Chavez suffers Relapse of Cancer and escapes his Socialist Paradise for Treatment in Cuba

Posted by PITHOCRATES - March 4th, 2012

Week in Review

Hugo Chavez is remaking Venezuela into to a socialist paradise.  Where everyone is equal.  And one of the tenants of a socialist paradise is national health care.  Where they put people before profits.  And give everyone access to the same quality health care.  Unless you’re the president and have suffered a relapse of cancer (see Venezuela’s Chavez confirms cancer recurrence by Andrew Cawthorne and Eyanir Chinea posted 3/4/2012 on Reuters).

“I will live! I will overcome!” the 57-year-old socialist leader said in a televised meeting with some cabinet colleagues from Cuba, where he underwent an operation six days ago for a recurrence of the cancer that first struck him last year.

Chavez also lambasted Venezuela’s opposition as “bourgeoisie” intent on dismantling his welfare policies for the poor, spoke of an increasingly fervent Catholic faith and – as always – broke into verse at several points…

Chavez, a close friend of former Cuban president Fidel Castro, prefers treatment in Havana because he is guaranteed discreet treatment and a lower possibility of media leaks.

Yeah, right.  Discreet treatment.  If the choice was between quality care and discreet treatment what would you pick?  Quality care.  Because you’d want to live, right?  So the quality of Cuban health care must be better than the quality of Venezuelan health care.  Or Chavez simply chose discreet treatment over higher odds of survival.  Which I doubt.  No.  He went to Cuba because he wanted to live.  And the health care in his socialist paradise, that’s good enough for his people, simply wasn’t good enough for him.  Which is socialism in a nutshell.  Where all of the people are equal.  Only some of the people are more equal than others.

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As NHS Budget Deficits balloon Britain tries to Privatize Parts of the NHS to rein in Costs and improve Quality

Posted by PITHOCRATES - March 4th, 2012

Week in Review

The proponents of Obamacare admire Britain’s National Health Service (NHS).  But they settled for Obamacare.  Which stopped short of providing national health care (though it put them on the path towards a national health care by making private health insurance either unaffordable or unavailable).  Because the nation wasn’t ready yet.  Not to mention the fact that most Americans want to repeal Obamacare. 

But they still look to the far side of the Atlantic and dream of having what they have.  Paradise.  At least, what they define as paradise.  Government control of 17.6% of the US economy (based on 2009 numbers) in addition to non-health care spending they already control.  Yeah, to them, this is what paradise is.  But, surprisingly, Britain has this now.  And is trying to move away from it (see NHS changes unavoidable and urgent, says David Cameron posted 3/3/2012 on BBC News UK Politics).

Under the NHS plans, GPs and other clinicians will be given much more responsibility for spending the health service budget in England, while greater competition with the private sector will be encouraged.

Mr Cameron said it would have been easier not to address an “invisible crisis” in the National Health Service in England.

“We could have just protected the NHS from the cuts, as we have, we could have just put in the extra £12.5bn, as we have, and we could have just left it there.

Did you catch that obscene amount of additional money the NHS needs?  £12.5 billion?  Based on the current exchange rate that’s $19.8 billion!  That’s not the budget.  That’s just the budget shortfall.  And if my math is correct that’s about a 12% budget deficit on a $167.8 billion dollar budget.  Worse, the total NHS annual budget is about 3/4 of Britain’s total annual budget deficit.  Meaning the NHS consumes approximately 75% all UK borrowings.

The NHS is bleeding.  And drowning the UK in debt.  No wonder they’re trying to privatize parts of it.  This is an economic model that cannot survive.  Especially with an aging population.  Which will only consume more health services in the future.  And make these deficit numbers grow worse. 

Here’s a lesson the US would do well in learning.  Lest they condemn themselves to making the same mistake.  Oh, wait a minute, that’s exactly what Obamacare is doing.  Repeating this same, horrible mistake.  Even though it is clear that this road they’re on will lead to disaster.  But that’s fine for the Obama administration.  Because at least they will have achieved paradise.  Control of over 17.6% of the US economy.

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BP agrees to $7.8 Billion Deal for the 2010 Deepwater Horizon Oil Rig Spill

Posted by PITHOCRATES - March 4th, 2012

Week in Review

It was the end of the world.  The apocalypse.  Brought on by Big Oil.  And our addiction to that silky rich and seductive crude oil.  A new Black Death.  Only blacker.  And stickier. 

We had finally done it to ourselves.  We ruined our pristine Gulf coast.  And the fragile ecosystem in the water.  And on the land.  But there is one small consolation.  BP is paying billions in a settlement.  Lucky for us that they were so profitable to be able to pay for both the regulatory and compliance costs of their industry.  And these big lawsuits.  So we win.  Until we pump gas, that is.  Where they will no doubt pass on the cost of this very large settlement (see ‘Deal reached’ over BP Deepwater Horizon oil spill posted 3/3/2012 on the BBC News US and Canada).

BP says it has reached a $7.8bn (£4.9bn) deal with the largest group of plaintiffs suing the company over the 2010 Deepwater Horizon oil rig spill.

It will benefit some 100,000 fishermen, local residents and clean-up workers whose livelihoods or health suffered…

The rig exploded in the Gulf of Mexico in April 2010, killing 11 workers and leaking four million barrels of oil.

BP says it expects the money to come from a $20bn (£12.6bn) compensation fund it had previously set aside.

“From the beginning, BP stepped up to meet our obligations to the communities in the Gulf Coast region, and we’ve worked hard to deliver on that commitment for nearly two years,” BP Chief Executive Bob Dudley said…

BP has so far paid out $7.5bn in clean-up costs and compensation.

US President Barack Obama called the spill “the worst environmental disaster the nation has ever faced”.

But was it the worst environmental disaster we ever faced?  If most evidence of that disaster can disappear in about a year’s time, perhaps.  But you’d think if it was the worst disaster of all time some of it would stick around a bit longer than that.  But it didn’t.  Which kind of lowers the bar for ‘worst of all time’ disasters, doesn’t it?  Here’s a follow-up published last April.  And it turns out that Deepwater Horizon was less worse than the Exxon Valdez disaster (see BP oil spill: Dramatic recovery of Gulf of Mexico one year on by Philip Sherwell posted 4/10/2011 on The Telegraph).

The Sunday Telegraph accompanied an assessment team scouring low-lying fingers of mud and marsh grasses along a 20 mile stretch of bayou where the river pours into the sea, the nearest point on land to the disaster site.

The phragamites reeds surveyed by the team leader Ivor van Heerden and scientists from the parish, state and federal governments took a direct hit last year.

But last week they found not even residual traces as the captain negotiated through the marshes on a flatbed airboat designed for swamps.

New shoots were bursting out of the reeds, wading birds were nesting, molluscs clung to the stems and the air was thick with greenflies.

And further along the Gulf coast, the white sand beaches of the panhandle that were soiled by tar balls last summer look back to their pristine best, packed in recent weeks by college students enjoying the raucous annual institution of spring break.
“The spill was a disaster, but it was not the catastrophe that many people were portraying,” said Mr van Heerden, a marine scientist who once headed the Louisiana coastal restoration programme for the state’s fragile eco-system of wetlands.

It was his intervention last July that first challenged the assumed wisdom in America that the spill was an apocalyptic environmental catastrophe.

“A lot of people, and that includes politicians and journalists, did not want to hear the message that it was really not that bad,” he said…

Swaths of the Gulf were closed to fishing and over the next six months, nearly 7,000 dead animals were collected from the area – mostly birds but also 700 sea turtles and 100 dolphins – although in many cases the cause of death has not been determined.

But volume can be a misleading measure of a spill’s impact. In 1989 the Exxon Valdez tanker lost just five per cent of the oil that escaped into Gulf last year, but damage to the Alaskan coastline, wildlife and environment was much more devastating.

“This was no Exxon Valdez, not even close,” said Ed Owens, a British marine geologist and oil spill veteran who developed the industry standard for clean-up and monitoring after he worked on the chaotic response to that disaster…

Although the longer-term damage inflicted on the wildlife, marshes and waters of the Gulf is still being assessed, the fishing grounds and oyster beds are open again.

But traditional fishing communities on the slivers of land that poke into the sea south of New Orleans are still reeling from the impact, economically and mentally.

At a roadside seafood stand that his mother opened 32 years ago, Sean Maise has discounted the juicy four-inch long jumbo shrimps in his iceboxes to $3.50 a pound in an effort to woo custom. “It’s bad, real bad,” he lamented…

“We have probably the most rigorous testing in the world here and there has not been a single case of contaminated seafood found since the spill,” he said. “Nobody’s got sick from eating Louisiana seafood, but still people are nervous.”

This doesn’t sound like the worst disaster of all time.  Unless you want to include the devastation of the oil industry, then, yes, it ranks pretty high on the ‘worse’ scale.  But if you’re talking about spring break beaches and delectable seafood, then no.  Even though the people are scared to eat it despite the testing proving that it’s perfectly safe to eat.  Within a year things got back to pretty much normal.  Which kind of makes a mockery of the label ‘worst environmental disaster the nation has ever faced.’  And the economic destruction of the Gulf oil industry.

The Deepwater Horizon oil rig explosion was s disaster.  It killed eleven oil workers.  And then destroyed the livelihood of all their coworkers.  And reduced the amount of US crude oil in the domestic pipeline.  Raising the price at the pump.  This is the disaster.  The beaches and water are fine.  Just ask the college students enjoying spring break on the beaches.  In the water.  And eating the seafood.

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The Bank of India to Reverse its Monetary tightening and Resume Inflationary Expansion

Posted by PITHOCRATES - March 4th, 2012

Week in Review

After battling inflation in India for over a year the Bank of India is ready to reverse course.  To halt the decline in their export market growth rate.  With some inflationary Keynesian policy (see Factory growth eases, but keeps healthy pace in Feb by Sumanta Dey posted 3/1/2012 on Reuters).

…employment contracted for the first time in three months and export orders grew at their slowest pace since November…

Price pressures also rose, with the sub-index for output prices, or the cost of finished products, hitting an 11-month high, and the survey suggests inflation could tick up.

A fall in the headline inflation, as measured by the wholesale price index, to 6.55 percent in January, its lowest level in more than two years, had raised expectations the Reserve Bank of India could start easing policy.

After 13 rate rises to stamp out inflation in between March 2010 and October 2011, the central bank signalled in January it was shifting its focus to growth by cutting the cash reserve requirements for banks by 50 basis points.

Clearly with falling export orders the rise in prices isn’t due to demand.  This rise in prices is inflation driven.  Something they’re no stranger to in India.  And something very Keynesian.  Thirteen interest rate hikes in about 19 months?  That’s about one rate increase every month and a half.  That’s some serious monetary tightening.  And now that inflation is down to 6.55% they’re ready to ease policy.  With some inflationary policy.  By lowering bank reserve requirements.  To expand the money supply via fractional reserve banking.  Which will, no doubt, increase prices further.  As inflation tends to do.

By lowering interest rates they are encouraging Indian manufacturing to borrow and expand production.  To meet a falling demand.  And what happens when businesses expand production amidst a falling demand?  Well, in Japan and the United States that resulted in some nasty asset bubbles.  That brought on some long and unpleasant deflation.  Will this happen in India?  It could.  And may.  Unless some markets open up to absorb any increase in supply.  But with the European Union and the United States still limping along and a Chinese export market competing head to head with the Indians, that’s not likely going to happen.

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Higher Labor Costs are squeezing Margins for Chinese Export Manufacturers

Posted by PITHOCRATES - March 4th, 2012

Week in Review

China is still able to exploit their cheap labor to maintain a healthy export market.  But for how long (see China exports may stay strong despite weak Europe by Zhou Xin and Nick Edwards posted 3/1/2012 on Reuters)?

An estimated 200 million jobs — a quarter of China’s workforce — are directly dependent upon the external sector, hiking the political risks of an export slowdown to a leadership hypersensitive to any hint of social instability that might threaten the one-party rule of the Communist Party…

Ye Dingsong is an exporter who has relied on sales to Europe, but his primary headache is pricing, not falling orders.

“There are orders, but the problem is that it’s hard to get good prices. European buyers have become sensitive to prices, but costs are rising quickly so I have to ask for higher prices,” said Ye, the owner of Dadong Shoes in Wenzhou.

His shoe factory, which at its peak employed more than 100 people, currently has only half as many after workers walked out for better wages elsewhere when Ye said he could manage only a 10 percent rise…

Wenzhou exported 265 million pairs of shoes to the EU last year, roughly one pair for every two EU residents, according to data from the local customs office. But total sales were just $1.6 billion, or $6.04 per pair, meaning margins are very narrow even as a starter’s monthly wage can easily exceed 2,000 yuan ($320).

Ye is one of the many exporters Beijing is trying to help through tough times with tax rebates and easier bank credit.

The state capitalists in America look to China with awe and admiration.  They would love to expand state control of the economy in America to the level in China.  So they, too, can produce those magnificent GDP growth rates.  Which they think they can do.  With a union work force.  Even with the high wages and generous benefits of union workers.  Which, of course, they cannot do.  For the only thing maintaining China’s export market is that cheap labor.  Which is far below the union wages and benefits in America. 

In America a Chinese type state capitalism will not result in higher GDP growth rates.  Only in higher wages and benefits for union workers.  Along with a collapsing GDP growth rate.  Thanks to an uncompetitive American work force becoming even more uncompetitive.

But even in Communist China they are having problems keeping their labor cheap.  But they will do everything they can.  Including brutal state oppression.  And Keynesian economic policies.  Urging businesses to borrow money and expand production.  Even in the face of rising prices.  Which one day will lead to falling sales.  Leaving the Chinese with some nasty asset bubbles in their economy.  The kind the Japanese had in the Nineties.  And the kind the U.S. just recently had in the housing market.  Both bubbles popped.  And a horrible deflation set in to undo all the Keynesian mischief that caused the bubbles in the first place.

There is no way for the Americans to do what the Chinese are doing.  Unless the state capitalists do like the Chinese.  And outlaw all unions.  And that’s about as likely to happen as Keynesian economics policies actually working without causing inflation and asset bubbles.

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North Korea uses its Nuclear Leverage to shake down the United States for some Food Aid

Posted by PITHOCRATES - March 4th, 2012

Week in Review

What’s the difference between North Korea and Iran?  The Iranian government is on a mission from God.  The Stalinist government of the North Koreans just wants to feed their people enough to keep them from rising up and challenging their autocratic power.  So they can continue to live in extreme comfort and plenty while the North Korean masses often mark time by the most recent famine (see U.S. announces diplomatic breakthrough with North Korea by Laura Rozen posted 2/29/2012 on Yahoo! News).

Under an agreement reached in direct talks in Beijing last week, North Korea has agreed to allow the return of nuclear inspectors from the International Atomic Energy Agency, and has agreed to implement a moratorium on long-range missile tests, nuclear tests, and nuclear activities  at Yongbyon, including uranium enrichment activities, the State Department said. In return, the United States will provide North Korea with a large food aid package…

Arms control experts welcomed the signs of progress in U.S. efforts to engage Pyongyang. But U.S. North Korea experts and foreign policy hands advised high caution in assessing Pyongyang’s intent, given its track record of abrupt reversals.

“These steps are modestly significant,” Richard Bush, director of Northeast Asian studies at the Brookings Institution, said in a statement Thursday. However, he noted, they “are only what negotiators call ‘confidence-building measures.’ They could indeed be an initial step on a path towards serious negotiations … Or they could simply be a ploy to get nutritional assistance and meddle in South Korean politics. North Korea’s record suggests the latter, but we shall see.”

This is the little dance we do with North Korea.  Their people starve.  They play with their nuclear toys.  And use their nuclear leverage.  We come in and offer them food aid if they put down their nuclear toys.  They do.  We give them food aid.  Then when the next famine rolls along they pick up their nuclear toys again.  And we resume our little dance.  It won’t be like this in Iran. 

The radical Islamists have a plan.  And it is a twofold plan.  First they want to incinerate Israel.  Then they want to reestablish their caliphate and rule the world.  And they will use a unique form of gunboat diplomacy.  Where they’ll back their diplomacy with the awesome destructive power of their nuclear weapons.

North Korea is dangerous.  But more in a scenario where the supreme ruler might go crazy.  Or get backed into a corner.  Where he has no options to keep himself in power.  And in a life of comfort and plenty.  Then like a child who can’t have his way he will launch his nuclear weapons so no one can have their way.  Of course the retaliation will be swift.  And there will be no more Stalinist government left in North Korea.  Hopefully without harming the good people of North Korea.  The suffering masses.  Whereas any retaliation against a strike from a nuclear Iran will be answered by an angry Islamist uprising in countries throughout the world. 

So is a nuclear North Korea dangerous?  Yes.  But manageable.  At least, so far.  Is a nuclear Iran dangerous?  Yes.  So dangerous that we really don’t want to get to the ‘North Korea’ stage in Iran.  Because radical Islamists don’t care about anything but their mission from God.

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