No Domestic Opposition to Global Hyper-Speculators
But this is not about the hyper-speculators' personal morality. It's not about somehow replacing the current hyper-speculators with more ethical ones, as if that could be done. It's about a monetary/financial system that is being run to benefit a very tiny group of global hyper-speculators. And in the final analysis, it is all about political/economic/military power.
The U.S. is not going to significantly rein in the global hyper-speculators, one of whom is currently Treasury Secretary. Perhaps there may be a little more policing at the margin to make sure the speculative orgy doesn't get out of control and finally wake someone up, but it won't amount to much.
"Top US policymakers believe fresh regulation of hedge funds may be needed to avoid a catastrophic hedge fund failure and that relying on banks and other counterparties to manage their exposure to the booming industry may no longer be enough. The development marks a shift in thinking on hedge fund oversight since a US court in June struck down a rule that hedge fund managers register with the SEC ... One focus of concern was that hedge funds had access to financing from multiple prime brokers ... official said. "The real concern is the transmission mechanism of the failure of a hedge fund into entities of a size that really are of systemic consequence." (FT, Oct 15)
"Hedge funds present a risk to the financial markets and tighter regulations are needed, a majority of private economists said in a new WSJ.com survey ... little is known about their borrowing. Banks have been aggressive in extending credit, sometimes requiring little or no collateral on loans ... Geithner, president of the NY Fed, recently called upon regulators to examine whether banks and securities dealers are requiring sufficient collateral from hedge funds ... Thomsen, the SEC's director of enforcement, said the agency will be monitoring hedge funds through their relationships with broker dealers, and those ties will face more scrutiny." (WSJ, Oct 13)
The "enlightened capitalist" factions that for years now have expressed deep concern about the direction of global economy and financial markets, e.g. those around Rubin, Volcker, Peterson, etc., have no political leverage to push for more significant reforms (e.g. Rubin supported Kerry), except perhaps via the Clintons (the same is true in foreign policy). That's because the domestic political power to fundamentally change the speculative system was destroyed decades ago, with the U.S. labor movement,
The "enlightened capitalists" heavily contributed to this destruction, e.g. Carter's Volcker ultra-high interest rate-ultra strong dollar policy "hollowed out" the U.S. "rust belt" in Reagan's first term; Clinton's Rubin Nafta-WTO "free trade"-strong dollar policy formally institutionalized the decades-old shift (first to the anti-union south) of U.S. industrial capacity abroad; with Bush Jr. delivering the final U.S. industrial deathblow in his first term, a truly bipartisan effort over the decades, with this final result:
"Wal-Mart is pushing to create a cheaper, more flexible work force by capping wages, using more part-time workers and scheduling more workers on nights and weekends ... workers assert that the company is making changes with an eye to forcing out longtime higher-wage workers. Investment analysts and store managers say Wal-Mart executives have told them the company wants to transform its work force to 40 percent part-time from 20 percent. Wal-Mart denies it has a goal of 40 percent part-time workers, although company officials say that part-timers now make up 25 percent to 30 percent of workers, up from 20 percent last October. Wall Street analysts praising the new approach to managing its workers ... A big area of discrepancy between what Wal-Mart says and what the workers say is whether the company has a policy of "open availability." (NYT, Oct 2)
"Wal-Mart Stores Inc. is paying a former advisor to President Clinton at least $3 million over the next two years to direct a rapid-response team to handle mounting criticism of the world's largest retailer." (LAT, Aug 30)
Not all that surprising, considering that Hillary Clinton was on Wal-Mart's board for six years.
Europe and Japan Offer Little Opposition to Global Hyper-Speculators
Since being defeated in WW II, the continental Europeans have consistently abdicated in the fight with Wall Street and its City of London ally, as has Japan. The BoJ usually seems to be just another branch of the Federal Reserve supplying virtually limitless liquidity to the global hyper-speculators via "yen carry trades," that isn't going to change under Abe, who will institute even harsher fiscal austerity than Koizumi.
Japan actually got uncharacteristically a little bold with the U.S. during the 1997-98 "Asian" financial crisis, proposing an Asian Monetary Fund, for which they were promptly slapped down and put in place by the Treasury Dept of Rubin/Summers, and Japan, especially Koizume, hasn't uttered a peep since that the U.S. doesn't like.
The rest of East Asia learned its lessons the very hard way from that 1997-98 experience regarding the ultra-tight relationships between global "hot money," the IMF, and the U.S. government, something Mexico and the rest of Latin America had learned long before in crises throughout the 1980s and 1990s, and as a result East Asia has accumulated a $2.4 trillion "war chest" of foreign exchange reserves, and entered into the Chiang Mai Initiative of swap networks.
As for Europe:
"Germany was also expecting opposition from the UK to its [renewed] plan to examine the risk posed by the activities of hedge funds. "We tried to get hedge funds on to the [G8] agenda in 2005 but we hit a brick wall from Britain and the US," the official said." (FT, Oct 19)
"Productivity may be about to do for [the ECB's] Trichet what it did for Greenspan ... European workers are catching up to their American counterparts after lagging behind for most of the past decade. One sign of the times: Last month's agreement between Volkswagen AG, Europe's largest carmaker, and union leaders to extend the workweek [4.2 hours] without additional pay." (Bloomberg, Oct 16)
That's "productivity" and "catching up" from the viewpoint of the global hyper-speculators, but not in any sane economic sense, not that they would care about the difference.
Thus, with very limited domestic and international opposition, that basically leaves China and Russia left standing in the way of total global domination by the hyper-speculators, two states which the U.S. government can not currently strongly influence, to the obvious chagrin and anger of those pushing U.S. hegemony in the current hyper-speculative version of globalization (there is a good version), hence the trotting out of Paulson's and Rice's current "soft cop" approach.
The U.S. is not really interested in "free trade," it no longer has much that countries like China seem to want to buy, except Boeings and soybeans, since as noted above U.S. industry has long since been hollowed out, as opposed to Japan's the EU's, which are more slowly getting there, to their great dismay.
Rather, what the U.S. mainly wants from China, and everywhere else, is unlimited capital mobility for its mega- global financial institutions, so it can ROLLL (again, return on leveraged legal looting) over them as they have the rest of the world. Both China and Russia seem aware of this, and their elites are playing a fascinating game with the global hyper speculators.
For the past decade, China has been the prime beneficiary of "globalization," but that is due to China's efforts and also to multinational foreign direct investment, the good kind, of $60 billion per year, not to the global hyper-speculators, who want that to change. Now a little-noticed battle is gearing up for control of China's economy, especially its financial sector, as I've mentioned in an earlier article.
"there is a growing perception that foreign companies have done too well from their investments. The Party leadership has publicly accused a few of capturing "excessive" market shares, acquiring too many stakes in China's strategic industries, and buying state assets at bargain prices. Above all, there seems to be a concern that overseas investors own too much of the technology crucial to China's economic development ... The main focus is on making it more difficult for foreign companies to operate in China ... China is also attempting to build "national champions" ... China's economic nationalism is a marginal adjustment to, rather than a fundamental repudiation of, Beijing's broader embrace of globalization." (Harry Harding, Eurasia Group, WSJ, Oct 24)
"Carlyle Group agreed to reduce the size of a planned investment in a Chinese company in an effort to close a deal that has stirred government and public concern about foreign inroads into China's economy ... Increasing numbers of Chinese officials and scholars have been speaking out against the strong market position some foreign companies have achieved in China." (WSJ, Oct 18)
"Buyout firms should give up on taking control of companies in Asia because of rising nationalism and sensitivity toward overseas investments, said Hsu Ta-lin, chairman and founder of H&Q Asia Pacific ... "It's increasingly hard to buy control of companies in Asia and I do think negative control is probably a way to it," said Frank Tang, managing director of Temasek Holdings Pte, Singapore's state-owned investment company." (Bloomberg, Oct 11)
"The U.S. may file new complaints with the WTO because China is showing signs of "backtracking" on its pledge to allow foreign investments and cut subsidies, the top U.S. trade official said. China is favoring domestic producers including steel producers and hasn't done enough to crack down on intellectual property violations." (Bloomberg, Oct 13)
One of the most important areas to focus on is control of the financial sector. Huge Western financial institutions have made significant investments on very favorable terms in China's four main banks, but China is clearly reticent to give up too much control of its key financial institutions and its nascent capital markets, as with Citigroup's efforts to take a stake in Guangdong Development Bank.
"overseas firms that invested $17 billion in China's four biggest publicly traded banks in the past two years. The mainland lenders have handed investors $10 billion in gains since they first sold shares in Hong Kong last year." (Bloomberg, Oct 9)
As it did with its industrial state-owned enterprises, China is using the club of foreign competition to do much of the politically unattractive dirty work, so to speak, to shake up its four large banks and the financial sector.
"China is pushing its biggest banks to sell shares to the public so that tougher international accounting rules, tighter stock market regulation and scrutiny of overseas investors will help improve corporate governance and management." (Bloomberg, Oct 27)
In the long term, the Goldman's will ultimately need China far more than China needs the Goldman's. China is at the center of East Asian production networks that generate real savings/capital, which the U.S. currently does not.
It is critical that China continue to channel its capital where it is needed, into China's internal development, not into very low-yielding U.S. securities, it holds $1 trillion in foreign exchange reserves, that are just being printed up in massive amounts to control and confiscate real wealth. E.g.,
"an engineering project is attempting to divert billions of tons of water from China's flood-prone south to the Yellow River and the cities that rely on it. [China] has one-quarter of the per capita water resources of the world average; in Beijing, it is one-thirtieth. Some 136 cities face severe shortages. More than 300 million people, almost a quarter of the population, lack access to clean drinking water, as more than half of major waterways are badly polluted. The entire project, which could take decades to complete at an estimated cost of more than $60 billion, would build three canals. Many worry that funneling water north fails to address problems of waste and inefficiency." (WSJ, Oct 20)
(Of course the same need for massive internal investment holds true for India and all the rest of the developing nations. "Last week [Prime Minister] Singh doubled the estimate of investment needed in India's roads, ports and other infrastructure to $320 billion by 2012 to accelerate economic growth to as much as 10 percent from the 8.1 percent expansion in the past three years." (Bloomberg, Oct 13))
A couple of recent examples of China's growing commercial and geopolitical clout:
"China International Trust & Investment Corp. will pay $1.9 billion to buy the Kazakhstan oil assets of Canada's Nations Energy Co. The acquisition follows China National Petroleum Corp.'s $4.2 billion purchase of PetroKazakhstan Inc. last year. China is beating India and the U.S. in bids for Central Asia's oil. Kazakhstan's reserves are twice as big as those of the North Sea." (Bloomberg, Oct 26)
"China's economic planners have approved the construction of a natural-gas pipeline from the country's northwest to its south to transport gas imported from Turkmenistan. will be more than double the capacity of the existing West-East pipeline ... part of Beijing's plans for as many as six natural-gas pipelines crisscrossing the country." (WSJ, Sep 28)
"Airbus SAS won an order from China for 150 A320 aircraft. [Airbus] will also set up a final assembly plant for the A320 in the northeastern Chinese city of Tianjin China will also sign a letter of intent for 20 A350 aircraft, which Airbus is redesigning to compete with Boeing Co.'s 787 model." (Bloomberg, Oct 26)
The profitability of China's companies is a hotly debated issue, as is its susceptibility to a U.S. economic slowdown, I don't have space to go into the latter here. E.g.,
"profits of [China's] industrial companies have soared by an average of 36% a year since 1999. The average pre-tax return on equity by state-owned firms increased from 2% in 1998 to 13% in 2005; private companies' return went up from 7% to 16%. most corporate investment is now financed out of companies' own cashflows and only one-third from outside sources. [return on capital] has risen steadily since the late 1990s. A fifth of all industrial firms (and a third of state-owned enterprises) continue to lose money." (Economist, Oct 19)
"Profits at Chinese industrial companies increased 29.6 percent in the first nine months from a year earlier. Higher earnings may ease concerns about overcapacity, causing the government to refrain from taking additional steps to curb investment." (Bloomberg, Oct 24)
"The largest SOEs are reporting burgeoning profits and financing new investments themselves, but they are the exceptions: in 2005, the 10 largest accounted for more than 53 per cent of total SOE revenues and the 165 SOEs owned by the central government for more than 70 per cent of profits. The implication is that banks' exposures are likely to be greater to the thousands of smaller government-dominated firms whose profits appear to be much less certain." (Dobson and Kashyap, FT, Oct 19)
Things in China are not very clear, at least not to me sitting on my duff in the U.S., so I'm really not sure how power between the Party, both central and local, capitalists, both industrial and financial, and military will play out.
"China said its top statistician, Qiu Xiaohua, was fired because he was linked to misuse of Shanghai's state pension fund, a scandal that has already brought down the city's party chief Chen Liangyu ... At least 16 billion yuan of China's national social security fund, valued at more than 1.8 trillion yuan in 2005, has been embezzled since 1998, the official Xinhua News Agency said on Sept. 15." (Bloomberg, Oct 19)
To just sketch out a little background on China's power relationships, China's pragmatists, led by Deng, asserted control over the Maoists ("Gang of Four") in 1976-80 after Mao's death, and implemented market opening reforms. Deng then re-asserted his initiatives in his 1992 "Southern Tour" over more conservative, old-line leftist comrades (e.g. Chen Yun, one of the "Eight Immortals," for you few sinologists) who wanted to pull back after Tiananmen in 1989. Zhu's WTO accession in 2001 and Jiang's "Three Represents" finalized that ideological political victory over the older leftists.
Hu's and Wen's recent emphasis on a "harmonious society" is a nod toward concerns about growing inequality, pollution, corruption, etc. E.g.,
"China's government said it will double social security coverage to at least 1 billion people by 2020. The party will build more low-cost houses. China's annual urban unemployment rate surged to a record 8.4 percent at the end of 2005." (Bloomberg, Oct 12)
"[In China] to qualify for the top 500 today a person must be worth at least $100m compared with a cut-off of $6m for a top 50 listing eight years ago ... China's richest mostly live in Guangdong or Zhejiang provinces, and are often active in real estate or manufacturing ... there are no information technology entrepreneurs in Hurun's top 10 for the first time since 2003." (FT, Oct 11)
"[China's] luxury-goods market is growing as much as 60 percent a year ... an estimated 300,000 U.S.-dollar millionaires in China ... About 200 million Chinese live on less than $1 a day." (Bloomberg, Oct 16)
"China estimates that the economic cost from China's industrial pollution reached $64 billion in 2004, or about 3% GDP. The cleanup cost of that mess in 2004 alone would have cost another $36 billion. China actually spent about a third of that amount two years ago. China would need a one-off investment of $135 billion to install the latest pollution-control technology. That's about 7% of China's economic output. from 2006 to 2010, China will commit $175 billion to clean up industrial pollution. some 20% of the population lives in "severely polluted" areas, 70% of the country's rivers and lakes are in grim shape. local environmental regulators owe their allegiance to local Communist Party officials." (BW, Sep 28)
"China's securities regulator said shareholders must return any fund that may have been misused by the year's end or they will face "legal responsibilities." Up to 102 Chinese publicly traded companies, or 7 percent of the 1,400 listed, have had 25.4 billion yuan ($3.2 billion) of funds misappropriated by their parents or affiliates." (Bloomberg, Oct 13)
For additional recent details than I don't have space for, please see the China and also India sections of my Oct 24 news summary link.
As for Russia, Putin continues to flex his energy muscle. E.g.,
"Energy is at the heart of EU-Russian ties, with oil and gas making up more than 60 percent of Russian exports to Europe ... Putin today also rejected calls to introduce investment rules modelled on the EU's free-market principles. The EU is pushing for an energy agreement with Russia, saying a free-market framework would bring in foreign capital to upgrade Russia's energy production." (Bloomberg, Oct 20)
"near Sakhalin Island, culminating a $17 billion project led by Exxon Mobil and local partner OAO Rosneft. About 350 miles to the south, at the tip of the island, engineers for a $22 billion venture led by Royal Dutch Shell. The Shell project has no Russian partners. The attack on Shell is more about OAO Gazprom's attempt to get a piece of the project than protecting wildlife, analysts say. Sakhalin contains the equivalent of 45 billion barrels of oil, equal to the North Sea's reserves, Shell estimates. About 30 percent of Russia's energy exports will flow to Asia by 2020, up from 3 percent today, President Putin said." (Bloomberg, Oct 19)
"Analysts said Gazprom's decision on Shtokman was almost certainly linked to frustration at what Moscow saw as US foot-dragging on the WTO deal and a broader increase in perceived US hostility towards Russia. While the Kremlin has denied linking the two issues, most observers believe they became heavily entangled this summer ... the explanation from Alexei Miller, Gazprom's chief executive, that the shortlisted foreign partners had not offered suitable assets in exchange, might contain some truth ... many previous deals had turned out to be highly unfavourable to Russia." (FT, Oct 11)
"Gazprom said yesterday it would develop Russia's massive Shtokman natural gas field alone - and switch eventual output from the US to Europe - dashing the hopes of foreign companies vying for stakes in the $20bn project ... The announcement highlights the Kremlin's determination that Russian companies should take the lead in developing the country's oil and gas. It follows pressure on the Royal Dutch Shell-led Sakhalin-2 project, and signs that state-controlled Gazprom wants to buy out private Russian shareholders of TNK-BP, the Anglo-Russian joint venture. The news is a particular setback for the US." (FT, Oct 10)
"OAO Russian Railways, the state-run monopoly led by Putin confidant Vladimir Yakunin, is planning to complete a rail line crossing the North Korean-Russian border. While the project doesn't violate UN sanctions on North Korea, it shows Putin's drive to expand Russian influence. Despite delays over financing and feasibility, Russian Railways is keeping the $2.5-billion project alive. Yakunin traveled to Seoul to press South Korea to guarantee the freight that would make the Eurasian rail link economically viable. A pipeline with Sakhalin gas that would follow the path of the railway into North Korea has been under consideration by OAO Gazprom." (Bloomberg, Oct 25)
"OAO Russian Railways, the country's rail monopoly, plans to raise billions of dollars selling shares in the company or its units by 2010. Sales last year surged 55 percent. The company transports 40 percent of Russia's freight." (Bloomberg, Oct 23)
Any Hope for the Dismal State of Politics in America
"Two leading Republican senators [Lugar and Specter] joined Democrats on Sunday in calling for direct talks with North Korea aimed at easing a nuclear standoff. Sen. Biden said Japan, Russia, China and South Korea have privately urged the U.S. to allow direct talks with the North. Lugar and Specter joined Biden in calling for direct talks with Iran." (AP, Oct 22)
"Leading Republicans and the Bush administration yesterday projected a deepening sense of American disarray over Iraq, as they argued with each other over the current state of affairs and the way forward. Several senators took issue with the administration's policies in Iraq, distancing themselves from the White House in the run-up to next month's mid-term elections to Congress." (FT, Oct 23)
"Former Secretary of State Baker said he agreed with Republican Senator Warner that Iraqi leaders have two to three months to demonstrate concrete evidence of progress ... Baker's comments and the remarks made last week by Warner are adding to the pressure on the president to change his strategy in Iraq." (Bloomberg, Oct 8)
Let me say at the very outset of this final section, I have NOT written this article in overt support of either major party, and most definitely NOT to give election advice. I have no favorite dogs in the fight, although my biases should be obvious. Please keep that very clearly in mind as you read the following.
Key Republican and Democratic senators are increasingly publicly voicing their dissatisfaction for the current direction of the country, especially with respect to Bush/Cheney/Rumsfeld policies on Iraq. It's not yet at the level of Fulbright in the 1960s and Church in the 1970s, but this will probably intensify after the election, unless there is a miraculous change.
My hope is that rather than descending into an intense partisan battle between the extreme wings of the two parties, the moderate centrists in both parties will eventually unite to take control of the situation. If the former occurs, and especially if the Bush/Cheney administration is greatly weakened, then the chances for global instability rapidly escalating will probably significantly increase.
That said, my personal hope is that sensible bipartisan politicians in D.C. do whatever is necessary to rein in Cheney, in particular, before it really is too late and irreversible damage is done.
It is a huge mistake to under-estimate Cheney's determination and capabilities, and also that of Rove.
Both have shown, over and over again, that unless one really finishes them off politically, once and for all, they will always come back, just like the Terminator, even more determined to push through their divisive, radical agendas. Cheney's pushing through the Military Commission Act through Congress was just the latest example.
"Officials said Mr. Cheney's staff and its bureaucratic allies were closely involved in guiding the talks with Republican senators. Their adversaries in the administration had to scramble just to keep up with details of the bargaining. "Basically, they were left to get back whatever they could from Congress," one senior administration official said of the Cheney group. "And they did." (NYT, Oct 1)
Cheney's and Rove's relenteless, unremitting pursuit of their very clear agenda is why I mentioned earlier that I don't agree with the implication of the title of Woodward's bush, "State of Denial." Cheney and Rove are most definitely NOT in a state of denial, while anyone who believes so most definitely is.
Cheney has known exactly what he wants to do with military policy (I hesitate to call it foreign policy at this point) since the 1970s, when he determined that a weakened presidency was disastrous for America. He controlled the personnel process in the formation of the Bush Administration to re-shape the basic nature of American government and military/foreign policy.
Likewise for Rove, his dream of a permanent Republican realignment dominance using his ultra-cynical wedge issues of "guns, gays and God" has been crystal clear for a very long time, at least by the time he started implementing it back when he got Bush elected governor of Texas.
To many, the Bush Administration has exhibited remarkable incompetence and hubris. Personally the thing that has always bothered me the most has been its obvious unwillingness to be upfront with the American public, especially about its clear intentions. I won't speculate why it chose this route, perhaps it sincerely felt it had to do so.
This style of governing has always been obvious, and can be easily seen in Woodward's two previous books on the Bush Administration prior to "State of Denial," and in a number of other recent well-researched books by respected mainstream journalists.
But to me at least, calling any of this "denial" is letting Bush/Cheney et al off the hook with an easy psychological label, as pop psychologists have done for decades.
As for the Democrats, for years now they have repeatedly folded under the relentless onslaught of Rove and Cheney, aided by the mass media, thus being complicit in the resulting massive loss of America's standing in the world and Constitutional rights at home.
Frankly, there is no other word for the Democrats' abysmal performance as an opposition party than national disgrace. They are the Chicago Cubs of politics, except I hardly consider them lovable losers. I am probably even harder on the Democats than on Bush/Cheney, who have always been just exactly who they are, as I fully expect.
"the Bush team goal is to accumulate just enough power to use the energies and passions of the base to effect ideological change in the nation's laws and institutions, even if -- sometimes especially if -- those changes might be at odds with majority public opinion ... Democrats chosen alternative -- in which they swallow their true beliefs on important national issues -- demoralizes their own base ... the core of their enunciated message -- both vowing to stop the president's right-wing policies and blurring their differences with Republicans on highly charged issues -- has in recent elections been a recipe for defeat ... uninspiring to both the Democrats' base and the center." (Mark Halperin, political director of ABC News, NYT, Oct 1)
Many feel that this mid-term election is the final chance for the Democrats to put up or shut up.
"Boiled down to a line, Roveism says that Republicans can win by mobilising and motivating their core supporters. The 2004 election seemed to prove the theory right. My skeptical reaction is that we have not yet had the true test of Mr Rove's strategy - one that tells us whether it can deliver for Republicans in less propitious circumstances and without a blundering Democratic opponent. But on November 7, we will get it." (Jacob Weisberg, editor of Slate.com, FT, Oct 18)
"As the Democratic strategist James Carville [said] in August, "If we can't win in this environment, we have to question the whole premise of the party." (NYT, Oct 1)
Personally, I felt that question was already on the table with the well-intentioned but inept Gore campaign in 2000, and most especially with the lamentably inept campaign of the well-intentioned Kerry in 2004.
Like millions of other American voters at the time, I was very dissatisfied in the 1980s with the direction of the country, the capture of the Democrats by its left-wing, and thus its failure to at least try to protect the average working American from the already decade-long assault on its jobs and living standards, finally offering little more than "re-training" schemes.
That Democratic failure to stand up for their base is what really created the white blue-collar "Reagan Democrats" in the pivotal battleground states in the industrial midwest, destroying the FDR "New Deal" coaltion, and gave Rove his openings to wage "culture wars."
Now in the 2000s, the political pendulum has swung way too far in the other direction, and I have become even more dissatisfied with the direction of the country and the capture of the Republicans by its right-wing,
Perhaps like a lot of other Americans, I am tired of this swinging back and forth between two unappealing extremes. As I tried to sketch out earlier in this article, I think the time has come for another massive, historic realignment of the political parties in America, so that the sensible majority vote can once again take control of the U.S. government.
I honestly don't care how this realignment comes about, as I said, I have no favorite dog in the fight, and under whose banner it would occur, call it Republocrat if you like, just so that it finally happens.
But I just don't see yet how it will.
Politics, like life, is all about power, money and status (Freud would add sex). Ideas are nice, that's why I write these articles, but they are meaningless without the power and money to do something about them. For there to be a major political realignment, there needs to be a huge source of money to fund it.
As I said earlier, I think the Democrats desperately need to break the financial control of their party by the Hollywood left and the Wall Street crowd, which is heavily contributing to them again, via Schumer and the Clintons. The Republicans are clearly captured by mega-corporate America, especially oil and gas and military industries.
So where is the money to come from to fight a major realignment battle? The unions are moribund.
Many in the technology elite have extremely good intentions and a huge amount of money to do something about them. Microsoft's Gates and Google's Page and Brin are just a couple of the most obvious examples. Moreover, unlike the Wall Street hyper-speculators and the Hollywood fantasy crowd, the technology elite is strongly connected to the real economy and are deeply committed to global progress.
Obviously I am very biased in favor of the technology elite, my web site's name, econotech, clearly indicates that.
That is why I have been so disappointed with the direction of Silicon Valley since the collapse of the 1990s TMT equity bubble. It has clearly moved away from the Valley of Grove and Moore, whom I consider American heroes (along with Noyce), and even Oracle's Ellison and Cisco's Chambers, to one that is now dominated by media and advertising, by the popular fantasy culture mentality of Hollywood and Madison Ave.
It would have been far better for the U.S. if the technology elite had allied with the Midwest industrial elite in the 1980s, when both were under relentless assault from Japan, where such an alliance still exists, as in other advanced industrial nations such as Germany, which is one reason they can still make big-screen tv's and great cars.
Unfortunately, that didn't happen, and now the once-proud and globally dominant American Midwest industrial elite is a tiny shell of what it was fifty years ago when "Engine Charlie" Wilson made the quote I noted earlier, along with the blue-collar industrial unions, prey to "vulture capitalists" like Tepper who described himself above as "not causing economic pain -- just capitalizing on it."
A couple of decades ago, a younger Steve Jobs once asked his prospective CEO and future nemesis, do you want to spend your life selling sugar water, soda pop? Nearly half of Apple's revenues are now dependent on music, mostly pop pop. Purely coincidentally, the stock of Google of Mountain View, which just acquired YouTube, is once hitting new highs, while that of Peoria's Caterpillar just had a sharp drop.
At this point, I wouldn't be surprised to open Yahoo's home page one day to see a headline in small text in the news section such as "Another War Breaks out in Middle East" buried underneath a banner headline for a video, "Next 15-Minute of Fame."
If too harsh, I'm sorry. I really hope I'm wrong, and that the Internet, like television over fifty years ago, really does live up to its hope, hype, promise and potential of making the world a much more informed and better place, as Google's founders have always worked for.
"Politicians with profiles that get the most traffic know that on MySpace, it is important to do as the under-30 crowd does: make public what is personal -- and don't skimp on the trivial." (WSJ, Oct 14)
I judge by the bottom-line results. In 2004, a President was re-elected with the strong support of Rove's political base, many of whom did not know the most simple, basic true facts regarding the President's stated reasons for going to war in Iraq, as repeatedly shown in polls. Presumably some of these people had broad-band access, along with their talk radio.
Now look at the results:
"early September poll of 1,150 found: Almost four in five Iraqis say the U.S. military force in Iraq provokes more violence than it prevents. About 61 percent approved of the attacks [on U.S. forces] -- up from 47 percent in January. A solid majority of Shiite and Sunni Arabs approved of the attacks. The increase came mostly among Shiite Iraqis ... The State Department has also conducted its own poll, found that two-thirds of Iraqis in Baghdad favor an immediate withdrawal of U.S. forces." (AP, Sep 28)
"More than 2,660 Iraqi civilians were killed in the capital in September amid a wave of sectarian killings and insurgent attacks, an increase of 400 over the month before, according to figures from the Iraqi Health Ministry. The increase came despite an intensified U.S.-Iraqi sweep of Baghdad that was launched in mid-August to try to put down the wave of violence that has swept over the capital." (AP, Oct 11)
So until I will see otherwise, I will remain highly skeptical about positive political change in this country, from either major party.
Despite all I've said above, please don't forget to vote, it's our right, privilege and duty. Who knows, perhaps some day a political entrepreneur/statesman with Lincolnesque courage and compassion eventually will come along to do what historically needs to be done. I hope so.
For those patient enough to get to the end of this very long article, I will go back to reviewing and analyzing the financial markets in a future article.
And thanks very much, I greatly appreciate you time and interest.