Text of Colonel Reese’s Memo
Text of memo from Col. Timothy R. Reese, Chief, Baghdad Operations Command Advisory Team, MND-B, Baghdad, Iraq.
It’s Time for the US to Declare Victory and Go Home
As the old saying goes, “guests, like fish, begin to smell after three days.” Since the signing of the 2009 Security Agreement, we are guests in Iraq, and after six years in Iraq, we now smell bad to the Iraqi nose. Today the Iraqi Security Forces (ISF) are good enough to keep the Government of Iraq (GOI) from being overthrown by the actions of Al Qaeda in Iraq (AQI), the Baathists, and the Shia violent extremists that might have toppled it a year or two ago. Iraq may well collapse into chaos of other causes, but we have made the ISF strong enough for the internal security mission. Perhaps it is one of those infamous paradoxes of counterinsurgency that while the ISF is not good in any objective sense, it is good enough for Iraq in 2009. Despite this foreboding disclaimer about an unstable future for Iraq, the United States has achieved our objectives in Iraq. Prime Minister (PM) Maliki hailed June 30th as a “great victory,” implying the victory was over the US. Leaving aside his childish chest pounding, he was more right than he knew. We too ought to declare victory and bring our combat forces home. Due to our tendency to look after the tactical details and miss the proverbial forest for the trees, this critically important strategic realization is in danger of being missed.
Equally important to realize is that we aren’t making the GOI and the ISF better in any significant ways with our current approach. Remaining in Iraq through the end of December 2011 will yield little in the way of improving the abilities of the ISF or the functioning of the GOI. Furthermore, in light of the GOI’s current interpretation of the limitations imposed by the 30 June milestones of the 2008 Security Agreement, the security of US forces are at risk. Iraq is not a country with a history of treating even its welcomed guests well. This is not to say we can be defeated, only that the danger of a violent incident that will rupture the current partnership has greatly increased since 30 June. Such a rupture would force an unplanned early departure that would harm our long term interests in Iraq and potentially unraveling the great good that has been done since 2003. The use of the military instrument of national power in its current form has accomplished all that can be expected. In the next section I will present and admittedly one sided view of the evidence in support of this view. This information is drawn solely from the MND-B area of operations in Baghdad Province. My reading of reports from the other provinces suggests the same situation exists there.
The general lack of progress in essential services and good governance is now so broad that it ought to be clear that we no longer are moving the Iraqis “forward.” Below is an outline of the information on which I base this assessment:
1. The ineffectiveness and corruption of GOI Ministries is the stuff of legend.
2. The anti-corruption drive is little more than a campaign tool for Maliki
3. The GOI is failing to take rational steps to improve its electrical infrastructure and to improve their oil exploration, production and exports.
4. There is no progress towards resolving the Kirkuk situation.
5. Sunni Reconciliation is at best at a standstill and probably going backwards.
6. Sons of Iraq (SOI) or Sahwa transition to ISF and GOI civil service is not happening, and SOI monthly paydays continue to fall further behind.
7. The Kurdish situation continues to fester.
8. Political violence and intimidation is rampant in the civilian community as well as military and legal institutions.
9. The Vice President received a rather cool reception this past weekend and was publicly told that the internal affairs of Iraq are none of the US’s business.
The rate of improvement of the ISF is far slower than it should be given the amount of effort and resources being provided by the US. The US has made tremendous progress in building the ISF. Our initial efforts in 2003 to mid-2004 were only marginally successful. From 2004 to 2006 the US built the ISF into a fighting force. Since the start of the surge in 2007 we have again expanded and improved the ISF. They are now at the point where they have defeated the organized insurgency against the GOI and are marginally self-sustaining. This is a remarkable tale for which many can be justifiably proud. We have reached the point of diminishing returns, however, and need to find a new set of tools. The massive partnering efforts of US combat forces with ISF isn’t yielding benefits commensurate with the effort and is now generating its own opposition. Again, some touch points for this assessment are:
1. If there ever was a window where the seeds of a professional military culture could have been implanted, it is now long past. US combat forces will not be here long enough or with sufficient influence to change it.
2. The military culture of the Baathist-Soviet model under Saddam Hussein remains entrenched and will not change. The senior leadership of the ISF is incapable of change in the current environment.
a) Corruption among officers is widespread
b) Neglect and mistreatment of enlisted men is the norm
c) The unwillingness to accept a role for the NCO corps continues
d) Cronyism and nepotism are rampant in the assignment and promotion system
e) Laziness is endemic
f) Extreme centralization of C2 is the norm
g) Lack of initiative is legion
h) Unwillingness to change, do anything new blocks progress
i) Near total ineffectiveness of the Iraq Army and National Police institutional organizations and systems prevents the ISF from becoming self-sustaining
j) For every positive story about a good ISF junior officer with initiative, or an ISF commander who conducts a rehearsal or an after action review or some individual MOS training event, there are ten examples of the most basic lack of military understanding despite the massive partnership efforts by our combat forces and advisory efforts by MiTT and NPTT teams.
3. For all the fawning praise we bestow on the Baghdad Operations Command (BOC) and Ministry of Defense (MoD) leadership for their effectiveness since the start of the surge, they are flawed in serious ways. Below are some salient examples:
a) They are unable to plan ahead, unable to secure the PM’s approval for their actions
b) They are unable to stand up to Shiite political parties
c) They were and are unable to conduct an public relations effort in support of the SA and now they are afraid of the ignorant masses as a result
d) They unable to instill discipline among their officers and units for the most basic military standards
e) They are unable to stop the nepotism and cronyism
f) They are unable to take basic steps to manage the force development process
g) They are unable to stick to their deals with US leaders
It is clear that the 30 Jun milestone does not represent one small step in a long series of gradual steps on the path the US withdrawal, but as Maliki has termed it, a “great victory” over the Americans and fundamental change in our relationship. The recent impact of this mentality on military operations is evident:
1. Iraqi Ground Forces Command (IGFC) unilateral restrictions on US forces that violate the most basic aspects of the SA
2. BOC unilateral restrictions that violate the most basic aspects of the SA
3. International Zone incidents in the last week where ISF forces have resorted to shows of force to get their way at Entry Control Points (ECP) including the forcible takeover of ECP 1 on 4 July
4. Sudden coolness to advisors and CDRs, lack of invitations to meetings,
5. Widespread partnership problems reported in other areas such as ISF confronting US forces at TCPs in the city of Baghdad and other major cities in Iraq.
6. ISF units are far less likely to want to conduct combined combat operations with US forces, to go after targets the US considers high value, etc.
7. The Iraqi legal system in the Rusafa side of Baghdad has demonstrated a recent willingness to release individuals originally detained by the US for attacks on the US.
Yet despite all their grievous shortcomings noted above, ISF military capability is sufficient to handle the current level of threats from Sunni and Shiite violent groups. Our combat forces’ presence here on the streets and in the rural areas adds only marginally to their capability while exposing us to attacks to which we cannot effectively respond.
The GOI and the ISF will not be toppled by the violence as they might have been between 2006 and 2008. Though two weeks does not make a trend, the near cessation of attacks since 30 June speaks volumes about how easily Shiite violence can be controlled and speaks to the utter weakness of AQI. The extent of AQ influence in Iraq is so limited as to be insignificant, only when they get lucky with a mass casualty attack are they relevant. Shiite groups are working with the PM and his political allies, or plotting to work against him in the upcoming elections. We are merely convenient targets for delivering a message against Maliki by certain groups, and perhaps by Maliki when he wants us to be targeted. Extremist violence from all groups is directed towards affecting their political standing within the existing power structures of Iraq. There is no longer any coherent insurgency or serious threat to the stability of the GOI posed by violent groups.
Our combat operations are currently the victim of circular logic. We conduct operations to kill or capture violent extremists of all types to protect the Iraqi people and support the GOI. The violent extremists attack us because we are still here conducting military operations. Furthermore, their attacks on us are no longer an organized campaign to defeat our will to stay; the attacks which kill and maim US combat troops are signals or messages sent by various groups as part of the political struggle for power in Iraq. The exception to this is AQI which continues is globalist terror campaign. Our operations are in support of an Iraqi government that no longer relishes our help while at the same time our operations generate the extremist opposition to us as various groups jockey for power in post-occupation Iraq.
The GOI and ISF will continue to squeeze the US for all the “goodies” that we can provide between now and December 2011, while eliminating our role in providing security and resisting our efforts to change the institutional problems prevent the ISF from getting better. They will tolerate us as long as they can suckle at Uncle Sam’s bounteous mammary glands. Meanwhile the level of resistance to US freedom of movement and operations will grow. The potential for Iraqi on US violence is high now and will grow by the day. Resentment on both sides will build and reinforce itself until a violent incident break outs into the open. If that were to happen the violence will remain tactically isolated, but it will wreck our strategic relationships and force our withdrawal under very unfavorable circumstances.
For a long time the preferred US approach has been to “work it at the lowest level of partnership” as a means to stay out of the political fray and with the hope that good work at the tactical level will compensate for and slowly improve the strategic picture. From platoon to brigade, US Soldiers and Marines continue to work incredibly hard and in almost all cases they achieve positive results. This approach has achieved impressive results in the past, but today it is failing. The strategic dysfunctions of the GOI and ISF have now reached down to the tactical level degrading good work there and sundering hitherto strong partnerships. As one astute political observer has stated “We have lost all strategic influence with the GoI and trying to influence events and people from the tactical/operational level is courting disaster, wasting lives, and merely postponing the inevitable.”
The reality of Iraq in July 2009 has rendered the assumptions underlying the 2008 Security Agreement (SA) overcome by events — mostly good events actually. The SA outlines a series of gradual steps towards military withdrawal, analogous to a father teaching his kid to ride a bike without training wheels. If the GOI at the time the SA was signed thought it needed a long, gradual period of weaning. But the GOI now has left the nest (while continuing to breast feed as noted above). The strategic and tactical realities have changed far quicker than the provisions and timeline of the SA can accommodate. We now have an Iraqi government that has gained its balance and thinks it knows how to ride the bike in the race. And in fact they probably do know how to ride, at least well enough for the road they are on against their current competitors. Our hand on the back of the seat is holding them back and causing resentment. We need to let go before we both tumble to the ground.
Therefore, we should declare our intentions to withdraw all US military forces from Iraq by August 2010. This would not be a strategic paradigm shift, but an acceleration of existing US plans by some 15 months. We should end our combat operations now, save those for our own force protection, narrowly defined, as we withdraw. We should revise the force flow into Iraq accordingly. The emphasis should shift towards advising only and advising the ISF to prepare for our withdrawal. Advisors should probably be limited to Iraqi division level a higher. Our train and equip functions should begin the transition to Foreign Military Sales and related training programs. During the withdrawal period the USG and GOI should develop a new strategic framework agreement that would include some lasting military presence at 1-3 large training bases, airbases, or key headquarters locations. But it should not include the presence of any combat forces save those for force protection needs or the occasional exercise. These changes would not only align our actions with the reality of Iraq in 2009, it will remove the causes of increasing friction and reduce the cost of OIF in blood and treasure. Finally, it will set the conditions for a new relationship between the US and Iraq without the complications of the residual effects of the US invasion and occupation.
30.7.09
Shitty Times!
Obama’s cavalcade of black vehicles had just entered the Ritz Moscow after midnight. The black ambulance was particularly ominous, but when I snapped a peak in the rear, the diaper preparedness seemed even more surreal… like the shear size of the security detail (dogs, metal detectors and a posse of about 1000 people).
Another lost opportunity to revert the police state we've become!
President Barack Obama, Professor Henry Louis Gates Jr. and Sergeant James Crowley toast at the start of their meeting in the Rose Garden of the White House, July 30, 2009.
Official White House Photo by Pete Souza
28.7.09
OPV
other points of view
Steve from Virginia
First things first; Obama's Presidency is completely compromised by Wall Street, Goldman Sachs and its Clinton retreads. There is little Obama can do 'more' to ruin his effectiveness.
Second, the so-called plan is just another bailout, this time to the Healthcare- Industrial Complex (HIC). Why does it need a bailout, other than because all of America's other industrial dinosaurs have gotten one? Because the HIC's business plan - bankrupting its customers - represents guaranteed bankruptcy for the complex.
It's going to happen anyway, good riddance!
The public mandate is unconstitutional; the government cannot compel an individual to buy a private product, it's an uncompensated taking prohibited by the 5th Amendment. The state cannot otherwise compel people to buy Aetna insurance any more than it can force through police power the purchase of Froot Loops, Diet Pepsis ... or Dodge Ram pickup trucks!
If I choose to go to Disney World that is my choice but the government cannot compel me to go there against my will.
Third, there is no such thing as 'insurance' - which is a way of rationing risk - if all risks must be accepted. Any economist knows this, including non- economists like me. See Willem Buiter:
http://blogs.ft.com/maverecon/2009/07/the-inevitable-socialisation-of-health-care-financing/
The Geithner/Bernanke method of subsidizing big business at every turn will fail here as it always has and always will. What do you want, Paul Krugman, a violent revolution in this country? All the lies under the bridge and a few more and the tree of liberty will again be watered with the blood of patriots and tyrants. Enough with the 'E-Z Let's Feed Wall Street' solutions, they are becoming provocative.
One solution is to get Uncle Sam as far away from the system as possible; eliminate all subsidies! Let the HIC bankrupt itself. As doctors wives and kids get sick too, there will always be healthcare and medicine. The market will price it, too. Dirt cheap; Walmart prices.
Another alternative is for the Administration to send some people down to Cuba and copy their system:
http://www.yesmagazine.org/issues/latin-america-rising/1733
It works and it's cheap. What is wrong with that?
The system is obsessed with conceiving a better space shuttle and winding up with lemons. How about building a bicycle instead?
First things first; Obama's Presidency is completely compromised by Wall Street, Goldman Sachs and its Clinton retreads. There is little Obama can do 'more' to ruin his effectiveness.
Second, the so-called plan is just another bailout, this time to the Healthcare- Industrial Complex (HIC). Why does it need a bailout, other than because all of America's other industrial dinosaurs have gotten one? Because the HIC's business plan - bankrupting its customers - represents guaranteed bankruptcy for the complex.
It's going to happen anyway, good riddance!
The public mandate is unconstitutional; the government cannot compel an individual to buy a private product, it's an uncompensated taking prohibited by the 5th Amendment. The state cannot otherwise compel people to buy Aetna insurance any more than it can force through police power the purchase of Froot Loops, Diet Pepsis ... or Dodge Ram pickup trucks!
If I choose to go to Disney World that is my choice but the government cannot compel me to go there against my will.
Third, there is no such thing as 'insurance' - which is a way of rationing risk - if all risks must be accepted. Any economist knows this, including non- economists like me. See Willem Buiter:
http://blogs.ft.com/maverecon/2009/07/the-inevitable-socialisation-of-health-care-financing/
The Geithner/Bernanke method of subsidizing big business at every turn will fail here as it always has and always will. What do you want, Paul Krugman, a violent revolution in this country? All the lies under the bridge and a few more and the tree of liberty will again be watered with the blood of patriots and tyrants. Enough with the 'E-Z Let's Feed Wall Street' solutions, they are becoming provocative.
One solution is to get Uncle Sam as far away from the system as possible; eliminate all subsidies! Let the HIC bankrupt itself. As doctors wives and kids get sick too, there will always be healthcare and medicine. The market will price it, too. Dirt cheap; Walmart prices.
Another alternative is for the Administration to send some people down to Cuba and copy their system:
http://www.yesmagazine.org/issues/latin-america-rising/1733
It works and it's cheap. What is wrong with that?
The system is obsessed with conceiving a better space shuttle and winding up with lemons. How about building a bicycle instead?
25.7.09
enforced stupidity has become an instrument of deliberate oppression
Patrice Ayme
Hautes Alpes
Not enough "folksy anecdotes" in the [Obama's] analysis of health care?
There is a deeper problem. And that is that enforced stupidity has become an instrument of deliberate oppression.
Talking heads in the media and their public have learned to be like children: they want to be told bed time stories, so that their tired little minds can go to sleep.
They cannot handle culture and logic, they are not trained for it. All what appeals to them is what would appeal to little children talking to each other, little anecdotes with a strong imaginary component.
As the Roman republic went down, culture and art went down, and they went down well ahead of the military and economic capabilities. Rome became idiotic first, and then , several decades later, it became completely incapacitated in all ways. Only then did the Huns moved in, from distant Mongolia.
Why did Rome become idiotic? Because the Roman republic had been kidnapped by the hyper rich "Senatorial" class. The hyper rich quickly learned that they ruled best over dummies, and bleating sheep. During the transition to generalized idiocy, those who refused to cooperate were killed. The philosopher and Consul Cicero, saw the hands he was writing with chopped off, and nailed to the Senate door. And that is not an imaginary anecdote a la Reagan. This atrocity was meant to impress those too willing to keep on writing down smart, progressive thoughts.
Finally the plutocracy mixed up with the theocrats, and any knowledge or thinking was denounced as an insult to "God". This episode is now called the Dark Ages. But it started with the rise of the stupid, paid by the hyper rich to extinguish culture and intelligence.
This is exactly what is going in the media today. The venality and stupidity of the "debate" on health care is deliberate, it is made to encourage stupidity, it teaches stupidity, it celebrates stupidity.
In truth, if anything should escape the profit motive, it is compassion. The obsession with profits and costs (not just the profits and costs of a financial, but also those of a legal, business, or marketing character) perverts the entire health care system in the USA. And not just for medical decisions.
For example, a peer reviewed article in Science Magazine explains that fewer and fewer drugs are brought to market (down to less than 30 from a peak triple this twenty years ago), because pharmaceutical companies are playing Wall Street. In truth MILLIONS of drugs could be brought to market, from natural products alone, says Science.
And so on. The health care insurance industry exists in a country such as France (with the best health care according to the WHO), but it does not insure the life threatening conditions' basic treatments. That is automatic (even for sick or hurt Americans who would happen to pass through France). Private health care in France insures only added comfort or plastic surgery type treatments. The moral position that an industry can thrive according to the modus operandi:"Your money, or your life!" is untenable in this civilization, and has been rejected in all advanced countries, except the USA.
At this point the extravagant portion of GDP given to those who profit financially from the bad health of others has become a strategic threat to the USA.
Wisely, Obama is gambling that he can defeat the stupidity head on, by rising the mental level of the debate. If he fails, the USA will keep on collapsing mentally, and the rest will follow. After all, the financial crisis, and the way it was solved (replenishing with public money, the private perpetrators themselves, without any strings attached) is the sort of idiocy that history shows change the fate of civilizations, and not for the best.
***
Patrice Ayme
http://patriceayme.wordpress.com/
Reference is on my site above, in the essay "To Sick to Care?", 21 July 2009.)
Hautes Alpes
Not enough "folksy anecdotes" in the [Obama's] analysis of health care?
There is a deeper problem. And that is that enforced stupidity has become an instrument of deliberate oppression.
Talking heads in the media and their public have learned to be like children: they want to be told bed time stories, so that their tired little minds can go to sleep.
They cannot handle culture and logic, they are not trained for it. All what appeals to them is what would appeal to little children talking to each other, little anecdotes with a strong imaginary component.
As the Roman republic went down, culture and art went down, and they went down well ahead of the military and economic capabilities. Rome became idiotic first, and then , several decades later, it became completely incapacitated in all ways. Only then did the Huns moved in, from distant Mongolia.
Why did Rome become idiotic? Because the Roman republic had been kidnapped by the hyper rich "Senatorial" class. The hyper rich quickly learned that they ruled best over dummies, and bleating sheep. During the transition to generalized idiocy, those who refused to cooperate were killed. The philosopher and Consul Cicero, saw the hands he was writing with chopped off, and nailed to the Senate door. And that is not an imaginary anecdote a la Reagan. This atrocity was meant to impress those too willing to keep on writing down smart, progressive thoughts.
Finally the plutocracy mixed up with the theocrats, and any knowledge or thinking was denounced as an insult to "God". This episode is now called the Dark Ages. But it started with the rise of the stupid, paid by the hyper rich to extinguish culture and intelligence.
This is exactly what is going in the media today. The venality and stupidity of the "debate" on health care is deliberate, it is made to encourage stupidity, it teaches stupidity, it celebrates stupidity.
In truth, if anything should escape the profit motive, it is compassion. The obsession with profits and costs (not just the profits and costs of a financial, but also those of a legal, business, or marketing character) perverts the entire health care system in the USA. And not just for medical decisions.
For example, a peer reviewed article in Science Magazine explains that fewer and fewer drugs are brought to market (down to less than 30 from a peak triple this twenty years ago), because pharmaceutical companies are playing Wall Street. In truth MILLIONS of drugs could be brought to market, from natural products alone, says Science.
And so on. The health care insurance industry exists in a country such as France (with the best health care according to the WHO), but it does not insure the life threatening conditions' basic treatments. That is automatic (even for sick or hurt Americans who would happen to pass through France). Private health care in France insures only added comfort or plastic surgery type treatments. The moral position that an industry can thrive according to the modus operandi:"Your money, or your life!" is untenable in this civilization, and has been rejected in all advanced countries, except the USA.
At this point the extravagant portion of GDP given to those who profit financially from the bad health of others has become a strategic threat to the USA.
Wisely, Obama is gambling that he can defeat the stupidity head on, by rising the mental level of the debate. If he fails, the USA will keep on collapsing mentally, and the rest will follow. After all, the financial crisis, and the way it was solved (replenishing with public money, the private perpetrators themselves, without any strings attached) is the sort of idiocy that history shows change the fate of civilizations, and not for the best.
***
Patrice Ayme
http://patriceayme.wordpress.com/
Reference is on my site above, in the essay "To Sick to Care?", 21 July 2009.)
16.7.09
economic orthodoxy vs. common sense
Paul Krugman:
Now, it’s bad enough to be jobless for a few weeks; it’s much worse being unemployed for months or years. Yet that’s exactly what will happen to millions of Americans if the average forecast is right — which means that many of the unemployed will lose their savings, their homes and more.
AnnS, from Michigan:
Problem: Too many people and not enough jobs that allow them to pay their ordinary living expenses.
1 out of every 6 people in the labor market are unemployed or underemployed (can only get part-time when they want full-time. And that number does not include all those workers whose hours have been cut by 1 or 2 or 3 days a month or whose wages have been cut.
The bulk of the jobs in the US do not pay enough to cover the cost of housing, utilities, car insurance, car purchase, health insurance, saving for retirement, saving for the kids to go to college .....and all the rest of the things that the talking heads and financial columnists say they should do. The average wage is around $17-18 an hour. The average hours worked are 33. That gives an average income of $30,030. Try using the median priced house at $175,000 on that income. Or paying for a non-group health plan at over $4800 + a deductible for an individual or $12000 + a deductible for a family.
A few weeks ago, on the same day that GM announced it was cutting 20,000 jobs that paid an average of $25-28 an hour plus comprehensive health insurance with a minimal deductible Walmart announced it was planning on hiring 20,000 new employees with its average wage of $9 -10 an hour and health insurance that very few employees can afford on their wages with a $1000+ deductible. That is a LOUSY trade in terms of the income of US households.
An economy based upon selling each other houses, selling each other mortgages and car loans and credit cards, selling each other cheap junk made in China is doomed to fail. The real estate, insurance, finance and retail jobs that have disappeared are NOT coming back since households do not, in fact, have the income to support all that spending and the endless credit if one could fog a mirror is gone and won't return. And the "Knowledge Economy" is a myth and a lie and a false image fed to the US public. There is no way that the US can 'corner the world market' on "knowledge. China and India have 8 1/2 times more people than the US, they have just as many smart people as a percentage of their population as does the US and numerically they have 8 1/2 times the number of smart people as does the US - and worst of all, their smart people will work for 1/10th or less of the amount paid to US workers. Globalization means an equalization in wages and incomes - and the US will get hammered. For incomes to equalize, China and India will go up exponentially and US incomes would have to fall by 75%.
Mechanization and computerization have reduced the need for workers. And now we have the problem of too many people in the US and in the world as compared to the amount of work that needs to be done by a human workers.
Answer: The Administration and the Congress Critters will take the unemployed seriously after there are repeated marches upon Washington which are somewhere between the Bonus Marchers of the spring of 1932 and set to on Bunker Hill. Until then, all the Administration and Congress will do is mouth platitudes and tell the unemployed to go back to community college and get a junk degree in fields where there are no jobs.
Now, it’s bad enough to be jobless for a few weeks; it’s much worse being unemployed for months or years. Yet that’s exactly what will happen to millions of Americans if the average forecast is right — which means that many of the unemployed will lose their savings, their homes and more.
AnnS, from Michigan:
Problem: Too many people and not enough jobs that allow them to pay their ordinary living expenses.
1 out of every 6 people in the labor market are unemployed or underemployed (can only get part-time when they want full-time. And that number does not include all those workers whose hours have been cut by 1 or 2 or 3 days a month or whose wages have been cut.
The bulk of the jobs in the US do not pay enough to cover the cost of housing, utilities, car insurance, car purchase, health insurance, saving for retirement, saving for the kids to go to college .....and all the rest of the things that the talking heads and financial columnists say they should do. The average wage is around $17-18 an hour. The average hours worked are 33. That gives an average income of $30,030. Try using the median priced house at $175,000 on that income. Or paying for a non-group health plan at over $4800 + a deductible for an individual or $12000 + a deductible for a family.
A few weeks ago, on the same day that GM announced it was cutting 20,000 jobs that paid an average of $25-28 an hour plus comprehensive health insurance with a minimal deductible Walmart announced it was planning on hiring 20,000 new employees with its average wage of $9 -10 an hour and health insurance that very few employees can afford on their wages with a $1000+ deductible. That is a LOUSY trade in terms of the income of US households.
An economy based upon selling each other houses, selling each other mortgages and car loans and credit cards, selling each other cheap junk made in China is doomed to fail. The real estate, insurance, finance and retail jobs that have disappeared are NOT coming back since households do not, in fact, have the income to support all that spending and the endless credit if one could fog a mirror is gone and won't return. And the "Knowledge Economy" is a myth and a lie and a false image fed to the US public. There is no way that the US can 'corner the world market' on "knowledge. China and India have 8 1/2 times more people than the US, they have just as many smart people as a percentage of their population as does the US and numerically they have 8 1/2 times the number of smart people as does the US - and worst of all, their smart people will work for 1/10th or less of the amount paid to US workers. Globalization means an equalization in wages and incomes - and the US will get hammered. For incomes to equalize, China and India will go up exponentially and US incomes would have to fall by 75%.
Mechanization and computerization have reduced the need for workers. And now we have the problem of too many people in the US and in the world as compared to the amount of work that needs to be done by a human workers.
Answer: The Administration and the Congress Critters will take the unemployed seriously after there are repeated marches upon Washington which are somewhere between the Bonus Marchers of the spring of 1932 and set to on Bunker Hill. Until then, all the Administration and Congress will do is mouth platitudes and tell the unemployed to go back to community college and get a junk degree in fields where there are no jobs.
6.7.09
on stimulus
Patrice Ayme
Hautes Alpes
Obama passed a pseudo stimulus package of around 800 billion dollars. Some of it was fake, such as the AMT adjustment (a standard part of the Fed budget), some was running in place: such as money sent to states that are cutting their own spending. Best example: 50 billion dollars of the Federal stimulus is sent to California, at the time when California state budget went into a deep freeze (thousands of California state projects were stopped, all employees were told to stay home, and not be paid one Friday out of two; starting July first, it's three days with no work and no pay, almost two months worth of salary, and work, a year, now reduced to zero, and the pitiful Obama stimulus cannot stop that non sense).
Moreover, the Obama "stimulus" spent so far is about 50 billion dollars. China's stimulus was about 500 billions, but three quarters of it has been spent, and it's on real infrastructure.
By comparison, Goldman Sachs, through TARP money sent to AIG, got a gift of 13 billion dollars from the proverbial "taxpayers", the government of the USA, in the name of the American People. Question: what does Goldman Sachs make? What employment does it support? For example, Boeing makes planes. Goldman Sachs makes transactions, as many as possible, and then extracts a cut for each.
When FDR was president the Federal budget was a very small part of GDP (this changed only with World War Two) . So FDR could do little, but to legislate very creatively and very boldly and intelligently, and all of that he did
Obama, by contrast controls a huge part of the GDP, but he gave it mostly to the dim witted foxes he put in charge of watching the hen house (see above: 50 billion stimulus, so far, 13 billion for Goldman Sachs alone, if not more through the central bank secret operations). Obama can do a lot, but, as long as he puts the profiteers in charge of not changing the system, all he can show is the profiteers profiteering again, as he boasts of regularly on TV, as if he accomplished something important. Well, maybe important to him.
Just two examples from France: the government there has decided to create a gigantic fast automatic 24/7 train in an immense eight connecting all four of Paris airports and business districts and central hubs. Cost: 50 billion dollars. Work on four new high speed train lines is proceeding. The high speed train line through the "metropolises" of the French Riviera (Marseilles-Toulon-Cannes-Nice) was decided this week. It will be underground a lot, so it's immensely expensive: 30 billion dollars. Next generation nuclear reactors are also being built. And so on. That is what one calls really stimulating.
Eco-nomy means house-management. It does not mean profiteering from the house. As long as Obama puts financiers (Summers, Geithner, and various other mental gnomes from Goldman Sachs) in charge of managing the house, they will keep on stealing it. that's all they know.
house-management is fundamentally not about money. Money helps to motivate the children, and keep tabs on their activities, but rather it's just a way to help, not the essence of the thing. The essence is productive work. It's for the People and its democratically elected government, guided by the deepest thinkers to decide that, it is not the business of the money swindlers. Such is Obama's mistake, and it could all end very badly, if he does not correct this in time.
I know someone with a PhD who works as an quality control inspector overseeing the Food and Drug Administration. She informed me an hour ago that all her portion of the overseeing system she works for will be cancelled in September. Meanwhile Mr. Obama is stimulating the Afghans by killing and terrorizing a lot of them. Change you can sneer by.
Patrice Ayme
http://patriceayme.wordpress.com/
Artie Gold
Austin, TX
The real question at this point is "will we get to 1937?"
A lot of the problem is that 9.5% unemployment is something we've seen before; a quarter of a century is but one generation. Yes, things are bad -- but to many, it's a restoration of "the way things are supposed to be" (hideous wealth distribution, the commoditization of labor and everything else). The big difference is that our expectations have changed to such a great extent. After all, the last time we saw unemployment at these levels it preceded a pair of decades of considerable growth (the second better shared than the first, to be sure -- and even then medians barely touched the pre-oil-shock levels).
Perhaps the first thing we need to do is to un-massage the unemployment numbers; if the "real" number were promulgated (is it 13%? 14%? more, using the pre-Reagan standard?) Of course, the "other side" would immediately demagogue that issue too -- happily comparing apples to oranges...
Yes, what must happen is to drive a stake through the heart of the trickle-down worldview that got us into this mess. There's a somewhat creepy predestination-type argument that keeps being made, that the whole problem was that people got loans who didn't deserve them -- indeed who were not WORTHY of them -- and THAT'S what brought things down.
No, dammit, the fact is that a consumer-based society coupled with a consistently upward-redistributable (read: "low tax") economy is, by its very nature, unsustainable.
Here's my prescription:
Raise the minimum wage by 30% over two years.
Institute a sharply progressive income tax for incomes over, say $400000, up to, say, 60% for incomes over 1500000 and 75% over 5000000.
Establish a living wage, at likely 150% of minimum wage; wages paid below that create a corporate tax liability of 25% of the difference (against profits).
Fund the shortfalls of the states.
Create a significant fund for very low cost loans for education.
Pass a reasonable form of Universal Health Care.
Might all this be inflationary? Yes. Most likely. Truth is, inflation has been artificially low for decades now. Capital has had its party. If we are dependent upon consumption, money has to be placed in the hands of those who will use it to consume.
When the party (finally) gets started -- and goin' pretty good -- *then* you take the punchbowl away. But not until we cut unemployment by half.
Look, I'm not an economist, nor am I an MBA (many of whom are wonderful people, but as a group -- in terms of their overall effect -- not so much). I am, however an observer of the scene and have been around the block likely a few more times than I have left. Still, it seems pretty obvious.
If we make the stated policy goal to eclipse the former high in real median income by 10% we'll be all right. Otherwise it's gonna be a long slog.
Zach
NY
Where is the economic stimulus going to come from the Obama administration? He's planning to increase government spending on all fronts therefore putting America more into debt, and plans to tax the productive in society even more, ignoring that the loathed big corporations are also big employers . What's this fantasy that the Cap and Trade tax, that will drain trillions of dollars from manufacturers, and that is going to make the price of everything increase, is going to create tens of millions of green jobs and provide cheap renewable energy for everyone? Some of this tax money will be given away to foreigners also? Everyone in America will be making wind turbines and solar panels and have a wind turbine and solar panel on their house? America's financial sector has swindled our 401K's, and these money shufflers still make criminal levels of income, for producing absolutely nada. With all this talk about deflation, why do the price of essentials like food, fuel, utilities, medical treatment and insurances keep going up? OK gas is down from a year ago but it's still high. I don't see prices dropping for consumables at places like Walmart either. What if foreigners start dumping the US dollar, China, Russia, Brazil, and South Africa would like to see an alternative global currency. If the rest of the world dumps and devalues our currency, printing more dollars will be necessary to buy the foreign manufactured goods we crave, increasing inflation. The blue states in particular are going bankrupt right now, California is the fiscal equivalent of a banana republic. To get ones house in economic order one must be sovereign over that house. What's this idea that the USA can continue to ignore it's national sovereignty and forever allow tens of millions of foreign nationals to uncontrollably enter our country, until our population hits half a billion in 40 years, and a billion before the century is out? What a great future for our grandkids, larger crowds of American consumers at Walmart. The only people I see getting wealthy in our future are politicians and other government employees and their media cheerleaders, and guess what, these folks don't do any real work or produce anything. I'm willing to wait 8 years for the Obama miracle to happen. It'll have to be a miracle as Bush and his buddies sold us all down the river. Let's see if the new guy isn't all talk. Progressives with 60 senators own this country now, let's see what you guys are made of.
pdxtran
Minneapolis
The first thing the Obama administration needs to do is stop pouring money into Afghanistan and Iraq, wars that were war crimes to begin with and are now being fought with no clear purpose in mind.
Then billions of dollars per month that are being spent on killing mostly innocent people and lining the pockets of corrupt private contractors can be used to meet our pressing domestic needs.
However, I fear that our Democrats are either complicit in this monstrosity of a war or are too chicken-hearted to withstand Republicans' cries of "Soft on terrorism!"
AnnS
MI
Obama is not FDR - not even close. He doesn't have a Harry Hopkins who shoveled money out the door for projects as fast as possible on the grounds that people needed work NOW because they eat ever day - and couldn't wait for work to buy food until the 'system' maybe might possibly recovered on its own.
Obama's advisers are so closely ties to and imbibed with the culture of Wall St one owners if they have ever deal with the regular median income household. Obama himself is a Chicago politician to the bone. The only difference between him and Richard Daley SR who knew where the bodies were buried in Chicago politics - and used that information - and whose mantra was to keep the voters happy by keeping the trash picked up and snow plowed is that instead of selling services to please the voters, he sells nice speeches and fine words which are not supported by backbone, grit, determination and a fundamental knowledge of how to make the legislative process work or where the bodies are buried among the Congress Critters. He is selling some phantasmagorical version of an alternative reality where everyone will play nice because he asks them to.
They will have to hurry to do something. By the U-6 unemployment data which shows 16.1% unemployed and underemployed ( and the number closest to the methods used to estimate unemployment in the 1930s) it is already late 1931 - early 1932 and moving fast to repeat the past.
I do not expect squat from Obama or his advisers. They are too timid in dealing with Congress, they are too inexperienced in dealing with Congress and Obama is simply too insipid and too unforceful with his focusing on vague ideas rather than the practicalities of getting things done. The only plus is that it would have been even worse if McCain had won.
Mehul Shah
Boston, MA
[Paul Krugman keeps asking for a bigger stimulus package] This is the guy who if you go back to his writings in 2001-2002 called for a housing bubble to offset the tech slump.
We all know how the artificial demand we pumped played out, and now Mr. Krugman is calling for more stimulus, more artificial aggregate demand pumping. Enough of this non-stop Keynesian bubble creation.....
This is not a partisan issue. We simply can't spend our way out of this mess. Let's take our bitter medicine and lay foundation for sustainable economic growth.
soso
Canada
Dear Economist Krugman, clearly you are trying to reason more, but most unfortunately, America has gone mad, perhaps permanently. Just read the headlines, many from NYTimes, your own paper, and tell us if you think otherwise.
New major offensive is mounted in Afghan; Iraq occupation continues.
Many, including a 12 year old boy captured, tortured, held at Gitmo.
700 billion annual defense budget, full of waste, rules the world.
Total jobless rate hits 9.5%, effective rate 18.6%, and still rising.
California and other states have, or are on the verge of bankruptcy.
South Carolina Governor prefers romantic adventure in South America.
50 million people with no health insurance, many more under insured.
The climate legislation reduced to meaningless in corporate Congress.
China is speeding ahead: Green Power Takes Root in the Chinese Desert.
WSJ reported today that “big pay packages” are back on Wall Street. Annual bonuses could reach 2007 levels, Goldman Sachs $700,000 each.
Well the root cause is now known = The Great American Bubble Machine
Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression.
Hautes Alpes
Obama passed a pseudo stimulus package of around 800 billion dollars. Some of it was fake, such as the AMT adjustment (a standard part of the Fed budget), some was running in place: such as money sent to states that are cutting their own spending. Best example: 50 billion dollars of the Federal stimulus is sent to California, at the time when California state budget went into a deep freeze (thousands of California state projects were stopped, all employees were told to stay home, and not be paid one Friday out of two; starting July first, it's three days with no work and no pay, almost two months worth of salary, and work, a year, now reduced to zero, and the pitiful Obama stimulus cannot stop that non sense).
Moreover, the Obama "stimulus" spent so far is about 50 billion dollars. China's stimulus was about 500 billions, but three quarters of it has been spent, and it's on real infrastructure.
By comparison, Goldman Sachs, through TARP money sent to AIG, got a gift of 13 billion dollars from the proverbial "taxpayers", the government of the USA, in the name of the American People. Question: what does Goldman Sachs make? What employment does it support? For example, Boeing makes planes. Goldman Sachs makes transactions, as many as possible, and then extracts a cut for each.
When FDR was president the Federal budget was a very small part of GDP (this changed only with World War Two) . So FDR could do little, but to legislate very creatively and very boldly and intelligently, and all of that he did
Obama, by contrast controls a huge part of the GDP, but he gave it mostly to the dim witted foxes he put in charge of watching the hen house (see above: 50 billion stimulus, so far, 13 billion for Goldman Sachs alone, if not more through the central bank secret operations). Obama can do a lot, but, as long as he puts the profiteers in charge of not changing the system, all he can show is the profiteers profiteering again, as he boasts of regularly on TV, as if he accomplished something important. Well, maybe important to him.
Just two examples from France: the government there has decided to create a gigantic fast automatic 24/7 train in an immense eight connecting all four of Paris airports and business districts and central hubs. Cost: 50 billion dollars. Work on four new high speed train lines is proceeding. The high speed train line through the "metropolises" of the French Riviera (Marseilles-Toulon-Cannes-Nice) was decided this week. It will be underground a lot, so it's immensely expensive: 30 billion dollars. Next generation nuclear reactors are also being built. And so on. That is what one calls really stimulating.
Eco-nomy means house-management. It does not mean profiteering from the house. As long as Obama puts financiers (Summers, Geithner, and various other mental gnomes from Goldman Sachs) in charge of managing the house, they will keep on stealing it. that's all they know.
house-management is fundamentally not about money. Money helps to motivate the children, and keep tabs on their activities, but rather it's just a way to help, not the essence of the thing. The essence is productive work. It's for the People and its democratically elected government, guided by the deepest thinkers to decide that, it is not the business of the money swindlers. Such is Obama's mistake, and it could all end very badly, if he does not correct this in time.
I know someone with a PhD who works as an quality control inspector overseeing the Food and Drug Administration. She informed me an hour ago that all her portion of the overseeing system she works for will be cancelled in September. Meanwhile Mr. Obama is stimulating the Afghans by killing and terrorizing a lot of them. Change you can sneer by.
Patrice Ayme
http://patriceayme.wordpress.com/
Artie Gold
Austin, TX
The real question at this point is "will we get to 1937?"
A lot of the problem is that 9.5% unemployment is something we've seen before; a quarter of a century is but one generation. Yes, things are bad -- but to many, it's a restoration of "the way things are supposed to be" (hideous wealth distribution, the commoditization of labor and everything else). The big difference is that our expectations have changed to such a great extent. After all, the last time we saw unemployment at these levels it preceded a pair of decades of considerable growth (the second better shared than the first, to be sure -- and even then medians barely touched the pre-oil-shock levels).
Perhaps the first thing we need to do is to un-massage the unemployment numbers; if the "real" number were promulgated (is it 13%? 14%? more, using the pre-Reagan standard?) Of course, the "other side" would immediately demagogue that issue too -- happily comparing apples to oranges...
Yes, what must happen is to drive a stake through the heart of the trickle-down worldview that got us into this mess. There's a somewhat creepy predestination-type argument that keeps being made, that the whole problem was that people got loans who didn't deserve them -- indeed who were not WORTHY of them -- and THAT'S what brought things down.
No, dammit, the fact is that a consumer-based society coupled with a consistently upward-redistributable (read: "low tax") economy is, by its very nature, unsustainable.
Here's my prescription:
Raise the minimum wage by 30% over two years.
Institute a sharply progressive income tax for incomes over, say $400000, up to, say, 60% for incomes over 1500000 and 75% over 5000000.
Establish a living wage, at likely 150% of minimum wage; wages paid below that create a corporate tax liability of 25% of the difference (against profits).
Fund the shortfalls of the states.
Create a significant fund for very low cost loans for education.
Pass a reasonable form of Universal Health Care.
Might all this be inflationary? Yes. Most likely. Truth is, inflation has been artificially low for decades now. Capital has had its party. If we are dependent upon consumption, money has to be placed in the hands of those who will use it to consume.
When the party (finally) gets started -- and goin' pretty good -- *then* you take the punchbowl away. But not until we cut unemployment by half.
Look, I'm not an economist, nor am I an MBA (many of whom are wonderful people, but as a group -- in terms of their overall effect -- not so much). I am, however an observer of the scene and have been around the block likely a few more times than I have left. Still, it seems pretty obvious.
If we make the stated policy goal to eclipse the former high in real median income by 10% we'll be all right. Otherwise it's gonna be a long slog.
Zach
NY
Where is the economic stimulus going to come from the Obama administration? He's planning to increase government spending on all fronts therefore putting America more into debt, and plans to tax the productive in society even more, ignoring that the loathed big corporations are also big employers . What's this fantasy that the Cap and Trade tax, that will drain trillions of dollars from manufacturers, and that is going to make the price of everything increase, is going to create tens of millions of green jobs and provide cheap renewable energy for everyone? Some of this tax money will be given away to foreigners also? Everyone in America will be making wind turbines and solar panels and have a wind turbine and solar panel on their house? America's financial sector has swindled our 401K's, and these money shufflers still make criminal levels of income, for producing absolutely nada. With all this talk about deflation, why do the price of essentials like food, fuel, utilities, medical treatment and insurances keep going up? OK gas is down from a year ago but it's still high. I don't see prices dropping for consumables at places like Walmart either. What if foreigners start dumping the US dollar, China, Russia, Brazil, and South Africa would like to see an alternative global currency. If the rest of the world dumps and devalues our currency, printing more dollars will be necessary to buy the foreign manufactured goods we crave, increasing inflation. The blue states in particular are going bankrupt right now, California is the fiscal equivalent of a banana republic. To get ones house in economic order one must be sovereign over that house. What's this idea that the USA can continue to ignore it's national sovereignty and forever allow tens of millions of foreign nationals to uncontrollably enter our country, until our population hits half a billion in 40 years, and a billion before the century is out? What a great future for our grandkids, larger crowds of American consumers at Walmart. The only people I see getting wealthy in our future are politicians and other government employees and their media cheerleaders, and guess what, these folks don't do any real work or produce anything. I'm willing to wait 8 years for the Obama miracle to happen. It'll have to be a miracle as Bush and his buddies sold us all down the river. Let's see if the new guy isn't all talk. Progressives with 60 senators own this country now, let's see what you guys are made of.
pdxtran
Minneapolis
The first thing the Obama administration needs to do is stop pouring money into Afghanistan and Iraq, wars that were war crimes to begin with and are now being fought with no clear purpose in mind.
Then billions of dollars per month that are being spent on killing mostly innocent people and lining the pockets of corrupt private contractors can be used to meet our pressing domestic needs.
However, I fear that our Democrats are either complicit in this monstrosity of a war or are too chicken-hearted to withstand Republicans' cries of "Soft on terrorism!"
AnnS
MI
Obama is not FDR - not even close. He doesn't have a Harry Hopkins who shoveled money out the door for projects as fast as possible on the grounds that people needed work NOW because they eat ever day - and couldn't wait for work to buy food until the 'system' maybe might possibly recovered on its own.
Obama's advisers are so closely ties to and imbibed with the culture of Wall St one owners if they have ever deal with the regular median income household. Obama himself is a Chicago politician to the bone. The only difference between him and Richard Daley SR who knew where the bodies were buried in Chicago politics - and used that information - and whose mantra was to keep the voters happy by keeping the trash picked up and snow plowed is that instead of selling services to please the voters, he sells nice speeches and fine words which are not supported by backbone, grit, determination and a fundamental knowledge of how to make the legislative process work or where the bodies are buried among the Congress Critters. He is selling some phantasmagorical version of an alternative reality where everyone will play nice because he asks them to.
They will have to hurry to do something. By the U-6 unemployment data which shows 16.1% unemployed and underemployed ( and the number closest to the methods used to estimate unemployment in the 1930s) it is already late 1931 - early 1932 and moving fast to repeat the past.
I do not expect squat from Obama or his advisers. They are too timid in dealing with Congress, they are too inexperienced in dealing with Congress and Obama is simply too insipid and too unforceful with his focusing on vague ideas rather than the practicalities of getting things done. The only plus is that it would have been even worse if McCain had won.
Mehul Shah
Boston, MA
[Paul Krugman keeps asking for a bigger stimulus package] This is the guy who if you go back to his writings in 2001-2002 called for a housing bubble to offset the tech slump.
We all know how the artificial demand we pumped played out, and now Mr. Krugman is calling for more stimulus, more artificial aggregate demand pumping. Enough of this non-stop Keynesian bubble creation.....
This is not a partisan issue. We simply can't spend our way out of this mess. Let's take our bitter medicine and lay foundation for sustainable economic growth.
soso
Canada
Dear Economist Krugman, clearly you are trying to reason more, but most unfortunately, America has gone mad, perhaps permanently. Just read the headlines, many from NYTimes, your own paper, and tell us if you think otherwise.
New major offensive is mounted in Afghan; Iraq occupation continues.
Many, including a 12 year old boy captured, tortured, held at Gitmo.
700 billion annual defense budget, full of waste, rules the world.
Total jobless rate hits 9.5%, effective rate 18.6%, and still rising.
California and other states have, or are on the verge of bankruptcy.
South Carolina Governor prefers romantic adventure in South America.
50 million people with no health insurance, many more under insured.
The climate legislation reduced to meaningless in corporate Congress.
China is speeding ahead: Green Power Takes Root in the Chinese Desert.
WSJ reported today that “big pay packages” are back on Wall Street. Annual bonuses could reach 2007 levels, Goldman Sachs $700,000 each.
Well the root cause is now known = The Great American Bubble Machine
Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression.
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