The Economic Decline

The recession appears to be severe and may be deep and long lasting. The economy is deteriorating at a rapid pace.

Fundamental problems are not really being addressed. I think the government will in the next year or so try to spend its way out of the recession. This may have limited success, but regardless of the degree that it may work, the end result will be that government will control the business activity of the United States more than ever.

Effects of recent Russian military action against Georgia

The war between Russia and Georgia is very serious. It can have long-term consequences for the security of the United States.

The United States seems unwilling to respond with military force, and so far has responded only with words. We may be over-extended in our military obligations. If Russia succeeds in conquering Georgia (they have the military muscle to do so), this will weaken the United States in its influence with other countries. Georgia is an ally of the United States and has had 2,000 troops on duty with our troops in Iraq. They have been willing to fight on our side in that war, and if we let them be conquered by Russia, that makes us look like an unreliable ally to the rest of the world. Our allies or potential allies will be afraid to help us and our enemies will be less afraid to challenge us.

China will watch what we do, and if we appear weak, they may be emboldened to think they can challenge Taiwan and we will not take risks to defend Taiwan.

This move by Russia also threatens Europe. What Russia is doing to Georgia it can try to do to other neighboring nations such as the Ukraine, Lithuania, etc. This may be the beginning of an attempt to build a new Russian empire.

This can have an effect on the value of the Euro vs. the dollar.

When nations and businesses choose a reserve currency, they look for more than appreciation in value. They look for stability and security. They want a currency backed by a nation with a strong government not threatened by internal revolution or external military conquest. The United States has a two century old constitutional government that has never been overthrown, and it is the strongest nation on earth. That makes the dollar secure. As Russia becomes more aggressive and starts to rebuild an empire, perhaps with plans to build a greater empire than the Soviet Union ever was, this makes Europe look less secure. What Russia is doing with Georgia they can do with the Ukraine and other former members of the Soviet Union. This is a direct challenge to Europe, which would like to incorporate some of these nations into the European Community someday.

Although the Euro has appreciated in value, it is not as secure as the dollar. It is risky. It is a recent invention, and actually an experiment. The European government that backs it is not strong, not stable, not old. Moreover, the European military, apart from the United States, is not particularly strong, especially compared to Russia.

Russia's aggressiveness puts the Euro's weakness in the spotlight. The European Union may appear to some to be at risk, and this makes the Euro seem less secure as a reserve currency long-term, and this can slow or reverse the increase in value of the Euro compared to the dollar.

It also brings to the attention of European leaders and citizens the need for a strong military. Diplomacy and trade can only go so far. Europe will begin to see that if they want to be a strong and influential power, they need to develop a strong military. They have always had the ability to do it, but not the will. Now they may develop the will.

Why Speculators Are Driving Up the Price of Oil

Oil is rising in price partly because world demand is growing faster than supply, especially with growing demand from China. But speculators are also being blamed.

There is a reason why speculators are bidding up the price of oil, and there is another reason why oil prices are rising.

There is anticipation among many informed people that there will be a war in the Persian Gulf soon. The most likely scenario is that Israel will attack Iran's nuclear weapon facilities after the American election but before a new president takes office. It may be after the new president takes office if McCain is elected. Iran is expected to retaliate not only against Israel but the West in general by trying to attack Persian Gulf shipping and possibly the oil facilities of neighboring nations. The United States will try to defend the flow of oil from those attacks.

Speculators are betting that oil will be disrupted and are buying futures now in the hope of selling later at a higher price. The bidding up of oil futures also causes today's prices to rise.

Also, countries and companies with oil storage facilities are building up their inventories so as to have oil when needed during and after a disruption of oil traffic from the Persian Gulf, and this is increasing demand for oil now and is driving up the price.

What It Takes to Get a Job as a Professional Blogger

A recent list of jobs whose demand for applicants is growing showed "blogger" as an item near the top of the list. There is a growing demand for bloggers who will work for a company and use their blogging skills to promote the company's business. One book I read gave advice to companies in choosing and hiring people for this role. One piece of advice: look for someone who is ridiculously prolific, someone who writes and writes and writes and loves it.

That may be one area where I fall short. I tell myself I love to write. But if that is true, why is it that I haven't posted an entry to this blog for over six months?

Actually, I do like to write, provided I have something to say on a subject. I am not so good at using entertaining and interesting language to say nothing.

Anyway, if anyone is looking to enter that career, if you haven't started your own blog yet, I encourage you to start one and post to it frequently. It will give you practice, and if you are good, or become good at it, you will have something to show a prospective employer.

Would Iran use a nuke?

Would Iran attack the West or Israel with a nuclear weapon if it had one?

I think eventually it would try to carry out a nuclear attack. The question would be, when?

Because of Iran's limited industrial and technical capacity, it would not have an inventory of bombs and missles to deliver them right away. It would start with one bomb, then two, then a few more, etc. over time. Would it attack Israel or Europe or the United States as soon as it had one bomb or two?

It is a safe assumption that Iran's first nuclear attack would be its last. Once they have the bomb, the longer they wait, the more they will have, and the greater the attack will be when it comes. Hitler did not go to war the moment he had the power to go to war. He waited and built up Germany's military strength first. So I do not think they will attack immediately if they develop the bomb. They will leverage their negotiating power while they build more bombs, using the few they have as a deterent.

But I think eventually they would try to attack Israel, the United States, and Europe. They can also use their increasing power to choke Persian Gulf oil traffic and bring the Western economy to its knees, or threaten to do so if their demands (whatever they would be) are not met. They could do that with convential military forces by announcing an oil blockade in the Gulf and threatening to attack oil tankers with their missles. This would close traffic. They could then use their nuclear ability as a deterent to prevent the United States from opening the Gulf with its naval power.

Iran war timetable

Dick Chaney recently said that the United States will never allow Iran to develop a nuclear weapon. Mohamed ElBaradei, head of the International Atomic Energy Agency (IAEA), said Monday that Iran would need 3 - 8 years to develop a nuke. He said this in the context of advocating against military measures against Iran, saying in effect, "we have plenty of time."

I wonder, how can Dick Chaney be sure that the United States will not allow Iran to go nuclear unless an attack is being planned before Bush and Cheney leave office? I don't think he has the confidence that Hillary or any Democrat would definitely go to war to stop Iran if the present administration doesn't do it. And three years is not a long time. Coming at the time it does, I think this indicates the high probability of some kind of attack against Iran.

Also, there have been reports that Syria has started a program to develop nukes and that Israel has already bombed one of their facilities.

Falling Dollar

I have recently read news that the dollar is falling more quickly in relation to other currencies, particularly the Euro, and this because Japan and China are dumping dollars.

Certainly this country's balance of payment and budget deficits contribute to the dollar's fall, and there can be dangers in a rapidly falling dollar. But the dollar has strengths too, strengths that perhaps up till now have kept the dollar from falling even more rapidly.

Foreign investors do not just look for a currency that appreciates in value, or does not fall in value. They also want a currency that is backed by a strong, stable government, which reduces the risk that those investors will be stuck holding a currency that has become worthless because the government that backed it has fallen to revolution or war.

The dollar is backed by a constitutional government that has been in existance for about 200 years, and we have never had a revolution against that government during that time. It is also backed by a government in command of the strongest military power in the world. As a nation, we have never lost a war on our own soil.

Compare that with the Euro. It is backed not by a single powerful nation, but by a loose confederation of nations that just a few decades ago warred against each other in the greatest war the world has ever seen. The Euro itself has existed less than a decade. And the Euro is not backed by a strong military power, except the power of the United States itself as the ally of Europe. So while the Euro wins on the issue of balance of trade, the dollar wins on the strength of the government and nation that backs it. Foreign investors have to keep both of these factors in mind in their decisions, and they do.

I am also not sure that the falling dollar is bad for the United States. Our industrial base has been heavily damaged by foreign competition, and now with the Internet our white collar base is facing competion from lower-paid foreign workers. But a lower dollar helps alleviate that problem by making U.S. manufactured goods cheaper and therefore easier to sell and makes it harder for foreign manufacturers to sell their goods in this country. And it helps level the competition between American white collar workers with foreign workers (computer programmers come to mind).

I think on balance a falling dollar is good for the United States economy and helps employment, provided it falls gradually in a controlled way. What we do not want, and most foreign nations do not want, is a dollar that falls so rapidly that it disrupts worldwide commerce. That could trigger a world recession or worse.