Stimulus. The mere mention of the word makes one want to yearn to be interested. It sure has gained the attention of the nation. Republicans just can’t get over the failed notion that tax cuts for the rich produces jobs through “trickle down” economics. All that has done for us is produce greedy Wall Streeters and spiraling debt. Democrats refuse to turn their backs on the social giveaways of the 1960s that lead to more dependence and less initiative. The Stimulus package consisting of over 600 pages. What one comes away with after perusing the bill is much of the bill attempts to pick up the detritus that is transforming the American economy. Many decry the fact the bill doesn’t have enough stimulus in it. The reality is the bill is attempting to ease the suffering of those who are collateral damage in this economic crisis. Much of the funding goes to state and local governments who are buckling from the weight of the meltdown. Maybe the bill is a finger in the dyke. This stimulus package appears to be more a bridge for those who are suffering than job creation measure. Most would like to see more infrastructure spending in the bill. This fact brings me to number two on the things Barack Obama should do as President.

Infrastructure and the Green Economy

If one spends anytime in places like Singapore or Oslo and then compares them to Chicago or Jacksonville it will become apparent that the United States is losing our edge. Singapore is using the interest they make off of US loans and investing in their infrastructure. Their modern airport has internet portals and kid play zones. American airports are functional but dated, dark and dingy. Look at the images when people are stuck in them during a snowstorm.  The Katrina episode pointed to the fact of how antiquated our infrastructure is. The bridge collapse in Minnesota highlighted this notion again. The complacency of America is in full swing. The innovation in the manufacturing sector has gone the way of its workers: overseas. For a nation to be truely viable, it needs to have something to trade. Trade was the instrument on which this nation was built. In large part Britain’s obstruction of unfettered colonial free trade played a large role in the Patriots telling old England to take a hike.

Infrastructure and trade work like a hand and glove. As the manufacturing sector has continued to migrate from the US, its infrastructure has continued to decline as well. At the height of the US’s industrial power following WW II (we were producing 60% of the world’s products), Eisenhower began the most significant infrastructure project of the 20th century; the establishment of the US highway system. American industrialism demanded it. It reminds me of the fact that the roads built by the Romans in their heyday continued to be the avenues by which the Europeans traveled during the Renaissance. Granted, the comparison is not as drastic but our infrastructure is in vital need of repair. For the better part of four decades American money has been bleeding towards overseas ventures. Defending Europe during the Cold War, maintaining hegemony over Japan in East Asia, the Vietnam War, payoff money for attempted Middle East peace in the 70s, the Gulf War, $3 billion a year to Israel, and the war in Iraq to name the biggies. Overseas trade is good but the hemorrhaging of American money is not.

To make the US energy independent should be near the top of President Obama’s list. If this nation can utilize its ingenuity and meet all its energy needs without using Middle Eastern oil, we can make that entire violent region superfluous. A shift away from ultra-militarism and more toward redefining the US economy is the only way to reignite America’s greatness. We have the capacity to develop a green sector in this country. Boundless reaches of this nation are ideal for wind turbines. The Southwest is  perfectly suited for solar energy and with huge investment, both through government incentives and private development, we have the brainpower to create energy in ways we can only dream about as long as those entities with competing interests will not be allowed to interfere. We saw this with the killing of the electric car in the 1990s. President Obama has openly stated he intends to proceed with a new energy agenda. Let’s just hope the economy will allow him to add it to his plate.

Democrat, Republican, Conservative, Liberal, it doesn’t matter. On a day when oil prices rocketed to $140 a barrel based purely on speculation of future oil prices it is time to let your Congressmen know how you feel about this issue. You can guarantee I will be sending out some letters tonight.

From Wall Street Journal’s Marketwatch

Last update: 4:24 p.m. EDT June 23, 2008

Gas could fall to $2 if Congress acts, analysts say

Limiting speculation would push prices to fundamental level, lawmakers told

By Rex Nutting & Michael Kitchen, MarketWatch

WASHINGTON (MarketWatch) — The price of retail gasoline could fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy-futures markets, four energy analysts told Congress on Monday.

Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.

Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters’ assessment at a hearing on proposed legislation to limit speculation in futures markets.

Read More

Every winter we hear about little old ladies who can’t afford their energy bill and live in small cold apartments. Well, it appears the Ukraine is playing that role these days. Russia’s energy company Gazprom has reduced the flow of natural gas to the Ukraine by 25% because of a delinquent bill. The former Soviet Republic owes Russia $600 million. The Ukraine, by far the largest importer of Russia’s natural gas,  has promised to pay the bill but says the reduction in gas output from Russia is not a major issue since the winter in that generally cold nation has been mild. Some believe Russia’s move was meant to show the region that she plans on continuing Putin’s strong hand. Russia and the Ukraine have a long history of tension culminating in Stalin’s decimation of the population of this largely agricultural country in the 1930s when he starved between seven and nine million Ukrainians after they failed to embrace his policies.

The closing of the oil spiket comes on the heels of the election in Russia of a new President, Dmitry Medvedev, who promises to have a more aggressive foreign policy. Anti-government rallies and dissent have been quashed in the wake of the election. Opposition parties have vocally referred to the election as a sham. Protests from  pro-Putin youths known as the Nashi rallying in front of the US Embassy against the occupation of Iraq and the US’s recognition of Kosovar independence were allowed to commence. Russia  historically has had strong ties with Serbia, the Baltic nation that recently lost the mostly Muslim state of Kosovo. Russia, no stranger to aggression throughout its long history, continues to flex its muscle in the region. The Cold War may be in the history books but that does not mean Russia as a Eurasian power has faded as well.

The free world community made a big mistake when they agreed without reservation to allow Beijing to hold the 2008 summer games. If China wishes to be an equal economic partner they must play fair. China’s currency is artificially deflated to the tune of 40%. The reality is China’s fiscal policy is not only hurting the United States, the European Community is also deeply affected by it. In 2006, the EU imported 191 billion Euros from China and exported 63 billion Euros and the deficit is trending upward. Not only is China undervaluing its currency but they are also pursuing protectionist policies to prevent foreign nations from selling certain products within China. The current dilemma, however, is how to go about punishing China for practicing unfair trade. The logical solution would be to simply place a tariff on imported Chinese goods, say 40%, which would decline in kind with the revaluation of the Yuan. The problem is many Western companies have moved their factories overseas to take advantage of kinder profit margins. To impose a tariff would hurt these companies. So what, you say. They are traitors anyway, right? Well,  many Americans own these companies’ stocks and such punitive measures would cause a ripple through the market. Even if we were prepared to aggressively go after the unequal trade situation, lobby groups would push back hard against such laws. The one area where the West could start to show how serious we are about the situation would have been to stop the Olympics from going to China until fair trade was a reality. Too late now. As we continue to hoard goods on our walls, in our kitchen cabinets, on our feet and in our clothes closet it should not be lost that most carry the label “made in China”. There is no doubt the movement of manufacturing jobs began with adjustment by Walmart to go from their famous slogan of the early 1980s “Made in America” to one in which nearly every product sold there today is made in China. Some say the natural byproduct of globalization is the transfer of manufacturing jobs. I’m fine with that as long as everyone is playing by the same rules.

For a good analysis of Walmart’s role in the loss of manufacturing jobs watch PBS’ Frontline special online: Is Walmart Good For America?

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