Davos, Pyongyang on the Potomac & Our Cosmic Hologram

Some thoughts for reflection at week’s end…..

In Congress and the boardroom, failure to recognize a new era.
It looks like a win but feels like a loss. The party-line vote in favor of the stimulus package could have been more, could have produced not only a more promising bill but marked the beginning of something new, not a post-partisan era (there will never be such a thing and never should be; the parties exist to fight through great political questions) but a more bipartisan one forced by crisis and marked by—well, let’s call it seriousness. President Obama could have made big history here. Instead he just got a win. It’s a missed opportunity. Read Peggy Noonan’s analysis here.

Davos09: A crisis and failure of leadership
Jeff Jarvis’ take on Davos…
The crisis the world is suffering through now is a failure of leadership. The leaders of the world are in Davos. If the world is watching what happens here this week, it will be to hear solutions and see responsibility and accountability. I’d say that’s not off to a great start… the first trend I spot here: the rise of government. Asked who can fix the economy and prices, among Davos participants government is now clearly the preferred leader, a survey says. The percent who agree that government should impose “stricter regulations and greater control over business across all industry sectors:” 61% in the US up to 84% in France (65% worldwide). The percent who trust business less: 62% worldwide, ranging from 77% in the U.S. down to 49% in India. The survey reveals a new world split: optimists in China (where trust in business rose from 54% to 71% in a year), Brazil, India, Indonesia; pessimists in the US, Europe. The other obvious trend is America to the woodshed. America is the new Europe. Read the full analysis here.

Global Crisis Destroys 40% of World Wealth; Bailout to Hit $4 Trillion
The World Economic Forum reports the past five quarters have seen 40% of the world’s wealth destroyed and business leaders expect the global economic crisis can only get worse. Steve Schwarzman, chairman of private equity giant Blackstone, says an “almost incomprehensible” amount of cash had evaporated since the financial crisis took hold. Read the complete analysis here.

The Height of Power: As other American fiefdoms fade, Washington looms larger than ever
For more than two centuries, it has been a wannabe among the great world capitals. But now, Washington is finally ready for its close-up. No longer a jumped-up Canberra or, worse, Sacramento, it seems about to emerge as Pyongyang on the Potomac, the undisputed center of national power and influence. As a new president takes over the White House, the United States’ capacity for centralization has arguably never been greater. But it’s neither Barack Obama’s charm nor his intentions that are driving the centrifugal process that’s concentrating authority in the capital city. It’s the unprecedented collapse of rival centers of power. This is most obvious in economic affairs, an area in which the nation’s great regions have previously enjoyed significant autonomy. But already the dukes of Wall Street and Detroit have submitted their papers to Washington for vassalage. Soon many other industries, from high-tech to agriculture and energy, will become subject to a Kremlin full of special czars. Even the most haughty boyar may have to genuflect to official orthodoxy on everything from social equity to sanctioned science. Read the complete analysis here.

Unemployment Surges As The Noose Tightens On The Global Recession
The International Labour Organization forecast this week that as many as 51 million jobs could be lost worldwide in 2009 due to the global economic crisis. But even this estimate cound prove to be a conservative one. Full post here.

Russian military a “paper tiger” despite symbolic comeback, says IISS
Russia may be flexing its military muscle once again, sending warships into international waters and dispatching long-range bombers on reconnaissance trips, but the former superpower remains a paper tiger, according to a respected London think-tank.
The recent naval maneuvers in the Mediterranean and Latin America were symbolic gestures – the former maritime giant was able to deploy only a small number of ships, while the rest of the fleet was anchored at home without enough money to keep it at sea, the International Institute for Strategic Studies (IISS) says. Read the complete article here.

Russia and Iran get strategic
While many analysts predicted a rosier picture for United States-Iranian relations with the President Barack Obama administration, the situation is rapidly becoming profoundly more difficult and more complicated. The new dimension is Russia. On February 20, the Russian Federation Security Council and the State Council will approve a new national security strategy to go through 2020. Without saying the “United States”, the draft document clearly identifies the United States as Russia’s primary rival for the next decade. It goes on to say that the primary focus of the struggle will be for hydrocarbons in some very specific areas. The Middle East and Central Asia are mentioned specifically. In these areas, according to the document, the struggle could develop into a military confrontation. Full analysis at this link.

Obama’s arc of instability
As money shots go, especially archived under “team of rivals,” few surpass the one last week heralding the launch of the new United States State Department. The photo features President Barack Obama, Vice President Joe Biden, Secretary of State Hillary Clinton, new US Middle East envoy George Mitchell and new US Afghanistan/Pakistan envoy Richard Holbrooke. Washington’s chattering classes have genuflected accordingly and burned down their Blackberrys in awe. Obama then laid down the (new) law – sort of. He re-extolled “America’s moral example” as “a beacon of our global leadership.” But the way the new White House is setting a “moral example” after the horrible carnage in Gaza is quite revealing. Obama phrased his top priority in no uncertain terms: “America is committed to Israel’s security … Israel [has the right to] defend itself against legitimate threats.” Not a word on the root cause of the whole tragedy: the illegal, neo-colonial, ever-expanding Israeli occupation of Palestinian land. Read Pepe Escobar’s latest well-reasoned diatribe here.

Gates returns to his Tehran hard line
When United States Defense Secretary Robert Gates accused Iran of “subversive activity” in Latin America this week, it raised the question of whether he is trying to discourage President Barack Obama from abandoning the hardline policy of coercive diplomacy toward Iran he has favored for nearly three decades. I wondered why Gates linked Iran to Latin America. Here’s one explanation.

Davos summed up
Government… is in charge now — until we remember everything that government fucked up.
It didn’t watch, didn’t regulate, and encouraged the madness. Once disaster came, governments have squandered billions — soon trillions — of our money without goals or accountability, with our money going to dividends and salaries for those who already skimmed too much off the latte that was our economy. Where’s the plan? I haven’t seen it here. I’m talking with other people who are getting more depressed as the day goes on and here, I think, is why: We are surrounded by the leaders who fucked it up: bankers, marketeers, regulators, and the press. They were in charge. That’s what Davos is: the people in charge. So who’s to say that we’re going to find the answers in Davos? Well, the people in Davos will. But I think the evidence is strong that the answer is not here. I’m going skiing.

And ringing down the curtain at Davos09: What’s missing in journalism?
The media machers at Davos got together yesterday with three economists to ask what went wrong in financial coverage that did not warn of the crisis. Like other leaders from other segments of society here in the meeting of the machers, they did not don hair shirts. I believe that will be the worst outcome of this year’s Davos: a failure to take responsibility for the failure of leadership. But blame isn’t the most productive priority. What’s more critical is to ask what to do about the failure. I wonder what gaps the crisis reveals in journalism. (Macher is a Yiddish word meaning “an important person, a doer,” it is generally used ironically.) Read Jarvis’ critique here.

The Heritage Foundation Builds a Fleet
The Heritage Foundation has released a report titled Quadrennial Defense Review: Building Blocks for National Defense. The key point that enables the report is the requirement for 4% of GDP spending. It also states boldly that the US Navy is a blue water force and if you don’t like it, shove it. The question is in what strategic environment would one find this be the desired fleet constitution? The Heritage Foundation apparently believes war between the US and China is coming. How else can this be a QDR vision?

The Bureau of Economic Analysis reported today that U.S. real GDP fell at a 3.8% annual rate in the fourth quarter of 2008. The full report is here.

The credit crunch has officially arrived
December data show a fall in credit to households and companies; Trichet warns the markets not to put pressure on banks to hoard capital; German unemployment shoots up, as financial crisis hits the real economy with brute force; global cargo traffic was down 22.6% in December, the latest sign of a collapse in world trade; Robert Shiller, meanwhile, predicts that the US housing crisis will last ten years.

Obama’s New Stimulus Plan May Be the Needle That Pops the Treasury-Bond Bubble

New Mall Construction “Dead for a decade”

The foreign portfolio of China’s government is higher than $2.3 trillion.
Consequently it should not be a surprise that China’s government now has close to a trillion in Treasuries. OK, not quite a trillion. But darn close. $860 billion or so at the end of November and – if current trends continue — over $900 billion at the end of December. China also has $550 billion or so of Agencies, which are effectively now backstopped by the Treasury. That works out to an enormous bet by China’s government on US government bonds. Read Brad Setser’s complete analysis here.

Floating rubbish dump ‘bigger than US’
It has been described as the world’s largest rubbish dump, or the Pacific plastic soup, and it is starting to alarm scientists. It is a vast area of plastic debris and other flotsam drifting in the northern Pacific Ocean, held there by swirling ocean currents. Full article here.

Content and the Media: Be Careful What You Wish For

Our world may be a giant cosmic hologram
Driving through the countryside south of Hanover, it would be easy to miss the GEO600 experiment. From the outside, it doesn’t look much: in the corner of a field stands an assortment of boxy temporary buildings, from which two long trenches emerge, at a right angle to each other, covered with corrugated iron. Underneath the metal sheets, however, lies a detector that stretches for 600 metres. For the past seven years, this German set-up has been looking for gravitational waves – ripples in space-time thrown off by super-dense astronomical objects such as neutron stars and black holes. GEO600 has not detected any gravitational waves so far, but it might inadvertently have made the most important discovery in physics for half a century. For many months, the GEO600 team-members had been scratching their heads over inexplicable noise that is plaguing their giant detector. Then, out of the blue, a researcher approached them with an explanation. In fact, he had even predicted the noise before he knew they were detecting it. According to Craig Hogan, a physicist at the Fermilab particle physics lab in Batavia, Illinois, GEO600 has stumbled upon the fundamental limit of space-time – the point where space-time stops behaving like the smooth continuum Einstein described and instead dissolves into “grains”, just as a newspaper photograph dissolves into dots as you zoom in. “It looks like GEO600 is being buffeted by the microscopic quantum convulsions of space-time,” says Hogan. If this doesn’t blow your socks off, then Hogan, who has just been appointed director of Fermilab’s Center for Particle Astrophysics, has an even bigger shock in store: “If the GEO600 result is what I suspect it is, then we are all living in a giant cosmic hologram.”

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About Caracas Gringo

Representing less than 0.00000000001515152% of the world population as of 31 December 2011.
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