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Monday: Slitting our own throats

Tyler Durden guest posted at Naked Capitalism yesterday.  Most of the post is beyond my economic paygrade, though Dakinikat might be able to provide us with the Cliff Notes later.  But I did find his overall observation very astute:

With articles like this coming out of Time magazine, it is inevitable that in the immediate future, the United States will be split into two partisan camps. However, this will not be the traditional schism of republicans vs. democrats, contrary to Mr. Barney Frank’s attempt to start ideological partisan warfare. The real split will be of naive, easily-manipulated, small-time mom and pop investors, who only care about looking at their daily yahoo finance screens and 401(k) statements, seeing more black than red, and only focusing on what happened in the immediate past, and the forward looking taxpayers, who see the upcoming budget deficit fiasco, the social security ponzi scheme, the Medicare/Medicaid debacle, the ridiculous underfunding in public and corporate pension funds, the rising city and state taxes, the shuttering factories, the rising unemployment, the plummeting American production base, the “seasonally” upward-adjusted economic data coupled with consistently downward revised prior economic releases, the increasing savings rate and the multi trillion discrepancy in consumer purchasing power. The taxpayers are becoming angrier and angrier at the net present value destruction of future opportunities of being a U.S. citizen, while investors cheer every piece of information (whether or not supported by facts) that provides a push to their current net worth, ignorant of what this may mean for the future. There will come a point where this schism reaches a boiling point, in the meantime, the paradox is that so many of the taxpayers are also investors, who are caught in a tug of war with themselves on what the proper response to the crisis should be: happy as a result of bear market rallies, or sad when they put the facts into perspective.

I’ve felt this coming for about 15 years now, ever since I ran for the school board because I was alarmed with the curriculum standards.  I’m sorry to break it to you guys not in the science area but our curriculum in the US doesn’t even come close to the standards in many countries in Asia.  Even our best high schools are pathetic.  I work with a lot of international scientists who find our math and science curriculums such a joke that they send their kids to Saturday schools just to bring them up to speed.  There is a lot of anger and disbelief at how educators intentionally hold our children back in our schools.  The sad part is that many of our nation’s teachers are not qualified to teach these subjects at a world class level and they know it.  And when I saw this problem emerging 15 years ago, I tried in vain to get curriculum supervisors in my own school district to see the future.  Think of it this way: if you have a country with 2 billion people and even if only 1/10th of 1% of that 2 billion was graduating with degrees in the hard sciences, it would be many, many more scientists than the US graduates.  But it’s even worse than that because NOW, if you are a chemistry major in a US university, your chances of being hired to do chemistry anywhere in this country is becoming vanishingly small.  All those jobs are now going to India and China.

We have spent the last 25 years disassembling ourselves technologically.  We did this at our employer’s encouragement.  Of course, it doesn’t help that most high tech jobs are non-union or that unions have very little power these days anyway.  When it happened to the unions, we were smug that it wouldn’t happen to those of us who had educations.  Those poor steel working shmucks and caterpillar workers were just vanishing dinosaurs.  But WE would be around forever because we were smart. We would in invest our 401Ks and watch the money pile up.

Then came the mergers when research came grinding to a halt for years at a time.  Then came the layoffs that boosted our 401K portfolios and made us cheer.  Then came the endless outsourcing and contractors and contract negotiations that came with oursourcing and contractors.  We spend almost as much of our day hunting down people to do the work we used to do as actually doing the work.  We now have people who were trained to do one thing taking on the upstream work because no one else will be hired to do it.

And the investors whine that no new drugs are being produced and they threaten to take even more work overseas.  And the layoffs will continue until there is no one left except a few project managers who will work part of their year in Hyderabad, fighting the traffic to oversee the work of the Indian PhD’s who will do low level chemistry grunt work for pennies on the dollar.

A year ago, the bulletin board of the  kitchenette on my floor was festooned with anti-tax screeds clipped from the Wall Street Journal.  Now, I’m just as likely to find letters to the editor about how when they lay us researchers off, it would be folly to think we have other opportunities in the Great American Industrial Landscape.  We have none.  When we are let go, that will be it.  There will be no bootstraps to pull ourselves up.  All the capital will have fled elsewhere.

We have eaten our seed corn.

The Rescue of Captain Phillips

Warship USS Bainbridge

Warship USS Bainbridge

Thank goodness for the Navy snipers who were able to take out three of the four Somali pirates holding Captain Richard Phillips hostage. Credit also goes to the crew of Phillips’ ship, the Maersk Alabama, who fought back when the pirates tried to take control of their vessel.

At No Quarter, Larry Johnson, who obviously knows infinitely more than I do about the inner workings of the government, praises Obama for his willingness to step aside and allow the experts to handle the crisis and following the advice of those who know what they are doing.

This AP story says that President Obama twice approved the use of force to rescue Phillips.

The Defense Department twice asked Obama for permission to use military force to rescue Capt. Richard Phillips from a lifeboat off the Somali coast. Obama first gave permission around 8 p.m. Friday, and upgraded it at 9:20 a.m. Saturday. Officials who spoke on the condition of anonymity to discuss internal deliberations said the second order was to encompass more military personnel and equipment that arrived in the Indian Ocean to engage the pirates.

It is clear from the story that Obama didn’t give permission for force to be used until Friday night. Yet the warship pictured above, the USS Bainbridge was in position by Thursday, according this story at Huffpo.

Now I admit that it is difficult for me to give Obama credit for anything. Quite frankly I dislike the man intensely and much as I want him to rise to the occasion and become another FDR, I don’t have much faith that it will happen.

I don’t necessarily think it took that much courage to issue these orders, but I do admit that Obama would have been roundly criticized if something had gone wrong. On the other hand, Friday afternoon, he was already being attacked by right wing talk show and even liberals like me for not using force. So there might have been even more poltical risk if he had decided not to use force.

I just have a couple of questions.

1. Why did Obama wait five days before issuing the order to use force? Why wasn’t there a standing order all along so that the Navy and FBI personnel at the scene could use their best judgment?

2. Why did Obama wait until this afternoon to call Phillips’ family? Couldn’t he have called them sooner just to say that he was doing everything in his power to rescue their relative?

From my observations, Obama’s decisions are always about politics and about what is best for him.
I suspect that Obama had originally given a “no shoot” order in order to avoid the risk of a huge political embarrassment if Phillips were killed or injured in a rescue attempt.

On Friday, Phillips himself tried to escape from his captors and was recaptured by the pirates without any effort by Navy snipers to back up his attempt. After that the political calculus changed. It had been three days, and nothing was happening other than FBI negotiations. After the failed escape attempt, there was more criticism in the media and on-line. At this point, I think Obama faced a greater risk of political damage if he didn’t give permission for the Navy to use force than if he did.

Call me a complete and utter cynic–I don’t mind. But that is how I think it went down. I still give Obama credit for listening to his advisors and allowing the rescue to take place. However, I don’t see the justification for the crowing that is going on at the Cheeto blogs right now. See here and here (WARNING! Don’t click those links unless you want to be transported to Cheetoland).

Next question: how can we make it more politically risky for Obama to keep funneling all our money to the banksters than for him to do the right thing?