Monday, November 24, 2008

J.M. Keynes - a la Neocon

John Maynard Keynes the economist who gets credit for the economic model which helped the world start to claw its way out of the last great swamp created by panicked Wall St. 'investors' has been newly-revivified to justify the neocon solution to the mess that's happening now. Problem is they're not reading Keynes, they're interpreting Keynes and we all have ample evidence of their powers of interpretation.

These are the same wizards of economy who espouse the 'Chicago School' of free markets - J.S. Mill and Adam Smith without the 'intelligent' or 'decent' parts. These are the same guys who clapped when the greatest market on earth dropped Keynes' slow-and-steady growth model for a wild west wahoo where a shyster could really make a buck. They're the guys who brought the Roaring 20's back to Wall Street. No wonder the past two decades have seen a wave of the greatest flim-flams and failures, and now, possibly, the biggest crash of all time. Having studied basic economics these mavens can't say they didn't think it could happen. They can't even say they didn't see it coming, they did, but by then even they couldn't stop it.

Here's the punchline - they aren't going to stop it this time either. For their Keyensian model isn't Keynsian at all and is just another waste of dwindling resources.

Keynes was all for government spending to get out of a depression. He was for massive public works projects and for support for the poor. But he wasn't big on bailing out private banks and businesses. The depression was caused by a round of self-generated bailouts which weren't enough to undo bank liquidity problems. Credit caused business failures and a round of unemployment, lack of credit, and diminished resources put the economy into a coma. Public spending - on infrastructure on America, on housing in Britain, on rearmament in Germany got economies started again. Massive public spending for World War 2 drove the economies into high gear and a developing consumer market after the war kept it there. Keynesian economics kept the lid on the high spots and supposedly revved up the low spots.

Increases in resource prices - particularly oil - in the 70's gave rise to an inflationary period that wasn't handled well. And 'new' economists - the Chicago School began to call for more relaxed market structures and lowered barriers to trade to minimize the cost of resources and raw materials. High production for a global free trade market would control the effects of demand on prices of goods. From the 1980's, as the world economy expanded, it seemed they were right, the bull market was eternal. The bull really was eternal, for the only thing missing was some inanity like 'prices will rise forever' - I think some real estate bozo actually said that! We know all too well that real estate, as it has been in other downturns, was the catalyst again this time.

So to-day we have our governments being 'Keynsian' and bailing out failing financial institutions. Now major industries are lining up for the free lunch. Next it will be smaller business. All demanding handouts, or selling crap to the public purse. Not that the government should be demanding value - liens and bluechip shares - that would be like socialism. The government would 'own' businesses - and we all know what a bad job government does managing business. So we'll settle for partial Keynes, a welfare Keynes, a hand-out that we hope will be a hand up. So far it seems the banks are sitting on their handouts, waiting for that 'run', when people want to get what they can. And that day may well come, for the banks are setting business up for it. And business is setting the people up for it.

They have done better, if not at least just as well to have blown 700 billion on economic stimulus to ordinary people. Most would have spent it at banks and business anyway - and solved the same cash flow problems naturally. As it is now, the ordinary people can't afford to drive the economy, and big government is in too much debt to do what needs to be done - take back the money supply and pass laws that might 'hurt' the debt-holders.

Wednesday, November 12, 2008

Soldiering On

The latest edition of the Canadian Legion Magazine (the Legionnaire) has an article on Canada's current role in Afghanistan. It is remarkable in two regards. The first is the good spirits and professionalism of Canadian soldiers serving in a military conflict where military victory is not attainable. The second point is the 'disconnect' between personnel inside the wire i.e. the 'base wallahs' at Kandahar and those outside the wire on the sharp end.

After hearing a long-service soldier address our men's group the other night, it is evident that an even greater disconnect exists between Ottawa and the forces in Afghanistan about what are realistic goals in Canada's involvement.

First some history. Canadian involvement, recently, dates back to the late 60's when a Canadian military mission, based in Pakistan was tasked with mine clearance or mine ameloration operations to assist Afghani refugees. Afghanistan, even to-day, being one of the most heavily-mined places on earth. The Canadian mission - from what the speaker said, was successful in educating Afghan refugees in Pakistan about mines and how to identify and dispose of them. This mission ended when government funding was withdrawn and the Afghans were left to their own devices.

As a military man, our speaker seemed informed, but had a 'biased' view of recent Afghan history. This is a commonly held one; that the Taliban are, somehow, a 'foreign' and 'evil' force in Afghanistan. Left out of his history are the facts that the Taliban were the only force to bring anything like stability to Afghanistan in the past 30 years. Given the fact that the country had been virtually destroyed in a series of wars and was 'isolated' from support by both 'sides' in the 'cold war'. The accomplishments of the Taliban are remarkable. However it is their religious fundamentalism that gets the attention. And that aspect gets them the 'blame', for lurid Islamic radicalist attacks on the 'free world' and their own people, that takes pride of place in explaining what Canadians are doing there at all.

What we're doing there, apparently, is 'fighting' so that the Afghans, or some Afghans, will have a chance to set-up and cement in place a western-style democracy where nothing like that has existed, ever, before. Somehow this can be done, when a socialist-style workers paradise - supported by an equally powerful neighbour fell to Islamic goatherds, supported by another power, in only 5 years. What we're also doing there is spending 20 billion dollars on the military - most of which will be attrited in Afghan service. This is part of what we're told, is our committment to NATO. It's also part of our support for America's 'war on terror'.

Canada's active combat role came after two years in a non-combat NATO role - the original intention, to re-build Afghanistan. Canada's post was initially outside Kabul, but when US forces were faced with an intractible and growing Taliban resurgence in the southern and eastern provinces, Canada responded by taking responsibility for Kandahar province. Once the Taliban realized we were there to fight, they obliged and since then the Canadian 'mission' has been involved with supression of insurgents, or development activites relating to suppression of insurgents. Canadian influence has been extended to some areas of the province near the capital, but, in essence, Canadians continue to fight over territory they were fighting over when the mission started, or within gun range of it. US Marines were reintroduced into the border regions - areas that had not been to amenable to Canadian or Afghan control.

We are told, by the Americans, and Canadian leaders, that troops are too-thin on the ground to 'take and hold' territory. The best we've come up with is to put out Afghan army and police units - stiffened with small Canadian units in little forts - to see if the Taliban can be held down. This has resulted in on-going attacks and cavalry 'rescues' which themselves risk attack. Supply and replacement has to be a real operational problem as Canada suffers from a dearth of helicopters. Even the main base is regularly rocketed. And Kandahar City, only an hour away, has been like 'Dodge City' at times this past year with jailbreaks, assassinations and even a fairly large military operation to take back a land grab.

Canada is committed to a presence in Afghanistan until 2012. It was recently reiterated after an announcement of a notable increase in US forces, that Canada would be sticking to this withdrawal date. Something tells me that those who 'support the troops' will be heard from if the Afghjan government is still fighting insurgents at that time. We're not getting Canadians killed so we can adhere to a calendar are we? If peace , security and freedom in Afghanistan are worth fighting and dying for in 2008, it's highly unlikely they'll become unworthy in 3 years time. Leaving before that gives the impression they weren't 'worth' anything at all.

And so things continue. Winter is taking hold in the Panjwai and Arghanderab. The Afghans generally hunker down in the winter which provides an opportunity for NATO to 'get active'. Last year that was the case, and it just might have had something to do with the 'active' summer the Taliban have given our troops in return.

Monday, November 03, 2008


There was a simpler time when, if you heard the word melamine, you thought about a plastic kitchen counter top. Not any more!. Now you think about additives in your food.

The stuff has been around for more than a century but it was only when research into plastics had this complex nitrogen-based molecule mixed with cyanide to produce a heat-formed plastic that the word came into general use. And it came into use to describe a form of thermo-plastic.

But the nitrogen base of the original fabrication was the thing that interested food producers. Nitrogen is a base for fertilizers and so it was only natural that somebody decided to dump some melamine on the garden. It didn't work as well as other forms of fertilizer, so there was nothing to be gained from that. But other wizards who were experimenting with high-protein animal feed were looking for something to replace urea. (No I'm not taking the piss, they lace animal feed with chemical urea to bulk them up.) Melamine looked like a source of cheap, easily-absorbed nitogen-based protein. Problem was, it wasn't all that easily-absorbed and, when used in high quantities, had some 'side-effects'. But somebody noticed that when it was added, it boosted the tested content levels for protein in the feed, even if the animal couldn't process it.

On large animals the effects were not as marked, although there were some reproductive affects noted. In dogs and cats the stuff was toxic, attacking the kidneys and leading to renal failure. It was in pet food that the first food-chain problems came to light with a rash of sick animals in pet-fancying America. The cause was traced back to pet foods and to protein additives imported from China, that were used in the manufacture.

While the Chinese were investigating, it came to light there, that infant formula was making some very sick babies. When that was checked what showed up? You've got it - melamine!

How come? Well, that point about melamine boosting tested protein levels wasn't wasted on the smart. Particularly the smart who thought that watering milk down and adding some melamine was a great way to increase the profit margin. Turns out there was no 'secret' here, virtually every milk producer in China was doing it. And the milk products - lactose, milk powder, whey, et alia were being exported everywhere and dumped into everything from soup - to nuts. And the melamine, too.

The Cadbury chocolate company pulled all its Hong-Kong produced products because they were made with contaminated milk. Whole and powdered milk was destroyed in bulk when contamination was discovered. The latest to go in China is 'eggs' - from contaminated chickens. Seems the melamine in their chickenfeed goes right into the chickens' eggs. Remember that reproductive thing?

Where are we in North America? Well, we're busy with the stock market plunge and electing presidents and we're too busy to think about food right now. But somebody's on it. In Canada they took some obscure chinese-made cookies of a shelf somewhere out west.

Maybe they are on top of it, but I doubt it. For a couple of reasons. First the FDA - that American food watchdog - says a little bit of melamine ain't gonna kill ya, so if it makes somebody's packaging advertisement true, what the heck, eat up. For another reason, the number of 'reputable' western firms involved. New Zealand's biggest food conglomerate is involved 'big time', being part owner of a couple of the worst 'offenders' in China. Buying food additives from the Fonterra Corp. doesn't sound half as scary as from the Huangzhou Industrial Chemical Plant #46.

For a third, there's always the need to minimize the bottom line, while avoiding regulation as much as possible. When it comes to corporations, as has been well demonstrated, while the head honchos may be the nicest people you're ever going to meet, when they get together over the balance sheets and some flunky 'on the way up' has a million-dollar idea to save on a few bucks on a cost item, those group decisions can always be regretted. But the cheque for all that 'responsibility' is a bigger attraction. I don't think we're too interested in scratching how deep the Chinese food additives business goes in North America. That might ruin an election and make a stock market crash worse!

A lot of additives are put into our food now, additives that didn't even exist in some cases 30 years ago. They're added for a number of reasons - to prevent oxidation, maintain moisture level, prevent decay, etc, etc, etc. But maybe it's time to start thinking about what we could be doing to ourselves, and our kids. Maybe it's time to go back - not a long way - to a saner time about what we do to our food. If somebody was grinding up your plastic counter top to make sandwiches .......