I choose The Economist and Obama

ENDORSEMENT: It's time, The Economist, Oct 30th 2008

Talking to an Economist reporter today on an unrelated subject, so good a time as any to remind everyone of my great devotion to this mag. If I was stranded on the proverbial desert island (and I've said this for years), the Economist is the only subscription I'd carry.

This is the clincher for me, even though I voted nearly a month ago.

Obama's task is the great unwinding of the Bush debacle, which Bush himself started these past two years, but which is likely to go four more. If Obama spends his first term unwinding both the financial crisis and the two wars well, then he wins a second term and there stands his real chance to imprint a different world moving forward.

McCain is just not the guy to do the unwinds. I honestly think he'd be a complete disaster, so my expectations for Obama are suitably set: unwind and reset in first term, come out charging like the America the world needs in term two.

Done well, this is one of the great rule-set resets of American and world history.

But no question, the need is great and the time is now and McCain is definitely not the leader for the job.

America's place (and Kagan's and Obama's)

OP-ED: Still No. 1, By Robert Kagan, Washington Post, October 30, 2008; A23

Sender thought I might rebut.

Truth is, I think this was a fabulous piece by Kagan and I agree with it 100%.

Hell, check out my own column this week, and pre-order my book. Stripped of his "league of democracies" notion, which I abhor, I often find myself in very strong agreement with Robert Kagan, whose Dangerous Nation was THE inspiration for my history chapter in Great Powers.

Seriously, an out-of-power Kagan is more than tolerable. He'll quite often be right and the voice of serious reason.

Honestly, my first thought when I saw those pics of Obama reading Zakaria's book, with that title, was, "that's a great way to lose an election."

We are a slightly center-right nation right now, and if Obama loses track of that, he'll be a weak-ass Jimmy Carter in office, especially with all those Clinton-clones hanging around (Bacevich's point in the LAT recently).

(Thanks: Jeffrey Itell)

WSJ for Gates

ARTICLE: Boots on the Ground or Weapons in the Sky?, By AUGUST COLE and YOCHI J. DREAZEN, Wall Street Journal, OCTOBER 30, 2008

Excellent little piece from Cole and Dreazen, who, with Jaffe's book-related absence, are clearly the duo-cream of the crop on defense at WSJ (Jaffe makes it a trio), so having them together in a single piece is a real treat.

The kicker is their end-of-article analysis that says, You give Gates one more year in position and this Leviathan-v-SysAdmin fight could well be settled in the favor of the SysAdmin.

To me, that's the #1 reason to argue and argue vehemently that Obama keep Gates on as a transitional legacy figure during two wars.

It's sort of a gutsy argument for two industry journalists to make openly, and I was surprised to see it out there in the open. I've made arguments just short of that (I don't think I've ever said "keep him" for explicitly that reason, although I've been open in the reason for my praise of Gates), so I really tip my hat to both of them for making that argument openly in print.

Pretty damn cool, actually.

(Thanks: Dean Wakeham)

The three images of this election, in the voter's mind

SPECIAL REPORT: "The three elections: Voters must decide whether the economy, security or 'values' matter most to them," The Economist, 4 October 2008.

Naturally, in the Good magazine piece I wrote on the election, I—the foreign policy expert—went for security, when the norm under the Boomers is economy-versus-values.

The conventional wisdom before the financial crisis is that Obama wins on economics and McCain on security, so values could be the tipping dynamic.

Now all that seems OBE.

An accurate and pithy post-mortem on Bush

COLUMN: "Reaping the whirlwind: George Bush's presidency is ending in disaster," Lexington, The Economist, 4 October 2008.

Killer quote:

The crisis underlined Mr Bush's two biggest personal weaknesses—his leaden tongue and his indecisiveness.

Bush was an incredibly indecisive leader on everything except starting wars. On the one subject where you want calculation and caution, he was bold, but on everything else, he was oddly detached from events until cries grew too great to ignore.

The crueler judgment:

Mr Bush devoted much of his energy as president to forging a lasting Republican majority. But over the past four years conservatives have turned against him on everything from immigration reform to financial management. Far from creating a hegemonic party, Mr Bush leaves the Republicans in the worst state they have been in for decades; riven by divisions, confused about their identity and facing Armageddon at the ballot box.

So how come Karl Rove is a seven-figure author, six-figure TV talking head, and five-figure speech-giver?

This is essentially his great legacy? This is what defines his marketable expertise?

A (minor) change in terminology

A change suggested by a reader a long time back, and a smart one. "Non-Integrating" suggests resistance too much, painting the whole Gap with the intentions of a few. "Non-Integrated" makes it a far less normative condition description.

I have the chance to reset the rule--so to speak--with Great Powers, so I do.

I chill somewhat on the Second Pass

Was going to do the deep read on the first 150 pages today, but realized I would get nowhere mentally without first going through the manuscript and comparing, page by page, the Second Pass with all those marked-in corrections on the First Pass, along with the master list of inserts (55 pages, or one per page) that I submitted to Mark along with all my small fixes. So I spent about seven hours doing that with great care, firing off a bunch of questions to Putnam.

Of the 55 inserts, about 40 got in okay. I now have a smaller file of 10 inserts that consist of seven already submitted (Lexington Green fixes), two that were previously submitted and that I now want to retract (purely my mistakes), and one new one (a Marx citation that was screwed up in the endnotes). So, as far as Putnam is concerned, I've generated only one new insert, that being in the second-to-last endnote.

I marked small corrections in 79 pages, and I would say that Putnam already has the bulk of them in hand (just not inputted in this copy), so that's pretty good.

I anticipate two small inserts in the Preface and probably only one in the glossary, plus whatever I find and/or can't live with in the deep read.

When all is said and done, I can imagine much more than 100-125 mark-ups, but even with that number, you can imagine how much I want to scan the final version one last time before saying goodbye forever.

Anyway, pumpkins to carve...

What I plan next?

The deep read over the next three days.

The Economist's call on presidential candidates' economic plans

THE ECONOMIST'S POLL OF ECONOMISTS: "Examining the candidates: In our special report on the election we analyse the two candidates' economic plans," The Economist, 4 October 2008.

REGULATION AND TRADE: "Changing the rules: The candidates offer divergent responses to the credit crunch and differ sharply over free trade," The Economist, 4 October 2008.

Very ouch, as Austin Powers used to say.

The Economist polls all these economists about McCain and Obama and their economic plans. 70 percent say McCain's plan will be "very bad" or "bad" and almost 50% says Obama's plan will be "very good" or "good."

Who picks the better economic team? 80% for Obama, and about 15% for McCain. Similar proportions for "who has the better grasp of economics" and "for whom would you rather work?"

Most interesting, and explaining some of the skew: a bit over 40% say they're Dems and a bit over 40% say their independent, while only about 10 percent say they're Republican. Those numbers explain why Obama scores so high, but not why McCain scores so low.

As with the election, Obama captures more of the independents.

Can it be that hard for the Economist to find GOP economists? Don't they exist anymore or has 8 years of Bush-Cheney driven them from the ranks?

On the question of future regulation: a wash. About one-third like each and one-third seem to like neither.

But the killer chart to me comes on page 7 of the special report, regarding tax plans much discussed in the debates:

• Under Obama, the top 1% (including me) pay more taxes and the lowest 20% pay less (meaning the top 1% have less after-tax income and the bottom 20% have more); about an 8% loss of income for richest and a 5-6% gain for lowest

• Under McCain, the top 1% pay less taxes (about 2%) and the bottom 20% pay about the same (virtually no change)

Conservatives for Obama

POST: The Top Ten Reasons Conservatives Should Vote For Obama, By Andrew Sullivan, The Daily Dish, 27 Oct 2008

I was serious when I said I voted for the conservative candidate.

Mallaby sees a grand bargain opportunity in this financial crisis

ARTICLE: “Bush to Host World Economic Summit by End of Year: Seeking a conference of ‘developed and developing nations,’” by Sheryl Gay Stolberg, New York Times, 19 October 2008.

THE FINANCIAL CRISIS: “A 21st-Century Bretton Woods: Success at global finance summit hinges on China’s willingness to play role once taken by U.S.,” by Sebastian Mallaby, Wall Street Journal, 25-26 October 2008.

The planned summit was proposed to be a Core-Gap love-in of inclusiveness, but as it shapes up, it’ll be the Old + New Core G-20 crowd, or about 2/3rd of humanity accounting for 90% of GDP.

Fair enough.

Mallaby has a great piece that describes how, in past crises, there is always a smart call for an updating of Bretton Woods, just like every crisis triggers calls for new Marshall Plans.

Some people say we’ve been living with BW-II for a while, which I like to describe as a sort of implicit Marshall Plan by which the U.S. consumer, through high consumption and borrowing, fueled the global economy across the 1980s and 1990s, facilitating the rise of all those emerging market pillars.

So whether you’d date this one as BW-II or BW-III (isn’t this a nicer and more sensible discussion than all that hyperbolic bullshit about World War III or IV?), Mallaby’s basic point is this: this time around it’s the US playing Britain and China playing the U.S. (sound familiar?).

Last time …

Britain, the proud but indebted imperial power, needed American savings to underpin monetary stability in the postwar era; the quid pro quo was that the U.S. had the final say on the IMF’s design and structure. Today the U.S. must play Britain’s role, and China must play the American one.

True enough in established-versus-rising dynamics, but, as Mallaby then points out, the cost to London was far higher than the one we face: the loss of its imperial trade preferences.

I guess you could say we’re going to lose ours too, just not in trade. Rather, we will end up losing our unilateralist war preferences.

The basic point here: China must unpeg its currency, loosen up on its $2 trillion in reserves, and in exchange for all that, we need to bring China into the senior heights of great power control of the global economy.

So duh! There won’t be any “league of democracies” and there won’t be any disinviting the Chinese from the G-20. Instead, there is, in Parag Khanna’s phrasing, the emergence of a G-3 that’s the US, the EU and the PRC.

Good stuff that I have been preaching for years now in the security realm. Now you know the reason why I’ve been so confident and dogmatic on the subject. I’m merely arguing superstructure; the base was already there, waiting to be realized by those clueless up to now.

China, not looking to step up, not ready to step up, but needs to step up—now

ARTICLE: “China’s Economy: Domino or dynamo? China is pretty well placed to cushion a global downturn,” The Economist, 11 October 2008.

ARTICLE: “China Slows, World Feels the Pain: U.S. Government Weighs Stimulus; Chinese Economy Cools Faster as Exports Soften,” by Andrew Batson and Ian Johnson, Wall Street Journal, 21 October 2008.

ARTICLE: “China, An Engine Of Global Growth, Faces A Global Slump: New Strains On Beijing; Strong Economy Vital to West’s Recovery and Communist Rule,” by Jim Yardley and Keith Bradsher, New York Times, 23 October 2008.

China’s most recent quarter reports drop to 9% from previous range of 10-11%, and experts predict a further decline to about 8%, a mark most consider the lower ranger of acceptable growth in China, given everything it’s trying to accomplish.

The culprit is simple enough: decline in U.S. demand. Turns out—as I love to preach—that supply isn’t exactly king-making power in the global economy, demand is.

What do we now define as China’s real and much-needed power in the global economy? Its ability to drive some domestic demand in light of recessionary downturns in both Europe and the U.S. So the focus now is on how Beijing might stimulate domestic demand “in a nation known for high savings rates.”

Time to use that $1.9 T in reserves.

Although China’s banks are overwhelmingly domestically focused, the local stock markets lose 65%. Back when the Asian Flu hit in 97-98, the CCP responded with a huge gov spending spree over 98-00. We should expect to see that occur again.

But since China’s already spent a lot on infrastructure, it’s getting harder to find good projects to spend on, so claims the article.

Hmmm. Morgan Stanley predicted China would spend $8T on infrastructure over the next decade. I would assume the complaint here is about trying to find more to spend.

Time to start sending more credit card offers in the mail, me thinks.

Still, hard to ask China to do too much more. It already accounts for 1/3 of global GDP growth nowadays. There are sheer limits to growth.

One area to improve? China needs to make home ownership easier. You have to put down 20-30% in China, despite a declining ratio of house prices to average incomes over the past decade.

Lighten up, baby! Because nothing credentializes the regime like home ownership. People with stuff to protect like their government more.

As I predicted, Iraq’s oil industries won’t be waiting on the central government deal

WORLD NEWS: “Iraq Opens Door to Foreign Oil Bids, Circumventing Delayed Legislation,” by Guy Chazan, Wall Street Journal, 14 October 2008.

No surprise, as the ROI (rest of Iraq—south of Kurdistan) follows the KRG’s (Kurdish Regional Government) example of letting oil company contracts without waiting on the passage of the much-fabled central gov law.

Interesting set-up: foreign companies get 49% stake compared to local NOC’s 51%, and would recover their costs and earn additional revenue from oil produced above the current levels at the fields. This is not the preferred method for most majors, that typically don’t like service contracts and prefer deals that grant equity in the ground—so to speak (so called “booked reserves”), but it reflects the industry’s evolution as NOCs dominate more and more. Good news: foreign firms can take their profit in either oil or money (cash).

Why do the foreign firms jump? Access to low-cost reserves (meaning cheap to extract) is simply too good to pass up.

Lunching with the loggies

Flew Monday afternoon on NWA through Detroit to Harrisburg PA. Windy and turbulent as all get-out on both flights. Upgrade to free liquor on the second leg helped

They try to make me go to rehab and I say, no! no! no!

You get a few days with no flights and you lose your stomach for all that excitement.

Picked up at airport by nice lieutenant and driven to Wyndam. Decent room and I settle in for a night of work (catching up on huge pile of clipped articles), keeping an eye on the Colts and Titans. I went to the preseason Titan game at Lambeau and wasn't that impressed. Since the combined record of the teams they've beaten so far is way below .500 and since I saw the Colts do to them stuff we did in August and because we handled the Colts so thoroughly, I am fairly optimistic on the Pack's chances in Nashville next week. Since the Titans are still unbeaten, they're ripe to fall and you always welcome the MNF curse. If I wasn't working Great Powers one last time this weekend, I would consider a mad dash.

Up yesterday morning and worked the WSJ map into the brief and then was driven over the Naval facility where I spoke to about 50 officers for 75 minutes with 30 Q&A. Then lunch with a trio, including one who's got the cabin in Bar Harbor ME that I dream about, along with the several boats I want. I told him he was living my life and I'd like it back!

Good interaction. Been a while on the brief (since beginning of month), so great to re-engage. Loggies are always such a smart bunch to work with--very connected on economic reality.

Then driven to Harrisburg and begin the journey home, which drags on until about 10, but I listen to music and keep blogging.

Harder for people to cross the border, but easier for money

BRIEFING: "Good neighbours make fences: America is building a border barrier that is both too tight and not tight enough," The Economist, 4 October 2008.

Arrests are down along the border, owing to a combination of tougher enforcement and lowered economic prospects here.

What does not change over all the up-and-down on enforcement over the past 15 years? The steady climb of the value of remittances from roughly $1B in 1996 to $6-7B today.

Little has changed over the last century and a half. A U.S. government surveyor in 1850 noted the followed:

Labour is cheap and abundant in Mexico. At El Paso, Mexican labourers could be had for sixty-two and a half cents per day, they finding themselves; but men could doubtless be procured at even less price.

Back then, copper mines, today it's industrial ag and construction.

You either deal with the wage differential or the flow continues. It's as simple as that.

Pakistan squeezes the balloon

ARTICLE: Pakistani troops capture militant stronghold, AP, Oct. 26, 2008

Either way you spray, the roaches will shift to the other side of the border, meaning--eventually--somebody commits to the full kill of the unredeemables and the co-optation of the locals you've got to live with.

(Thanks: Jeff Jennings)

Media bias? Waa!

OP-ED:
Media's Presidential Bias and Decline, By MICHAEL S. MALONE, ABC News, Oct. 24, 2008

Ha! There's always a media bias when you lose, and when you court the anti-intellectual, as the GOP is wont to do, then you're mad as hell!

But guess what? Winners always charm the media to a certain extent--even Nixon in '72.

So this is a bunch of whiney, smoke-blowing cry-baby-ism.

What is very clear in today's world is that both the Right and Left have their dedicated media, so it's false to claim a systemic bias. Only the unaware buy that BS.

If anything, people's ability nowadays to live in the media bubble of their choosing make them far too irrational and Manichean in their world views--as in, "If my side doesn't win this election, it's the end of America as we know it!"

Yes, yes, the media's pro-Democrat bias certainly must explain the GOP winning 7 out of the last ten White House elections. No, no, wait a minute! That was "good Americans" overcoming "evil" ones!

Or maybe Americans just vote for who they want, when they want them, and the media's not nearly as all-powerful as it's made out to be. Maybe Americans aren't as stupid as many experts would believe.

End of America? Yet somehow we survive political shift after political shift, this being the sixth in my life. How does the all-powerful liberal media allow this?

But yes, go on and believe in your media conspiracy if you want.

Just go on to another blog where your whining will be tolerated, perhaps even celebrated, for this is the wrong bubble.

(Thanks: Rob Johnson)

The Gap and the panic map

If I go with my norm nowadays and include the Balkans in the Core, and then add in Turkey as well (critical regional mass argument), the match-up with the panic map is awfully close. Forgive Indonesia's contagion because it's a Seam state unlikely to be considered Gap by anybody in a decade's time and you're down to just the island of the emirates (superconnected) buried deep inside the Gap. Appreciate that for the beachhead that it is.

Remember, the map was a snapshot, not a permanent divide. I expect it to shrink and it is. In many ways, then, this might be the best current depiction we can muster.

You map the vectors of contagion and that gives you the outline of the coherent body.

Commensurately, Greenland is totally out mister!

Server problems

Media Temple shut down our account today because of a runaway Movable Type script. But they were having server issues, coincidentally, so it took me a long time to even be able to get to work on it.

I made a minor tweak that satisfied them for now, but we're going to have to do something more robust going forward.

So, sorry for being offline most of today, and thanks for your patience.

I've got emails in to a couple of professional consultants, but if you're a script ninja (re:MySQL interaction) and want to help us out, please let me know!

Wetting your pants in public is embarrassing

OP-ED: The world isn't flat, it's flattened, By Spengler, Asia Times Online, Oct 28, 2008

Good baseline analysis, but hyperbolic to the point of hysterical on the follow-on implications.

To be read as an example of uncontrollable fear-mongering for a column that doesn't usually wet its pants in public.

Kind of embarrassing for the brand.

That's not to say that some of the listed bad things won't happen, just that they won't cause a similar pants-wetting on the U.S. side.

You see an article like this and you realize why only America can really play Leviathan. The rest of the world simply loses it during times of tumult.

(Thanks: Kurt Peters)

Would Al Qaeda prefer McCain?

OP-ED: The Endorsement From Hell, By NICHOLAS D. KRISTOF, New York Times, October 25, 2008

Obama does represent a rhetorical de-escalation of the GWOT, and that will be good. Terrorists are only as important as we choose to make them. Outside of the spectacular kills, their activity will not rise about the white noise of our own networked complexity (and tomfoolery)--such as the current financial crisis.

About time for Osama to issue a tape declaring, "What about me? I'm still crazy!"

(Thanks: Dan Hare)