Iran Burns 30 Years after the Revolution

A lot of things have happened in Iran during the Shia holiday of Ashura.  We very well could see another revolution or an incredibly bloody crack down by the Islamic government. I’ve been busy with FFT (Forced Family Time) this Christmas weekend and haven’t kept up on posting about what was happening. Now it is almost too much to report.

For the last week there have been extensive demonstrations against the current government, mainly by university students which is reminiscent of how the 1979 revolution that overthrew the Shah began. While there have been many protests since the fraudulent elections, things turned more violent. Attempts to rescue two men being hanged ended up with people being killed and reports the rescued men were shot dead.  There have been many arrests including relatives of powerful politicians and academics.

Let’s start with Michael Totten’s post at Commentary Magazine calling it Iran’s modern equivalent of the Battle of Karbala. In it he explains how the killing of demonstrators during Ashura has created an extremely powerful symbol:

Ashura is a Shia religious holiday, and it is not joyous. It is a day of lamentation that marks the date when the forces of the Umayyad caliph Yazid killed Hussein, son of Ali and grandson of the Prophet Mohammad, during the Battle of Karbala in the year 680. It’s one of the most infamous episodes in the struggle for power that permanently ruptured the house of Islam into its warring Sunni and Shia halves. The Shia – the partisans of Ali and his lineage – have been at war with the Sunnis – those who took the side of Yazid – for thirteen centuries.

Totten goes as far as saying that Iranian religious conservative are turning against the government.  That may explain the report that Ayatollah Khamenei is planning to flee to Russia.  If this is true, things are falling apart quickly.

But will the people of Iran prevail against their government?  Even if they do, will that change relations with the outside world?

My concern is that the Khamenei and Ahmadinejad will use total force to retain power, much like China did in Tiananmen Square twenty years ago.  Beyond that, the Iranian government is saber rattling quite a bit and have let Egypt know they will hit US bases in the Middle East if Israel bombs their nuclear facilities.

Iran is becoming very unstable and anything could happen as a result.  While I wish for the best for those who want more freedom and fair elections I also fear for their lives and those in countries around Iran. As it is, all we can do is wait and watch to see if this truly is a revolution or just a rebellion doomed to fail.

One thing is for sure and that it appears to be the beginning of a civil war.

Rekindling the American Dream

A plan to get America out of the financial crisis.

I normally don’t post material written by others, but when I read this message put out by Hugh Miller I felt it should get more attention.  While I haven’t gotten permission to reprint, the fact he paid money to get into the papers in the first place makes me think he won’t mind.  If he does, I’ll take it down!

REKINDLING THE AMERICAN DREAM

by Hugh Miller, Nov. 30, 2009

Our country is in very serious financial trouble, mortal financial danger, and unless and until we turn it around, quickly,the American Dream will die. But upon reflection it’s even worse than that, for while the death of the American Dream would be tragic enough, the end of America being a safe, stable and good place to live would be cataclysmic.

It’s that serious, and as an impassioned American citizen, very worried about his country, there is an obligation to speak out, as forcefully as possible. Here’s how I see it.

The national debt we are accumulating is both debilitating and unsustainable, and by most standards we are already bankrupt. What this means, in practical terms, is shortly we will not be able to control our own destiny -- others will control it for us. It also means our children, and their children, will not have the same opportunities we had, and in fact will be lucky to find a real job. Further, it means our standard of living declines, rapidly, bringing about extreme and likely violent social unrest. Let me try and explain.

The numbers are staggering and confusing, so I’ll try and state it in terms we can better understand.

Imagine you, Mr. or Mrs. Public, have take-home pay of $27,000 per year. During the year, however, you spend $47,000, $20,000 more than you take home. How can this happen? You charge things you can’t afford and your creditors look the other way. Anyway, you now have a debt of $20,000 you’ll have to pay back over time. You have a real problem, solvable, but unless you get at it, soon, you’ll end up in serious trouble.

Now let’s imagine you suddenly realize you have a second debt of $120,000. That’s on top of the $20,000, so the total you now owe is $140,000. That’s a very big number, more than five times your take-home pay. With a really dedicated approach, and cooperative creditors, your debt is still manageable, but only with extreme discipline and understanding bankers.

Believe it or not it gets worse. Now let’s imagine you’ve just discovered you have a third debt and will owe another $480,000 in just a few years. That’s on top of the $20,000 and the $120,000 for a total of $620,000. That’s more than 22 times your take-home pay, so even if you paid all your take-home pay for 22 straight years you’d still be in debt.

You are beyond out of control; you’re a fiscal catastrophe.

Fortunately most of us don’t live this way, as we live within our means. Unfortunately, however, our favorite uncle does not. No, our Uncle Sam has spent too much in the past, is spending too much now, and will spend too much in the future.

Mr. or Mrs. Public in this example is actually the U.S. government, not with take-home pay and spending in the thousands, which we can all understand, but with take-home pay and spending in the trillions, which most of us cannot understand.

Instead of taking home $27,000, the U.S. government takes home $2.7 trillion dollars. Instead of accumulating debt of $20,000 over the next year, the U.S. government will accumulate debt of $2 trillion dollars over the same period.
Instead of having a second actual debt of $120,000, the U.S. government today has an actual debt of $12 trillion dollars. And instead of discovering you have a third debt of $480,000, the U.S. government has unfunded liabilities, due shortly, of $48 trillion dollars and growing. This would include future payments for Social Security, Medicare pensions, and other obligations.

How can any person live like Mr. or Mrs. Public? The answer is they can’t. How can any government live the same way? The answer is they can’t either. Most Mr. or Mrs. Publics know better and would never put themselves in such a terrible position. Sadly, and certainly shortsightedly, and arguably stupidly, the U.S. government has put our country, and all Americans, in extreme financial peril. Worse, they don’t seem to care.

If we are to solve our problems, we must first understand them, and so we need to step back and realize just how much we have already borrowed from our future and future generations. We are a nation of about 300 million people, and we now have a total debt and unfunded liabilities of about $62 trillion. That’s $200,000 apiece! That’s truly a startling figure, but that’s reality, and that’s the burden we’ve already placed on ourselves. Irresponsible doesn’t begin to describe this travesty.

What should we do? Here is what I would do.

1) First we must immediately come to grips with and try to comprehend the dire financial position we’re in, today. And we must explain that ugly truth to our people, also today.

2) Second, we must stop things from getting any worse. We simply must start living within our means, within our take-home pay, whether it’s $27,000 or $2.7 trillion dollars. In that regard I’d be in favor of an amendment requiring our government balance its budget, every year, except in times of a declared war. Until that happens, I’d balance the budget anyway.

3) We don’t take in too little, we spend too much -- much too much. Since 1999 to the present the U.S. government has taken in, on average, 4% more per year. Unfortunately, during that same time frame, they have spent, on average, 9.2% more each year.

Simply put we must cut spending, drastically, tough and unpopular as that may be. The alternative is worse, much worse. Taxing businesses or other job creators is not the answer and will make the deficit worse while increasing unemployment.

Sacrifice will be required by all of us, and it must be done fairly, and that’s as it should be. But whatever policies emerge must not be done at the expense of growth, for that would be counterproductive. After World War II we also had a huge debt, but strong economic growth made it much easier to handle that debt. And the reverse is true, the lower the growth the harder it is to pay back debt.

4) Any new spending programs should be shelved until we have a real plan for fiscal solvency. It’s like redecorating your living room while a fire is blazing in your basement. Put the fire out first, completely, before you even begin to think about redecorating.

Our first order of business, by far, is to put out the fire in our basement. Unless and until we fully extinguish that fire we won’t have a house to live in anyway.

5) Both the second debts, $120,000 for Mr. and Mrs. Public and $12 trillion dollars for the U.S., and the third debts, $480,000 for Mr. and Mrs. Public and $48 trillion dollars for the U.S., must be dealt with, now. Aggressive repayment and other appropriate procedures, in a bipartisan way, must be implemented immediately. We either solve these problems, together, or we die, financially at least, together. We have no choice, it must be done.

6) Lastly, but certainly not least, we must start rekindling the American spirit, which once was so great, and inspired our ancestors to come here in the first place. That same spirit turned this country into a great world power, largely by way of American manufacturing, American education, and American entrepreneurialism.

Today that would seem far less likely, as that American spirit is missing. We live in a highly competitive global society, and, sadly, America not only has a fiscal nightmare it has also lost its competitive edge in manufacturing, in K-12 education, particularly math and science, and in entrepreneurialism.

While our first order of business is digging ourselves out of our self-inflicted financial hole, simultaneously we must also start solving our manufacturing, educational, and entrepreneurial problems. By doing that we make ourselves globally competitive and give ourselves a chance to win. By not doing so we lose.

Those six things are keys to solving our problems and laying the foundation for a successful future. It will be difficult and painful, but it can be done and it must be done.

I often think of my grandfather, who like many others came here with little more than the shirt on his back. But those brave souls also brought with them a dream, a dream of making a better life for themselves in their new country, America -- the American Dream. And they did. I’ve little doubt my grandfather never heard of, let alone understood, the term entrepreneur. But nevertheless he was one, and mainly by hard work and sheer determination established a business, made life better for his family and his community, and created opportunities for others along the way. He lived the American Dream.

Would he be able to do so today? He certainly was strong and determined and his wife even more so, but I’m not so sure, in fact I doubt it -- there simply are too many roadblocks. Would he even want to come here today? I’m not so sure of that either, and that, to me at least, is really sad.

Minus that entrepreneurial spirit our economy won’t grow, jobs won’t be created, and we’ll start to experience an increasingly rapid decline in our standard of living. If we are to recover, it’s entrepreneurs who will lead that recovery. Accordingly they must be encouraged, not discouraged.

This looming catastrophe hasn’t happened overnight, but clearly it has accelerated rapidly this past year. We’ve trusted our politicians to do the right things, and clearly they’ve betrayed that trust. You might give them the benefit of the doubt by saying they don’t understand the problems, but if that’s the case they should find another line of work.

Rather than playing the blame game, however, and God knows there’s plenty of blame to spread around going back many years, let’s take the positive approach and just start solving the problems.

Quite frankly we have a mess, actually messes, almost beyond description, and they become increasingly unsolvable the longer we wait. We must start attacking them today. But it’s going to take a unified, bipartisan approach, starting right now.

From a personal perspective I would greatly prefer not to be the one highlighting these extremely unpleasant issues. However as an American citizen, very worried about his country, and very worried about the future of his children, and someday their children, and all other people’s children, there is no choice -- it must be done. There is, in fact, an obligation.

We can rekindle the American Dream, and we must, but we must get going. Our grandfathers and fathers would want it that way. Our children and grandchildren will be forever thankful.

Hugh Miller
President and CEO
RTP Company

What Recovery?

I find it fascinating how government agencies such as the Commerce Department fudges numbers for media consumption. They put out projected numbers that are usually rosy and then revise them downward after the media has forgotten about them. Somehow we’ve gone from a 3rd quarter figure of 3.5% growth to 2.8%  to 2.2% in three months!

Captain Ed has a great dissection of the announcement and explains how even the 2.2% is inflated by the Cash for Clunkers and new home owners tax credit stunts. Without those the growth was 0.7% and I have to wonder if even that happened. I don’t think things can be hidden forever when people are losing jobs and pay raises. 

Then there are the disastrous home sales figures that came out today.  A rise of 6.2% in sales was expected for November. Instead, they fell 11.3%.  I think this is the quote of the article:

November’s performance was a “hangover from the tax-credit-induced binge in the July thru October period," Peter Boockvar, market strategist at Miller Tabak, wrote in a note.

I think both ugly figures show the perils of government based stimulus efforts.  All the Feds can do is create a short term artificial bounce and that obscures the systemic problems at the core.  It looks good politically and might even get a country through a small recession, but it does nothing to solve the underlying weaknesses.  In this case, it may have done more harm by generating false expectations -- if not more credit bubbles.

Adding to the problem is the way the media portrays sales as increasing by only talking about month to month sales.  Comparing sales by year to year in the same period, things are not good.  Even the anemic 1.3% growth for November sales is from October.  This Gallup survey says holiday spending is actually down 22% from 2008, which was considered a very bad year. If the consumer is all we have to pull us out of the recession, we are in very bad trouble.

It seems we have a great many proverbial Nero’s fiddling while the American economy burns.  Bluntly, it probably already too late to do anything.  We are in for another major fall in 2010.

Relying on Drones Is a Bad Idea

Drones are starting to replace combat jets, but is it a wise decision?

One of the debates in military circles is whether or not manned aircraft have a long term future in combat.  The main idea is that remote controlled drones can be sent to fight without jeopardizing any American lives in the process.  They will be cheaper to manufacture and we won’t ever face an enemy with a significant air force again are parts of that theory.

I have problems with the argument, both on overall cheapness and the idea that all wars will be like Iraq and Afghanistan from now on.  The latter is foolishness because history says the next war will be unlike the previous one you fought, at least as far as the United States goes.  As far as being cheap, the drones have to be as they have an astronomical loss rate.  While that data is over two years old, I highly doubt Predator losses have improved significantly.

Then there is the whole concept of remote control being vulnerable to disruption.  We haven’t seen control of a drone being taken over by hostile forces, but they have successfully hacked the video feed of Predators.  The day will come when there will be a true hack rather than leeching video like a satellite TV pirate and what then?

That photo above is of a Predator pilot and instructor in the control station for the MQ-1.  He sits in a room watching monitors and pilots the drone via satellite. I believe having a human in the aircraft allows for many more contingencies to be dealt with.  You can’t hack a human and they can react much more quickly if they are in a real cockpit rather than a virtual one thousands of miles away. That flexibility simply cannot be replicated.

Then there is the “what if” of satellite jamming and destruction.  China has shown they can shoot down satellites as have we. Getting a replacement up is far more expensive and difficult than getting an airplane in the air.  I fear we are witnessing an over reliance on high technology that could be catastrophic against a powerful opponent such as China or Russia.

A more practical “what if” of facing an opponent with a real air force.  Drones are easy prey for manned jet fighters as the following video shows:

 

The answer to that is to use a stealthy drone as shown by the recently revealed RQ-170 Sentinel.  I find it strange that they are testing it in Afghanistan where there are no radars or fighters to evade.  Perhaps they are hopping over the border into Iran.

Still, there is a lack of flexibility inherent in such a design.  We’ll never see CAS (Close Air Support) effectively carried out by a drone.  Their slowness makes them effective only in environments we completely dominate in the air and their ability to respond to a changing threat is minimal.

Then there is the inevitability of them being hacked some day.  Everything networked gets hacked at some point, it is the nature of our time. The rest of the world has gotten very tech savvy and really are only limited by their budgets.  Just a couple of days ago, Twitter was hacked by Iranians.  While that isn’t a military organization, they do have active security experts protecting the network after some embarrassing lapses.

Lest you think I despise all drones, I don’t.  They have their uses but are too limited to be replacing fighters, bombers, and attack aircraft.  Reconnaissance is their forte and there they excel, but at quite a cost in airframes. 

One day this debate may be looked back at in much the same way the fiasco of going to missile only jet fighters is.  Generals, technicians, and politicians got overly enamored with technology and it failed to live up to exaggerated expectations. Going all remote control will suffer the same judgment in history, but we need to fight for programs like the F-35 Lightning II.

Manned aircraft will never be obsolete as long as the fog of war exists – and that will never go away.  Yes we will lose pilots because the nature of war means casualties.  That is unavoidable and a painful truth.  We can’t afford to lose our ability to fight a wide range of wars from fear of casualties.

The secret to our military’s success is only partly due to technology.  Most of it is due to flexibility and the supreme competency of our troops.  Often they have to make orders given them by isolated generals and politicians work in the field.  To continue doing that, they need to be fast moving and flexible.

Drones are neither fast moving or flexible, so relying on them primarily for an air force will be disastrous for the troops on the ground. Ask someone on the ground whether they’d like a Predator or a Strike Eagle backing them up.  I bet they’ll choose the fighter every time.

Auschwitz Sign Stolen

Poland’s police on the borders are on the lookout for the infamous sign from the main gate at the death camp.  Why would anyone steal the iconic and ironic sign?  My guess it has been stolen for a rich collector or by a neo-Nazi group, but humans being as weird as we are, anything could be behind the motive.  I just hope they retrieve it intact. With the rise of anti-Jewish sentiment in Europe it makes me concerned, considering next month the liberation of the camp is to be commemorated.

Another Debt Crisis or Two

Ran across a few interesting economic pieces last week, but didn’t feel well enough to write about them. Fortunately, or more accurately unfortunately, they still apply. I’ve been warning that bad commercial real estate loans would be the next shoe to drop.  We’ve seen that happen in Dubai, which I’ll write about further on.

But another debt problem is brewing and it will dwarf the real estate bubble.  That debt problem is the debt of sovereign nations, with the United States poised to be in major trouble.  Earlier in the year, the federal government had problems with some of its bond auctions not selling.  Now a new complication has entered the picture.

Ralph Benko’s op-ed at The Washington Examiner lays out the details of our debt servicing problem.  I was surprised to find out that we are only giving 1-2% interest on treasury bonds.  What country would want to buy those from us when inflation could easily turn them into losses rather than investments?  Something has got to give.

Quote of the piece:

The federal government currently pays, according the article, $202 billion a year in interest. White House estimates that interest payments will rise to $700 billion a year in 2019.

That doesn't count the projected catastrophic increases in entitlement costs in Medicare as the baby boomers retire. And you thought the American people were already shellshocked!

I don’t know, I think there is a point where the barrage of bad news ceases to register emotionally.  How low can we go is the question I ponder reading the news anymore.

Meanwhile, Greece is in a financial meltdown that is spooking investors in Europe.  Credit agencies have been making noises about what’s going on, even lowering ratings for Greece.  Quote of the article:

Analysts and credit-rating agencies are warning that countries with already high debt levels have rung up historically large deficits during the financial crisis, with tax collection plummeting even as public spending has soared.

The same principles that apply to individual debt apply to nations as well, duh!  Yet the idea of more spending by governments has taken such a firm hold on policy that increasing deficits are the norm rather than the exception.  But when it is someone else's economy they have no trouble in telling them to make cuts.

Instead, most officials in Europe are pushing the Greeks to clean up their own mess by making tough cuts.

"Considering the gravity of the situation, I am confident that the Greek government will in the near future take the courageous and necessary measures required," European Central Bank President Jean-Claude Trichet told the Belgian economic dailies L'Echo and De Tijd this week.

I can’t decide if it perverse hypocrisy or an indication the other European countries don’t have any capital they can infuse into the Greek system.

The Dubai financial crisis has been a problem that rippled out all the way to Scotland.  Now their neighbor, Abu Dhabi has come to a short term rescue to the tune of $10 billion.  It looks like a temporary solution that doesn’t address the long term defaults that may happen. After all, it a $80 billion debt that still need to be addressed. 

Buying time is a scary part of solutions offered by debt ridden governments and is becoming all too common. I think the truth is that nobody knows how to deal with what is happening world wide and domestically. 2010 is going to be interesting.

Navy Starting to Growl

One of the more esoteric missions in military aviation is that of electronic warfare.  While most people are familiar with the ideas of fighters, bombers, reconnaissance and attack planes, they will draw a blank when you mention “jammer planes.” The latest US design is the EA-18G Growler and it finally has been declared operational.  Deployment will begin next year.

A modification of the F/A-18F two seat Super Hornet, the Growler is replacing the much older EA-6B Prowler design.  The Prowler is a four seat derivative of the A-6 Intruder attack jet that served so well from the Vietnam War to Desert Storm.  The main advantages of the new design are the youth of the airframes, ease of maintenance, and ability to defend itself from aerial threats. 

So the Navy has their new jamming bird, but where does this leave the Air Force?  One of the more boneheaded decisions made was to get rid of the EF-111A Raven’s that did a bang up job in Desert Storm.  They had many years left in them and were a perfect match in performance to the F-15E Strike Eagles and F-16’s they escorted.  Since 1998, the Air Force has been dependant on the Navy Prowlers to do the same job and now they will have nothing.

Meanwhile, the Prowler isn’t done yet.  The Marines are keeping theirs and I haven’t run into a retirement date for them yet. 

While I’m not a fan of the Super Hornet (or Super Bug), I do like the Growler as a platform.  My chief complaint about the F/A-18E is its limitations as an interceptor/fleet defender compared to what an upgraded F-14 Tomcat could have been. Thankfully, AEGIS cruisers have only gotten more capable in taking out incoming attacks. Then there is the range problem. 

But what is done is done and cannot be undone. Hopefully the F-35 won’t be cancelled and I believe it will give air superiority back to the carrier wings in any future engagement.

So it may be surprising to read that I’d like the USAF to consider buying the EA-18G instead of thinking drones will do the job.  This looks to be a very capable platform for electronic warfare and there will be a need for it before all is said and done.