A view from the land of Oz, “down under”:

Sun Could Set Suddenly on Superpower as Debt Bites

Question:

We have been raised to think of the historical process as an essentially cyclical one. We naturally tend to assume that in our own time, too, history will move cyclically, and slowly.

Yet what if history is not cyclical and slow-moving but arhythmic, at times almost stationary, but also capable of accelerating suddenly, like a sports car? What if collapse does not arrive over a number of centuries but comes suddenly, like a thief in the night?

Concept:

Great powers and empires are complex systems, which means their construction more resembles a termite hill than an Egyptian pyramid. They operate somewhere between order and disorder, on “the edge of chaos”, in the phrase of the computer scientist Christopher Langton.

Such systems can appear to operate quite stably for some time; they seem to be in equilibrium but are, in fact, constantly adapting.

But there comes a moment when complex systems “go critical”. A very small trigger can set off a phase transition from a benign equilibrium to a crisis. Complex systems share certain characteristics. A small input to such a system can produce huge, often unanticipated changes, what scientists call the amplifier effect.

Application:

Empires exhibit many of the characteristics of other complex adaptive systems, including the tendency to move from stability to instability quite suddenly. But this fact is rarely recognised because of our addiction to cyclical theories of history.
What are the implications for the US today? The most obvious point is that imperial falls are associated with fiscal crises: sharp imbalances between revenues and expenditures, and the mounting cost of servicing a mountain of public debt.

Think of Spain in the 17th century: already by 1543 nearly two-thirds of ordinary revenue was going on interest on the juros, the loans by which the Habsburg monarchy financed itself.

Or think of France in the 18th century: between 1751 and 1788, the eve of Revolution, interest and amortisation payments rose from just over a quarter of tax revenue to 62 per cent.

Finally, consider Britain in the 20th century. Its real problems came after 1945, when a substantial proportion of its now immense debt burden was in foreign hands. Of the pound stg. 21 billion national debt at the end of the war, about pound stg. 3.4bn was owed to foreign creditors, equivalent to about a third of gross domestic product.

Go to the linked article for the gory details on our current circumstances that lead to a harrowing conclusion:

For now, the world still expects the US to muddle through, eventually confronting its problems when, as Churchill famously said, all the alternatives have been exhausted. With the sovereign debt crisis in Europe combining with growing fears of a deflationary double-dip recession, bond yields are at historic lows….

We should be so blessed!

Australia’s post-war foreign policy has been, in essence, to be a committed ally of the US.

But what if the sudden waning of American power that I fear brings to an abrupt end the era of US hegemony in the Asia-Pacific region? Are we ready for such a dramatic change in the global balance of power?

Judging by what I have heard here since I arrived last Friday, the answer is no. Australians are simply not thinking about such things.

A favourite phrase of this great country is “No dramas”. But dramas lie ahead as the nasty fiscal arithmetic of imperial decline drives yet another great power over the edge of chaos.

Hopefully more of us will start to remember a few inconvenient historical facts in time to make a difference.

South Dakota is one of the states that is weathering the unemployment storm quite well, thank you!

How the mighty have fallen.

Nevada, California, and Florida have the nation’s weakest economies, according to a midyear review of state employment trends by Portfolio.com and bizjournals. That’s a stunning reversal from half a decade ago. Nevada and Florida finished first and second, respectively, in 2005’s midyear review. California was a respectable 11th.

But this year’s study puts Nevada in 51st place, dead last among the 50 states and the District of Columbia. California (50th) and Florida (49th) are barely a step ahead.

On the other hand…

Surprises can also be found at the top of the new midyear standings. Tiny North Dakota enjoys the nation’s strongest economy at the moment, and Alaska holds second place, according to the Portfolio.com/bizjournals rankings….

But the severity of the economic recession has been tempered in states with affordable housing, especially those in the heartland that stretches from the Gulf of Mexico to the Canadian border. Six of the top 10 states are located within that broad belt, including North Dakota (first place), Texas (third), South Dakota (fourth), Nebraska (sixth), Louisiana (seventh), and Utah (10th)

Not too shabby.

Oakland’s City Council late Tuesday adopted regulations permitting industrial-scale marijuana farms, a plan that some small farmers argued would squeeze them out of the industry they helped to build.

It looks like the only argument in Oakland is whether or not the corporate dopers will crowd out the small-time family dopers. (I know that sounds weird, but there it is!)

I REALLY don’t get this one! (And no, I am not arguing here one way or the other about Bob Newland’s Favorite Issue. That’s a whole other discussion.)

As far as I know the Federal drug laws are still on the books, and are still (sort of?) being enforced…at least the DEA hasn’t been abolished yet, as far as I know.

SO…Arizona is sued by DoJ for having the unforgivable nerve to presume to pass a law on immigration that mirrors the Federal laws, and is slapped down for doing so. They are acting IN SUPPORT of the Federal legislation.

Meanwhile, Oakland, and other locations, are actively promoting the direct VIOLATION of Federal laws withing their jurisdiction, with no Federal action in response?

Can you say N-U-L-L-I-F-I-C-A-T-I-O-N? Wasn’t there a rather sharpish discussion on that topic from the 1830′s until 1865 when the issue was supposed to have been disposed of? If not, perhaps the spirit of J.C. Calhoun and the other proto-Confederates of his day is truly alive and well and lurking under a hempen shroud.

OK. The Feds are challenging Arizona’s mild attempt to reinstate some semblance of enforcement to laws put in place, but subsequently not enforced by them. This of course is on the grounds that the states cannot act to enforce Federal law. This proposition raises some points of interest.

Does this mean that states (and localities) then must also not enforce any state or local laws against illegal drug trafficking, possession, or use, all of which are against Federal law also? Also, what then about localities and states that have licensed and tolerate businesses whose entire existence is in violation of Federal laws–specifically the so-called “medical marijuana” trade? According to common law wouldn’t this de-facto administrative annulment of Federal law establish a precedent for similar de-facto state and/or local administrative annulment of other Federal laws?

If this is the case then there is no basis for the Federal suit opposing Arizona’s willingness to take on part of the neglected task of the Feds to enforce their own laws. If it is NOT the case, then the Federal government is directly violating the equal protection of the Constitution by arbitrarily choosing to selectively enforce SOME of its laws while simultaneously ignoring others! (Just wondering, you know?)

Meanwhile, to get back to the point of the above cited and linked op-ed is that even if Arizona is NOT upheld by the court system, it is far from helpless in the face of the ongoing Mexican invasion…Arizona still has some options, ones that are fully allowable under some rather specific terms of the Constitution:

(Uff da!  Here’s that pesky 2nd Amendment rearing it’s head again!)

…Arizona can form and expand its own state militia. Such forces were common when our nation was founded, and the Second Amendment recognizes that a “well-regulated Militia” is “necessary to the security of a free State.”  In short, Arizona and other states can raise and arm their own military forces. But, for what purpose can such forces legally act?

(Ooops! Not JUST the 2nd Amendment at work.)

The Constitution is informative here. In Article IV, Section 4, the federal government is required to “protect each [state] against Invasion; and [on request of the state government] against domestic Violence.” As St. George Tucker noted, this provision guards against “the possibility of an undue partiality in the federal government,” for example a “sectional” president who might, for political reasons, decline to protect states in a certain region. Today the federal government, at the direction of the president, has declined to carry out its duty under Article IV. Leaving aside its other possible consequences, this intentional failure to protect Arizona raises the question of what action the state is now entitled to take under the Constitution.
[emphasis added]

Yes, what indeed CAN Arizona (and by extension any other state) do in this case?

This brings us to Article I, Section 10, Clause 3, which provides that “No State shall, without the Consent of Congress … engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

Did you catch that? States MAY go to war under some circumstances WITHOUT “the Consent of Congress”!

“So, the militias organized and armed by a state may go to war when the state has been invaded or is in imminent danger. This is clear under Article I, and plainly justified when the federal government has deliberately failed to protect against invasion as required by Article IV. As Joseph Story explains in his treatise on the Constitution, the prohibition against states engaging in war is “wisely” limited by “exceptions sufficient for the safety of the states, and NOT justly open to the objection of being dangerous to the Union.”

So, the concluding summary from the piece:

At the time of our nation’s founding, the states surrendered certain limited powers to the federal government. Logically, foremost among the enumerated powers delegated to the new central authority were those relating to foreign affairs, including the war powers. But the states were prudent; they had a logical concern that if the federal government should fail in its duty to protect them from “invasion” or “imminent danger,” perhaps for reasons of political “partiality,” then the states should have a robust right to defend themselves, including by armed force. And so they do.

Hmmmm. Federal government “fails in its duty to protect”…for reasons of political “partiality”…? Sounds sort of familiar, somehow.

Finance Overhaul Casts Long Shadow on the Plains

So…you think that the recently passed financial reform bill is going to righteously stick it to those high-rollin’ Wall Street finance dudes? Not likely.

The impact may hit a lot closer to home than you might have thought:

Farmer Jim Kreutz uses derivatives to soften the blow should the price of feed corn drop before harvest. His brother-in-law, feedlot owner Jon Reeson, turns to them to hedge the price of his steer. The local farmers’ co-op uses derivatives to finance fixed-price diesel for truckers who carry cattle to slaughter. And the packing plant employs derivatives to stabilize costs from natural gas to foreign currencies.

Far from Wall Street, President Barack Obama’s financial regulatory overhaul, which may pass Congress as early as Thursday, will leave tracks across the wide-open landscape of American industry.

Designed to fix problems that helped cause the financial crisis, the bill will touch storefront check cashiers, city governments, small manufacturers, home buyers and credit bureaus, attesting to the sweeping nature of the legislation, the broadest revamp of finance rules since the 1930s.

Historically, the more that government gets involved in the market, the worse things get. (Remember, most of the the alleged negative effects of the free market are really the product of business and/or regulatory arrangements that have hindered the free market’s operation.)

I get a bad feeling about this one.

NASA Chief: Next Frontier Better Relations With Muslim World

NASA Administrator Charles Bolden said in a recent interview that his “foremost” mission as the head of America’s space exploration agency is to improve relations with the Muslim world.

Though international diplomacy would seem well outside NASA’s orbit, Bolden said in an interview with Al Jazeera that strengthening those ties was among the top tasks President Obama assigned him. He said better interaction with the Muslim world would ultimately advance space travel.

I could have thought that the foremost mission of the chief administrator of NASA was to…(maybe?) administer what little is left of our space program?

Silly me! But at least My opinion shared in good company:

Former NASA Director Says Muslim Outreach Push ‘Deeply Flawed’

The former head of NASA on Tuesday described as “deeply flawed” the idea that the space exploration agency’s priority should be outreach to Muslim countries, after current Administrator Charles Bolden made that assertion in an interview last month.

“NASA … represents the best of America. Its purpose is not to inspire Muslims or any other cultural entity,” Michael Griffin, who served as NASA administrator during the latter half of the Bush administration, told FoxNews.com.

At least somebody is stills sane!

Griffin said Tuesday that collaboration with other countries, including Muslim nations, is welcome and should be encouraged — but that it would be a mistake to prioritize that over NASA’s “fundamental mission” of space exploration.

“If by doing great things, people are inspired, well then that’s wonderful,” Griffin said. “If you get it in the wrong order … it becomes an empty shell.”

Griffin added: “That is exactly what is in danger of happening.”

He also said that while welcome, Muslim-nation cooperation is not vital for U.S. advancements in space exploration. “There is no technology they have that we need,” Griffin said.

Dang! Does this mean that we won’t be able to use camels on Mars after all?

The former administrator stressed that any criticism should be directed at Obama, not Bolden, since NASA merely carries out policy.

That last bit hits the nail on the head. This rot begins at the top!

Allah’s final frontier
NASA races to reach the crescent moon
This editorial comment from the D.C. Times makes a decidedly non-PC but true observation:

The Muslim world has nothing to offer the United States as a space-faring nation. If anything, America should be discouraging Middle East space programs. Iran has the most advanced space initiative in the region and claimed to have launched a satellite in February. It’s a short step from putting satellites in space to being able to do the same with warheads. Given that Iran is on the verge of nuclear-weapons capability, the upbeat message from NASA seems ill-advised

It doesn’t take rocket science to figure this out…but hey, nobody except B.O. and his KoolAid crew could mistake Bolden for having any real understanding of non-pharmaceutical experience of space.

In addition, there is an explanation why Islam may be in need of some technological strokes:

Islam’s meager contribution to human technological advancement is no accident. In his new book “The Closing of the Muslim Mind,” former Voice of America director Robert Reilly describes the brief flourishing of intellectualism in Muslim Spain 1,000 years ago before it was brutally suppressed by religious extremists. They imposed a continuing Islamic orthodoxy that is hostile to rational thought and to the scientific method. According to this view, the only knowledge required for human existence is contained in the Koran and the life and sayings of Muhammad. Pursuing any knowledge beyond that is at best a waste of time, at worst a capital offense. Classical books of knowledge were burned, the few Muslim philosophers and scientists were banished and the stage was set for centuries of scientific decline. The small number of discoveries credited to that part of the world since the Middle Ages came principally from conquered peoples.

Where is JFK now that we REALLY need him!

A Market Forecast That Says ‘Take Cover’

WITH the stock market lurching again, plenty of investors are nervous, and some are downright bearish. Then there’s Robert Prechter, the market forecaster and social theorist, who is in another league entirely.

Mr. Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years.

In a series of phone conversations and e-mail exchanges last week, he said that no other forecaster was likely to accept his reasoning, which is based on his version of the Elliott Wave theory — a technical approach to market analysis that he embraces with evangelical fervor.

Originating in the writings of Ralph Nelson Elliott, an obscure accountant who found repetitive patterns, or “fractals,” in the stock market of the 1930s and ’40s, the theory suggests that an epic downswing is under way, Mr. Prechter said. But he argued that even skeptical investors should take his advice seriously.

“I’m saying: ‘Winter is coming. Buy a coat,’ ” he said. “Other people are advising people to stay naked. If I’m wrong, you’re not hurt. If they’re wrong, you’re dead. It’s pretty benign advice to opt for safety for a while.”

This article is really worth the read, and some thought. Even when they present an opponent to Prechter’s view…well…he sort of agrees too:

Over the next several years Mr. Acampora expects an “old normal market,” characterized by relatively short-lived swings that will provide many opportunities for smart investors — one that resembles the markets of the 1960s and 70s. “I’ve lived through it,” he said.

Like Mr. Prechter, he is a past president of the Market Technicians Association, the leading organization of technical market analysts, and he said that his colleague has done “some very good work.” But Mr. Acampora doesn’t agree with Mr. Prechter’s long-term theories, either intellectually or emotionally.

Hmmmm. Doesn’t agree with him EMOTIONALLY? WTF does THAT have to do with it?

The “mathematics don’t work,” Mr. Acampora said, because such a big decline would imply that individual stocks would need to trade at unrealistically low levels.

The logic here is very interesting. First, “The mathematics don’t work…” Why not? “BECAUSE such a big decline would imply that individual stocks would need to trade at unrealistically low levels.” (Like GM and GE, etc. trading for a few dollars a share in ’33?) Since when does the production of a mathematical result serve as the criteria to determine whether the mathematics “works”? He’s essentially stating that the math doesn’t work out because it gives an answer that he doesn’t like. This attitude is further amplified by the following statement:

Furthermore, he said, “I don’t want to agree with him, because if he’s right, we’ve basically got to go to the mountains with a gun and some soup cans, because it’s all over.”

Then he concludes:

“Still, on a “near-term” basis, he said, “We’re probably saying the same thing.”

Oops! Remember…THAT’s presented as an opposing view to Prechter!

At least the view from across the pond in the UK is better…right? Well, not exactly…it sounds more like the favorite observation of the robot character Marvin from Doug Adams’ Hitchhiker’s Guide to the Galaxy: “It’s all so depressing.”

With the US trapped in depression, this really is starting to feel like 1932

The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation.

“The economy is still in the gravitational pull of the Great Recession,” said Robert Reich, former US labour secretary. “All the booster rockets for getting us “Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing,” he said.

Read on for more of the gory details. Maybe the robot has it right after all.

The president’s agenda on healthcare and financial regulations sets the stage for a clash with the Supreme Court’s conservative majority.

There’s a lot more text in the article that amplifies the point…in the Chief’s humble opinion, the Constitution is functioning as designed – to slow down and limit the scope of what the government can and should be doing.

Perhaps B.O. will get the point that there is more to Constitutional governance than Executive Orders, rubber-stamp Congressional actions, and the proliferation of “Czars”.

Nah. Probably not.

I KNEW it was time to stop when I woke up one night and thought “This is the most comfortable place we’ve stayed yet – but why can’t I remember checking in?” A moment later I realized I was at home!

’nuff said!