Critical Brain Candy

I like Fareed Zakaria.  He’s always pretty objective and manages to summarize the key points in any problem.  This edition: Palin Is Ready? Please.

It’s difficult to predict how this will all play out, but it really does seem like the McCain campaign is digging itself into a hole.  From his Palin pick (which is unwinding quickly) to his obvious ploy to cancel the debate, it doesn’t seem much is going well for him right now.

However, as always, national US politics is so screwed up that the discovery of a candidates gay 3rd cousin can change the course of history.

Interesting description of how the Fed impacts and moves the economy: The humbling of the Fed

I hadn’t known Bernake was trying a new approach, too bad it’s not proving effective.

The current situation looks bad and unfortunately it will probably get a lot worse. I have a huge interest in US financial policy both because I work for an American company and since Canada’s economy is so tightly tied to the US due to the huge amount of trade.

Here’s a glimpse of the situation:

• The US government has put itself on the hook for an extra $500 billion to possibly $1 trillion in these recent bailouts
• The US federal government is running a deficit of around $400 billion per year
• The US has a lot of debt, both direct (almost $10 trillion) and (scarier) unfunded future liabilities (almost $60 trillion)
• The growing trade deficit is being funded, in large part, by other countries taking on US debt

If I was looking at investing money in a company with those financial fundamentals, I’d run away as fast as possible.   Now, I’m no economist, but looking at the above my thought would be “How is the US economy not already in the tank?”   One simplified answer to this is that the US federal government is running a very delicate balancing act right now.  Federal monetary policy is always a balancing act, but at this stage it’s much more difficult.

Put another way, the US monetary system is currently built on a bubble of debt.

What’s worse is that the only way to keep the balance going is to feed the beast.  We’ve seen the start of the bubble bursting with these financial failures.  A bunch of debt in the bubble went bad, so the house started to fall over, but guess how they “fixed” it?  Try to deflate the balloon a bit to reduce the effects of the bad debt?  Nope.  Injected more debt.

The linchpin in this whole thing is the value of the US dollar.  Pretty much everyone has an interest in keeping the value of the dollar high.  The US wants to keep the value high so, among other things, its credit rating stays high, meaning other countries are willing to loan it more money.  The rest of the world wants to keep the value high because they’re currently holding many trillions of dollars of it, and for every percentage point drop in value they lose a heck of a lot of money.  Further, they all fear a US economic collapse because their economies are growing due, in large part, to massive US consumer spending fueled by what?  You guessed it, debt.

Unfortunately, this dance can’t continue forever.  Most economists believe (and point to many historical cases) that the US federal government will eventually have to start printing a lot more money to repay its debt.  The side-effect of this, of course, is massive inflation.  Inflation means lower value for the dollar, which means creditors will freak out and dump their holdings, which will devalue the currency further, which ends in a downward spiraling currency.  This has happened in all other similar historical examples.

However, although this is the most likely outcome, it’s difficult to predict when.  The US federal government still has a lot of tricks up its sleeve.  I personally don’t believe the tricks do more than delay the outcome, and therefore make the crash bigger, but I’m neither an economist nor policy maker so my opinion matters about as much as all that bad mortgage debt.

A few interesting reads:
Is the US going broke?
Bailout reality check: Taxpayer tally

Today I ran into a poll and a tool that were interesting given the discussions about strategic voting on my last post.

The first: Canadians prepared to vote strategically to prevent Tory majority: poll

The second: Vote for Climate – a site to help people make their strategic voting decision, specifically to help stop a Conservative majority.

I’m not a fan of strategic voting myself, but I don’t think it’s wrong either. My objection to it is that it’s based on what you don’t want, not necessarily promoting the ideals you really agree with, so you can’t ever expect to build the country you dream of. However, unless one political party truly represents all of your positions I guess a vote is a trade-off, therefore somewhat strategic.

I think it was pretty stupid that the old-boys club wanted to stop her from entering the debates.

But, now begins my own decision making. Who to vote for? I don’t know if there’s any recent polling for my riding, but according to the 2006 election results I’m in a safe Liberal riding. As such I’m pretty safe to vote Green. If my riding was close between the Libs and Cons it would be a more difficult decision, as I fear the damage the Cons would do to the environment is potentially worse than the extra good the Greens would do compared to the Libs.

However, that’s not even a real consideration since I’m obviously not hoping my vote for the Greens would help them take power. Too bad we don’t have the MMP system federally that was voted on in Ontario, in which case my Green vote might actually help get some Greens into Parliament. In either case, considering the Environment is the most important issue for me, voting Green is a good way to “send a message.”

Just noticed this article, which is interesting considering my recent rant about an Air Canada weather cancellation I suffered: A flier strikes back.

Now, I’m not the litigious type, but this sure would have sounded good as I sat in a grungy hotel in New Jersey waiting 16 hours for my re-booked Air Canada flight.

This isn’t really news, but it’s definitely been showcased this week.  Thompson, Giuliani, Lieberman, Palin, to name a few, have really cranked up the fear mongering and hypocritical BS.  I guess that’s what they resort to when they think they will lose.

McCain seems to be campaigning as if he were the same person as in 2000, who was somewhat respectable, but has since succumbed to senility and special interest groups from the far right.

Then you’ve got Palin.  I won’t bother talking about all the ways she is screwed up, as others are doing a good job of that.  But, the scariest part is that she gives speeches claiming “… don’t ever forget, our military is in Iraq on a task from God, and there is a plan!”  I’m sorry, but any person who claims a democratic nation, especially one with supposed separation of church and state, has sent their military to perform a Gods work should be immediately banned from politics forever.  Just imagine if she’s in office and a respected religious figure convinces her that God wants the US to invade Mexico to stop illegal immigration.  Good enough evidence for her, lock and load!

Lastly, I just can’t resist, Palin claims the media should shut up about her daughter so she’s not being exploited for political reasons.  Ok, that would make sense.  Except that in the next sentence she proudly exploits her son for political reasons by repeatedly mentioning he’s in the military and will be sent to Iraq.  So, until she stops the media should feel free.

Unfortunately, US politics is screwed up enough that the presence of all those nitwits does not guarentee a loss at the polls.  I respect, and even agree with, a lot of true conservative ideals.  It’s just sad that people have been fooled to think the Republicans stand for them.