Mark Anderson, CEO, Strategic News Service, talks with Margaret Brennan from InBusiness about President Obama’s technology goals and the growing impact of China’s IP theft.

This one is obvious, but worth making public:

China has just put one over on the U.S., in no-doubt private meetings.  Here is the secret deal, as it looks from in front of the curtain:

1. The U.S. stops pressuring China on its currency.  This includes a postponement by the Treasury in releasing its required annual report on nations manipulating their currencies, of which China is surely one.

2. Hu Jin Tao agrees to come to the U.S. for the nuclear discussion, and to exert further pressure on Iran via sanctions, etc.

3. China will take care of its currency on its own, soon, and in a way that does not position the country as reacting to U.S. pressures.

What a great deal all around, eh?  Everyone gets what they want. 

Already, the papers (FT, NYT) are full of stories talking about China’s sudden reconsideration of the Yuan’s value, but Not in response to pressure from the West.

Choreography is a wonderful thing.  123, 123,

There are only a couple of problems with this secret deal:

1. China will make a currency move that, all done in a year, will yield no more than 10-15% appreciation in the currency, at a time when everyone, everywhere, (i.e., all major global economics experts, including Chinese experts) agree that the real number should be 30-40%.

By doing this, China gets to look like it did the right thing, and it pulls the fangs of those in the U.S. pressuring for a (larger) change.  Instead of a trade war and tariffs, the Chinese get a slight Yuan bump.

2. Since the whole idea of sanctions is stupid, and has never worked on any country, the U.S. is trading for something that it does not need.  Sure, it looks great on the Sunday paper, but which global leader alive today thinks that sanctions will keep Iran from making nuclear weapons?  None.  No one.  What a stupid exercise, and what useless poker chips to trade for.

OK, that’s it.  China wins, the U.S. loses; Iran wins, the U.S. and the rest of the world lose; the trade imbalances continue, and nothing, at all, changes.

Great deal, Barack.  If you live in China or Iran.

In my mind, the passage of this bill represents two opportunities, neither of which is contained in the bill just passed.

First, the real meaning of this bill is that it is possible to defeat the insurance lobby.  Ask anyone from the past who has tried, and it will be clear that this is really a demonstration of democracy, even if the bill is pretty mild.  This passage opens the mind, and therefore the door, to passage of other important legislation, from Wall St. regulation to a stronger broadband network plan, without assuming that powerful lobbies always win.

Second, the real work on healthcare can now begin.  Eisenhower Republicans, i.e., those representing business, will see this as an opportunity to begin cutting healthcare costs in a real way.  These rising costs are the greatest threat to families (in terms of being the primary cause of personal bankruptcy) and to businesses, from GM (whose greatest liability upon filing bankruptcy was future medical exposure through its pension plans) to the corner store.  American businesses, and individuals, need to bring the U.S. healthcare cost juggernaut to a halt, and then reverse it. 

We suffer 200% plus pricing for our healthcare because of how this non-business model works, with too many incentives for overspending, and too few for good outcomes.  We need to reverse the situation, bringing the doctor and patient back into a business relationship, and reducing defensive treatments caused by the fear of litigation.  This is a real opportunity for pro-business and pro- individual interests to work together to really improve the country.  Will it happen, or will the Party of No back off again, just when it has a chance to achieve its own stated goals of cost reduction? 

What matters more, party politics, or cutting healthcare costs?  If it is the latter, now is the perfect time.  The GOP will have to throw some of the insurers under the train, but in doing so they will make ALL U.S. businesses more competitive, at home and internationally.

Skipping all of the drummed – up rhetoric about the bill, there are a few thoughts about it and this process that seemed worth sharing:

1. The U.S. will not become a socialist or communist country after its passage.  We will, on the other hand, stop being the ONLY developed nation in the world that does not offer a healthcare plan to all of its citizens. 

2. For virtually ALL citizens currently enrolled in the healthcare system, they will see ZERO change.  Think about all of the anger, fear and money spent on this, for this result.

3.  Two changes that matter, which WILL occur: the uninsured will become insured, if they are legal citizens (illegals are not covered, contrary to Fox Not News); and, neither can insurers block you if you have a pre-existing condition, nor can they dump you once you get sick and actually need their help.

4. This new bill will make more money than ever for the insurance industry, in the short term.

5. This bill represents a minium structure on which real cost cutting can, in the future, be performed.  One of the great mental lapses (or logic failures) in this discussion, has been the opposition’s insistence that they want to cut costs, without understanding that cost cutting requires a system in place that can stand up to the largest cost multipliers, the insurance companies.  The latter explains why:

a. The insurance companies spent billions of dollars to fight this bill even though, as noted,

b. They will make a lot of money in the short run as headcount goes up.

Finally, it is worth mentioning this whole process as a case text on what can be done with too much money.  If there has ever been a living argument against lobbyists being allowed to spend money on representatives, the year of healthcare spending has been it.  Estimates of $1M per person are, in my opinion, WAY too low, and I expect the final lobbying expense total against this bill will be in the $2-3B range.

What did this money buy?  A lot of fear.  Fear coming from every direction.  Threats, anger, outrage, more anger, lots more fear, and lies all day every day on Fox Not News.  (Did you know that Illegal Immigrants will be covered, and you will have to pay for them?  That’s what Fox News said.)

The refusal, I suspect, of any Republicans to vote for the bill, will have the opposite effect that they are dreaming about.  Rather than getting them a landslide midterm election, they will increasingly be properly understood as the Party of No, regardless of subject.

(To be fair, this week several Republicans broke ranks to vote for a small jobs bill.)

As time follows the passage of this bill, Americans will quickly realize that they have the same care, the same doctor, the same plan, and the same costs that they had before.  Two months later, the general feeling, despite continued (no doubt) lies and money spent trying to continue whipping up a furor of outrage and anger, will be: “so what?”

One wonders, is there a stage at which the victims wake up and realize they are being manipulated by those making the big bucks?  This is no doubt the greatest challenge and fear that the broken party GOP deals with today: how do we represent the elites and the very rich, while continuing to suck votes out of the south, which tends to be poor, and was all Democrat until the end of the sixties?

It’s a tough act, and without constant spending on anger-making machinery, could easily fall completely apart, as the manipulated take stock and figure out that their economic masters are driving them and their families into the ruin they so long feared from the “other side.”

Maybe getting back into the healthcare system will do the trick.

The last administration spent more money from current funds, and indebted us more deeply into the future, than any in history.  Was it all just bad management and fake wars?  Or was it as intellectually simple and negative as the current GOP refusal to vote for any single bill?  It’s a simple strategy.  Did it work?

When the Republicans invited President Obama to address their congressional House delegation in Baltimore today, they probably had no idea how badly it would turn out for them.

Presumably the Republicans thought they’d get a chance to grill the president on live television. But instead, Obama – following on from his state of the union address on Wednesday night – turned the tables by highlighting the Republicans who opposed his policies and refused to bend, yet were prepared to “turn up and cut ribbons” when their constituents reaped the rewards.

Obama also displayed a rare grasp of policy and legislation, wrong-footing his questioners with some stern rebuttal and in some instances quoting their own positions back to them to highlight the contradictions. He mocked the GOP for presenting healthcare reforms as a “Bolshevik plot” – and got a laugh, even from the Republican audience – and suggested that their approach was counterproductive:

Frankly, how some of you went after this bill, you would think that this thing was a Bolshevik plot. That’s how you presented it. I’m thinking to myself, how is it that a plan that is pretty centrist — no, look. I’m just saying. I know you guys disagree, but if you look at the facts of this bill, most independent observers would say this is actually what many Republicans — it is similar to what many republicans proposed to Bill Clinton when he was doing his debate on health care.

So, all I’m saying is, we’ve got to close the gap a little bit between the rhetoric and the reality. I’m not suggesting that we’re going to agree on everything, whether it’s on health care, energy or what have you. But if the way these issues are being presented by the Republicans is that this is some wild-eyed plot to impose huge government in every aspect of our lives, what happens is you guys then don’t have a lot of room to negotiate with me.

I think we can confidently predict this is the last time the Republicans invite the president to a similar format. Indeed, because the hall the Republicans are holding their event seemed to have just a single TV camera, Obama literally took the spotlight away. Republican questioners showed up as shadowy figures, and when caucus leader Mike Pence kicked off the Republican questions at first he couldn’t be heard at all.

At the end, shaking hands with the president, Pence’s face looked as if he’d sucked a lemon for an hour – and in a way he had.

A sign of how compelling the footage was: the US cable networks, always so trigger-happy and ready to move on if an event is looking boring, stuck with the live feed, although Fox did cut away first for analysis.

The net effect is that Obama looked serious, reasonable and intelligent. The Republicans got to sound like whiners, complaining about various pet peeves and chewing over their old laundry list of tax cuts and opposition.

CNN quickly compared it to weekly question time in the House of Commons – and Twitter is seeing an avalanche of comments calling for this to be a regular event. Not if the Republicans have any say in the matter.

Richard Adams Friday 29 January 2010 18.36 GMT | guardian.co.uk

http://www.guardian.co.uk/world/richard-adams-blog/2010/jan/29/barack-obama-republicans#

See also:

Why do people often vote against their own interests?

The Republicans’ shock victory in the election for the US Senate seat in Massachusetts meant the Democrats lost their supermajority in the Senate. This makes it even harder for the Obama administration to get healthcare reform passed in the US.

Political scientist Dr David Runciman looks at why is there often such deep opposition to reforms that appear to be of obvious benefit to voters.

http://news.bbc.co.uk/2/hi/americas/8474611.stm#

The 2 articles above nicely illustrate the view from the UK, one covers an amusing episode in the confrontation and the other the frustration.  Who would want to be a politician these days?

We have likely avoided global economic oblivion.  The Republicans, who are largely at fault for this horrible experience, have been incessantly whining about spending, self-dealing, and anything else their focus groups can come up with: how truly ignorant, and dangerous to the world.

We, the world, owe a debt of gratitude: first, to Ben Bernanke, who came in modestly, faced a completely frightening task, and did it well, while ignoring the many partisan voices that had no backing in intelligence or data.

Second, to Hank Paulson, who also was and remains a subject of criticism, for many imagined wrongs, while he, at the time, was the only officer awake on deck.  Imagine having been Paulson, surrounded by economic idiots like Bush and Cheney, and staring over the edge into what not only seemed like, but really was, the Abyss.  Thank you, Hank, for scaring DC just enough to get their jowls out of the troughs and do some meaningful things to avoid disaster, without scaring the world so much that the sky fell in.

Even more to the point, we have Barack Obama, and his hand-picked team of professionals, who since the early days have quietly, every morning, looked into that same Abyss, and reduced its depth by a few miles.  No one is getting any thanks for this, so I would like to go on record for appreciating the difficulties, intellectual, emotional and political, that these chosen financial professionals are experiencing dailly, and conquering as they go.

So that is the Good News: by accident, we had an expert in place in a Bush administration riddled with amateurs.  And we chose Obama, who did what we hoped, and picked the best people in the country to take the wheel.

The Bad News: it isn’t over.  We’re about at the half-way point now.  We are not going to repeat the Great Depression, I think, and that is great, but this is the moment of second-greatest danger, as everyone assumes we’re OK, when we are not there yet.  What I mean by this: there remain plenty of actors on Wall Street who were doing intellectually dishonest things to “make money” without creating value, and who are ready tonight to go right back at it, hammer and tongs, without a second thought.  Wow!  Really?

One example of this is in the oil pricing story, where the same schemers are now back again, driving up prices without a thought: why should they care if their personal antics, worth a few bucks in income, put a heavy tax on the global economy?  They just don’t get it.  Since they don’t, I hope someone in Washington will, and will decide that price manipulation of energy is a federal felony worth prison time.  More to the point, that they will seek out such miscreants and put these white collar criminals behind bars for a very, very long time.

Given that the worst is over, but the battle is not, now is a good time for our subscribers, members and blog readers to be vigilant, careful, and not to act as though risks are now history.  Plenty of small banks will fail in the next year (watch out, Georgia); California will likely go bankrupt in some form within 90-120 days.  More people will lose their jobs, and retail in the U.S., our largest economic input historically, will be in the gutter. 

But for those who are careful and paying attention, there are already opportunities, globally and locally, in U.S. real estate, in commodities (copper in China, anyone?), in large scale opportunities in alternative and clean energy.  The world is changing in fundamental ways, and that is always the best time to make money.

So, again: Thank you, Hank, Ben, Barack, and Tim.  The world owes everything to you, after we twice ran the Monkey in the Cockpit test. 

Whatever the angry men on radio and TV are shouting out this week, you saved us from that darkness over the edge that Hank saw the weekend after Lehman failed. 

For those who are serious about making money, there are today more ways of doing so than there have been for many years, and these are real, rather than fraudulent.  And for those who are serious about world affairs, we are back in adult, professional hands, and none to soon.  Now we just have to be very, very careful.

This week’s exercise in Party Management (what can we give these disparate folks to do, so they will feel important?), no doubt cooked up by some PR firm on K Street in DC, was to have mini tea bag parties around the country.  The real picture, if you ignored Fox TV : groups of 10-100 people, average age 67 (Fox, this is your demographic), whining in the rain about taxes.

IF someone had been at each event, asking: “Do you make less than a quarter of a million dollars in income per year?”, I can guarantee you that almost all of them would have said, Yes.

And then, with their No New Taxes signs on their shoulders, the interviewer could have asked the final question: do you realize that, under Obama’s budget, you will have a tax reduction?  Boy, that would have spoiled their party.

Is this current crisis an IQ test?  Of course it is: life is an IQ test.  Is it Darwinian?  You bet: life is Darwinian (unless you live in Louisiana, which just voted to put Creationism on school curricula).  Will some lose, and some win?  Absolutely.

The days of Karl, and his antics, are really over.  In fact, the Pentagon’s propaganda office was taken apart by the Obama people this week.  Now, the message of the nation will again come from the White House, and the State Department, and not from the Pentagon. 

Staging goofy tea bag parties against tax increases that the people in the crowds would not be paying?  Was it the ghost of Karl? 

Had to be. 

It certainly was not for the benefit of: the town, the county, the state, the country, the world.  Did it benefit the party?  On the face, the answer would be Yes.  But, a day later, when they all realize that they actually were not paying higher taxes?  Will they have that moment?  Are they smart enough? 

That’s the next test.  Who will they be more angry with, since anger is the currency of the current party hacks?  With the party hacks?  Or with Obama, who didn’t raise their taxes after all?

I’m afraid the answer, again, will be (b).

Rather, I think it is more interesting to continue the very serious conversation about which exact crimes they have committed, who has committed them, and what kind of punishment they may expect to receive, a process that will begin hours (not days) after they relinquish power.

I want to say one quick thing about Obama’s comments on this, echoing Paul Krugman in today’s NYTimes: a) Obama would be making a huge mistake, despite the short-term advice being given him by inside counselors (the top one the son of an Israeli terrorist) about letting the Neocons and other criminals get off the hook; and, b) it isn’t up to him.

This latter view is worth pursuing:

Who cares what Obama decides to do about Bush? Excuse me, but I just could not care less. When criminals break the law, we don’t ask candidates-to-be if we should prosecute. I would suggest that ANY comments by the Obama team indicating a lack of will to prosecute would, of itself, be worth examining as being in some way accessory.

In other words, Obama: on this subject, please shut up. We are not interested in your first big mistake: not prosecuting the most evil and dangerous villains ever to misuse power in the U.S. government.

Therefore, regardless of the Obama political calculations, we should be resolved, as we have in past similar situations (Iran Contra, Watergate) to put these crimininals to trial.

There are so many crimes, it seems almost impossible to list them; I certainly won’t try to here, but will leave it to experts in each department and field to do so. Krugman says he has counted six different departments wherein crimes were committed; that seems too small a number, but it does not matter.

Here is a simple question: who is responsible for nearly a million civilian deaths in a faked war? There was never, ever a need for an Iraq war; and that statement will stand the test of history. Given its truth, we should not be talking about the few thousand GI deaths as the cost of the war, but should recognize that the United States, without cause or any particular aggression on Iraq’s part, and without any proven concern for its own safety, did cause the deaths of between 600,000 and 1,000,000 civilians in that country.

Let’s see now, is Dick Cheney ready to stand up and pay for this? Exactly how, Mr. Cheney, are you planning on doing that?

One million civilian dead.

And then we have the increasingly-correct pattern I have discovered about the entire Bush administration: it was about nothing smaller or larger than regular old Texan self-dealing. If you are familiar with Texas political history, self-dealing is kind of like getting up in the morning. But, for the rest of us in the Union, self-dealing is unethical and often illegal.

The story of the Bush administration will fall into prosecutorial parts, all of them very large, and all of them worth the effort of pursuit and conviction:

1. Killling of Innocent Civilians. With no cause, and based upon lies and deception, the Bush administration invented a war which led directly to the deaths of about 1 million civilians. Welcome to Hell, boys. If the reconstituted Justice Department doesn’t get you, Satan surely will. I’m glad y’all are so religious, that’ll be worth five points.

2. Self-dealing. Richard Clarke noted your map showing an Iraq already divided between oil companies nine months before you declared war. In fact, self-dealing is the single term that describes the entire Bush time in office. Everything the Bush folk did was, in some way or other, self-dealing. Specifically, historians will be working for years to figure out how you managed to milk $3T (trillion) out of taxpayers and transfer it to – - well, that is the interesting question, isn’t it? Did it all go to Cheney, since he was the real president most of this time, and he retained real financial connections to Halliburton, and Halliburton got most of the money?

But that is being way too simple about all of this. Let’s just assume that, starting with Enron, Kenny Boy Lay, and moving through Cheney’s top-secret energy committee meetings, on into the Iraq War, you used every opportunity, not to serve your country, but to serve your friends. With $3T in cash. Oww! Gee, some large number of people are SURELY going to jail on that one. $10B in cash missing in boxes in the first weeks of the Iraq War, and today, maybe $350B missing so far, with so much more still undiscovered — WOW! George, there is no other word for this kind of theft from the taxpayer other than, well, breathtaking.

Don’t worry. We will find it. And we will find your fingerprints, and those of your self-dealing Texas pals, eventually. It might take three or four years, but we have time.

3. Perverting the Justice Department, and Justice, itself. Others have written eloquently about this; it was, generally, mirrored in the EPA, and in other government agencies. I personally think your goofy AG Gonzalez will serve time, and many of his mis-guided screwballs will also go to jail. Mssr. Yoo is first in line for writing 8th grade level deceptive opinions on why torture etc. was legal. Other appointees made for purely political purposes will come next.

In a brief not-quite summary: in addition to killing millions of innocent civilians without cause, self-dealing trillions of dollars to Halliburton, KBR, and your own family, and doing your best to destroy the Rule of Law and Bill of Rights in this country, there remain thousands of other, smaller, but also important, crimes, for which you

The Defendants, civilians
George W. Bush
Dick Cheney
Donald Rumsfeld
Douglas Feith
Richard Perle
Larry Franklin
Paul Wolfowitz
Condoleezzaa Rice
John Yoo
Alberto Gonzalez
Unnamed John Does in the Justice Department
Unnamed John Does in the EPA
Unnamed John Does in the other departments of government
“Scooter” Libby
Karl Rove

Are hereby charged to answer, on the xxth of February, at XXXX in Washington, DC.—-

The world is watching, and, more importantly, so is the nation. Even more important, so are the criminals who did these really, really horrible things.

This prosecutorial decision is not up to the Obama Transition Team. This is about breaking the law.

Krugman says that, without punishment, you will continue doing what your Dad did in Iran Contra.  BTW, George, I did in fact notice that your very first act in office was to extend the secrecy of your father’s archives, beyond their usual time coming public.  So: Iran Contra.  Daddy started it, You continued it.

I think Krugman is right: if no one is punished for the most flagrant and greatest violation of U.S. laws in history by (illegally?) elected politicians, how can we go forward?  How can the world, knowing that the Z Team is just waiting, in reserve, to come back onto the field and do it all over again?

Neither the country, nor the world, can afford it; nor can we afford even the doubt about it.

We need to be clear: when you intentionally, flagrantly, break the law, we will come after you.  Even if you are or were an elected official.

That is the most well-loved aspect of America, and it is the part of America we most want to keep.

So, Mssr. Obama, please don’t discuss this publicly at any greater length.  If I wanted you to be the person who decided whether the law mattered or not, I would have voted for you as the Decider, instead of as the President.

Put some steel in that backbone, and get used to having it there.  Your widest road to failure is paved with having no personal stand.   We all like Henry Clay when it comes to geographical compromise.  None of us would espouse the same approach to murder, or abrogation of the Bill of Rights.

The Bush Team is going to jail, and one hopes, quite soon.  Of course, then we’ll have to face the ultimate self-dealing question: Can a President pardon himself and all of his self-dealing friends for crimes in the future, for which they have yet to be charged?

The answer is no, but I have no doubt he, and they, will try.  They have already proved to us that they have no personal shame.

I first suggested this subject in my opening remarks at FiRe 2008, and my thinking hasn’t changed much since then.  Here is what I see for oil pricing in the near term future:

Because it is keying primarily off of speculation, today’s pricing will continue to rise until the November election.  I don’t know how far they can take it, although if you take a look, it has been on a straight line increase for the last six months or so, and I see no reason for this not to continue during that term.

After the election, we have two different paths.  And this is where it gets fun, I’ve found, because my call seems to run counter to the intuition of a lot of consumers.

If McCain is elected, the price will fall just slightly, bracketed at the low end in the $125 / bbl range.  The chances for its continued rise after this are high.

If Obama wins, the price will drop more, probably bracketed at the bottom in the $95 / bbl range.  The chances for continued increases are lower, and the chances of a lower rate of increase are higher.

In other words, the US and global economies will be under less pricing pressure for oil if Obama wins.

Here is my reasoning:

The price today contains about a 40-45% premium from speculation (I agree with Soros on this).  Speculators love fear, war, uncertainty, and anything else that leads to volatility.  Additionally, nations like Iraq, Venezuela, Iran, Saudi, etc. that have responded negatively to US military moves in the Mideast by pumping or delivering less oil to the US (or raising prices, or restricting access, etc.), are more likely to continue doing so under a leader vowing to continue the military footsteps of the Bush administration.

Conversely, if Obama makes moves of withdrawal from Iraq of any real kind, and indicates to the Middle East that he is seeking peace, the result will be a reduction in speculation and volatility, and an increase in volumes made available to the US and world markets.

As for the numbers, the routines for getting the exact figures are a bit hard to define – and, of course, they may be inexact.

But I have no doubt regarding the fact of paying a McCain premium, any more than one would doubt we are now paying a Bush premium. 

Because oil pricing is probably the most important economic parameter of the decade, this differential ought to be part of any discussion of election politics, regardless of the points of view of those involved.

I hope that this spurs that debate.