Chart of the day: China's loosened peg changes little

WSJ story noting that, after China's pledge to ease its peg to the dollar, the yuan has gained a whopping 0.7% over a month. Based on the 2005 de-pegging, no big change as hoped for.

Early judgment, yes, but the first month gives a strong hint that we won't get much relief this way.

The fight for depegging within China has been led by the People's Bank of China, but for now it seems that this view has not won out.

So expect more Congressional threats and some action, after a while.

Next pressure point will be the IMF's review of the Chinese economy.  China and the IMF have feuded specifically over this issue.

Chinese custom meets the FCPA

The Chinese have a wonderful custom of gift-giving, which is why, whenever I go there, I pack a lot of small gifts--especially preferring to give out books.  If you don't, you'll end up feeling weird when your Chinese hosts give you all sorts of gifts at each stop, a lot of it being traditional crafts with company or agency logos attached.

But here's the rule for Americans or any company that lists here: whenever gov officials are involved, to include state-run companies, there are strict dollar limits on the value allowed for gifts exchanged. These limits aren't all that hard to meet, so long as you're not in the serious graft business.

But even in that more exalted realm, US agencies are more vigorously prosecuting violations of the Foreign Corrupt Practices Act (FCPA):

In late June, more than 150 executives from Siemens (SI), the German industrial giant, met in Beijing to discuss compliance with Chinese and U.S. anticorruption laws. That a multinational would spend millions to strategize about avoiding bribery charges in a country where bribery is rampant shows how much business is changing in China.

U.S. prosecutors, empowered by the Foreign Corrupt Practices Act of 1977 (FCPA) to investigate allegations of bribery anywhere in the world, have been stepping up their activities in China, where a tradition of gift-giving in business often degenerates into serious graft. The FCPA bans U.S. companies from bribing foreign officials. It also applies to foreign companies like Siemens that list their securities on U.S. exchanges. Companies that violate the FCPA face millions in fines, and executives can go to prison.

Yes, yes, it's a thin red line that separates pleasant custom from corruption.

Says one former USG official involved in compliance, it's all about "reconciling Chinese customs of entertainment and gift-giving with the culture of compliance."

Beware of enabling middlemen, says the article, because they can get you in trouble.

The more you connect, the more you're subject to the rules--and customs--of others.  I see this rule-set clash going down rather quietly, like the rustling of red envelopes.

The ultimate opportunity insurance policy for your Chinese kid

Interesting NYT story on a nifty trick being pulled off by a China-based consultancy WRT to America's 14th Amendment that says, anybody born here is a US citizen, no matter where the parents come from.

Zhou and Chao, a husband and wife from Taiwan who now live in Shanghai, run one of China's oldest and most successful consultancies helping well-heeled expectant Chinese mothers travel to the United States to give birth.

The couple's service, outlined in a PowerPoint presentation, includes connecting the expectant mothers with one of three Chinese-owned "baby care centers" in California. For the $1,475 basic fee, Zhou and Chao will arrange for a three-month stay in a center -- two months before the birth and a month after. A room with cable TV and a wireless Internet connection, plus three meals, starts at $35 a day. The doctors and staff all speak Chinese. There are shopping and sightseeing trips.

The mothers must pay their own airfare and are responsible for getting a U.S. visa, although Zhou and Chao will help them fill out the application form.

At a time when China is prospering and the common perception of America here is of an empire in economic decline, the proliferation of U.S. baby services shows that for many Chinese, a U.S. passport nevertheless remains a powerful lure. The United States is widely seen as more of a meritocracy than China, where getting into a good university or landing a high-paying job often depends on personal connections.

"They believe that with U.S. citizenship, their children can have a more fair competitive environment," Zhou said.

There are no solid figures, but dozens of firms advertise "birth tourism" packages online, many of them based in Shanghai, and Zhao said the number has soared in the past five years. But he said that many are fly-by-night operations, unlike his high-quality service.

"The customers we serve are very successful and very affluent," he said.

'We are not snakeheads'

Zhou and Chao insist that everything they do is legal, noting that the 14th Amendment to the U.S. Constitution, ratified in 1868, says anyone born on U.S. soil has the right to citizenship.

The environment that allows for "life, liberty and the pursuit of happiness"--still our greatest competitive advantage.

California toques the lead on legal pot!

Economist story on how California always leads with new rules, and always leads on pot, so inevitable the two strains shall meet in this age of stressed state public finances.

Not that America leads the way on decriminalizing pot--far from it.  We're bringing up the rear in the Core.

A bill now working its way in Sacramento:  treat pot just like alcohol.  

I think this is the path we're on.

Much shturm und drang to follow, but I see this happening eventually.

Deutch: don't obsess over the BP disaster; instead look ahead on gas

John Deutch (MIT and former gov bigwig) is the latest to tout the "revolution" on the horizon.  He worries that accidents like BP's Gulf disaster or Three Mile Island (great example) have too much lasting--and negative--impact on US energy policy.

Actually, the entire Core stands to benefit from the shale gas revolution, as it re-empowers a host of countries who previously viewed themselves as energy dependent.

Two huge impacts:  

1. Short-run: gas crowds out coal in electricity generation--crucial for coal-gobbling China especially (although hard to shift percentages when your energy use grows that fast); and
2. Long run: gas becomes more attractive for transportation.

Guess who leads the world in NG use in transpo?

That would be Pakistan, with 2.4m vehicles and 3000 fueling stations.  The US has only 100k vehicles and 1300 stations, meaning gas now accounts for 0.1% of the 12mbd oil we use for transpo.

As energy "independence" arguments go (I usually hate them), this one is pretty sound. 

WPR's The New Rules: Globalization's Staying Power a Triumph of American 'Hubris'

There’s no question that globalization, in its modern American form of expanding free trade, just went through its worst crisis to date.  But while economists debate whether or not we in the West are collectively heading toward a 1938-like “second dip,” it’s important to realize just how myopic our fears are about the future of a world economy that America went out of its way to create, defend, and grow these past seven decades.

Read the entire column, which you can consider my oblique response to Peter Beinart's "Icarus Syndrome" book, at World Politics Review.

See the references for my inspiration on this piece.

China's squeeze play on US software industry

WAPO story by way of WPR's Media Roundup.

Subject is China's squeeze play on American software providers:

Nearly four out of five software applications running on PCs in China have been stolen instead of paid for, the market research firm IDC has found. China has made commitments to the U.S. government to reverse this trend by enforcing intellectual property rights, but IDC data show no discernable progress. Indeed, between 2005 and 2009, the commercial value of stolen personal computer software in China doubled, to $7.6 billion. Roughly half that amount should have been paid to U.S. companies, which could have used the money to hire more U.S. workers and invest in research and development for new products.

With most of this rampant theft occurring in Chinese businesses, the economic impact reaches far beyond the software industry. Software is a critical tool for production in every sector of the economy. Stealing gives Chinese companies an unfair cost advantage over their paying American counterparts.

Beijing late last year compounded matters for the software industry and several others -- from makers of clean-energy technology to producers of telecommunications equipment -- by instituting a heavy-handed "indigenous innovation" strategy that excludes foreign companies from important segments of the Chinese market, such as government procurement, and tries to compel transfers of intellectual property rights for key technologies as the price of market access. This squeezes us at both ends -- shutting many of our innovative products out of the market and stealing the rest.

The industry is fighting mad and pushing the Obama Administration for a generalized get-tough stance that avoids the past tactic of complaining about one trade obstacle, only to have it removed and replaced by a new one two steps over.

The hope?  Correcting the relationship like we did with Japan previously:

In Japan, for example, software theft was pervasive in the early 1990s -- accounting for two-thirds of all PC applications. In little more than a decade, however, thanks to public education and a strong judiciary system, the piracy rate there has dropped to 21 percent, a level on par with that of the United States.

So a discouraging and encouraging message at the same time. Nice piece.

Old acquaintance/colleague Igor Sutyagin freed in "spy swap"

Igor Sutyagin was an arms control researcher at the USA and Canada Institute, which has had a close relationship to my old employer, the Center for Naval Analyses, since Cold War's end. As a result, when I was sent over to Moscow in 1995 to consult with Russian naval flags on the future of U.S.-Russian naval cooperation, Igor was my handler/guide to facilitate meetings.  I found him to be a most excellent fellow and diligent researcher. He was later accused of spying for the US and was clearly railroaded into a conviction in 2004. Word was he suffered mightily in prison, health-wise, so I know everybody who cared about him is ecstatic to hear about his release and wish him well in his new life.

Because what goes around, comes around

Couple of WSJ stories.

Beijing lets Google keep a toe-hold in China while Baidu’s grip on domestic searches reaches dominance level at nearly two-thirds.

Still, the Party does well by not shutting out Google completely, because soon enough, Western markets will retaliate more fully against would-be entrants like telecom equipment provider Huawei, which is already fighting an uphill battle in India.

The more China plays this game at home, the more it will face the same abroad.

The cyber "shield" in the making

WSJ story on planned federal government initiative "Perfect Citizen" to detect cyber assaults on private companies and gov agencies running critical infrastructure.  Naturally, it will be a vast and expanding program--a la the WAPO series by Priest and Arkin.

The surveillance by the National Security Agency, the government's chief eavesdropping agency, would rely on a set of sensors deployed in computer networks for critical infrastructure that would be triggered by unusual activity suggesting an impending cyber attack, though it wouldn't persistently monitor the whole system, these people said.

Defense contractor Raytheon Corp. recently won a classified contract for the initial phase of the surveillance effort valued at up to $100 million, said a person familiar with the project.

An NSA spokeswoman said the agency had no information to provide on the program. A Raytheon spokesman declined to comment.

Some industry and government officials familiar with the program see Perfect Citizen as an intrusion by the NSA into domestic affairs, while others say it is an important program to combat an emerging security threat that only the NSA is equipped to provide.

Hard to argue against some government effort to surveil the critical infrastructure domain, and hard not to see the effort stay fairly secret, because as I learned with Y2K, the critical infrastructure industry isn't exactly interested in advertising its vulnerabilities.

To repair infrastructure, US must seek foreign $ & partners

FT story that states "US antipathy to foreign investment in its infrastructure threatens to deprive the country of much-needed capital as a time when state and local governments are struggling with rising deficits."

So warns legendary Felix Rohatyn, famed Lazard banker.

Great quote:

This dislike for foreign ownership is Kafka-esque; much of our country was built on foreign capital.

True enough: we were the rising China of the 19th century and got ahead with tons of foreign direct investment.

Recent polls say Americans are 80% opposed, because, I would surmise, the question is always framed in terms of foreign ownership rather than crumbling infrastructure.

Experts say we ned $2.2T in upgrades and repairs in the next half-decade alone.  Meanwhile, lots of cities are pressing ahead with privatization schemes, but even when US financial entities are involved, these efforts have a checkered history.

The succession is well underway in NorKo

FT full-page "analysis" on recent going-ons in NorKo, as bodies continue to wash up in this succession crisis.

Gist:  Kim Jong Il is clearing out his politburo to stock it with loyalists for his son, Kim Jong-eun, the "young general" (as he is now touted) who needs military "victories" to prove his worth--hence the recent sinking of the SouKo warship.

But since all the major players (SouKo, China, US) are loath to confront Kim on what will likely become a lengthy pattern of increasingly provocations, we should expect them to continue for quite some time.  

And with the ludicrous public promise of making NorKo a "mighty and prosperous nation" by 2012 hanging out there, foreign demons will have to be slain to explain the inevitable shortfall.

The only real variable in the equation is China becoming unhappy enough with these shenanigans to stop using its UN Security Council veto to shield the regime.  Other than that, we're waiting on the Romanian scenario, by which a cabal of senior NorKo officials move against Kim Jong-eun once the old man dies.

India's pharma industry grows up

NYT story on how India's pharma industry is both moving up the ranks and consolidating its position as a low-cost manufacturer. The development recalls Andy Grove's arguments about losing manufacturing and thereby losing the long-term innovation edge. This piece gives you the sense of how hard--if not impossible--it will be to stem such losses in existing mature industries, which says we do best to follow his advice in new industries.

The gist of the piece:

India’s drug industry — on track to grow about 13 percent this year, to just over $24 billion — was once notorious for making cheap knockoffs of Western medicines and selling them in developing countries. But India, seasoned in the basics of medicine making, is now starting to take on a more mainstream role in the global drug industry, as a result of recent strengthening of patent law here and cost pressures on name-brand drug makers in the West.

And while the Indian industry has had quality-control problems, it nonetheless benefits from growing wariness about the reliability of ingredients from that other historically low-cost drug provider — China. The United States is India’s top export customer for drugs.

India is becoming a “base for manufacturing for the global market,” said Ajay G. Piramal, the chairman of Piramal Healthcare, a drug maker based in Mumbai. Eventually, in Mr. Piramal’s perhaps overly optimistic forecast, only the very first and very last steps of the business — molecular drug discovery and marketing — will be run by the West’s global drug giants.

Those companies “don’t create much value” in the steps in between, he said.

It is not only Indian executives, though, who are bullish about the pharmaceuticalsindustry here. Analysts, research groups and consultants have been making similar predictions in recent months.

Big pharmaceutical companies have come calling, too. This year, Mr. Piramal sold his generic drug business to Abbott Laboratories for $3.7 billion, the latest in a string of takeovers and joint ventures here.

Like China, India seeks to move up production chains as rapidly as possible:

The shift to pharmaceuticals is part of a subtle, broader shift in the Indian economy. Moving beyond less sophisticated, outsourced services like telephone call centers, India has been advancing up the business value chain, particularly in law and medical diagnostics. Now it is showing a flair for manufacturing, particularly in goods demanding high-skill production and superlow prices.

Which says we have no alternative but to do the same.

The outdated rule-set that governs the most important trade relationship in the world

FT "analysis" full-pager on US-China trade by Alan Beattie. Starts by noting China's slight loosening of the yuan's peg and says this won't change the relationship all that much.

Then the key point:

With discontent rising across American business, fuelled by incidents such as the Google China censorship spat, Washington is recognising to its intense frustration that it lacks the instruments to conduct international trade policy in a modern economy.

“China is distorting global trade and investment patterns with a web of state-sponsored industrial policies,” says Jeremie Waterman of the US Chamber of Commerce. “The tools the US government has are inadequate to cope with this interlocking web.”

The old-fashioned architecture of US trade policy largely reflects the metal-bashing economy of the past. It is predicated – as is the focus on the exchange rate – on its manufacturers competing head-on with Chinese companies, particularly in the American market.

The US has a panoply of “trade defence” instruments – antidumping, countervailing duty and safeguard measures – that allow it to block imports it deems unfairly priced, state-subsidised or flooding in too rapidly. One such tool was used in September last year to restrict Chinese tyre imports, provoking a storm of protest from free-traders.

But the goods to which the US applies such measures are mainly basic, low-margin industrial components in which American competitiveness is being eroded against many countries. The list hit with trade defence protection in recent months does not read like a tour of America’s economic future: drill pipe, phosphate salts, coated paper.

Francisco Sánchez, undersecretary for international trade at the Commerce department, notes such products cover less than 3 per cent of US trade with China. Yet because the industries are long established and often have powerful labour unions, they exert disproportionate control over trade policy. When China joined the World Trade Organisation in 2001, the negotiators’ focus was on goods such as these, and particularly the eternally controversial area of garments and textiles.

The problems started after China joined the WTO and the the government protectionists were given more free reign under Hu and Wen, who, when they came to power, saw that few Chinese companies were predominant in the high-tech local markets and wanted to change that.

From the piece:

Beijing says it is merely trying to do what other countries have done – modernise its economy, ascend the value chain and ease away from dependence on foreign companies for investment and technology.

But US companies say “indigenous innovation” goes way beyond familiar problems with software and movie piracy, and amounts to a full-blown system of government manipulation of large swaths of the economy.

Procurement is used to favour Chinese companies. Idiosyncratic technical standards such as a home grown wireless technology – “Wapi” – are given a clear run by denying licensing to more familiar international standards. Information, communication and technology companies complain about restrictions, such as requirements for products to be certified and tested in government laboratories, and for businesses to disclose source code.

Alarm about this is rising to the point where business representatives are increasingly prepared to criticise policy publicly. “We are feeling less and less welcome in China, which is why you are seeing more people speaking out and reconsidering their futures in China,” says John Neuffer of the Information Technology Industry Council.

Last week Jeffrey Immelt, chief executive of GE, expressed his growing concern about Beijing, telling an audience of Italian executives that “I am not sure that in the end they want any of us to win, or any of us to be successful”.

So the question for the US is, How to keep China's markets reasonably open for US company penetration while China seeks to fence those areas off for its own national flagships?--not exactly a new trick, I would add. Our trade instruments don't cover that scenario, the article argues.

How about suing China in the WTO?

But this strategy costs time and effort, and is not a cure-all. After the two or three years it can take to bring and win a case and an appeal, the remedy often comes too late. In the car-parts case, US business experts say, the delay gave Chinese industry more time to develop and American industry to weaken, foiling the goal of allowing US car-parts companies export significant quantities to China. Mr Neuffer notes that dispute settlement is even slower for high-tech industries, where product lifecycles can be less than a year.

In the end, no easy answer avails:

There are no strong rules about promoting competition in markets in WTO agreements. There is an agreement whereby governments commit to put public purchases of goods and services out to international tender but China has never signed.

“Government procurement in China is actually much more important to the American and European economies and companies [than issues such as textiles], but much less effort was put into getting China to join,” Mr Horlick says. China says it will make an offer to sign up this month but appears to have ruled out including regional and local government and state-owned enterprises, thus punching huge holes in any new commitment.

Debbie Stabenow, Democratic senator from Michigan, has proposed a bill that would cut China off from US government procurement if it does not open its own market. But few investors seem to think that would make a tremendous difference. Rules such as the “Buy American” provision already restrict China from bidding for some government contracts, against which Beijing has in turn complained.

So expect this relationship to remain tense as we seek to increase our exports in the face of Chinese efforts to dominate their own domestic market.  It would seem that the only way we're going to correct a trade imbalance with China is to restrict their exports--a tricky path with someone who owns so much of your debt.

A funny thing happened on the way to rising China

pics here

WSJ story on how Russian oil previously thought destined for China is ending up in US oil refineries stretching from Puget Sound down to LA.  Imports have gone from zero to 100k bpd (barrels per day) overnight, leading to downward price pressure in usually high-priced CA.

Experts expect Russia to become a serious source of oil for the US, which seeks to diversify and recover lost flow from declining Mexico.

Soon enough, some of the flow of the multibillion-dollar Eastern Siberia-Pacific Ocean pipeline will be diverted to China in a spur yet to be completed.  By 2013, Russia's flow to China is expected to rival that of Saudi Arabia's, or roughly 1m bpd.

Rising India(n)-American politicians

WAPO story on the growth in Indian-American involvement in politics.  The rise of this group has been stunning, but hardly atypical:

The nation's 2.5 million Indian Americans rank among the most highly educated ethnic groups in the United States, according to Census figures, and they have the highest per-capita income.

Although the community leans Democratic, according to a 2009 survey by the Asian American Legal Defense Fund, its wealth has attracted aspiring candidates of both parties.

Individual donors connected to Teppara's council have given hundreds of thousands of dollars to Indian American conservatives and other Republicans, he said. Democratic candidates get financial support through the decade-old Indian American Leadership Initiative. That group has endorsed both congressional and local candidates this year, and late last year it formed a political action committee, which has raised $100,000.

The money "obviously" makes a big difference, said Sanjay Puri, chairman of the nonpartisan US India Political Action Committee, which raised $75,000 in the first quarter of the year and $300,000 in 2008 to support Indian American candidates and others who have pro-India views. "The money is there. The candidates just have to prove that they are credible."

In a word, economic success breeds money breeds influence breeds the ambition to play the political role yourself. This trajectory has been the same, ethnic group after ethnic group, throughout US history.

The Indians have just done it faster, thanks to globalization speeding up the cycle considerably.

Still, stunning to witness.  I remember my first glimpse:  seeing Hindu temples go up in northern VA. I had never a church being built before, because, like most people, I came from a place were churches--seemingly--always were.  I remember thinking to myself then, If they've got money for new churches, then political candidates can't be far behind.  A decade later, they started to win, and just five years after that, we see the wellspring take off.

Grove on what it will take to generate new employment in the US

Bloomberg Businessweek piece by Andy Grove, legendary retired CEO of Intel.

Basic point:  tech start-ups can't create enough jobs, as proposed by Thomas Friedman recently in the NYT.  

Reality of the tech world:  for every high-tech job in the US, there are ten connected manufacturing ones in Asia, like all those Foxconn workers cranking out iPods.  Also, over time, it takes a lot more money to create even those high-tech jobs we keep.  An HP could create a job for less than $10k back in the 1950s (when it did its IPO), but a Google today spends roughly $100k per new job.  

Grove:  "The obvious reason:  Companies simply hire fewer employees as more work is done by outside contractors, usually in Asia."  This results in Foxconn employing more people than Apple, Dell, MS, HP, Intel and Sony combined.

The same has happened with alternative energy.  Good example: we stand on the verge of mass production of electric cars and trucks, meaning lithium-ion batteries are to electric vehicles what microprocessors are to computing, but we basically abandoned any attempt to lead the world in that sphere three decades ago when we stopped making consumer electronics devices.  Grove doubts we can ever catch up now.

Groves passionate call is for America to begin once again valuing manufacturing and not simply give into the notion that, so long as we retain the knowledge work, we can stay current.  His point is that there is much innovation to be found in the challenges of manufacturing:

Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution.  As happened with batteries, abandoning today's "commodity" manufacturing can lock you out of tomorrow's emerging industry.

His prescription:  "job-centric economics," because "losing the ability to scale will ultimately damage our capacity to innovate." Thus we need to "rebuild our industrial commons" even to point of taxing the offshoring of jobs.

As someone not given to such arguments, I found this powerful in its logic, especially as we consider biotechnology.

WAPO's "Top Secret America"

First chunk of what will clearly be a large series flow of information, and certainly an accompanying book from Dana Priest and William Arkin at the Washington Post.

The general theme is, "Be amazed at how big our secretive defense world is!"  Also, "Look how big it has grown since 9/11!" Finally, "Much of this work is redundant, useless in its overwhelming flow, and no closer to dot-connecting than before 9/11!"

All valid points but all also painfully predictable and well known. So the charges aren't particularly new or revealing, even as the great flow of anecdotes are well designed to make you especially anxious and frustrated.  I would expect tons of air time for the duo, lots of op-eds bemoaning the details revealed, and the usual congressional grumblings.

But not a lot of positive action in reply.

Two bits caught my eye:

The overload of hourly, daily, weekly, monthly and annual reports is actually counterproductive, say people who receive them. Some policymakers and senior officials don't dare delve into the backup clogging their computers. They rely instead on personal briefers, and those briefers usually rely on their own agency's analysis, re-creating the very problem identified as a main cause of the failure to thwart the attacks: a lack of information-sharing.

This is why briefers ruled before 9/11 and it's why they still rule. The flow of info is too great for the system to handle.  So the "just-tell-me-what-I-need-to-know-right-now" principal relies primarily on whomever does the all-purpose daily or weekly brief.

Second, befitting all "electronic-Pearl-Harbor-is-right-around-the-corner" media flow:

And all the major intelligence agencies and at least two major military commands claim a major role in cyber-warfare, the newest and least-defined frontier.

"Frankly, it hasn't been brought together in a unified approach," CIA Director Panetta said of the many agencies now involved in cyber-warfare.

"Cyber is tremendously difficult" to coordinate, said Benjamin A. Powell, who served as general counsel for three directors of national intelligence until he left the government last year. "Sometimes there was an unfortunate attitude of bring your knives, your guns, your fists and be fully prepared to defend your turf." Why? "Because it's funded, it's hot and it's sexy."

This is why the problem, which existed long before 9/11, gets worse inexorably over time:  the latest crisis du jour becomes simply the newest layer of effort added on top of all the rest (in PNM, this was my explanation for how America's "national security interests" mushroom over time).  Nobody and nothing ever get downgraded or truly eliminated because, once created, they take on a life of their own, with all sorts of bureaucrats and contractors protecting their programs.  My favorite example is missile defense, which is now being touted in op-eds as our great response to North Korea and Iran.  Not exactly how it started out, but heh, you work with what life gives you.

I don't mean to pooh-pooh the piece, which is very good and certainly rare enough in these days of tight budgets in the MSM.  I just find the target too easy and too big, and, as I said above, I don't think this kind of reporting stands much chance of having any real impact because the whole long war mindset regarding transnational terrorism is too strong to crack right now, both for legitimate and illegitimate reasons. Everybody will decry all right, but nothing will be done.  Even with the push to cut defense by untold billions over the next X years, a lot of this stuff will remain sacred.

And that's a shame, but the reporting here is all accurate.  It's too big, too redundant, and too useless to justify the resource diversion.  The investment should be in resilience in the face of bad things happening in this complex world, not intelligence fantastically tasked with preventing bad things from happening in the first place.  There's real money to be made in the former, and way too much to be wasted on the latter.

I second that emotion

WAPO story on effects of the Great Recession in terms of employment and wages:

The recession has directly hit more than half of the nation's working adults, pushing them into unemployment, pay cuts, reduced hours at work or part-time jobs, according to a new Pew Research Center survey.

I can honestly say that every single one of those things has happened to me in the last year: losing jobs, pay cuts, and reduced workload.

I survived by having lots of jobs in the first place and replacing those I lost.  

One thing I learned with Emily's cancer:  never rely on a single paycheck.

The beginning of the end of ethnic identity politics

An argument that says Obama was less the breakthrough than the political codification of a lengthy demographic transformation that encompasses my nearly five decades of citizenship.

If anyone still doubted, after President Obama’s election, that candidates are no longer prisoners of their race or ethnicity, then South Carolina’s Nikki Haley offers further proof. Ms. Haley, 38, was born Nimrata Nikki Randhawa, the daughter of Indian Sikh immigrants. Now she is the Christian, Republican nominee for governor in a state with a brutal history of racial oppression.

What’s notable about Ms. Haley’s campaign, like that of Mr. Obama and other candidates, is not just that she has breached a racial and cultural barrier, but that she doesn’t feel the need — or the desire — to talk much about it. “I love that people think it’s a good story, but I don’t understand how it’s different,” she recently told The New York Times. “I feel like I’m just an accountant and businessperson who wants to be a part of state government.”

Such reticence probably reflects the complicated set of expectations imposed on candidates like Ms. Haley. (Gov. Bobby Jindal of Louisiana, who is Indian-American, and Gov. Deval Patrick of Massachusetts, who is black, also come to mind.) We are attracted to the idea that they have transcended ethnic boundaries and reaffirmed the American ideal.

At the same time, we do not expect them to dwell on their stories in the way that ethnic candidates of a previous generation routinely did. And so we create a more diverse politics that is in some ways more cautious and anodyne, too, increasingly populated by candidates who are easy to support but harder, perhaps, to really know.

To understand what has changed, think back 40 years or so, when a generation of ethnic, white candidates — Democrats, for the most part — were rising up through urban political machines. Politics then was delineated primarily by economics; if you were the working-class child of, say, Irish immigrants, chances are you had a lot in common, politically, with struggling Italian and Jewish voters in your district, too.

There was an advantage, then, in drawing attention to your journey, through anecdotes and jokes that served to underscore the universality of the immigrant experience. Take, for instance,Michael S. Dukakis, the Democratic nominee for president in 1988, whose story of Greek immigration so defined his political career that the comedian Jon Lovitz immortalized it in a line from one of the more enduring impersonations on “Saturday Night Live”: “My parents were little people. Little, swarthy people.”

Whenever I watch historical movies with my kids, I am constantly forced to explain that a lot of what they see in them, in terms of social mores, were the way things were throughout most of history (especially the treatment of women) and that the vast majority of social equality has been achieved really in only the last half century or so.

And yeah, I don't think that's a coincidence.  America becomes a global superpower and we see radical change result and spread throughout the system, to include powerfully positive feedback to the US itself (for example, we don't deal with civil rights until after we expose our population to the world so fully in WWII and then realize how backward we remained on that subject).

Another thought triggered:  Obama running for re-election will widen the door even further, because almost anyone from any background can take him on and conceivably win.

Which has me thinking seriously about Michael Bloomberg.