the Hong Kong-Macau-Zhuhai bridge, press ahead with Hong Kong-Shenzhen airport and Hong Kong-Guangzhou express rail links, foster development of a world-class metropolis” in Pearl River Delta, support Hong Kong companies building next Shenzhen metro line, support Hong Kong developing border zone, facilitate co-ordination between delta container ports, raise export tax rebates, and take other steps to help Hong Kong firms on the mainland, allow out-of-towners living in Shenzhen to get visas for Hong Kong there rather than in home provinces, consider opening mainland market to more local service firms and secure stable food, water and fuel supplies from China to Hong Kong.

China pledged 130 billion yuan in loans to Taiwanese businesses operating on the mainland as part of an economic co-operation package to help the island weather the global financial crisis. Taiwanese firms will also be allowed to work on mainland projects under its stimulus plan. China also agreed to buy $2 billion worth of flat-screen displays made on the island. Beijing also pledged to do its utmost to provide whatever aid Taiwan needed during the global economic crisis.

China's Double-Fisted Handful

2009-01-06T01:05:00.000+08:00

The reality is China cannot afford to follow in the financial footsteps of America and the Western world it leads. Furthermore, there is no domestic support for such action. China has been adversely affected by the Wall Street meltdown and needs to spend its reserves domestically to support its economy and create new jobs to replace the millions of factory jobs lost because of the global recession and loss of export orders.

China has to find 24 million jobs in 2009 to ensure social order. Jobless university graduates, unemployed migrant workers and disgruntled retired military personnel, of which there will be more than three million with their families in 2009, protesting government policies is a lethal political social cocktail. Especially in the major cities where most of the unemployed homeless migrant workers make up the multi-million floating population. With more than 60 percent of China’s population moving to cities by 2030 ─ that’s 900 million urban dwellers ─ economic stability and prosperity are essential for the Communist Party to retain public order and power.

When confronted with about 100 retired army nuclear engineers, representing over 60,000 suffering from radiation exposure while working on China’s atomic weapons program, staging public protests over their pensions which they are not receiving, while grain and pig farmers ─ who have made or broke Chinese Dynasties, including the Communist Party ─ unable to make a living on the farm, have created a food crisis that threatens to bring down the communist dynasty. Famines have been one of the primary causes that toppled Chinese dynasties. As the global prices for key grains ─ rice, wheat, corn and soya beans ─ have risen steadily since 2005 because of pressure from farmers who would rather plant crops for bio-fuels than food. China has seven percent of the world’s arable land to feed 22 percent of the world’s population.

G-2

2008-12-18T21:40:00.000+08:00

The China and U.S. agreement at the conclusion of the 5th Strategic Economic Dialogue talks in Beijing earlier this month to give traders of both countries $20 billion in trade financing credit to boost bilateral commerce is the first right step in the direction of upgrading the SED to a G-2 biannual summit between the two countries. The export-import banks of America and China will offer $12 billion and $8 billion respectively to credit worthy importers in developing countries.
The U.S. also said it would support China joining the Financial Stability Forum, a club of central banks and finance ministries from the world’s richest nations.

After president-elect Obama’s election victory, the Chinese congratulatory message emphasized that China is ready to strengthen its relationship with the U.S. and further promote friendly and constructive cooperation. Obama agreed with China’s president Hu that the development of Sino-U.S. relations is not only in the interest of countries, but the interests of the world. Let’s hope he sticks to that agreement and brings about the necessary “change” in U.S.-China relations and doesn’t get his mind changed by Congress. Any treaty with China requires a two-thirds vote by the Senate, a potential hurdle with Democrats retaining their overwhelming majority.

Why not elevate the biannual SED meetings to the presidential level and make them G-2 meetings? Why not make them even stronger? America and China must step up their dialogue and cooperation in areas of trade, energy, environmental protection, food safety and military cooperation and sign a mutually beneficial bilateral treaty governing their relationship in these areas.

The China challenge is first and foremost, really about money and military might. Energy and the other geopolitical issues are secondary. The other side benefits of a bilateral treaty are that it would allow U.S. firms to invest in China’s industrial sector and allow U.S. firms in China to settle disputes by international arbitration rather than subject them to the arbitrary rule of law that currently exists in domestic Chinese courts. In turn, China would have an incentive to improve its legal system and to better protect private property rights and intellectual property.

With a U.S. federal budget deficit that could reach $1 trillion in Obama’s first year in office, a national debt of more than $10 trillion that requires more than $2 billion a day just to stay afloat, with China owning over half-a-trillion dollars in U.S. government bonds ─ more than any other country and Washington’s continued need for China to buy more ─ how many other options does America have to finance its national debt and the $700 billion financial industry bailout? America can’t just “spend” its way out of the financial crisis alone. It desperately needs a long term partner that can help it.

Giving China greater recognition would also send a strong signal that the U.S. is not opposed to China’s peaceful rise, prosperity and ability to invest in or buy U.S. companies the way it attempted to do in 2005, when China National Offshore Oil Corp tried to acquire Unocal, a U.S. oil and gas company for $18 billion, much more than it was eventually sold to Chevron for. America would also affirm its confidence in a policy of engagement and its distrust for protectionism. That would be good for America, China and the world.

Necessary Dialogue

2008-12-12T22:03:00.000+08:00

The fifth U.S. China high level get-together on December 4 and 5, 2008, under their Strategic Economic Dialogue Agreement of 2006, in Beijing was the main event to watch as America changed White House Administrations and its congressional makeup.

The dialogue was conceived as a civilized mellow way of dealing with prickly and sensitive issues without any one at any time ending the process acrimoniously. The dialogue held twice a year in China and the U.S. in turn, have so far achieved 150 agreements ranging from the macro economy to environment protection.

With all the noise and media coverage of the need for China to revalue the yuan, the fact that the yuan has appreciated about 20 percent in the less than three years since it was de-pegged from the dollar has been conveniently overlooked. Granted, but not surprising, the yuan recorded its highest one-day fall against the dollar during the high level meeting. Just a reminder of who controls currency fluctuations. Many economic and political experts speculate that China let its currency weaken to help its exporters during the crisis. The yuan will continue to appreciate with time.

Another significant fact that is overlooked is that for every gain the yuan makes against the dollar, the lesser the value of China’s holdings in dollars become. Being the largest holder of America’s debt, that can be a significant financial hit. Why should China follow in America’s footsteps? Just because America says so? America was again reminded that its un-ceasing pressure to revalue the yuan is tantamount to interference in China’s economic affairs.

It should therefore come as no surprise that Chinese officials urged the U.S. to stabilize its economy and protect China’s U.S. dollar based investments as the two sides opened their first cabinet-level economic talks in Beijing since the global financial meltdown.

China pointed out that it had made important contributions to the global economy by keeping its economic growth steady, adopting pro-active fiscal and monetary policies and raising domestic demand. China also assured America that it would sustain its growth and financial stability. Excessive consumption in the U.S. and over-reliance on debt are the key reasons behind the global financial crisis, said China Central Bank Governor Zhou Xiao-chuan, as he lectured America about its economic frailties.

China expressed its concern over the constantly shifting U.S. regulatory environment which made it difficult for China to invest in U.S. companies. U.S. Treasury Secretary Henry Paulsen, the architect of SED, took most of the criticism on the chin like honest bankers do.

China’s GDP growth dropped to 9 percent in the third quarter of 2008, the lowest in five years. The forecast for 2009 doesn’t look any brighter according to the World Bank. It has slashed it to 7.5 percent, the lowest in almost two decades. Although China also faces a rapidly slowing economy and rising unemployment, the tone of the critical comments reflected the shift in power. China made it clear that it is more productive for China to put its foreign reserves to work in China rather than continue underwriting America’s debt.

The U.S. has no basis to lecture China, or any other country really, about prudent financial policies. It really should devote most of its time to get its financial house in order. Why does China’s agreement to open its markets to foreign banks come across like such a big diplomatic coup? China has seen how incompetent they are and now that it knows it is welcoming them to its financial poker table as it rethinks its view of the U.S. banking system. The U.S. system, once the epitome of modern economic thinking and an example to emulate, suddenly imploded.

The Main Event

2008-12-01T22:45:00.000+08:00

he G-20 meeting in Washington, on the cold Atlantic seaboard, was a warm up to the Asia-Pacific Economic Cooperation forum that took place in Lima Peru last week. The APEC meeting of leaders from 21 Pacific Rim countries that account for half the world’s economy endorsed the Washington Declaration of the G-20 and pledged not to implement protectionist measures for 12 months ─ no matter how punishing the global downturn gets.

APEC 2008 was President Bush’s global summit swan song before he hands over the Washington reins to his successor on January 20, 2009. President elect Obama will preside over the April 2009 G-20 meeting and take on the global financial crisis head on. That is the main event that can bring about financial discipline and order to the global financial markets. Obama will personally grapple the global financial issues with his new economic team, in contrast to what he did at the 2008 G-20 meeting in Washington, when he sent a bi-partisan team of two out of respect to Bush and his presidency. Thankfully, he actually understands what is being discussed and if he doesn’t, makes sure he does. The same cannot be said about his predecessor, which can be a problem when confronted with today’s unprecedented global financial meltdown.

Capitalistic America that believes in free enterprise, individualism, none-or-minimal government interference ─ and God forbid intervention ─ allows the government to bailout and become a shareholder in America’s financial pillars of capitalism ─ AIG, Bear Stearns, City Bank, Fannie, Freddie, Wachovia and Washington Mutual. And guess who is picking up the tab? American taxpayers, as their homes are foreclosed, their gas and food prices rise and the standard of their children and grandchildren’s education plummets.

The lesson is that, when government pollutes capital markets by implicitly guaranteeing debt, market participants recognize that they will be protected if the enterprise runs into difficulty. There are exceptions. Lehman Brothers over-played its hand. That is why foreign investors, including the People’s Bank of China, hold more than $1.3 trillion in just Fannie and Freddie bonds.

The subprime crisis that started the financial tsunami, is at its base, a crisis of markets tainted by government intervention, along with the failure of the Federal Reserve to tighten monetary policy. It is also a failure of regulation to effectively monitor lending practices in the subprime market. Hopefully, Obama and his economic team at the main event in April will start to rebuild the necessary new global financial architecture to ensure it doesn’t happen again.

China at Center Stage

2008-11-21T04:17:00.001+08:00

China’s huge foreign reserves forced the G-20 Washington 2008 summit global crisis spotlight to be shined on Beijing to step up and take a bigger financial role in addressing the crisis. Because China holds the biggest inventory of foreign exchange reserves in the world, and because it looks to be one of the few major economies to show significant growth in the near future, it was urged to boost the resources of the International Monetary Fund. Pressure was brought to bear on China because Japan, which holds $1-trillion in foreign reserves ─ the second-largest cache of foreign reserves ─ pledged $100 billion in loans to the IMF.

The IMF, like the World Bank, is a relic of World War II, created at the Bretton Woods conference in 1944, as the foundation cornerstones of the postwar world financial system. I advocated their abolition along with the United Nations, or at the very least, their restructuring in my last book Custom Maid Knowledge, to give China and other developing countries greater say than the founding European nations and America now dependent on China have. That is the only way to avoid the widening fissures developing between the developed, developing and underdeveloped nations. To its credit, China demanded greater voting rights be assigned to it and other developing countries in the U.S.-dominated organization before committing to loan any funds to the IMF.

China announced at the opening of the summit that in addition to the $586-billion economic stimulus package it announced to bolster domestic demand and consumption, it had offered $500 million in financial aid to financially teetering Pakistan, calling it an urgent agreement based on the countries’ long-term friendly relations, and that it was prepared to do more once it had a say proportionate to its size and global financial clout. China also demanded the abolition of protectionist legislation in America and Europe which limit its export ability.

China wants the global trust and respect it thinks it justifiably deserves. It is frustrated and angry that despite all its economic progress, the developed world led by America, is denying it the proper place at the head of the table alongside America.

The reality is China cannot afford to follow in the financial footsteps of America and the Western world it leads. Furthermore, there is no domestic support for such action. China has been adversely affected by the Wall Street meltdown and needs to spend its reserves domestically to support its economy and create new jobs to replace the millions of factory jobs lost because of the global recession and loss of export orders.

China is already helping the global financial situation by holding onto U.S Treasury debt. China’s foreign reserves have already been invested ─ more than half in U.S. Treasury issues and other American bonds and much of the rest in euro-denominated assets ─ and it isn’t easy or practical to transfer hundreds of billions, or tens of billions of dollars without causing serious disruption to the currency market, which wouldn’t be in China’s self-interest either. If it sells the U.S. Treasuries it holds, global interest rates will go up and the dollar would collapse.

China’s New Deal

2008-11-14T00:27:00.001+08:00

China’s announcement to pump $586-billion into infrastructure projects and other stimulus measures to bolster domestic demand and shore up its weakening economy five days ahead of the Washington global economic summit of the G-20 group of leaders, which gave global stock markets a limited boost, highlighted Beijing’s global financial muscle. It also put America on notice that China can contribute to global stability and that it wants to play a bigger role with America and Europe in running the world economy.

The limited time scheduled for the G-20 meeting, a White House dinner and less than a full day of meetings, makes comprehensive change unlikely and the embrace of China by America even more remote. The long overdue embrace must come sooner than later. That is a longer term goal for China.

The stimulus package amounts to one-sixth of China’s annual economic output. Not a concern for China with its $2 trillion in foreign reserves and a reported fiscal surplus of $175 billion in the first half of 2008.

China’s immediate main aim is to keep the Chinese economy from slowing down to much to fast in order to avoid social and political instability. Tens of thousands of Chinese factories have closed down as export orders evaporate. China’s phenomenal growth to date was based on exports and investment. China’s economic output grew by 11.9 percent in 2007, 9.7 percent in 2008, and is projected to drop to 8.5 percent or lower in 2009. Although such numbers are music to any U.S. politicians ears, few countries, China included, can absorb a three percentage point falls in annual growth without problems. The government hopes its stimulus package will stimulate consumer spending.

Household consumption made up more than half of China’s GDP in the 1980s. Today it contributes less than a third. Chinese household savings have been as high as a quarter of disposable income. Corporate and government savings have also soared. China has been saving close to 60 percent of GDP.

The two year stimulus package, which includes tax cuts, loosening of credit and government spending through 2010, includes construction of low-income housing, transportation systems, rural infrastructure, technological innovation and disaster relief in the hope it will stimulate consumer spending. China’s economic stimulus package also benefits U.S. multinationals doing business in China which will have a positive effect in America.

China has set the bar for America and other countries to follow. China’s New Deal FDR economic model to boost local and global economic stability is one America and the rest of the world should follow. The basic fundamental solution of today’s global financial crisis lies in the plugging of America’s deficits with China’s savings. Americans have to save more as Chinese spend more.

Revolutionary Change

2008-11-07T06:07:00.000+08:00

America and the world it leads is ready for a revolutionary change. A fresh start. Watching the results of the 2008 presidential election with a full house of Americans, citizens and wannabes, silently riveted at the several TV screens at the Foreign Correspondents Club in Hong Kong, starting at 8am because of the 13 hour time difference, yell and applaud in sheer delight whenever another state and its electors were declared in Obama’s favor, there was no doubt in anyone’s mind that America and the world are ready for the long overdue dramatic change taking place.

The death on the eve of the 2008 presidential election of the woman who raised Obama, his white grandmother, was also the death knoll of lilly white bread American and European politics. Obama’s Kansas born and bred white mother and Kenyan black father were rebels with a cause. Any wonder Obama led a revolutionary change in American and global politics?

The historic 2008 presidential campaign and election was revolutionary not just because of the candidates color, age and sex, but the glaring absence of the incumbent president from the campaign trail, the fact that it was the longest, most expensive internet leveraged fund raising, managed news media with blogs, technologically driven grass roots voter registration drives, get out the vote campaigns and viral marketing with a record turnout of young non-white voters at the 300,000 voting booths across America, over four time zones that elected an African American ─ who is not a descendant of slaves ─ America’s 44th president.

Watching the 200,000 people from across America who had traveled to Chicago’s Grant Park to celebrate the historic revolutionary change party until the wee morning hours, I couldn’t help flash back to the thousands of people who came to Chicago in 1968 to demand revolutionary change of the Democratic Party at its convention that year at the height of the Vietnam War. It took 40 years, but America has finally acknowledged it is ready for change. Now the hard part. Meeting of expectations and making the necessary changes.

Terrorists Are New-Age Pirates

2008-10-28T20:03:00.001+08:00

The threat of piracy, armed robbery and terrorism on the high seas ─ especially off the coast of Somalia and in the Malacca Straits ─ are real 21st-century realities. Today, 30 percent of liquefied petroleum gas, 40 percent of commodities and 50 percent of the world’s oil production are shipped through these vital waterways.

The 21st-century war on terrorism is very similar to the 19th-century war against piracy that resulted in colonialism. Again, it was America that initiated the first campaign against pirates in the 19th century.

In the 18th century, most civilized states accepted the Roman law definition of pirates as “enemies of the human race.” By the end of the century, the rulers of Algiers, Tunis and Tripoli had become notorious for harboring pirates, and engaging in piracy and the slave trade in whites, chiefly captured seamen. European countries found it easier to ransom these unfortunates rather than go to war. Admiral Horatio Nelson, commanding the British Mediterranean fleet, was forbidden to carry out reprisals. “My blood boils,” he wrote, “that I cannot chastise these pirates.”

By contrast, America was determined to do so. Pirates were the main reason Congress established a navy in 1794. In 1805, U.S. Marines marched across the desert from Egypt, forcing the Pasha of Tripoli to sue for peace and surrender all American captives – an exploit recalled by lyrics from the U.S. Marine Corps Hymn: “From the halls of Montezuma to the shores of Tripoli.” America followed up on its bold initiatives in Tripoli in 1815 when Commodores Stephen Decatur and William Bainbridge led successful operations against all three of the Barbary states, as they were called. This shamed the British into taking action themselves, and the following year Admiral Lord Exmouth subjected Algiers to what was then the fiercest naval bombardment in history. However, these victories were ephemeral. The beys repudiated the treaties they were obliged to sign as soon as American and British ships disappeared over the horizon. Something America and Britain forgot when they forced Saddam Hussein to surrender after the first Gulf War.

It was the French who took the logical step, in 1830, of not only storming Algiers but of conquering the whole country. France eventually annexed Algeria and settled 1 million colonists there. It solved the Tunis piracy problem by turning Tunisia into a protectorate, a model it later followed in Morocco. Spain also digested bits of the Barbary Coast, followed by Italy, which overthrew the Pasha of Tripoli and created Libya. Tangiers, another nuisance, was ruled by a four-power European commission.

In the 19th century, as today, civilized countries tried to put down piracy by organizing coalitions of local rulers who had been victimized. Arabia and the Persian Gulf were a patchwork of small states, some of which were controlled by criminal tribes that practiced caravan robbing on land and piracy at sea. Pirate sheiks were protected by the Wahhabis, forebearers of the present rulers of Saudi Arabia. Sound familiar?

Presidential Death and Political Revolution

2008-10-17T22:20:00.000+08:00

A repeated disturbing politically incorrect conversation I either heard or participated in during my 2008 summer-fall pre-election visit to the U.S. was of the death in office of the next president. President McCain of natural causes, but President Obama by assassination. The belief by so many Americans that both McCain and Obama could die in office caught me off-guard ─ and was frankly, revolting and offensive.

I can understand and accept the reality of McCain’s age and ill health and the concern, fear and embarrassment the thought of President Sarah Palin evokes. It is therefore no surprise that Obama, for numerous rational core competitive reasons, is starting to pull ahead of McCain in the polls. He is not only more qualified to lead the country out of the economic, financial and military quagmire it is in, but has a seasoned vice president.

The fact that people at Palin rallies yell out “Kill Him” without being reprimanded by the candidate and that so many Americans take it for granted that “That One” will be assassinated if elected president because America “really” isn’t ready for a black president is not only offensive ─ but suicidal thinking.

Suicidal because a 21st-century political assassination in America in the 20th-century mold of the Martin Luther King, John and Bobby Kennedy assassinations, will plunge America into a political revolution the likes of which America has not seen since the founding of the Republic.

The fact is, America has failed to come to terms with its continuously changing cultural, economic and religious fabric. Mythology replaced reality. Spirituality has failed to keep up with technology. Debt has consumed equity. America has undergone a tremendous transformation since the Pilgrims landed. America has changed from vanilla WASP to Cherry Garcia white patched butterfly, with butterfly ballots. Or is it a multicultural scoop of Ooey Gooey cake? Apple pie America is a racial blender of caramelized apple. Senator Barack Obama is a representative of what America is and has to be accepted and supported as such if elected president. There is no room for discussions or thoughts of anything else.

China Bashing

2008-10-10T01:56:00.001+08:00

Presidential candidates Senators John McCain and Barack Obama have both taken political swipes at China in recent answers they gave to questions submitted to them by the American Chamber of Commerce in Beijing and published in the chamber magazine. Surprisingly, the candidates were not asked during their first presidential debate to comment on how they propose to deal with China. Surprising, because China is the scapegoat blamed for everything wrong with America. It is a convenient political football. In the vice presidential debate that followed, China was blamed for causing global warming and pollution. The fact that America is the biggest emitter of carbons was conveniently overlooked. Both presidential candidates did however take a swipe at China during their second debate. That is not surprising.

China is the villain that keeps the value of the yuan artificially low to maintain a trade advantage over U.S.-based manufacturers, and it caused the higher prices for raw materials, including oil, increased exports of cheap manufactured goods that have condemned America’s work force to redundancy because of outsourcing, and global warming.

Congress also wants to impose sanctions on China for its successive inclusion since 1999 on a U.S. blacklist of “severe” religious freedom violators.

U.S. politicians habitually make sure that whatever blame is directed their way for their “voodoo economics” is deflected and redirected at China ─ especially during the current financial meltdown and recession. The rise of protectionist sentiment in America over the trade deficit with China could have devastating consequences on the global economy. Quotas on textiles and televisions from China will not save U.S. jobs. The quotas will only increase imports from other low-cost manufacturing centers that have lost market share to China. This will raise the prices paid by U.S. consumers. The fact is affordable Chinese textiles and goods are an integral piece of fabric of the American lifestyle. If the U.S. insists on messing with Chinese currency and quotas, Americans will end up wandering around like the Timorese ─ the poorest people on earth.

America seems to have forgotten a certain 1980s Japan trade history lesson. Japanese low-cost, fuel-efficient cars terrified Detroit so much in the ‘80s that they U.S. automakers persuaded Congress to impose quotas on them. The Japanese then started to make luxury cars that are far more profitable. The result is that Japan’s Infinitis, Lexus and other luxury makes ─ along with their low-cost, fuel-efficient cars ─ have almost bankrupted the Detroit automakers and their part suppliers who once dominated the luxury market.

China bashing, sanctions and quotas will not help America’s fast melting economy recover. On the contrary, it will only expedite the current economic and financial meltdown should China decide to retaliate by dumping its dollars and treasuries ─ especially now that America is insisting on going ahead with the sale of military weapons to Taiwan.

Religious Constitutional Suicide Pact

2008-10-01T01:50:00.000+08:00

On Sunday September 28, 2008, 33 evangelical Protestant pastors, including the vice presidential candidate on the American Independent Party ticket, in 22 states launched a “pulpit initiative” in hopes of influencing the presidential election. The initiative was conceived by Arizona based Alliance Defense Fund which hoped to overturn the Internal Revenue Code’s ban on political endorsements by tax-exempt organizations, including churches. The pastors argued that the ban ─ originally sponsored by then-Texas Sen. Lyndon Johnson in 1954 ─violates the clergy’s first amendment rights to both free speech and free expression of religion. The pastors endorsed Sen. John McCain for president hoping the IRS will try and revoke their tax exempt status so they can challenge the law all the way to the Supreme Court. They believe the court’s conservative justices will hold the ban on political endorsements unconstitutional.

The pastors and their lawyers are wrong on their history and the law. The Founding Fathers were clear that America’s notion of religious liberty intended to prohibit the state from dictating the content of religious convictions. Preachers may preach on God and country, on war and peace, but they must not endorse candidates for political office if they want to retain their tax exempt status. As Christ enjoined: “Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s.” Elsewhere in the Bible Jesus said “My kingdom is not of this world,” an example his evangelical pastors should follow. Jesus and the Founding Fathers saw the value in the separation of church and state which prevents the suppression of religion by the state and ensures that our civil institutions do not favor one faith over another.

Under today’s Constitution and tax code, churches that have accepted the exemption also have accepted the prohibition against endorsements, and must faithfully abide by them. I support organizations like Americans United for Separation of Church and State that have made it their mission to report churches that preach politics to the I.R.S. The Alliance Defense Fund and its lawyers should be prosecuted and indicted by the I.R.S.’s Office of Professional Responsibility for inducing churches to engage in conduct designed to violate federal tax law in a direct and blatant manner.

The concept of separation of church and state as we know it will be in tatters if preachers with tax exempt status start preaching and advocating their political beliefs at taxpayer expense.

Freefalling Meltdown

2008-09-24T20:24:00.000+08:00

What happened at the beginning of 2008 was the beginning of the freefalling meltdown of the biggest pyramid game in human history. Since the burst of the Nasdaq internet bubble in March 2000, hedge funds, private equity funds and proprietary trading at banks have come to dominate money making. The new business model depended on asset prices constantly rising. Because so many wanted the same assets at the same time, demand pushed up asset prices and the model became a self-fulfilling prophesy. “Higher return” came to mean “faster appreciating” instead of “higher yielding.” Once banks started making margin calls and hedge funds and private equity had to liquidate and assets had to be marked-to-market, the pyramid collapsed.

The Bank for International Settlements said credit default swaps totaling $43 trillion, half the entire asset base of the global banking system were outstanding at the end of 2007. That is reality. Any wonder President George Bush, Treasury Secretary Hank Paulsen, Federal Reserve Chairman Ben Bernanke and Congress are panicking about how to structure a sustainable bailout package? Asking U.S. taxpayers to sign off on a $700 billion bailout package without adequate regulation or assurances as to how many more billions ─ make that trillions ─ will be needed or how it will be recouped, just because Congress wants to recess is absurd. Why should taxpayers trust the government when it is a responsible creator of the mess the career politicians and their financial backers ─ the same banks and insurance companies that pushed the “higher returns” that accelerated the freefalling meltdown ─ are now begging to be bailed out at any cost to taxpayers.

The ongoing implosion of the global financial infrastructure so dramatically exemplified by the government bailout of Bear Stearns, Freddie Mac, Fannie Mae, AIG and the bankruptcy filing of Lehman Brothers and 24 banks, with other takeovers and bankruptcies to surely follow, dictates that the government take its time and do things right this time ─ for a change.

The long slippery slope of globalization and financial deregulation has resulted in a financial meltdown that has put America where it doesn’t want to be ─ at the mercy of foreign government sovereign funds and a prolonged recession that is incurring trillions ─ not billions ─ of dollars of government debt faster than American taxpayers can acquire the means to pay it off.

Change: Obama/Palin Style

2008-09-09T20:16:00.001+08:00

Change Obama/Palin Style (“COPS”) is exactly what America needs ─ or is it? The operative political consensus from both Senators McCain and Obama is that “change” is coming to Washington and the Beltway insiders are in for an unpleasant shake’n’ bake-wakeup call no matter who wins. America is going to have to come to grips with a change that is going to not only shakeup D.C., but the world. First term senator-African-American president, or small state woman governor-vice president, regardless of their experience and credentials, is unquestionably a 21st-century revolutionary change in U.S, politics. It is going to be one or the other. Either way it is a welcome change.

The ailing U.S. economy is the number one issue of the 2008 presidential election. Foreign affairs, national security and the conflicts in the Middle East and the Caucuses ─ and of course the wars in Iraq and Afghanistan ─ play second fiddle. Most American voters know very little about U.S. foreign policy and care even less. Their number one concern is domestic policy, which includes employment, an affordable home, health care and education for their children. Unemployment hit its highest monthly rate in five years as Republican Vice President Sarah Palin accepted her party’s nomination. U.S. joblessness rate shot up to 6.1 percent in August during the American political convention season while China basked in the glory of its outstanding opening-closing ceremony showmanship and stellar gold medal performance at the Beijing 2008 Olympics. America, notwithstanding the brilliant performance of the Redeem Team, came in a distant second in the gold medal count.

America is in desperate need for change, something both U.S. presidential contenders and their vice presidential nominees recognize and are addressing. The reality is that both the Democratic and Republican senators vying for the presidency are maverick Beltway politicos. Neither one has accepted or played by party conventional rules. Add to that a vice president that is not a traditional Beltway insider ─ notwithstanding her traditional values ─ and one has to acknowledge change is on its way to D.C.

Is the change, regardless of which party wins good for America? The criticism of both Obama and Palin is their lack of experience. What experience? The Washington Beltway “Good Ol’ Boy Network” failed domestic and foreign policies experience? Where does one start? Education, health care, housing, employment, social security, Medicare, federal deficit, failed foreign policies in the Middle East, the Americas, Iraq, Afghanistan, Russia, China…? Change, regardless of which party wins with their inexperienced team will be a refreshing political Redeem Team that can hopefully bring the change America so desperately needs.

Putinomics

2008-09-03T03:44:00.000+08:00

Russia’s military invasion of Georgia, Stalin’s home state, has generated world condemnation and calls for economic sanctions. Economic sanctions are short sighted and won’t work. The minute any state questions or challenges Russia or its oil czar, Prime Minister Vladimir Putin, Russia instinctively resorts to Cold War totalitarian bombastic rhetoric and tactics, which includes military confrontation.

Putin is well aware of the response his Putinomic actions will elicit and is prepared to pay the price. He has called America’s bluff.

The new cold war Russia has launched, unlike the first one, is not a fight for military supremacy, but rather for respect and security. Putin is transforming Russia into a new economic oil and gas superpower with vast bargaining power over America and the European community. Russia is the world’s eighth largest producer of crude oil and the largest of natural gas. Russia is also third only to China and Japan as a holder of Western government securities. Moscow is using its energy clout for geopolitical gain. Especially in the regions that were once under Soviet control but are now independent countries.

Russia and Putin are angry and fuming at America for what they perceive as deliberate bad-faith dealings. It dismantles the Soviet Union and the Berlin Wall, folds up and abolishes the Warsaw Pact. And what does America do instead of being supportive and welcoming? It surrounds Russia with NATO and a missile defense system it places in the former Soviet puppet states of Poland and the Czech Republic to allegedly defend against any missiles launched from Iran. Sound right? Is it any surprise Russia invaded Georgia? Georgia lost a war with Abkhaz separatists in the early 1990s. Since then the area has been a self-declared republic that sought independence and finally got it.

The Cold War border effectively moved from Germany to Poland, Czech Republic and Georgia. Not bad for America. It thought it had a first down in Poland and the new Cold War until the ugly Russian interception and touchdown in Georgia. Moscow will not under any circumstances accept that America is the sole world superpower. Russia’s actions are supported and backed by the Russian people.

Russia’s strategic security will not be sacrificed and it is being secured with its recycled petrodollars loaned to the West. Imposing economic sanctions on Russia will only result in more economic and geopolitical interceptions by Russia that will cost America dearly. America, faced with a global recession it helped bring about, cannot afford to marginalize Russia and its Putinomic clout. America and Russia must reach an accommodation.

Finish Off Freddie and Fannies Shareholders ─ Save the Creditors

2008-08-26T00:59:00.001+08:00

As a taxpayer witness and victim of America’s savings and loan meltdown of the 1980s, I have no qualms advocating that both Freddie and Fannie be nationalized or carved up into smaller entities and privatized at the expense of its shareholders and not be bailed out at taxpayer expense. To allow Freddie and Fannie to continue using Uncle Sam’s credit card as a reward for their denial of the global financial Ponzi scheme and crisis they created as they went bankrupt is criminal. Bondholders and the foreign governmental and institutional creditors who supported their pyramid schemes are the ones to be saved at the shareholders expense ─ not taxpayers.

The last thing either the Federal Reserve or Treasury should be doing is continuing to prop up a dead horse. They should worry about how to constructively pay back the foreign central banks, even though they banked on the misperception that Freddie and Fannie are owned by the Federal government and will be bailed out. They aren’t, and like all mismanaged private corporations should be liquidated, put out of their misery and allowed to utilize the benefits of the new bankruptcy code ─ not taxpayer dollars.

Their debt was perceived as having U.S. government backing thanks to a less than truthful aggressive marketing campaign and should therefore be honored. It must be honored if America wants to continue to gain foreign credit. About one-fifth of the securities issued by Freddie and Fannie, some $1.5 trillion worth are held by foreign investors. In other words, one out of 10 American mortgages is in the hands of foreign institutions and governments. China is one of the largest creditors. Mainland Chinese banks have more than $376 billion of Freddie, Fannie and other U.S. government credit exposure ─ that is on top of the $12 billion exposure to subprime bundled debt the Fs created. The debt was implicitly guaranteed by Uncle Sam. Large Chinese banks typically have about a third of their overseas investment in mortgage agency bonds, according to JP Morgan estimates. Hong Kong bank’s bond holdings in the two Fs, to their credit, is limited to 0.1 percent of their assets.

America can no longer continue on the path of temporary fixes. The financial framework of the 1930s that brought post-depression financial stability has to be updated to meet the financial realities of the 21st-century. It is time to start addressing permanent structural repairs and regulations that properly govern and protect the way U.S. taxpayer dollars are spent and bring an end to the ways they have been repeatedly misused to correct the mistakes of career politicians who are financed by America’s financial and corporate institutional delinquents, including Freddie and Fannie.

Un-American Freddie Fannie Fury

2008-08-18T23:54:00.001+08:00

Fannie Mae is a nickname for the Federal National Mortgage Association. It was created in 1938 following the Great Depression. Its twin, Freddie Mac ─ Federal Home Mortgage Corporation ─ was created in 1970 to further boost home ownership. Both firms have lost over 80 percent of their value as a result of the subprime crisis and are asking U.S. taxpayers and the government to bail them out. Ironically, Freddie and Fannie were the inventors of the mortgage-backed security, the principal cause of the housing bubble and its collapse. The two were complimented for years for their great invention. Now they are scrambling to survive and contain the economic subprime mortgage train wreck they unleashed on an unsuspecting public.

The two “government sponsored enterprises” own or guarantee roughly half of America’s $12 trillion in outstanding mortgage debt. They have combined debts of $1.5 trillion, own or guarantee more than $5 trillion in mortgages and have contracts with other financial institutions worth $2 trillion more to hedge the risks behind those mortgages. Today they cannot raise a dime without government support because they are insolvent.

Both Freddie and Fannie were chartered by Congress to support the mortgage market, but they are owned by private shareholders. Investors have long believed that the government implicitly backs them. That allowed the two companies to borrow at favorable rates, benefiting shareholders and supporting the housing market, but putting taxpayer money at risk. They have used their unusual status and clout to create a regulation free zone around them.

They became highly leveraged behemoths on the implicit guarantee that the government would step in and rescue them if they ever got into trouble. This allowed them to borrow money more cheaply than their competitors, enabling them to make loans more cheaply. That secured more business and rewarded their shareholders, along with their handsomely compensated executives. It emboldened them to trade in highly risky investments. Freddie and Fannie have positioned and portrayed themselves as the political sacred cows of home ownership, thanks to an army of lobbyists, power brokers and political contributors who are shareholders. I agree with former Fed Chairman Alan Greenspan who recently criticized both Fs as fundamentally flawed institutions that privatize profits and socialize losses.

Both Fs made the list of Washington’s top 20 lobbying spenders the last decade. They spent a combined $170 million to cultivate political favors. At the same time, their executives have consistently led the mortgage-banking sector in campaign giving to members of Congress, contributing a combined $16.2 million since 1997. Their lobbyists have played or are playing roles in the presidential campaigns of both John McCain and Barack Obama.

To allow Congress to inject billions of U.S. taxpayer dollars to bail them out is a mistake. America has to get back to the Founding Fathers frontier nation cut throat laissez-faire capitalism that allows losers to die. They should be nationalized and owned by the taxpayers being asked to pay and bear the burden for both institutions greedy mistakes. Their fire sale to taxpayers is in order. The alternative, America becomes more indebted to foreign creditors at our grandchildren’s expense. It’s about time U.S taxpayers got a reward for their continued bailouts of incompetent self-serving bankers witnessed in the bailout of Chrysler in 1979, savings and loans in 1989 and more recently Bear Stearns.

Korean Denuclearization

2008-08-07T00:09:00.000+08:00

The recent killing of a South Korean tourist by a North Korean soldier and North Koreans firing off machine-gun rounds at their South Korean counterparts as the six-party talks were to resume in August 2007, are just some of the many surprises and misfires awaiting America after Pyongyang destroyed its nuclear facility at Yongbyon before Korea truly denuclearizes.

North Korea will want the U.S. to take North Korea of the list of state sponsors of terrorism. Dropping North Korea from the list, along with freeing Pyongyang from Washington’s Trading With The Enemy Act, would make it easier for sanctions to be lifted and help ease international suspicions over dealing with North Korea.

The Dear Leader is going to demand that America come clean of listing North Korea on any of its lists of unsavory characters, before he scraps the nuclear program.

The Koreas have been separated by a 248 kilometer-long and four-kilometer-wide demilitarized zone since the end of the 1950-53 war. Minefields and barbed-wire fences guard the approaches to the zone. One does have to wonder how effective they are considering the zone has more wild life species flourishing and growing on the same trails that the four U.S. military defectors took off from their U.S. bases in South Korea, for their own personal rebellious reasons, against America ─ not necessarily because they believed, knew or were prepared for what they defected to.

The North refuses to recognize the line drawn unilaterally by the United Nations Command at the armistice. A big issue is the disputed sea border, brought up again by North Korea, in the course of the denuclearization talks. There will be a lot more misfires at the DMZ and between the six parties at the talks before Korea really comes clean and denuclearizes.

Iran Denuclearization

2008-07-30T21:40:00.001+08:00

The recently failed Iran denuclearization talks in Geneva should come as no surprise and should nevertheless be viewed as a positive step that Iran is prepared to freeze its uranium-enrichment activities as part of broader negotiations which include Iran’s right to develop nuclear power and the cessation of covert U.S. military activities in Iran.

Objective intelligence reports claim that the U.S. data on Iran, like Iraq, is flawed. America’s evidence on Iran’s nuclear plans and programs remains ambiguous, fragmented and difficult to prove. One thing certain is that the U.S. has been trying to undermine the Islamic Revolution since 1979. The Iranian regime’s fragile sense of legitimacy necessitates dealing with it respectfully.

Negotiating with Iran is essential if there is to be a rapprochement between the two global powers. The arguments made against negotiating with Iran were also made against negotiating with the Soviet Union during the Cold War. Soviet misconduct easily matches that of Iran in aggression, oppression, murder, support of terrorist groups and mendacity.

President Reagan challenged Soviet behavior by supporting groups fighting communist intervention, building the military, strengthening NATO, condemning human-rights violations, and conveying the message of freedom in every way possible. Nevertheless, negotiations took place with four specific policies in place, including: Regime Acceptance ─ which required the U.S. to refrain from activities aimed at destroying the Soviet regime it was trying to influence, while vigorously denouncing its political and moral legitimacy; Limited Linkage ─ Negotiations on human rights, arms control, regional issues and bilateral relations were pursued without linkage to Soviet conduct, enabling negotiations to proceed while the U.S. responded firmly through deeds; Rhetorical Restraint ─ Reagan vigorously criticized the Soviet system and its behavior, but promised not to “crow” when the Soviets agreed to U.S. proposals, enabling Soviet leaders to avoid being seen as capitulating to U.S. demands; and Self-Interest ─ U.S. negotiating policy was based on convincing the Soviets to act in their own best interests.
Why can’t these same principles be applied to Iran?

His Way? No Way! The Highway Mugabe

2008-07-04T21:57:00.000+08:00

Africa’s “liberating lion” Robert Gabriel Mugabe stole the Zimbabwe election by brutalizing his opponents and their supporters. He now wants the world to recognize him as the legitimate winner of the election and leader of the country. No way. It is time for Mugabe to hit the highway.

The main problem in Africa in general and Zimbabwe in particular, is its tribalism. It is what allows monstrous megalomaniacs to persist against all the interests of “the country.” It is probably the antipathies of tribalism that keep them there rather than the rationalistic interests of the unit called Zimbabwe, a creation of white boys at the Berlin Conference of 1884-1885.

Mugabe received his education in Jesuit schools. Primarily a teacher, he joined the National Democratic Party and earned a 10-year jail term, during which time he earned bachelor’s degrees in law and education. When Rhodesian President Ian Smith allowed Mugabe to attend a conference in Lusaka, Zambia, he took off to Mozambique where he recruited volunteer freedom fighters. He and political rival Joshua Nkomo fought a successful guerrilla war with soldiers trained in China.

On December 21, 1979, the Lancaster House Agreement ended Britain’s rule over Rhodesia and paved the way for democratic elections the next year, which Mugabe won. He brought his Marxist communist ideals that formed his personal philosophy and social justice to bear on addressing the inequalities left by the white regime. Within a year, free junior school education was every Zimbabwean’s right. Those who qualified were guaranteed a place in secondary schools. A new housing law gave ownership to people who had rented their homes for 30 years or more. And the poor had access to free medical care.

In the late 1980s, Zimbabwe was the textbook example of a functioning African state. Yet today, after two decades of rule, Mugabe has become a caricature of the African despot ─ in the footsteps and tradition of Uganda’s brutal Idi Amin.

To his credit, Zimbabwe boasts a very high literacy rate for Africa. But, paradoxically, this is working against Mugabe. The young electorate ─ called the “Born Free” because they did not grow up under white rule, have learned the ideals of democracy and socialism, yet they have also witnessed their president’s descent into dictatorship and they want change. Shouldn’t we all?
Mugabe is determined to anoint his successor so that he can escape the almost certain criminal prosecution he will face if an opposition candidate wins. The ghosts of the 20,000 Ndebe people slaughtered in the Gukurahundi crackdown in the 1980s by the North Korean-trained Fifth Brigade, the starvation and brutality brought upon opposition supporters and their supporters in the media, the use of torture and the abuse of human rights all build a solid case against him. He knows he needs an exit strategy. And while he figures it out, the brutality and ban on opposition parties and politicians within his own party is destined to bring him down. Anytime a country is hungry and broke, its leader gets busted. That is the time to sit down with that leader and grant him immunity from prosecution and let him and his family keep a portion of their plundered loot that belongs to the people. That is the deal Boris Yeltsin cut with Vladimir Putin and the Russian people when the Russian economy was in tatters. Isn’t it time Zimbabwe cut the same deal with Mugabe and show him the highway?

A Fearful Truce

2008-06-26T06:10:00.000+08:00

The six-month cease-fire agreed to between Israel and Hamas has brought a calm “Fury and Fear” in Israel, and in Gaza ─ “tahadiya,” the Arabic word which means not quite a truce, not quite a cease-fire, but a temporary cessation of hostilities.

Hamas has offered a ceasefire of sorts ─ a hunda. A hunda extends beyond the Western concept of a cease-fire and obliges the parties to use the period to seek a permanent, nonviolent resolution to their differences. A hunda affords the opportunity to humanize one’s opponents and understand their position, with the goal of resolving the inter-tribal or international dispute. “Such a concept ─ a period of non-war but only partial resolution of a conflict ─ is foreign to the West and has been greeted with much suspicion. Many Westerners I speak to wonder how one can stop the violence without the conflict,” said Ahmed Yousef, a senior advisor to the leader of Hamas, Ismail Haniya. “After all, the Irish Republican Army agreed to halt its military struggle to free Northern Ireland from British rule without recognizing British sovereignty. Irish Republicans continue to aspire to a united Ireland free of British rule, but rely on peaceful methods,” Yousef added.

Hamas has agreed to peace talks. The only question is pre-conditions and a date which can only be agreed to when communicating face to face. Israel and the Palestinians, and other Arab cousins should again join forces and work together the way they used to during the caliphates.

The alternative is civil war in the Palestinian territories and cross-border conflicts with Israel and Egypt. With Egypt because of President Hosni Mubarek’s repression of Hamas’ sister organization, the Muslim Brotherhood, for which Hamas is seeking political concessions by threatening that if Egypt fails to open its border with Gaza, “there will be no border.” Hamas officials getting busted at the border carrying million of dollars in cash, as guns and munitions are smuggled from Egypt to Palestine through tunnels beneath the border only escalate the tension and violence.

It is time to end the fearful truce and embark on the road to a regional permanent peace.

EU Wake

2008-06-18T00:51:00.001+08:00

Irelands vote to reject European Union membership and the treaty that comes with the privilege is no great loss because the EU was a non-starter from the outset. A club that was founded in 1957 with six members that has grown to 27 members speaking 20 different languages “Did you just say this was a budget for a mean Europe?” a Danish journalist asked Jose Manuel Barroso, the Portuguese president of the European Commission during the 2005 budgetary debates.. “No, I said it was a budget for a mini Europe,” he replied. In fact, Barroso meant both.

Europe’s mean history and identity is rooted in religion – Christianity. Austria, which was in the forefront of opposition to Turkey’s membership, is encumbered with the historical baggage of conflict with the Ottoman Empire. Dismembering the Ottoman Empire may have been the most damaging and dangerous thing Europe ever did for itself. Nation states then, like now, tried to maintain religious monopolies. At best, a concordat could be struck with other Christians, although often only after generations of civil war. “Ultimately, antagonistic religions mean antagonistic cultures,” T.S. Eliot warned, “and ultimately, religions cannot be reconciled.” He was writing in the aftermath of World War II and probably had in mind Catholics and Protestants, and perhaps Jews. Europeans today might think of Muslims and perhaps agree with Eliot.

The 450-page European Constitution as drafted is disconnected from Europe’s history. To make matters worse, its language, like the EU, has been dictated by bureaucrats ─ unelected “experts.” The text, which has as many exceptions as rules, isn’t written for the ordinary citizen, but for the bureaucrat. For example, Article III-139, which declares: “This sub-section shall not apply, so far as any member state is concerned, to activities which in that state are connected, even occasionally, with the exercise of public authority.

European laws or framework laws may exclude certain activities from application of this sub-section.” As a lawyer, I can’t figure out what that means. Any wonder Irish, French and Dutch voters turned it down? I don’t know of any European, yet alone a Irish, French or Dutch person, who will vote in favor of a document that begins with the words “His Majesty the King of the Belgians….” Just because the proposed EU will be headquartered in Belgium does not make all Europeans Belgian.

The fact is the European Constitution is dead ─ dead and cold ─ unless it gets back to its historical competitive roots. Europe is the product of intense competition of numerous states on a small continent. The competition has to get a lot stiffer for Europe to survive as a union.

Continued U.N. Abuses & Waste

2008-06-12T02:52:00.000+08:00

The list of reasons I gave for abolishing the United Nations in my recently released book Custom Maid Knowledge For New World Disorder ─ and spoke about at length at book signings, radio and T.V. shows across America during my May 2008 book tour in America, ─ just got longer.

Two new reports, one by the U.N. and one by Save the Children UK, condemn the global body for waste, lack of oversight on development funds and child sex abuse. Peacekeepers and aid workers in Sudan, Ivory Coast and Haiti are accused of committing a litany of sexual crimes against children as young as six. The report by the children’s charity said that children were denied food aid unless they granted sexual favors; others were forced to have sex or take part in child pornography. More than half the children interviewed knew of cases of sexual abuse and that in many instances children knew of 10 or more such incidents perpetuated by aid workers or peacekeepers. The threat of retaliation, and the stigma attached to sexual abuse, were powerful deterrents to coming forward the report said ─ but many did. Again, the U.N. promises to investigate the accusations.

The U.N. investigated the allegations of waste, transfer of sensitive technology and misappropriation of funds by Pyongyang made by the U.S. last year against the United Nations Development Program in North Korea. The U.N. report concluded it is time to give member states access to the internal audits, now secret, of UNDP programs. This latest report ─ by three experts appointed by the UNDP ─ is a wakeup-call for more accountability throughout the U.N.

North Korea diverted development funds for its own financial ends because of the UNDP’s personnel slipshod practices that gave North Korean officials access to sensitive information, dual purpose technology and allowed them to divert funds as they pleased.

Of the 151 pieces of equipment reviewed by the U.N. auditors, 95 were on the U.S. Commerce Department’s control list and required an export license. Many were “controlled by the U.S. for national security and anti-terrorism reasons… and were of heightened concern.” The UNDP had not obtained the required licenses. The report said that when the UNDP pulled out of North Korea in March 2007, it left the equipment behind.

How many more blatant U.N. abuses of basic rights and waste have to be documented before the U.N. is abolished and replaced by a new global body relevant to the 21st-century?

Cuban-American Vote Conundrum

2008-06-05T21:21:00.000+08:00

On my 15 hour flight back to Hong Kong from America on the night of June 3rd, the historic day Senator Barack Obama clinched the Democratic Party nomination, I decided to compare his foreign policies to those of Senator John McCain, his Republican opponent for the White House.

I started with Cuba because Cuban Americans are the most politically active and wealthiest constituency in a critical State needed to get to the White House ─ Florida. It was the Cuban Americans who delivered Florida to George W. Bush in the 2000 presidential race. They were angry at the Democrats because the Clinton administration returned young Elian Gonzalez in 2000 to Cuba. Four years later, Bush won again because he tightened sanctions and obtained the release from a Panamanian prison of four exiles considered heroes for having plotted to kill Castro.

Obama and McCain have opposing views on how to deal with Cuba. McCain promises to maintain the sanctions and status quo. Obama has called for “direct diplomacy, with friend and foe alike” in a speech to the Cuban American Foundation. Obama said he would “turn the page” on half a century of policy that isolates Cuba. As a result, Cuban Americans face a vote conundrum.

Cuba is the longest running example of how and why embargoes don’t work. Cuba’s economy is unique. Over 90 percent of the entire Cuban economy is state owned and run by Castro’s brother Raul who is trying to bring about in Cuba a China style transformation. He has traveled a number of times to China to study first hand Beijing’s economic policies, and in 2003 invited the leading economic advisor to China’s then-premier, Zhu Rongji, who played a key role in opening China to foreign trade and investment, to Cuba to give a series of lectures. Lectures his brother Fidel boycotted.

He’s sent senior military officers trained in Russia’s most prestigious military academies to learn hotel management in Spain and accounting in Europe, Latin America, Asia and Canada. Cuba is opening and has been since Castro came to power in 1959. State of The Art Israeli farms and Chinese made bright-blue buses are right up there with the numerous joint ventures Cuba has established globally notwithstanding the embargo.

Cuba’s foreign exchange earnings have nearly doubled since an integration agreement with Venezuela was signed in 2004, due mainly to the export of medical and other services to Venezuela and record high nickel prices. Economic growth has been three times what it was at the start of the new millennium when Cuba began to recover from the post Soviet slump after it got dumped. Everyone is benefiting at the expense of America. The U.S. has slammed the door in its own face and is having a hell of a time getting on the right side.

The 40-plus year “el bloqueo,” the U.S. embargo on Cuba has been such a failure, that every kind of U.S. made product is available there. MasterCard, Visa and every consumer item from soft drinks to diapers can be found by the more than 200,000 plus American citizens who travel there in defiance of the embargo. Western Union has an office there to facilitate the wire transfer of dollars.

The tightening of sanctions not only perpetuates a failed foreign policy, but is cruel and unusual punishment for Cubans and those Cuban Americans who need or want to support relatives and friends in Cuba. Cuban Americans should be allowed to travel to Cuba and send unlimited financial aid. They can ensure they do on Election Day.

Survival or Armageddon?

2008-05-28T06:54:00.002+08:00

President Bush’s speech in Israel during his recent visit there to celebrate the country’s 60th anniversary criticized Senator Obama for willing to “appease” terrorists. His speech was criticized in America for being partisan because as a sitting president he is expected to stay out of the electoral fray. Bush’s speech and visit was also criticized by the Palestinians for even taking place. Stories of Bush’s visit, like many of the stories about Israel’s 60th Anniversary celebrations, were followed by stories of the Palestinian Nakba, the Palestinian word for catastrophe. Palestinians use the term for what they describe as the cataclysm that befell them with the rebirth of the state of Israel in 1948. The political spin of who is right, wrong and to blame for the state of Israel has to be put aside and both sides must sincerely try to survive the next 60 years as friendly sovereign neighbors. The alternative is Armageddon.

The simple facts are: The history of Jews running a political state has not been good. The last two times it did so, first under King Solomon, Jews ended up in exile in Babylon and the Jewish Commonwealth of the Second Temple period was conquered by the Romans who scattered the Jews and renamed the area Palestine. Zionism may actually be the most successful national liberation movement of the 20th-century. Today there are 5.4 million Jews in Israel, 1.3 million Christian and Muslim Arabs and an additional 3.4 million more Arabs in the West Bank and Gaza. While Israel’s short term threat is Iran, a greater long term danger is that it becomes overwhelmed by Arabs. It is estimated by 2020 Jews will only make up 47% of the population between the Jordan River and the Mediterranean Sea.

Israel has welcomed Jews from all over the world, including those evicted from Muslim and Arab countries because of their religion. Jewish refugees from Iran, Iraq, Syria, Saudi Arabia, Yemen and all other Arab countries, whose families lived there for centuries, have been quietly absorbed by Israel without any claims of compensation or demands for the right to return. Together they built an economy that produced a gross national product of $150 billion in 2007. The Palestinians can do the same.

Palestinians are successful business people, merchants and politicians in the countries they have settled in. Antonio Saca, the president of El Salvador, is one of 100,000 Salvadorians of Palestinian origin. There are an estimated 10 million Palestinians worldwide. Those living in Arab countries cannot become citizens. Most of them are conflict-weary and simply want a passport and a secure place to call home.

Sixty years ago, the Palestinians refused partition and ended up stateless. If rejecting partition was a mistake then, it is a bigger one now that Israel’s population has increased eightfold. Palestinians deserve a better future. But they can help themselves by putting history behind them and coming to terms, as the Israelis already have, with the obvious. A peaceful future is possible only with two states, not just one. The alternative is Armageddon.

Destructive Religious Divide and Political Pastors

2008-05-20T20:13:00.001+08:00

Crisscrossing America by plane, train and car during the spring 2008 democratic primary season, reading, listening and watching the multi-million dollar bitter implosive democratic primary campaigns of Senators Clinton and Obama, I couldn’t help exchanging views about it with fellow travelers. It became clear to me after these constructive discussions that America is ready for a change ─ not just in the White House ─ but the role of religion in politics.

The Clinton-Obama political bloodbath is reminiscent of the Democratic Party bloodletting of 1968 in Chicago that I witnessed first hand as a photographer. A badly divided Democratic Party will put Senator McCain in the White House with a foreign policy that will continue to make religion a cornerstone and will make the world shudder even more as it, like the Democratic Party, is further ripped asunder.

America can no longer continue to disregard and disrespect the Founding Fathers admonition and wish to separate church from state. If it does, it will become what the Founding Fathers feared and wanted to avoid ─ a country that is divided and destroyed by religious extremists. When 69 percent of Americans disapprove of the performance of America’s religious Bush, the highest disapproval rating for a president that Gallup has ever recorded, one does have to question the role of religion in American politics today.

America’s religious Founding Fathers were explicit and clear that there is no room for religion in politics for the reasons highlighted and crystallized during the primary season by Reverend Jeremiah Wright Jr. and Pastor John Hagee. The ranting of Reverend Wright Jr. is well known. Lesser known are those of Pastor Hagee, the San Antonio televangelist who has endorsed Senator John McCain, who has offended Roman Catholics and others. Pastor Hagee, called the Catholic Church, among other things, “the great whore” and “a false cult system.” He also offended many with his 2006 statement to National Public Radio that New Orleans had suffered “the judgment of God” because of its “level of sin.”

America is a sinner if it allows religion to continue playing a central divisive role in its domestic and foreign policy, a sinner whose pain and suffering will only get worse at both the economic and geopolitical altars of capitalism.

Gassed Out

2008-05-09T20:25:00.001+08:00

Driving in California, from Los Angeles to Sebastopol in Sonoma County and back in April 2008 after my protest horseback ride against high oil prices in Los Angeles, to attend book signings and make speeches on the reasons for the high price of oil, I stopped at several truck stops, diners and country cafes to get gas and personally gas up.

The conversations and concerns of locals at all stops was the same ─ the high cost of gasoline, food, health care, education and hardships of single parenting ─ the basics of American life. Driving through John Steinbeck’s Grapes of Wrath Central Valley by vineyards and wine tasting rooms with the American flag proudly fluttering in the wind over the fertile land and irrigated fields with rolling hills of different shades of green grass, with hues of brown, I couldn’t help think of the beauty of America that was being corrupted by the hundreds of ugly graffiti covered empty rail cars idly parked on the silent rails snaking through the lush valleys, that like America, are waiting for an engine to move forward.

The silent landscape with motionless crane like oil derricks in San Aldo, was periodically disturbed by the occasional derrick huffing and puffing to pump the crude America so desperately needs to bring down the rising gasoline prices at the pump. Gasoline prices rose by more than 20 cents a gallon in the last two weeks of April. Truckers protested the rising fuel prices in Washington as politicians made more empty promises on how to lower gasoline prices, so I decided to share some personal tips on how to minimize the cost of gasoline and how I maximize my bang for the buck at the pump.

Only buy or fill up a car or truck in the early morning when the ground temperature is still cold because all service stations have their storage tanks buried below ground. The colder the ground the more dense the gasoline. When it gets warmer gasoline expands. So buying in the afternoon or in the evening, a gallon is not exactly a gallon. In the petroleum business, the specific gravity and the temperature of the gasoline, diesel, ethanol and other petroleum products plays an important role. A one degree rise in temperature is a big deal but gas stations do not have temperature compensation at the pumps.

When filling up do not squeeze the trigger of the nozzle to a fast mode. The trigger has three stages: low, middle, and high. In slow mode gas is pumped on low speed, thereby minimizing the vapors that are created while pumping. All hoses at the pump have a vapor return. When pumping on the fast rate, some of the liquid that goes to the tank becomes vapor. Those vapors are sucked up and back into the underground storage tank so one gets less value for their money.

One of the most important tips is to fill up when the gas tank is HALF FULL. The reason for this is, the more gas there is in the tank the less air occupies its empty space and makes room for more gas. Gasoline, like gassed politicians campaign promises, evaporates faster than people imagine.

Religion, Sex and Politics

2008-04-29T23:26:00.000+08:00

Religion, guns, elitism, bitter Americans and ducking bullets in Bosnia dominate the political debates in the democratic primary as Pope Benedict XVI arrived in America and apologized for the sexual-abuse scandal afflicting the Roman Catholic Church. Sex, religion and politics, the three subjects we are taught not to discuss, dominate America’s political landscape during the democratic primary season ─ not because of the Pope, but Reverend Wright, Senator Barak Obama’s former pastor.

The political mudslinging that spreads hatred and lies about candidates running for office hit an unprecedented high in the Clinton-Obama contest for the democratic nomination. Americans can be forgiven if they are confused by the political expression, “The enemy of my enemy is my friend.” Americans debate what Reverend Wright, a former Marine, said and meant and whose enemy he really is.

But then again, America deposes and executes Saddam Hussein, a secular Sunni, and replaces his government with a democratically elected religious coalition supported by Iran. The anti-democratic and anti-American-coalition occupation Sunni insurgent Saddam loyalists, backed by Syria and U.S. friend, ally and protectorate Saudi Arabia, contribute more than their fair share of support for the political and military confrontations that kill and maim U.S. and coalition military and civilian personnel, along with countless innocent Iraqi civilians.

Sunni-dominated Saudi Arabia raised and contributed to America and the world ─ Osama bin-Laden, 15 of the 19 9/11 hijackers, and Sunni insurgents combating Shiite militias backed by Iran, yet they are, according to the Bush-dominated dynasty political spin doctors, a friend of America. To add fuel to the fire of confusion, Syrians, Iranians, Saudis and all three factions of Iraqis hate Israelis and distrust Jews. Democratic Israel, where Arabs sit in parliament, is vitally dependent on U.S. military and economic support to live comfortably while being stressed out by their determined, fanatical, suicidal neighbors hell bent on annihilating Israel. Yet the democratic primary debates only briefly touch upon these critical geopolitical issues vital to America’s security.

Foreigners visiting America can be forgiven if they believe only gays, pedophiles, peaceniks and bigots run for political office. Sex, religion and Democratic Party politics is resulting in the implosion of the Democratic Party and another possible Republican administration in the White House.

Virtual Hedge Funds

2008-04-23T23:22:00.000+08:00

Hedge funds have been described as financial "weapons of mass destruction" by investment guru Warren Buffet. There are an estimated 8,000 hedge funds with over two trillion dollars of assets under management with no government oversight, supervision or guarantees should the funds start melting away in the subprime wake.

Their oversight, risk management and transparency is mandatory to prevent another multi-trillion financial industry meltdown. The voluntary guidelines under which hedge funds currently operate are no longer acceptable in light of what we have learned from the subprime crisis.

In 2007, a presidential working group headed by Treasury Secretary Henry M. Paulson Jr. rejected the idea that the funds needed increased regulation. The voluntary guidelines recommended by two industry groups assembled by the Bush administration earlier this year are a "virtual farce" according to the Connecticut attorney general. Many of the hedge funds are headquartered in the state and their meltdown is a legitimate concern to politicians there. It should be. Not just to them but all Americans. "Hedge funds have become too big and too important to remain outside the rules," said the attorney general. I concur!

America today has a debt of nine trillion dollars that requires us to pay more than two billion dollars a day in interest. Taken together with the more than 40 trillion in social security debt that our children and grandchildren have been saddled with, I do not believe America can continue to carry the risk of a two trillion dollar hedge fund industry collapse.

The regulation of hedge funds will make the financial system more stable and reduce the risk it currently poses to the world financial markets and economy. The subprime crisis has revealed how the banking system and unregulated financial instruments are interwoven with each other, essentially creating one credit market. Policymakers can no longer ignore the systemic risks posed by hedge funds.

Partition

2008-04-15T20:04:00.001+08:00

The February 22nd bomb attack that destroyed the gilded dome of the 1000-year-old Shiite mausoleum of Iman Ali al-Hadi in Samarra, was the most graphic visual of the gilded political rubble the U.S. has created in Iraq, and also a sneak preview of the current civil war in Iraq. While Iraqi politicians and U.S. bureaucrats haggle over the formula of a national unity government, the repeated weekly suicide bombings of Shiite mosques remind us of how futile their effort to unite Iraq is.

Iraqis know that a unified Iraq is unsustainable for four reasons: history, religion, ethnicity and politics. They also know the appearance of unity will hasten the removal of U.S. and coalition troops.

The new constitution Iraq approved on October 15, 2005 created three de facto states ─ Shiite in the south, Kurdish in the north, and Sunni in the center. Local laws are superior to national law. The Shiites in the south and the Kurds in the north will own newly discovered oil reserves ─ which are in the Shiite south and Kurdish north. The only remaining issue is the revenue share formula for the Sunnis share of the oil revenues.

Most of the armed and police forces being trained by the U.S. led coalition forces are Shiite and Kurds. The more the U.S. military hands over prematurely to “Iraqis,” the more it will be handing over to Shia and Kurdish militia members that are bent more on advancing ethnic and religious interests than on defeating the insurgency or preserving national unity.
To think that the Kurds and Shiites in Iraq can forget their history and embrace the Sunnis in one central government is delusional and defies reality. Ultimately, the deep, vindictive ethnic and religious factions will fracture the government and country. Nationalism, as manifested by Kurds, Sunni and Shiite Arabs, is no different than the nationalism expressed by the new democratic republics that were part of the former Soviet Union, the Serbs, Croats and Macedonians in Yugoslavia, or the Czechs and Slovaks in Czechoslovakia. The World War I remnants of the Austria-Hungary Empire are no different than Iraq, itself a remnant of the Ottoman Empire.

The artificial borders of Iraq were created by its British colonial overlord to facilitate domination and control of the oil and can only be enforced by an oppressive authoritarian regime. The colonial borders must disappear for democracy to flourish as was the case in the former Soviet Union, Yugoslavia and Czechoslovakia. Likewise Iraq will have to be divided into three separate countries to accommodate the Kurds, Sunnis and Shiites. Trying to keep them together in one democratic state ignores the religious and ethnic historical differences and grudges that have been temporarily put aside as they try to rid their collective tribal lands of the occupying infidels.
A democratic Kurdistan and democratic Sunni and Shiite states will do to Iran and the Middle East what glasnost did to Russia and democratic Eastern Europe. Iran’s mullahs, Syria’s Baathists and the royals in Saudi Arabia will go the way of the ruling elites in Romania, Poland, Yugoslavia and Czechoslovakia.

America can create a lasting democratic model in Iraq for the Middle East. It has to install three democratic regimes and make sure they survive. It is important to avoid another U.S. foreign policy disaster. It would be a colossal catastrophe. America must deliver on its promises to the Iraqi people, America and the world. That is the only way America can extricate itself with honor with its “mission accomplished.” America cannot afford to fail in Iraq. If it does, it will be relegated to a 21st-century debt-burdened bankrupt – financially and politically.

Corporate Welfare Bear

2008-03-25T00:51:00.000+08:00

The Federal Reserve decision to underwrite and guarantee $30 billion of Bear Stearns securitized mortgages for the fire-sale of the firm to JP Morgan was nothing short of a corporate welfare stamp of approval by America’s Central Bank of the irresponsible short sighted lending practices of greedy bankers ─ to prevent Bears collapse that will have a domino effect on other major financial institutions ─ and their greedy short-sighted bankers.

There is a real problem when the next day investment bank giants Lehman Brothers and Goldman Sachs report profits down 50%-60% from the previous year ─ and the market rallies. It is a problem that is received with a sigh of relief in the wake of Bear Stearns $2 a share fire sale. The company corporate headquarters is worth more than $1.2 billion, yet Bear was sold for a mere $236 million and a $30 billion guarantee from the Fed as a sweetener. It confirmed its multi-billion dollar mortgaged backed securities portfolio ─ like that of many other investment banks ─ is worth zero.

If Bear Stearns, a company that has been independent in the true American capitalist way for 85 years, survived the Great Depression, was valued at $20 billion in January 2007, and made a fortune in mortgage-backed securities has to be bailed out of bankruptcy, how many more stellar U.S. household name financial institutions will be put on the Bear corporate welfare program before they are cut off and allowed to lose it all like the foreclosed homeowners they profited from? Why doesn’t the government do the same for the dispossessed homeowners?

The Fed’s decision to bail Bear Stearns, lend $200 billion to investment banks, $100 billion in credit lines for banks and other financial institutions, that is pump over $300 billion of taxpayers reserves to prop up investment banks in the fast melting financial markets, merely delayed the collapse of the bear market as the Fed signifies a significant shift in policy and raises the question why aren’t investment banks and hedge funds subject to more stringent regulation? It is time all financial institutions capital and collateral requirements, and regulatory oversight, are overhauled. By throwing out its longstanding rule about lending only to commercial banks and extending this facility to investment banks, the Fed is admitting it was asleep at the wheel as the entire financial system went into meltdown mode before the Fed realized that long-term illiquid assets are not sustainable in short-term money markets ─ and the Fed has became a corporate welfare mom to avoid a global financial meltdown because of its late wake up call.