I want to thank you all for continuously coming to my blog and frequenting it, even though I haven’t posted for quite a while. That’s going to change. I will try to have a post out by Sunday morning, (California time,) every week. Since I like to sleep in, that means that said post might even be posted as early as Saturday evening! This post is going to be longer than my usual posts, but since I haven’t posted for quite a while and yet you kept coming, you’ve earned it!
Introduction to American Analysis
Contrary to myth, Americans are great analysts. Warren Buffet’s advice on financing, http://finance.yahoo.com/news/30-years-ago-warren-buffett-160500867.html, should be required reading for all high school students and graduates. Read it! It’s superb. And that’s just one example of the American ability to perform quality analytics. But for some odd reason, ever since the Cold War ended, the people in Washington DC seem to not care about even the most basic analytical studies. Such errors are not hard to find, http://www.forbes.com/sites/markadomanis/2014/08/04/3-things-barack-obama-got-wrong-about-russia/, even for elementary students with internet access, so it’s crazy that the president’s staff cannot perform such a simple task. It’s gotten so bad that the Russian Ministry of Defense recommended that the Pentagon consult an atlas, before claiming that Astrakhan is near Ukraine’s border. Psaki’s comment about kids being used in voting carousels almost made the Russian comedians file a lawsuit against her, for taking their jobs.
This leads to the Obama Administration’s constant inability to face the facts. For instance – Obama claimed that Russia is a regional power. According to CNBC, http://www.cnbc.com/id/101918812, Putin’s mere words turned the market around. To quote CNBC: “calming words from Russian President Vladimir Putin helped turn shares around… [w]e seem to be reacting now more to Europe and Russia than anything happening here”. According to Obama, Russia is nothing but a regional power, but according to his very own supporters’ website, Putin’s mere words turned the stock market around and all the US could do was to react. Hmm, maybe, just as the definition of the word “is” changed under Clinton, perhaps the definition of the word “regional” changed under Obama.
In the US, (IMHO,) there are a few major networks, http://www.freepress.net/ownership/chart. NBC is the station of Democrats, Fox is the station of Republicans, and everyone else falls in between. CNN is for the corporate elite. Ted Turner explained why this is bad for America in another article that’s a must read: http://www.washingtonmonthly.com/features/2004/0407.turner.html (Hey, I’ve only given out two homework assignments thus far, and they’re both very informative!)
The lack of analysis can be seen everywhere, even in the selection of leaders who are allies. The leader of Crimea is Konstantinov, (in Crimea, the legislative branch trumps the executive branch,) whereas the leader of Ukraine is Poroshenko. Let’s compare the two. In 1998 Poroshenko entered politics, being very “loyal” to the Kuchma government. He even helped to create the Party of Regions. He promptly switched to the party of opposition, when he was offered a better spot. Loyalty, eh, doesn’t mean much to Poroshenko. He was accused of stealing millions from Ukraine, but solved his problems by helping to promote Yushenko’s candidacy, who promptly forgave Poroshenko. Yushenko’s candidacy proved to be an outright disaster, with Yushenko being the first incumbent president of Ukraine to lose the primary with single digit numbers. It was pure disaster for Ukraine’s economy. Poroshenko switched sides again, this time allying himself of Yanukovich, and when the time was right, Poroshenko funded a coup that led to his ascension to the presidency.
In each of his posts he was accused of corruption and failed to do much for Ukraine. The biggest accusation against him was assisting in the privatization of a government company valued at $1 billion for a mere $80 million: http://web.archive.org/web/20131002143944/http://articles.chicagotribune.com/2005-09-27/news/0509270090_1_petro-poroshenko-privatization-ukrainians
On the other hand, the Crimean leader is Konstantinov. He focused on ensuring that Crimea’s buildings were up to date, devised massive plans for the tourism industry, (which saved Crimea’s economy,) and understood the basics of Crimean construction. Like Poroshenko, he entered politics in 1998 and there the similarities end. By 2002, Konstantinov left politics to focus on business. In 2006 he returned, not to hide from law enforcement, but to build a coalition. In the subsequent election, his coalition captured 93/100 seats in the legislature, and increase of 30 seats, or 48 percent.
Who would you rather have as your go to guy? A political wiz, or someone who knows how to save your region’s economy? And this isn’t a unique comparison; I could do a comparison of Saakashvili versus Kokoity just as easily, and reach similar results.
An even bigger problem in Washington DC is that the leaders don’t learn from the past. If Bush focused on solving the housing crisis in 2003, instead of promoting the War in Iraq, the debt of the US would be substantially smaller than $17.7 trillion. Instead of focusing on fixing the Rust Belt, (including Obama’s home state,) illegal immigration, (the Republicans and Democrats assure us that they’ll have a plan, soon,) Obamacare/healthcare, (the hallmark of America’s inefficiency, swallowing up to 10 percent of the US GDP,) the US government is focused on an issue that’s “vital” to America’s survival: which Oligarch Clique gets to rule Ukraine?
Let me go over these problems one by one, right after I explain why America’s debt increased. Introducing, the most “pro-Putin” source in the US – the Economist: http://www.economist.com/blogs/dailychart/2011/08/americas-fiscal-union
This is an incredible chart that required hours labor to create. I have every reason to believe that the chart is correct, so I plugged the numbers from the chart into a program that I wrote using Microsoft Excel. Between 1990 and 2009, the states netted a profit of $886 billion. At the same time, the US debt increased from $4,066 billion to $14,599 billion. http://www.usgovernmentdebt.us/spending_chart_1990_2012USb_15s2li111lcn_H0t
What happened? Under Bill Clinton, the average yearly increase in debt was $263 billion, under George Bush, it was $684 billion and under Barack Obama it was $1,612 billion. During this time the states produced more than they consumed. The jump in debt accumulation was due in a large part to the Iraq War. As Reuters notes: http://www.reuters.com/article/2013/03/14/us-iraq-war-anniversary-idUSBRE92D0PG20130314
“The U.S. war in Iraq cost $1.7 trillion with an additional $490 billion in benefits owed to war veterans, expenses that could grow to more than $6 trillion over the next four decades counting interest, a study released on Thursday said.”
Had the US simply not invaded Iraq, the debt would be at least $2.5 trillion less, if you include interest. That’s enough to save Ukraine’s economy, heck, if that number was spent on Keynesian Capitalism in Russia in the 1990s to prevent the spread of Gangster Capitalism, we’d still be living in a Unipolar World with US and EU, (the latter with Russia as a member,) leading the charge, and the challenge would be integrating China within that system.
Additionally, the focus on the Iraq War by the Bush Administration prevented proper investigation into the Housing Bubble, much like Poroshenko’s current military gamble, which boldly continues to fail, is slowly choking off what little lifeblood remains in Ukraine’s economy: http://247wallst.com/investing/2014/08/11/who-needs-russia-ukraine-will-destroy-itself-with-new-gas-tax/.
Had there been proper focus on the housing crisis, even as late as 2006, it could have been prevented, making the bailout unnecessary and substantially reducing the US debt. Let’s imagine for a bit that Bush didn’t invade Iraq, Obama didn’t have the Arab Spring/Ukraine Fiascos, and didn’t have to manage the Bailout. We’d be left with Clinton’s numbers, that’s $263 billion a year. Hmm, $263 billion times 9, that’s $2,367 billion, plus $4,066 billion, that’s $6,433 billion or $6.4 trillion. Would you rather have that much debt, or $14.6 trillion? And even if you prefer the latter, wouldn’t spending $8.2 trillion to promote the integration of the US/EU with the SCO member states be better than simply wasting that money on Iraq and the Housing Bubble?
The main thing to take away from that chart, (for now,) is that the US debt is primarily the result of America’s Foreign Entanglements. It’s not beneficial for the American taxpayer; it’s quite harmful. To further expand on this concept let’s presume that Clinton began closing down US bases abroad, instead of bombing Serbia. In that case we’d be left with practically no debt. The cost of foreign intervention is the reason for the decline of standards of living in the US amongst the average Americans, because the states are doing their fair share. I’ll expand on this in a bit, but first, I want to explain why the health costs in the US are so high.
The Healthcare Debacle
The US Healthcare System is grossly inefficient. According to the World Bank’s database, the US spends 18 percent of the GDP on welfare: http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS. The UK is able to achieve similar results by spending just 9 percent. Canada, whose healthcare is much better than America’s, spends 11 percent. Thus the US healthcare inefficiency ratio is 2:1. That is, of course, assuming that the UK’s system runs at 100% efficiency, which I highly doubt. What that means is that for every dollar that you spend at the doctor’s office, as an American, you only get 50 cents worth of treatment. When I need treatment I go to European countries, like the Czech Republic. It’s not an issue of affordability, but rather an issue of cost-effectiveness.
It’s cheaper for me to fly to the Czech Republic, rent a luxury hotel there, and get all of my healthcare issues resolved, than it is to have the exact same treatment in California. Most Americans don’t have that luxury. If the US was to fairly compete with other countries in the healthcare industry, America would get its butt kicked over and over and over again. Who benefits from said inefficiency?
First, there are the loan providers. In America you generally have to get a loan or a scholarship to attend a college or university. The average loans for those who are going for an MD are massive. The median MD education debt in 2012 stood at $170,000: http://www.bloomberg.com/news/2013-04-11/medical-school-at-278-000-means-even-bernanke-son-carries-debt.html. Paying that off would take over $1,000 a month, so that $1,000 transfers from the doctor to the clients, while the banks make money from the loan.
Second, the drugs are overpriced, as well as certain medical commodities. Why are drugs cheaper in Canada? “The Canadian government puts a cap, or ceiling, on the amount that drug companies can charge pharmacies and other distributors of drugs. This reduces the wholesale cost of medication for most organizations throughout Canada by about five percent. The prices are determined by Canada’s Patented Medicine Prices Review Board. Since drugstores pay less for many medications, they can sell them for less.” http://drugs.about.com/od/faqsaboutyourdrugs/f/Canada_cheap.htm
Third, there’s very little regulation of what hospitals can charge. A hospital can charge $7,000 for a procedure that costs $2,800 at a nearby hospital and under $500 in Europe. And get away with it. Regulations have been proposed for hospitals, but they have very powerful lobbyists in Washington and Sacramento.
Fourth, there’s the triage system. That means that when you’re admitted to the hospital, someone goes over all of your information, medical and financial, has to check it through their computers, contact your insurance company, etc, etc, etc. That takes time and money. Additionally, there are the medical insurance companies who have a financial incentive to deny claims. That means that every single claim gets thoroughly vetted, checked and double checked by several doctors. The more claims a medical company can deny, the more money it can save. Can you imagine having a car dealer being paid for botching sales?
Fifth, illegal immigrants and those who are bankrupt cost money and don’t get the preventive healthcare benefit. There’s a saying: “an ounce of prevention is worth a pound of cure!” When it comes to illegal immigrants, Obama’s Administration is providing the pound of cure, and since illegal immigrants and those who are bankrupt are too poor to afford it, the American taxpayer foots the bill. I can keep on going, but I think I got my point across. Obamacare was supposed to fix this problem, but all it really did was to shift the burden from the lower class to the middle class; as a result, America’s middle class will shrink even faster, which will detrimentally affect the US economy.
It’s no secret that illegal immigration is a problem in America, especially in the border states of California, Arizona, New Mexico and Texas. Illegal immigrants are a burden on the safety and welfare nets of these states. Most of the services, such as schools, police, firefighters, etc, are locally provided, and these expenses are deducted from the local budget. A much bigger demand for education and a slightly bigger supply of taxpayer dollars means that the schools are going to have to do more with less, and since administrator salaries are usually the last ones to be cut, it’s the teachers that get spanked. The per pupil spending of Border States was between $7,500 and $9,200 in 2011: http://www.governing.com/gov-data/education-data/state-education-spending-per-pupil-data.html
Comparatively the spending of most states was over $10,000. The spending in Alaska, which, unlike California has no state income tax, was roughly $16,700 per pupil. As thus, illegal immigration doesn’t just mess with national spending; it hurts the local budgets as well. And it messes with the private sector. Despite being required to have health insurance, one must usually acquire it through the private sector. Since illegal immigrants cannot pay for the hospital services, the hospitals simply increase the bills of the people who can pay, and threaten bankruptcy if they won’t pay.
On top of all this, illegal immigrants are growing more accustomed to their lifestyles in the US, and being human, they are demanding more and more social rights, which is a further drain on our social safety net. This problem is being gloriously ignored by both political parties.
The Rust Belt
Remember the chart that I posted earlier? Let’s analyze it:
I’ve divided the 50 states into five categories. ANE is Atlantic and New England states, namely Delaware, New Jersey, New York, Maryland, Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire and Maine. Between 1990 and 2009 they gave the Federal Government $8,431 billion and received $6,913.8 billion for state expenditure from the Federal Government, providing net revenues of $1,517.2 billion.
The South states are Texas, Georgia, Arkansas, North Carolina, Missouri, Tennessee, Oklahoma, Florida, Louisiana, South Carolina, Kentucky, Virginia, Alabama, West Virginia and Mississippi. Those states are a drain on the US budget, and need revitalization programs to meet their potential. Out of those states, only Texas, Georgia and Arkansas are profitable.
The Midwest states are Nebraska, Kansas, Utah, Idaho, Iowa, Wyoming, Arizona, North Dakota, South Dakota, Montana, New Mexico and Colorado. Again we’re seeing a bit of a drain, with only Colorado and Nebraska being profitable.
The Pacific states are Nevada, California, Washington, Oregon, Hawaii and Alaska. Although Nevada does not touch the Pacific Ocean, their economy is closely linked with California’s. This group is profitable, but mostly due to California’s profits. Although Nevada and Washington are also profitable, their economies benefit from California’s, which produced a net profit of $336.2 billion.
And then there’s the Rust Belt. This region includes Minnesota, Illinois, Ohio, Michigan, Wisconsin, Pennsylvania and Indiana. With the exception of Pennsylvania and Indiana, whose losses amounted to a meager $11 billion, the rest of the region is profitable, and the lifeblood of Washington DC’s economy worth $1.790.7 billion. This lifeblood is rapidly deteriorating. The population of major cities in these states, like Detroit’s, are rapidly shrinking and Detroit cannot even afford water for some of its residents: http://news.nationalgeographic.com/news/special-features/2014/08/140822-detroit-michigan-water-shutoffs-great-lakes/
“Nearly 19,500 Detroiters have had their water service interrupted since March 1. The Water and Sewerage Department, under pressure to reduce more than $90 million in bad debt, ordered shutoffs for customers who owed at least $150 or had fallen at least two months behind on their bills. The decision to take such drastic measures, done with little warning, ignited a controversy that prompted protests and arrests, more bad publicity for the struggling city, global dismay, and a warning from the United Nations.”
This symbolizes the decline of the Rust Belt. California and Texas, the two leaders of the Pacific and South regions, are being forced to deal with illegal immigration. If these trends continue, and the politicians in Washington provide no real policies for reversing them, then the states will demand more money from Washington DC than they receive, for the first time in American History since the Great Depression.
US Budget and Foreign Intervention
This is a snapshot, from wikipedia, of revenue sources for the US Federal Budget. I could’ve picked any modern year and the numbers wouldn’t have been very different. If one was to take away the social security, one would note that the ratio of all other income to individual taxation is that of 1 to 2.5. That means that, social security aside, for every $35 that comes into the Federal Budget, $25 comes from the taxpayer. This is important to remember, as we look at the expenditure:
Social Security profits, worth $140 billion in 2013, are going to disappear fairly soon. That gap will continue to get worse. The Net Interest and Other Mandatory expenditures must be paid out because without them, the infrastructure and education of the US will collapse, as will dollar diplomacy. The corporate, excise and other taxes will probably be raised to cover this gap. However that leaves the personal income taxes, worth $1,316 billion to cover the expenditures for Medicare, Medicaid, Defense and Other Discretionary Government expenditures, worth $2,052 billion. That’s a difference of 56%. And this gap will continue to get worse, so the question of cutbacks comes into play.
As the baby boomers retire, Medicare and Medicaid costs are going to go up, even with the cuts. Cutting from defense is a nightmare, because first you have to go through defense lobbyists, and then you meet the local opposition for the cuts and cutting other discretionary programs, aside from foreign intervention, will cause austerity. What can be cut? The funds for foreign intervention.
The private companies are seeing the writing on the wall, which is why they’re divesting from this system and working together with BRICS, even when said projects go against the US Government’s official policy. In India, Washington wanted Ghandi to win, and the current leader, Modi, was under sanctions. A part of the private sector disagreed: http://pando.com/2014/05/26/revealed-the-head-of-omidyar-networks-in-india-had-a-secret-second-job-helping-elect-narendra-modi/
Thus far there have been no sanctions against ON, and there won’t be any, since the government is not powerful enough to take on the private sector and fix the economy.
Putin unilaterally redrew the boundaries of Europe with the Annexation of Crimea. It was carried out with extreme precision. The ineptitude of Ukraine’s government is now leading to the secession of the DonBass Republic. Novorossiya could be next, followed by Pridnestrovie. All of these places can be reintegrated into the Russian Federation. What could be done to stop it?
The financial war is lost. The Rebels just scored a series of military victories and the Russians can always send in the SpetzNaz, covertly, should the need for more military victories arise. Ukraine is facing a third Maidan. The sanctions won’t work under the modern capitalist system. What’s left?
Continuous bashing of Russia and Putin. But reality always triumphs over make believe history. The only thing that the constant bashing will accomplish, will be the loss of soft power for the current leadership. And then, what’s left? Nothing, except to cry me a river over how brutal and how unjust Putin is, at which point I’ll ask: was it Putin that failed with Obamacare? Was it Putin who started the Ukrainian Intervention? Was it Putin who let Corporatism run rampant? Was it Putin who lost the US Soft Power over South Ossetia? Was it Putin who caused the breakup of Serbia? Was it Putin who intervened into Ukraine without performing a basic financial analysis? Was it Putin who failed to combat illegal immigration with the passage of a simple law, one requiring heavy fines on businesses that employ illegal immigrants?
There is a way that everyone can save face through the recognition of self-determination of the people of Crimea, Sevastopol, Lugansk and Donetsk, as well as turning Ukraine into a Swiss Style Confederacy, a throughout investigation of the crimes committed during the conflict, (especially the Odessa Fire,) dismissal of the Oligarchs and a concrete plan to rebuild Ukraine. The US/EU can save face if it’s packaged as a please of the people to democracy, which most of it is. Self-determination, if the vote is conducted properly, is as democratic as you can get. Additionally, anyone want to argue that Switzerland is not a democracy? Punishing those who burn their fellow citizens alive is a good thing. They should be punished. As for dismissing the Oligarchs, that’s a feat that simply cannot occur without societal participation in the local elections. But these goals can only be achieved if the US/EU work together with Russia.