West Hemisphere way behind on integrating intra-regional trade

Per the 10 March Economist editorial on Latin America's growing fears about being recaptured by China as just a source of commodities (deindustrialization) and per the recent Wikistrat sim on North America's Energy Export Boom where we discussed, in one master narrative, the notion of NAFTA using the lure of cheaper and cleaner energy to re-energize the Free Trade Area of the Americas initiative.

Now, you have to understand that this chart is misleading, because it counts intra-EU trade while not counting interstate trade within the multinational union known as the US.  If the stats were equalized on that scale, then the NorthAm numbers would be unreal.

But larger point about Latam's numbers being small (and presumably the W Hem numbers being commensurately low) is valid.  The US and the rest have not made the regional trade integration effort that is possible here, as South America is beginning to recognize its mistake is not pursuing FTAA.

People will paint this as de-globalization, but it's not a binary choice.  Globalization tends to push regions to up their regional integration for all sort of reasons, the primary one being the title of the editorial here: "unity is strength" in trade negoations.

But the long-term advantage here is substantial: if you want to grow, then you want to have high trade flows with faster-growing neighbors first and foremost.  China is doing that in SE Asia but US is not doing the same in W Hem, thus the strategic impulse now to go after things like reviving FTAA.

The oil renaissance in the Western Hemisphere

Bunch of big ads run by Cambridge Energy Research Associates (CERA) in the WSJ last week. All part of its annual confab of industry biggies.

The most interesting factoid to me was the rise in liquid fuel production in the W Hem from 2000 to 2020: from 12.2 million barrels a day to 19.6.

With conventional oil decreasing in both US and Canada, the three reasons for the up-tick are "tight oil" production in the US, oil sands production in Canada and Brazil ramping up new production. US will be up over 10mbd - just barely - come 2020, with about 1/4 coming from unconventional sources.

Don't export US natural gas!

Also per the recent Wikistrat simulation, a weird alliance of environmentalists and the US chemical industry getting together to try and put a halt to ambitious plans to export natural gas as LNG (liquid natural gas), something that big buyers like Japan are lobbying to see happen.  The enviros don't want all the greenhouse gases released by fracking (mostly methane), and the chemical companies want all that cheap gas to be hoarded by the US economy to keep its feedstock flow as cost-advantageous as possible (ultimately allowing that export profit to be somewhat hoarded by the chemical industry).

If all the planned LNG export facilities were built, as much as 1/4 of US nat gas production could go abroad.

We are now 7 years past when Fed Reserve Chairman Alan Greenspan warned Congress that America needed to build more import terminals.

Peak this!

The displacement effect of all that new US natural gas

See it already in how natural gas deals are proceeding internationally: the flow out of North America alters things, regionalizing flows more as Japan and Germany move off nukes and seek to ramp up their use of gas to generate electricity, and as emerging markets in general ramp up their gas use.

But another displacement raised in the recent Wikistrat crowd-sourced online simulation on the North American Energy Export Boom was the notion that the long-term abundance of cheap gas in NorthAm would encourage a crowding out of oil in transportation:

• Encouraging hybrids by making electricity cheaper long term;
• Enabling more direct natural gas fueling of vehicles (typically trucks); and 
• Pushing refiners to take NG, process it into syngas and then into gasoline.

WSJ story cited here:" "Natural gas to power pickups." US auto makers introducing trucks powered by NG "as they look to catch the growing wave of interest in the fuel as an alternative to gasoline." So here we're talking either pure compressed natural gas (CNG) or vehicles, like the one Chrysler is working, that will run on a combo of gasoline and CNG.

Exciting stuff.

North American energy boom attracting Chinese investment

Per the recent Wikistrat online crowdsourced simulation on the North American Energy Export Boom, one of the summary conclusions was that China should aggressively invest in the US fracking industry (tight oil, shale gas). While the US attracts only a tiny share of China's total global FDI (foreign direct investment), when you look just at investments in oil and gas, recently North America has become the biggest Chinese target ($20B or so since onset of global financial crisis).

The key to overcoming US political concerns:  keeping it to a minority investment.

Most estimates have Chinese shale gas reserves as equal to that of the US and Canada combined.  Canada is #7 in the world and the US is #2.

The quintessential deal in the works:

Chinese firms now are attempting to negotiate partnerships with FTS International, a Fort Worth, Texas, company that specializes in hydraulic fracturing, a process used to extract energy from shale, according to one person familiar with the matter. FTS, which is owned by Chesapeake [already in deals with Chinese firms] and a consortium of Asian investors, would use proceeds from any deals to expand internationally, this person says.

That is right out of the win-win scenario ("Cooking with Gas") from the Wikistrat sim: encourage Chinese investment so super-energy hungry China can dramatically upgrade its capabilities and tackle its own shale gas challenge, but do so in a way that accelerates the internationalization of the US fracking technology via US firms.

WPR's The New Rules: U.S. Needs Chinese Partners in Asian Century

While America has begun an economic recovery of uncertain strength and staying power, we Americans nonetheless face a far longer-term and more substantial national rebuilding project. This daunting task has placed us in a contemplative space, in which we nervously toggle between bouts of renewed self-confidence and crippling self-doubt. But the same thread runs through both cycles of this national bipolar disorder: the assumption that we must bear this burden alone.

Read the entire column at World Poliics Review.

WPR's The New Rules: The Coming War With Iran

While the debate over whether Israel will strike Iran ebbs and flows on an almost weekly basis now, a larger collision-course trajectory is undeniably emerging. To put it most succinctly, Iran won't back down, while Israel won't back off, and America will back up its two regional allies -- Israel and Saudi Arabia -- when the shooting finally starts. There are no other credible paths in sight: There will be no diplomatic miracles, and Iran will not be permitted to achieve a genuine nuclear deterrence. But let us also be clear about what this coming war will ultimately target: regime change in Tehran, because that is the only plausible solution.

Read the entire column at World Politics Review.

Obama says US wants Chinese FDI, but East Asia needs AirSea Battle Concept too!

What's wrong with this picture?  It comes from a WAPO article that says China is still wary of putting FDI in US, even though Obama claims he wants it for job creation.

Hmmmm.

Where to begin?

AirSea Battle Concept?

New national security strategic guidance that says US military force-sizing should be toward high-end warfare requirement in East Asia - namely China specifically?

Gosh, you wonder where the Chinese feel like we let national security fears trump economic opportunities.

I mean, shouldn't we be able to take their money AND target them for great-power war down the road?  What's so weird about that?  According to Kagan, everything you need to know about China and America is told in the fable about the frog and the scorpion.

This is not the world America made; these are merely the fears we prefer over change - and it's fairly pathetic.

From a Wikistrat crowd-sourced simulation: North American Energy Export Boom meta-scenarios

These are the four master narratives that got fleshed out in the first week of the Wikistrat simulation looking at an unfolding/future North American Energy Export Boom.

We went into the exercise with the four implied "bins" of the X-Y:

1. The lose-lose of North America getting the revolution "wrong" by getting the rule-set wrong (too restrictive out of environmental fears or too loose out of greed) and the Rest of the World either contributing to that outcome or exploiting it for their own equally short-term mindset.
2. The lose-win of NorthAm getting it "wrong" and the ROW drilling ahead anyway, "winning" on terms they find acceptable enough, even if NorthAm might define them as a loss.
3. The win-lose of NorthAm getting it "right" but doing so in such a way as to set off a destructive global competition toward that end; and 
4. The win-win of North-Am getting it "right" and triggering a virtuous QWERTY effect where the world benefits similarly.

The Wikistrat crowd came up with about two dozen scenarios, each filled out to the tune of several hundred words spread across about ten fields that explored their up- and down-sides, uncertainties, risks, etc. At the end of that first week, I thereupon read through everything (after commenting all the way during the week) and binned the two dozen into plausible pathways (roughly the order portrayed above in the bullets per bin). Then, taking all those precursing, in-situ and downstream scenarios in hand, I rethought the original notional master narratives, naming them thusly:

• The lose-lose lower-left scenario becomes What the Frack??#*!, suggesting a rude surprise and significant disappointments and a sense of having one's dream destroyed by circumstances beyond one's control. As a stream, it involves a Euro crash delaying investment flow, thus delaying development and allowing negative environmental evidence (water contamination and seismic activity chief among them) to mount. Then you get the environmental counterattack, as the Not In My Backyard Types declare their opposition (Build Absolutely Nothing Anywhere Near Anything). The "Erin Brockovitch" fights thus begun, foreign competitors swoop in to both steal the technology and complicate its local application through "lawfare" campaigns designed to keep the fracking revolution bogged down in courts for years. By the time all the legal dust settles, what the energy industry can actually exploit in terms of resources is far less than originally imagined, yielding a "red queen" sort of outcome (running in place) where the additional supply tapped is quickly swallowed up by growing domestic demand and the fabled export boom never quite occurs.
• The lose-win master narrative is dubbed, The Gas is Always Greener on the Other Side of the Fence, suggesting that, no matter how if unfolds in NorthAm, it seems to go better elsewhere in the world. In NorthAm, a compromise emerges between industry and enviros: short-term regulations allow for a fairly permissive situation but mid-term data collection ensures a legal/regulatory showdown down the road. This situation creates an overall market uncertainty that allows a certain amount of macro-questioning to unfold: Are we trading gains in CO2 emissions (coal to gas on electricity) that are just ruined by releasing more greenhouse gases instead? The NorthAm effort diverges as Canada, less fussy and more greedy in its mindset, moves aggressively to connect its unconventional reserves to Asia and NorthAm industry players decide it's easier to experiment more aggressively abroad, leading to a quick global spread of the technologies. Over time, we witness more desperate Europe (fearing Russian dependence) and Asia (fearing dependence on EVERYONE!) actually moving ahead more successfully with the revolution, with the latter suffering exacerbated water difficulties as a result. In the end, the US, desperate at the lost lead, moves toward national energy companies (public-private partnerships) to try and catch up.
• The win-lose scenario is called, Fits of Peaks, suggesting both more great-power contentiousness (fits of pique) and destabilizing shifts in global energy profiles (akin to the imagined "peak oil" in supply, but here in terms of demand). In this narrative, the US is especially creative in setting up enclaved experiments (the example of letting Native American reservations do things that states cannot) that get around the usual environmental rule-sets. Here, Mexico becomes its own big NAFTA experiment, as the political system there, desperate over PEMEX's decline in oil, sets up a sister national energy company to pursue the fracking revolution and that entity becomes a magnet for investment and aggressive experimentation. Sensing a way to push the Free Trade of the Americas idea, the US uses the lure of cheap energy cooperation to reach out to Latin America in a geostrategically defensive move (good-bye Carter Doctrine focus on the Persian Gulf, and welcome back Monroe Doctrine's historical ambitions regarding the Western Hemisphere's economic and political integration). Yes, OPEC tries to fight back by keeping oil prices low, but the fracking revolution's main impulse (natural gas) still takes off magnificently, giving America a newfound geostrategic confidence that allows it to press China all the more on the negative aspects of its rise in East Asia. The Middle Kingdom, in turn, sensing that America is aggressively organizing the Western Hemisphere to its long-term economic advantage, attempts the same in East Asia. Thus, in an attempt to stave off one sort of strategic vulnerability, the US amplifies another, making this the "be careful what you wish for" scenario.
• The win-win scenario is called, Now We're Cooking with Gas!, which is actually the old marketing catch phrase used in late-19th century America when pushing natural gas stoves as an ungrade to old wood-burning ones. More generally, the phrase has come to refer to a process that has experienced a significant increase in efficiency. Here we talk about the US and Canada coming together to finesse the environmental challenges in a responsible manner, allowing their companies to promote the technology worldwide to their own market advantage. As a result of the long-term boom in incredibly cheap natural gas, King Coal is dealt a death blow first in NorthAm and thereupon globally, as there's now no economic reason for not building gas-fired electricity generation plants almost exclusively (raising the question of what happens to nukes?). Over time, natural gas becomes so plentiful and cheap globally, that a portion of shale gas is siphoned off to gasoline production, so that even the gas-combustion half of hybrid cars are sourced by natural gas - in addition to the electricity part. This development proves a boon for the swapping out of pure gas-combustion automobiles with hybrids and natural-gas fired mass transportation vehicles. Over time, the explosion of cheap energy redefines the North American economic scene, leading to an industrial renaissance and a rebuilding of America's manufacturing industrial base. It also boosts NorthAm's competitive advantage in agriculture, befitting an increasingly voracious global middle class as global climate change stresses crop production in many of the world's emerging economic regions. In the end, all that academic speculation about looming "resource wars" proves to be just that, and the fracking revolution, well-played by North America, is the primary reason why.

Now, with the first week's scenario drill completed, the community moves on to brainstorming and competing their ideas regarding how this range of master narratives could impact the strategic interests of our six main characters: US (NorthAm), EU, China, India, Russia and Brazil.  Naturally, the fate of OPEC will loom throughout the proceedings.

The simulation thereupon unfolds over a third week that focuses on generating strategic options for the six pack of players.

WPR's The New Rules: Slouching Toward Great-Power War

Arguably the greatest strategic gift offered by America to the world over the past several decades has been our consistent willingness to maintain a high and hugely expensive entry barrier to the “market” that is great-power war: first by deterring outright war with the Soviet Union during the Cold War, and then by maintaining a lopsided and unipolar military superiority in the post-Cold War period. However, a case can be made that in recent years, the greatest threat to this enduring component of global stability arises from within the United States itself -- namely, a national security establishment intent on pressing the boundaries of this heretofore rather sacrosanct responsibility.

Read the entire column at World Politics Review.

Wikistrat's chief analyst quoted in Reuters piece on cyber struggle landscape

Disagreements on cyber risk East-West "Cold War"

By Peter Apps, Political Risk Correspondent

Fri Feb 3, 2012 11:32pm IST

LONDON - With worries growing over computer hacking, data theft and the risk of digital attacks destroying essential systems, western states and their allies are co-operating closer than ever on cyber security . . . 

But many Western security specialists say the evidence against both nations -- particularly China -- has become increasingly compelling.

"China is currently engaged in a maximal industrial espionage effort that it justifies internally in terms of a catch up strategy (with the West)," says Thomas Barnett, chief analyst at political risk consultancy Wikistrat and a former strategist for the U.S. Navy. "The key question here is: can China assume the mantle of intellectual property rights respect fast enough to avoid triggering economic warfare of the West... If it can't, then this is likely to get ugly."

Read the entire column at Reuters.

Wikistrat's chief analyst quoted in Reuters piece on great-power rivalries in the Mideast

 

Here's the intro and my section:

Global "great power politics" returns to Mideast

By Peter Apps, Political Risk Correspondent

LONDON | Tue Jan 31, 2012 7:28am EST

(Reuters) - With Russia sending warships to discourage foreign intervention in Syria, and China drawn more deeply into Iran's confrontation with the West, "great power" politics is swiftly returning to the Middle East . . .

Chinese officials might be willing to use sanctions to negotiate better oil prices from Iran, but there seems relatively little prospect that they will stop buying even if Tehran's rival Saudi Arabia makes up the difference in output.

"Each time the West tightens the leash, Beijing quietly avails itself of the slack," says Thomas Barnett, a former strategist for the U.S. Navy and now chief analyst at political risk consultancy Wikistrat. "The more explicitly Washington bases its global strategic military posture on the perceived Chinese threat, the more Beijing will welcome - and even overtly encourage - these diversions" . . . 

Read the entire article at Reuters.

Chart of the day: Flat-liners versus climbers on L.T. energy demand

From an otherwise regurgitating Economist special report on state capitalism, a wonderfully clear chart on primary energy demand, aggregated as billion tons of oil equivalent.

Not amazing: semi-flat growth for Russia, given its demographic slide.

Impressive for US and EU: the efficiency angle keeping growth flat, despite modest economic growth and significant demographic growth for US.

Curious is Brazil's capacity to keep its curve semi-flat.

So that leaves only the two great risers as demand climbers: China's stunning trajectory and India's late-blooming-but-likely-to-skyrocket-from-that-point-on curve (India surpasses China in labor around 2030 and then grows 50% larger, suggesting it will replicate China's trajectory on some level, understanding that its energy profile could be dramatically different in those future decades).

To me, this is a great example of why the military containment strategy (keep the PLA boxed-in in East Asia is dangerous - and counterproductive.  China needs to go so incredibly global due to its energy demand that it's only natural that it build up power projection and become more contentious on the issue of energy security. America can address all that or go super-unimaginative and make it all about an arms race in East Asia, believing that we'll temper China's behavior by doing the same things we did with the Sovs in the Cold War.

But making China feel nervous at home makes it harder for it to address its growing overseas dependencies in the very same regions where the U.S. is becoming less interested in providing stability and more focused on just killing bad guys. Conceivably, our willingness to go anywhere we want, when we want, to kill anybody we want, would make the Chinese feel better about their interests in these regions. But this thin-green-line approach, augmented with the transparent encirclement strategy in East Asia, essentially works to keep China nervous on both scores by insinuating that growing Chinese military capacity is automatically bad - both at home and extra-regionally, unless, of course, the Chinese become "transparent" in the direction of the very same superpower that threatens them in their home region with its world-class military (the same one that's just declared China to be its primary force-sizing threat from here on out).

Bit much, huh?

Charts of the day: US debt and petroleum

From Business Insider (via Zakaria's GPS site) comes the following listing of who holds US public debt.

• Hong Kong: $121.9 billion (0.9 percent)
• Caribbean banking centers: $148.3 (1 percent)
• Taiwan: $153.4 billion (1.1 percent)
• Brazil: $211.4 billion (1.5 percent)
• Oil exporting countries: $229.8 billion (1.6 percent)
• Mutual funds: $300.5 billion (2 percent)
• Commercial banks: $301.8 billion (2.1 percent)
• State, local and federal retirement funds: $320.9 billion (2.2 percent)
• Money market mutual funds: $337.7 billion (2.4 percent)
• United Kingdom: $346.5 billion (2.4 percent)
• Private pension funds: $504.7 billion (3.5 percent)
• State and local governments: $506.1 billion (3.5 percent)
• Japan: $912.4 billion (6.4 percent)
• U.S. households: $959.4 billion (6.6 percent)
• China: $1.16 trillion (8 percent)
• The U.S. Treasury: $1.63 trillion (11.3 percent)
• Social Security trust fund: $2.67 trillion (19 percent)

The Global Post's Tom Mucha writes the post as revelation: See! China doesn't own the U.S.

Okay, so China doesn't own the US anymore than we get all our energy from Saudi Arabia, but China is the single biggest foreign holder - more than 3 times the long-time historical champ UK and more than recent historical champ Japan.

And yes, we do get a picture sort of like our oil situation, where our biggest supplier remains ourself (here, in various forms, accounting for roughly 2/3rds) and other big suppliers remains long-time friends.

But what's also been clear when we've floated large amounts recently is that China is the one great foreign buyer out there who can soak up our surges, so it does play a bit of a Saudi Arabia-like role in things, and that's not to be dismissed.

Then also via Zakaria' site comes the following US Energy Information Agency chart:

The clear long-term trend here, per the North American energy export boom in the works (Wikistrat's next community simulation to begin shortly), is the declining role of petroleum imports, dropping from the high in 2005 (60%) to under half today (49%) and down to just over a third (36%) by 2035.

Things you note:

• Flatness of demand curve!
• Significant rise in production - part of the fracking revolution!

The combo yields America's resumption of its role as a net exporter of petroleum products for the first time in over six decades!

Compare that picture to China's and ask yourself if you'd switch energy challenges with them.

Of course not.

But back to the first point: China is the big saver in the system of the last two-three decades. That means it's not only our great release-valve source of money for things like our national debt. It plays that role increasingly around the globe - to wit, the recent Wikistrat sim on "China as the de facto World Bank for Africa."

My point in the pairing: excitement over our improved energy picture, yes, but realism on the future of money - especially given this fear-threat reaction embodied in Obama's strategic "pivot" to China.

Wikistrat post @ CNN/GPS: Nine roads to November

Editor’s Note: The following piece, exclusive to GPS, comes from Wikistrat, the world's first massively multiplayer online consultancy.  It leverages a global network of subject-matter experts via a crowd-sourcing methodology to provide unique insights.

Upsetting both conventional wisdom and the party establishment’s preferred narrative, New Gingrich’s big win in South Carolina’s Republican primary last weekend has dramatically energized the GOP race. While it suddenly feels like a two-man fight between Gingrich and the previously presumptive nominee Mitt Romney, in truth, the party’s three main wings (country-club moderates, Reaganites,  and the farthest-right social conservatives and libertarians) remain deeply divided, suggesting a lengthy and drawn-out battle across the remaining GOP primaries. Taking that as our starting-point assumption, Wikistrat polled its global network of strategists for scenarios as to how this might unfold and what it could mean for the November general election.

Read the entire post at CNN's GPS blog.

In honor of Newt's SC victory . . . remembering a 2006 dinner with him

The post from back then, reposted in full. The dominant impression: wide-ranging knowledge, reflecting a huge memory.

Speaking with the Speaker, and a great reporter

Referenced from: http://thomaspmbarnett.com/globlogization/2006/3/23/speaking-with-the-speaker-and-a-great-reporter.html#ixzz1kJTxa9cN

THURSDAY, MARCH 23, 2006 AT 5:35PM

Last night was pretty good. Sat at the head table with the hosting general of the Joint Flag Officer Warfighting Course and Newt Gingrich, who seemed to know a lot about me (saying things like, "this is a book I know you'd find interesting" and stuff like that, and asking a lot of questions that revealed some knowledge).

Gingrich is a pretty easy guy to talk with. Inquisitive as hell, he asks question after question and then he spits out theories every so often at high speed, often linking them to American history. His favorite point of comparison to today was the tougher years of the Civil War.

I countered more with the settling of the West, and we went back and forth some on the subject, which was fun.

Also, covered Iraq, where the consensus of the table (us and five or so 3-stars) was that we toppled the regime but that we should have kept the government (mostly because we were prepared to topple a regime but not to replace a government). Gingrich really liked that enunciation, and wrote it down on his Delta flight coupon sleeve, upon which he took notes throughout the night (not a napkin note-taker, he).

Gingrich asked me about Indiana (why I was there), said he loved the zoo there (I told him we had just visited and were members; he countered that he was a zoo freak who visited them every town he traveled to), and compared his Wisconsin experiences to mine (his wife is from a town not that far from my hometown).

Chatting through a dinner with him is pretty much what you'd expect, having seen him on TV so many times: accessible, very fast, likes to hear himself talk but listens very intently as well (asking you to repeat stuff he likes, or typically following up everything you say with a question). Serious Republican, no doubt, and he wears his credentials openly on every point, but not hard to converse with or conduct a reasonable argument. It's not hard to see why the military likes to have him around so much. He's a fascinating guy, and who doesn't like all the Civil War references?!

When I got up to talk, I was a bit nervous, or rather, a bit too tired, as I often am when I talk late after talking early (I am not the young man I once was), so I stumbled a bit on the first couple of slides, in part because the mike started feeding back and in part because my clicker did not work whatsoever, which was baffling, because we tested it all out earlier in the afternoon.

I had one of the hosting personnel swap out the batteries and it did little good: instead of clicking the keypad, I could use it but basically only if I held it almost over the laptop. Very weird. Worked fine back in my room. Really wonder about the RF quality of that room, which is a none-too-rare experience for me in venues.

Anyway, once I got warmed up, it flowed. But I was surprisingly more stark and forceful than usual, which I didn't credit to Gingrich being there so much as my sense from the room: about three dozen 3-stars from all services. Basically tough faces to work: thinking hard, agreeing or disagreeing hard, and working it all out very seriously in their skulls.

You can just sense that with certain rooms: this is not entertainment to them but something far more serious. So you just go with the feeling, and the delivery adjusts.

Still, I was a bit surprised. Just didn't expect such a strong flow.

Went about 60 (norm is 30) and then did about 30 Q&A, which was exceptionally good, and tougher than usual. Seems like everyone had either read or was reading PNM.

Signed about 25 copies of BFA afterwards, and Gingrich came up and said how much he liked the talk. What was especially cool during the signings was hearing what I heard several times during the earlier one that afternoon: senior officers saying this was one of the rare times in their lives when they ever bothered to get an author to sign their copies, which is kind of a weird compliment but one I get in its meaning--namely, people saying they don't usually get touched by a book but that this one did it for them. You get that sort of feedback from a 3-star and you feel pretty good about your decision to put it into print.

Then the real treat for me: a long chat over beers with Greg Jaffe of the Wall Street Journal. He showed up at the reception because he heard I was talking (Gingrich flew in as well for the talk). Both he and Newt would have come anyway that night or early the next morning for their own stints with the JFOWC, but it was a real honor to have them both attend the dinner because of me.

I hadn't spoken F2F with Greg for a while, so a great discussion on what good reporting is over the reception before dinner, and then just a nice long private conversation (no flags) on the porch outside our rooms after the dinner and talk, a conversation that ran until midnight.

That meant I got little sleep before my flights home to close on the house this afternoon, but it was worth it. I respect Greg so much, and like him personnaly as well, that it was really great to have that time together, jawing our way through a host of defense and mil topics. Greg's been on the Pentagon beat for so long, and he's so on top of his game. Still, I'll be interested to see what the paper has in store for him next. He's simply too good a reporter just to keep doing the same thing forever. Frankly, I don't think he can get much better at what he covers now than he already is, and that's a recipe for stagnation if you're not careful.

Weird fact about Greg: his first newspaper job was in Montgomery, which is why he's easily talked into this course.

Addendum #2 to Saturday's unburdening

First, understand that I am hurting from last Sunday big time. This whole week was depression personified. Until the SB is over, I live in a sad, limbo-like existence, dreaming of Cullen Jenkins' return because the Eagles got too many old-man high-price free agents to re-sign.  It's pathetic, but there I am - Jerome stewing beside me.

David Emergy asks for a "hell yes!" on the presidential field versus an my admittedly weak endorsement for Romney and my I-can't-have-her lust for Hillary.

Emblematic of America, I don't have that candidate in hand - which is why I'm still window shopping when it comes to passion.

Yes, the right "wrong" person could warm me up again on Obama.  Santorum would do it, as would Paul, as would Gingrich in the end - as much as I admire his imagination. I wouldn't cross the aisle for any of those three.

I would get jacked for Giuliani, and have said that often.  My dream ticket remains Rudy and Michael Bloomberg. I like Giuliani's leadership capacity and I love Bloomberg's adventurous technocratic personality. I think he's the most exciting tinkerer out there, and a huge global influence in that role (vastly underappreciated, but most people don't get the coastal mega-city network vibe that's out there, making things happen on globalization). The two of them would be my version of a progressive ticket: fixers with no serious ideological bent. I had hopes for Obama on that score, but the smartest-guy-in-the-room thing got in the way. Rudy's and Mike's egos are accomplishment based, not loved based, and I really love that in leaders.

Frustrated with the field?  Let me count the ways.  I do agree with Newt: this is an historic and crucial election, and the idea that Obama just glides in with mega-buck spending stikes me as very bad for the country. I think he can win, but only with great negativity, and then I think we have four years of an embattled president whose main outlet of foreign policy is already spoiled with the strategic "pivot" choice. I don't want America to play four more years of the waiting game.  I want better.  I want progressive movement that regains the only lead worth capturing vis-a-vis the two great risers of the age - China and India: I want America once again being the best provider of sharp new answers that move the ball with purpose. Obama accomplish the basic realignment from Bush that I advocated in "Great Powers," but after that, I've seen litte-to-no strategic purpose or momentum, with the big choice on China being stunningly unimaginative in nature (i.e., he either wants to cover his defense "ass" on spending, which is silly given his vigorous killing program, or he can't stand up to the Pentagon, or he's actually dumb enough to believe this sort of empty posturing is worthwhile - I like none of my choices here).

If my only choices are Mitt and Barack, I choose the former as being more likely to achieve some momentum, but I am unhappy with this choice. Mitt feels too much like Mondale or Dole or McCain - the my-turn candidate, which to me just guarantees a second term to somebody who will do very little of value with the opportunity.

Deficit myths: it's still all about healthcare, so Obama was right to work it. And yet, I want him gone in 2013 [WITH ADDENDUM]

Got asked in Belvoir this last week about the present situation in US and what must be done.  I answered by citing my own household economy as microcosm:

• Far more competitive world means earning potential is harder to achieve;
• That income "haircut" means past debt patterns unsustainable, thus the deleveraging that continues (done better by individuals, families, firms, everybody but the Fed Gov!);
• Housing is key (our move to short sale old house was big financial achievement of 2011), and curing that is key to allowing workers to move (that's why we did it this year, while the right constellation of circumstances presented themselves, in preparation for eventual 2014 move back East for job-related purposes);
• Education is key (I pay 7 tuitions: 2 preschool, 2 grade school, 1 HS, 1 undergrad and 1 grad) to maintaining future possibilites, so investment trumps damn near everything; and yet,
• Healthcare is huge drain (I pay my own now and the pre-tax cost, by my estimate, is between $30-40,000, meaning that's how I gotta earn to cover it all from stem to stern).

So larger reality for US not unlike my family: we had to scale back everything to preserve what matters, which is healthcare and education; we had to solve the housing situation to allow for renewed labor mobility; we haven't really seen our standard of living go down at all, and yet we've made wrenching changes to be able to live on a much smaller consumption footprint. All tough adjustments, but incredibly worthwhile.

But again, healthcare is huge and seemingly unassailable from my perspective. We are exceedingly careful about how we spend those dollars, even as that's the last thing - besides education - that we want to scrimp on.

Of course, if we don't have six kids, then my life is dramatically simpler on all scales, but there again, what keeps America strong?  Demographics, so that's worthwhile too.

Citation here is Alan Blinder op-ed in WSJ.  Great stuff.

"Four deficit myths":

1. Americans now demand deficit reduction like never before. Not true.  Jobs matter far more now, as does healthcare and housing. Just understand, polls on this subject are no more definitive than they were 20-30 years ago.  This is not our current obsession.
2. Our deficit is so bad right now that massive cuts are required immediately. Also not true. We have no trouble selling debt in this global economy. Yes, long-term deficit issue is acute, but key is setting in place conditions for long boom that takes care of that. See Europe for austerity approach.
3. The ten-year reduction focus makes sense. Bad thinking. Little can and will be accomplished in any 10-year plan. The problem if far longer in scope - see demographics, and thus the solutions must be similarly gauged.
4. America has a generalized problem of runaway spending. Very untrue. The only part of the Fed budget that's really exploding is Medicare and Medicaid, so it's still mostly about healthcare.

In short, "we have a humungous healthcare problem."

Anybody familiar with the US defense budget has long said the same thing: we don't have operations or acquisition or training or personnel crises. The "imperial overstretch" argument remains complete academic bullshit.  We primarily have a healthcare crisis that is extended into pension system. Everything else pales.

In my family right now, the biggest short-term threat, now that we're mortgage free and successfully deleveraging across the board, is healthcare. Huge drain.  Big uncertainty. Encourages self-defeating avoidance behavior on many levels (which we try desperately to be smart about). Leaks into everything.

When GOP says Obama went off deep end on healthcare because country didn't want that or didn't elect him for that, they miss the mark.  It is clearly the biggest internal challenge we face - short and long term. It is the hidden villain on everything. Saying it was a diversion is - itself - a diversionary election-centric tactic.  

But still, I would trust a Romney to finesse its implementation better than an Obama, whose political and negotiating skills I no longer respect, and whose stunning ignorance of, and antipathy toward, business has become an unacceptable leadership flaw - given the tough adjustments still to come.

And yes, I LOVE that Romney did it first in Massachusetts - and did it intelligently. That is a huge credentializer in my mind.

Americans' distrust and anger toward globalization and big business is stunningly misplaced. Globalization has made the world so much better, but it now challenges us in ways we've long gotten used to avoiding because of our long-term privileged position in the global economy, which itself reflected gross historical injustices stemming from colonialization, WWII, socialism in the East, etc. None of those things were our fault, and we took the lead in overcoming them all, but we did live in a pretend world of superiority on that basis across the second half of the 20th century.

That world is gone, and good riddance, say I, because it was supremely unfair to the majority of the planet, and I don't want to live in this world by exploiting others unnecessarily.

So our succees in spreading American-style globalization now comes back to haunt us, demanding we adjust. That's not about demonizing business, even as it is about cleaning up some incredibly bad form on Wall Street (a regular task, just bigger this cycle). It's also not about demonizing China, who is our biggest ally in the global economy going forward - like it or not.

Romeny will say stupid things on China to win the GOP nomination. Obama is already doing stupid things. On the business, it's clear who's hostile and who's not.

Looking ahead, I want a dealmaker, a difference-splitter, a realist on business who acts based on experience and not sterile theory. I also want somebody who can rationalize our military budget and global presence without resorting to idiotic, default targeting of the Chinese.

Romney is far from ideal on all those scores, but he does beat Obama, in my mind, on every one of them.

I stil maintain Obama was the best choice of the two in 2008. I would still vote for him all over again, given the repeated chance. I do think America, however, would have been much better served by a Hillary presidency (I voted for her in the primary), and since I can't get that this time around, I'll make do with the alternative, who I think will have a far better chance of working with a Republican House and Senate than Obama will - given overall Boomer political proclivities (most Boomer politicians are just above cartoon-grade in their motivations, skills and intelligence).

No, I would take Obama over the two jokers (Santorum and Paul) and the complete wild card (Gingrich). And yes, this would be my first vote for a GOP presidential candidate in my entire life.

And my logic on all this if decidedly unemotional (can I toss in that I'm the father of two African-come-to-America daughters, just to be safe?).

This isn't personal in the least; this is strictly business.

LATER ADDENDUM DUE TO MIKE RUSSELL'S COMMENT ABOUT GOP'S CHARGE THAT OBAMA IS "ANTI-BUSINESS":

I don't use that political term of art (anti-business), because I don't think it's true. I don't think his policies have been particularly anti-business.

I think he doesn't understand business (ignorance) and on that basis tends to vilify and scapegoat business (antipathy) for our continuing poor recovery. The silliness over "taxing millionaires and billionaires" is, to me, just rhetorical nonsense. Those people pay plenty, but no matter how much more we tax them (I am indifferent on the subject), it won't change our fundamental issues. So, to me, rolling with political gamesmanship like that says serious change isn't what he's looking for, otherwise he would have gone with Bowles-Simpson and not ignored what everyone said were sound recommendations.

I also cite the ignorance issue for what I consider to be generally bad-for-business-but-bad-for-everybody-else-too policies in combating the crisis. The administration just hasn't done enough to encourage deleveraging throughout the economy, instead preferring stimulus spending to cure a financially-driven overhang crisis, which, per Rogoff, is the wrong medicine chasing the wrong disease.

I won't claim to have tracked the US economy enough to have said, I told you so way back when, because I most certainly did not. But it's hard for me to accept that a guy as smart as Obama couldn't find enough people around him who were smart enough to realize that stimulus splurging after a financial crisis only gets you a follow-on fiscal crisis without actually improving the financial hang-over/debt overhang. They still don't seem to get that, and as long as they don't, I think business will hold off on investment and hiring because consumers are forced to keep their spending low (I certainly am).

So all I am left assuming is that he doesn't know business (ignorance) and made patently bad choices out of some antipathy to business (it is hard to advise the guy who's certain he's always the smartest guy in the room). I say that because business has largely argued for a far stronger deleveraging focus versus the path Obama has taken. That path did include bailouts for Wall Street firms (not sure history will be kind there) and Detroit (am certain history will be kind there and have said that throughout in posts and speeches - but there I cite the global car industry, which is something I have tracked).

Finally, if Obama were both smart on business and less into his business-can't-be-trusted mode, I think he would have pursued opening up the US economy to Chinese investment instead of staying stuck on the RMB's value and this bizarre strategic "pivot" to East Asia, where apparently our weaponry and national "will" is going to keep us economically engaged in the region despite openly targeting the biggest economy there, a country, by the way, that we expect to finance this military buildup in the Pacific. But that's just me saying I don't trust how he views or understands global business.

In general, I do think Obama is a smart guy, but he's displayed enough dumb/antipathy WRT business for me to want him swapped out versus keeping him another four years. The global economy right now is in fairly precarious shape, and I don't see his administration being able to work with a GOP congress over the next four years any better than he has the past 3. We can say it's all GOP hostility but Bill Clinton managed that, and Reagan did with the Dems. Obama is just not that guy. He matches the GOP's Manichean view with too much of his own, along with a pride and self-confidence in his supreme intelligence that I think is his biggest weakness.

We've have world-class brain presidents (Hoover, Carter, Obama) and they manage to have attract hard economic times. I have come to greatly prefer emotionally intelligent presidents (FDR, Reagan, Clinton) or incredible dealmakers (Johnson, Nixon). That's why I will take Romney and his blandness and his difference splitting and flip-flopping and non-agenda. I want a manager who moves the process along for the next four years, rather than the perceived/actual ideologue who attracts more fight than he's worth and isn't clever enough to realize when he needs to bend instead of stand proud.

China as Africa's De Facto World Bank - the Wikistrat video

This is a recorded briefing that I generated from the recent Wikistrat internal training simulation entitled, "China as Africa's de facto World Bank." It summarizes the points I gleaned from the wide-ranging simulation (dozens of wiki pages filled with all manner of brainstormed ideas, strategies, options by several dozen analysts) and summed up in an 8-page report.

This was the first major video production in the set-up I have constructed - after excruciating testing and accumulation of equipment - in our new rental home, which, in various parts, doubles as my work environment. Fortunately for me, virtually everyone else in my family is in school, with youngest Abebu starting within months. So during the day I have the house completely under control, meaning I can meticulously set up the gear, test at length, and pursue recordings and subsequent processing/production in peace.

Ah, the life of the bootstrapped start-up!

Naturally, comments and suggestions are welcomed on content, presentation choices (there are many ways to skin that cat, given the tremendous volume of ideas generated by any one simulation), and video capture.

One correction already accomplished: on this taping I set up a flatscreen for video feedback (I can see screen's content and myself in foreground) just to the right of the camera.  That gives me a slight off-camera eye orientation, which I thought was fine for simulating an audience interaction. But in retrospect, we decided that a straight-into-the-camera style would be better.  That is accomplished in an improved set-up that involves a smaller feedback screen being place just below the came - as in, within a couple of inches. That way I can look directly into the feedback and be, for all practical purposes, looking directly into the camera. The feedback screen is crucial because all of these briefs will be screen-content heavy and first-and-one-time briefs on my part, meaning I can't possibly memorize every click like I do on my regular brief. In that way, it is a LOT like doing the TV weather: lots of data/info to get through and you need to position yourself in front of the screen while not blocking it.  I do fairly well on this first try, but can obviously get smoother - trick being the feedback presents itself in a mirror image.

Another fix in the works: I lost my clip for my clip-on mike and therefore had to wear below the camera line because my substitute clip ain't so elegant.  That meant I picked up the clicking sound from my remote controller a bit too much - for my taste. New one is in the mail, so next time I'll wear the mike far higher and hopefully not pick up that sound.

Overall, pretty happy with the effort. At first, I repeat the text too much, but I warm up over time and get more extemporaneous and relaxed as I got more comfortable with moving myself around. This is far different from me being tracked by a cameraman on a big stage, because I go completely unconscious on my style and let the camera-guy deal with all that.  Here, with a fixed camera, I have to adjust my style somewhat. So a bit stiff at first, improving throughout, and clearly something I will grow more easy with it as I repeat the process.

Wikistrat post @ CNN/GPS: 10 strategic issues with Obama's East Asia "pivot"

Editor’s Note: The following piece, exclusive to GPS, comes from Wikistrat, the world's first massively multiplayer online consultancy.  It leverages a global network of subject-matter experts via a crowd-sourcing methodology to provide unique insights.

The Obama Administration recently released a military strategic guidance document, which calls for a strategic “pivot” from the Middle East to East Asia. This bold move replaces President George W. Bush’s “long war” against violent Islamic extremism with a new, ongoing effort to shape China’s military rise.

What are the strategic, military trade-offs of this historic shift? Wikistrat, the world’s first massively multiplayer online consultancy, recently tapped its global network of several hundred analysts to ponder this question. This online network offers a uniquely powerful and unprecedented strategic consulting service: the Internet's only central intelligence exchange for strategic analysis and forecasting, delivered - for the first time - in a real-time, interactive platform. Exclusive to GPS, here are Wikistrat’s top ten strategic, military issues to bear in mind as this “pivot” unfolds:

Read the entire post at CNN's Fareed Zakaria GPS site.