Cycle

There is, in ECON 101, a cycle called the Kondratieff cycle. According to this theory, the economy follows an up cycle , where consumers spend more and more, business earns more and more, until we reach the top of the cycle and we are in a down cycle, with recession, unemployment, and deficits, until consumers prime the pump again.
In case of as severe a recession as the September 2008 Bush recession, the down cycle is much more prolonged and the upcycle takes place, but later. There is absolutely no doubt that by 2012, 2013 at the latest, the economy is going to be booming, and then humming along in 2013-2014. The deficit will be wiped out , simply because the Federal Govt. will earn much bigger revenues. It will be much easier to reimburse the debt and, with bipartisan effort, to achieve a balanced budget as we did under President Clinton.
Instead of waiting for the economy to recover normally, the Republicans are sounding the alrma: :The deficit is coming, the deficit is coming!" They see in this temporary phase of the cycle a great opportunity to achieve their old dream: to wipe out the New Deal and The Great Society in one fell swoop. They claim it is a must to cut deeply into all entitlements, squeeze the middle class (without touching tax cuts to the rich as if we needed another trickle down theory).
If they are in such a hurry that we have to cut the deficit without waiting, I have a few suggestions:
1. Let the Bush tax cuts expire as they were supposed to.
2. Stop both wars , Iraq and Afghanistan, right now.
3. Use the proceeds of the stimulus plan to invest in infrastructure repair, high speed train networks, and inner city light rail.
4. Launch a real race to Mars.

But do not use the crisis to take from the poor and add to the rich. The societal divide is unsustainable in the long run and makes for terrible societies.

Disconnect

There is a disconnect between the mood of the voters in the US and reality. It is not surprising that the average taxpayer, frightened by high unemployment,and by the apparent incapacity of either party to master the crisis , is rebelling. The Tea party, egged on by populist puppet masters chez Murdoch, wishes to go back to simpler times, the late 18th century, where the Founding Fathers wrote simple Constitutions and things were easier to understand. The complexity of today's world is too frightening to contemplate. In 1789, it took news 2 weeks to go from Philadelphia to Washington. 80% of the population could not read nor write, and women, slaves, and non property owners could not vote. This notwithstanding, the populace hankers for these good old days, were most of them would have been too hungry and tired to even think about politics.
The complexity of today's world finances totally escapes them. Needless to say the bankers who brought us the Great Recession are busy encouraging this popular turmoil, which brought the US a new Republican majority. This is an insurance contract against any type of inquiry or even less, retribution for their misdeeds. The real winners of these mid-term elections are the members of the finance establishment powerfully aided by their media branch, Fuax News. It is not really a Tea Party but rather a Kool AId party.

On strike!

If you were in France today, you would probably see huge demonstrations in most cities, large and small.Also, there would be no public transport, no trains, no planes,no TV and no public radio. France is on strike. It is a particular trait of that country, that, although they are under a parliamentary democracy, mob rule is often the only form of opposition. (Come to think of it, we have the same thing in the US with the Tea Party!)
The reason for this new strike is the pension reform instituted by the government and supported by its majority. France, like most advanced countries, is the victim of both the financial crisis, imported from the USA, and of the coming of age of baby boomers. The Free French Government of 1945, fresh from the German defeat, and very close to its Soviet ally, instituted a very generous social regime. Since then, the social coverage has been added to and multiplied. In 1945, France had vast colonies, many clients and few competitors. Today, in a globalized world, France is but a medium sized advanced country, without colonies and with an industrial landscape devastated by the flight of manufacturing industries to Eastern Europe or Asia. The generosity of the French Welfare state has reached its limits. The government, elected on the promise of reforms is acting upon its promise. But French citizens thought the reforms would be applied to others.
The proposal to change the retirement age from 60 to 62 has sent 2 million people in the streets.
To add a twist to the situation, Mr.Woerth, the labor minister, is under a cloud of suspicion, being accused of financial shady deals, a scandal well manged by the minority to weaken the reform.

Socialism

While some are trying to link president Obama to socialism, here is a good look at what socialism is like in France. Since 1936, the Popular Front, made up of communists and Socialists has created paid vacation time for all French citizens. Another communist administration in 1947 extended the paid vacation to a whole month. Later on a 13th month pay was added so that French citizens could afford that month at the beach. In the 90s, a socialist government decided that the work week could not exceed 35 hours, paid 40. Since 1946, all French citizen were entered into a medical insurance scheme that covers everybody for free, although medicine is in the hands of the private sector. The World Health Organization has consistently rated France as no 1 in the world for the quality of its medicine. College is free in France , as far as you can go. A doctor graduates from medical school without any debt. Families are paid monthly premiums as they have more children.
The French are arguably just as free as Americans. They have freedom of speech, of assembly, frequent elections and even the right to bear arms. Since they retire early, between 50 ans 60, the French are among the word's most avid travellers. And, on average, they live much longer than Americans.
Useless to add that everytime a conservative government is elected , such as now, they know better than touching any part of these entitlements.

Adieu Belgium ?

Most Americans are caught in the never ending vortex of the Gulf oil spill. In the argument as to whether Obama failed miserably, or BP lied and cheated, we forget our oil addiction. When president Carter warned us that it would come back to haunt us in 1977(!!!), he was ridiculed and was stuck for ever with the word "malaise". He was right! Those who accuse Obama of incompetence have zero notion of the responsability and duties of a president. They also conveniently forget that, under the influence of the oil lobby and certain bought politicians (remember the Dick Cheney secret energy meeting?), everything has been done under the sun to remove all safeguards, safety measures, inspection, etc. The same people who gave you Enron, the Wall Street carnage of 2008 and the recent WV mining catastrophe, are now serving us with a gusher that nobody knos how to stop. Not a great publicity for those who advocate the supremacy of the private sector.
In the meantime, unbeknownst to the majority of Americans, brave little Belgium is fading away. The country that aroused anger and pity in 1914, is voting itself out of existence. Sunday's legislative elections gave victory to the NVA party of Bart de Wever, whose platform is the independence of Flanders, the northern majority of Dutch speaking Belgians. The French speaking minority, impoverished by a rust belt economy voted itself a socialist government. No doubt Mr De Wever will want to initiate a split. His model is the smooth divorce between the Czech and Slovak republics. Would the French speaking region want to rejoin France? Would France take them? What about the 80,000 German speaking Belgians? Actually, this could be the beginning of the unraveling of the Nation-State. Local affairs can be handled by Regions (Corsica, Britanny, Bvaria, Scotland, Alsace, the Basque region), and world affairs can be handled by the EU.

Europe?

On May 9, 2010, Europe celebrated its 60th anniversary.On this day, in 1950, Robert Schuman launched the European ideal with the Coal and Steel Community. It was a sad anniversary. Back then Europe was still partially in ruins. It limped out of a 31 year civil war (1914-1945). The human and material toll was unbelievable. Europe had just lost all influence on the rest of the world. A union of Europe was the only way out. 60 years later, the European Union is dead in the water. It has enlarged to 27 countries. But although it has a common passport, a common currency, a common agricultural policy and custom tariff, it is not a federation. Its great weakness, enshrined in the Lisbon Treaty, is to give all power to the 27 individual governments, with 27 budgets, 27 tax policies, and 27 armies. In other words, the farther Europe moves from its big bang, the more it atomizes. The current Greek financial crisis, demonstrates the powerlessness of a construction that stopped in the middle of its dream. The current European leaders want to stick to the obsolete nation-state. This way, they never will fulfill Schuman's dream.

Nuclear summit

I had the privilege of working at the Nuclear Summit in Washington this week. I started with a lunch at the Vice-President's Residence at the Naval Observatory on Wednesday. He was receiving a dozen heads of state from the "non aligned movement". I arrived early at the Residence and was able to admire the mansion, which, in fact is , as Mr.Biden himself says, more livable than the White House. Were it not for the Secret Service and the huge fence surrounding the house, the interior looks like a regular Washington DC home. Jo Biden told us that deer roam free inside the park, but are prevented from escaping by the fence. Hence, they are very tame. After my service was done with French speaking leaders, I scooted to the main event, the Summit on Nuclear Security downtown. Security, period, was at an all time high. Inside the cavernous expo Center, we promptly started with Obama's dinner. It was, as usual, fascinating to observe the relationship between the main world leaders in close proximity. I was very impressed , not only by Obama's maestria, but especially by the reverence demonstrated by his peers. I wish the American public had been able to feel the respect America inspires through its young president. Later on, I was able to observe close up, while interpreting her, Hillary Clinton at an energy summit at the IDB. For once, there is a country in excellent health.

Sarkozy in the US

As I write this, president Sarkozy of France is paying a short two days visit to the US. fresh from a landslide electoral defeat in France, where the Socialist party took 21 of the 22 Provincial governments (the 22nd was won by the fascist party). The US press barely mentionned this visit, although France is one of the strongest of our allies. His speech at Columbia sounded dangerously leftist to American ears (strict financial regulations, closing tax havens, making fun of the US for taking care of the sick 50 years after Europe solved that problem.) In France he is seen as a hard right conservative, dangerously enamored of all things American. Hence his huge defeat at the polls in this era of high unemployment and economic crisis.
Sarkozy had hoped for a State Dinner at the White House, but instead will have to be satisfied with a private affair.
He has remained deaf to Mr. Obama's call for more help in Afghanistan. Any French troop increase would not be supported by a public lulled by 60 years of peace in Europe and where the horrors of WWII are still the Nr. 1 topic at many dinner tables.
So whereas the Obama Administration is under fire for being dangerously socialist, the real Socialists in France are winning by painting a conservative Sarkozy as a dangerously pro-American politician.
The reality is that, whether Obama (on his country's left) or Sarkozy (on his country's right, but way left of Obama), little can be done as long as the Masters of Finances are the real rulers. The current crisis has caused huge unemployment, a surge in poverty, and destroyed the middle class. As long as our politicians will depend on them for their campaigns, do not expect much change. In 1922 president Millerand of France complained already about "The Money wall".

It is ridiculous for the Republicans to warn against "a European syatem" or a "French type solution". Just as it is for French socialists to say:" anything but the American system". If you take the Health Care Reform Law, for instance, you would think that taking care of the sick and the poor would be a natural policy for a party that claims so loudly to be christian. Isn't it weird that it is de-christianized Europe that leads the way in taking care its most vulnerable?

Ruins

The cradle of Democracy could very well become the grave of European hopes. Greece,was not qualified to join the Euro, the European common currency, back in 1997 when they applied. They did not fall within either of the three so-called Maastricht criteria (debt, deficit and GDP). But it would have been politically harsch to leave out the Mother of Democracies, the land of Aristotle, Pericles and Homer. So the founding fathers of the Euro closed their eyes and let Greece use the Euro instead of the Drachma. What they did not know at the time is that even the dismal figures the Greek authorities were showing were grossly inflated. Once they had the Euro, and a low interest rate to boot, the Greeks went beserk. It is as if they had gotten ahold of the family checkbook and embark on a shopping spree. Alas for them, the George Bush Great Recession brought the orgy to a halt, and now, the bills have started to accumulate. Greece`s debt is 130% of its GDP. But since they share a currency with Germany and 14 other Euro member states, they cannot devalue (which would have made it easier to reimburse the debt). Since they used the reserves accumulated by other member states, it is as if they had stolen it from them. Worse, because they now have to reimburse foreign banks, they might default on their loans. German and French taxpayers are understandably reluctant to bail out their Greek associates. All the more since the same disease seems to have infected the PIIGS (Portugal, Ireland, Italy, Greece and Spain).
Speculators have already bet against the Euro. This is a blow to the European construction and to Europe as a whole. Already the nomination of thenew EU prsidents and its Foreign Affair envoy had been a blow to Europe.
Back at the Dublin Summit, when Helmut Kohl sought to impose sanctions to member states who would leave the Maastricht criteria, President Chirac watered down the heavy fines, proposed `talks`instead. We can see the results today.

We, the People

One year after president Obama's triumphal inauguration, he is hitting a nadir. Scott Brown, an obscure Cosmo centerfold managed to upend Ted Kennedy's seat in Massachussets. But, much worse, the Supreme Court rendered a catastrophic 5-4 ruling allowing corporations to freely finance elections, thus changing a century old regulation. Nowhere in the first amendment does it say that corporations are the equal of human voters. The only regime that alowed its corporations to fuel elections, was Mussolini's in 1932..... So much for judges who swore against activism.
The much admired American system has become dysfunctional. When the majority is kept in check by a small minority through fillibusters.
The vast majority of Americans voted for Obama to have proper health care. A small minority has managed to rob them of this basic right. Besides, the present system, by linking health care to both employment and private insurance is particularly backwards in terms of competitivity and fairness.
Obama has been a failure as apresident so far. He has not been aggressive enough and has not defended his voters forcefully enough. He has lost his base and, of course, will never please his opposition.
He should have enforced single payer from the start to pull America back in the ranks of advanced democracies.
The recent decision by SCOTUS brings us back to pre-1907.