Trying to Play Chicken with Everybody’s Money

A slow and painful battle over America's financial future, photo: Benjamin Reed/flickr

The bumbling US Tea Party has issued its latest ultimatum: cut public expenditures or risk defaulting on the national debt. And how? By stopping lawmakers from raising the country’s legal debt ceiling, currently set at $14.3 trillion. The US Treasury reckons it will hit and inevitably exceed the limit sometime between late March and May.

The Obama White House has deemed the issue non-negotiable. Is it an idle threat?

Strictly speaking, the Tea Party doesn’t have the votes in Congress. Mainstream Republicans would all have to vote no. Mainstream Republicans, however, primarily serve the interests of the corporate and financial elite; overt attempts to undermine US economic power typically receive a cold reception with this crowd.

As discussed in my ISN Blog post last week, the instance of disagreement nevertheless puts the spotlight on the growing rift in the American Right. It also exposes the ignorance of the frustrated Tea Partiers. Nuking your economy is no solution to your economic woes.

Categories
Keyword in Focus

Keyword in Focus: North Korea

When will this border be crossed again? photo:fresh888/flickr

After Tuesday’s incident, in which North Korea reportedly shot 170 rounds of artillery on the South Korean island of Yeonpyeong killing two civilians and two marines, tensions have been at an all-time high in East Asia. Increasingly unpredictable and volatile in its behavior, the Kim regime seems to have embraced a whole new level of brinkmanship in this long-running conflict. Explanations in terms of reasons for such a brazen attack vary, from the internal power dynamics of the elder Kim shifting power to his newly appointed heir-apparent, to simple blackmail. Although we may never know what caused North Korea to risk so much (also in relation to its increasingly impatient ‘big brother’, China) the worry that the Koreas and their closest allies might be drawn into a war because of a provocation or freak accident is as worrying as ever.

I don’t believe that this conflict will escalate further. North Korea has pushed proverbial buttons before and will undoubtedly continue to do so, whether to consolidate the heir-apparent’s power base in the military or in order to push members of the six party forum to grant it further concessions in a yet unforeseeable round of talks. It is, however, unlikely to be willing to sign its own death certificate in the form of a highly destructive war and one which could involve the threat or actual use of nuclear weapons (shudder). We may not want to place much trust on the rational capabilities of Kim and his entourage, but China, for one, will do all it can to prevent this.

Saving the World, Ruling the Earth?

China: Where modernity is a mantra, photo: Trey Ratcliff/flickr

China’s rise to the center stage of world affairs has been much faster and more multifaceted than anyone expected.

The Chinese themselves seem to have been taken aback by their new-found might, and although prophesies about China’s future dominance should be taken with a whole spoonful of salt (a lot can still go wrong), a deep confidence is permeating the country. And it seems like the rest of the world is finally taking note.

I wrote a short piece in October 2008 for the Finnish Business and Policy Council (EVA) about what I thought would be the geopolitical ramifications of the financial crisis, in its very early stages at the time. America, as the epicenter of the crisis, was shocked into a state of socio-political and economic self-denial and panic that was given tangible expression in last week’s midterm elections. In many of the individual races the anger and vitriol was directed at the great ‘new’ menace- China. In the meantime a real and perceived shift to the East has taken place. It is only beginning to take shape, but its effects are already being felt.

Categories
Uncategorized

ISN Quiz: Iraq

Test your knowledge on Iraq, the topic of this week’s Special Report.

[QUIZZIN 37]

Investing in Infrastructure

Repair wanted, photo: cmh2315fl/flickr

On September 6, President Obama announced an infrastructure renewal project in the US. According the White House press release, the plan aims to create a long-term framework for the renewal and expansion of a major part of America’s transportation infrastructure (roads, railways aviation and transit infrastructure.) Its broader objectives are to contribute to the economic stimulus of the Recovery Act with a front-end investment of $50 billion.

Specifically, the plan aims to do the following in the coming six years:

  • Rebuild 150,000 roads
  • Build 4,000 miles of railroads and introduce high-speed rail systems
  • Reconstruct 150 miles of runways and upgrade the air traffic control system
  • Establish a permanent infrastructure bank to leverage capital investment in the nation’s infrastructure

This contribution is a step in the right direction, but only a step. The plan addresses only four of the 15 issues outlined by the American Society of Civil Engineers, which produces an annual report card  on the state of US infrastructure, assessing bridges, dams, drinking water, energy, hazardous waste, inland waterways, levees, public parks and recreation.

According to the most recent ASCE report, the US scored a dismal D (approx. 1.0 out of a possible maximum of 4.0.) This same report estimated a 5-year investment of $2.2 trillion would be needed to significantly improve these areas, including some 1,800 high hazard and over 4,000 structurally deficient dams, as well as 72,868 and 89,024 functionally obsolete bridges.

But, as the mid-term elections draw near, calls to reign in federal spending have grown. Republicans have vowed to oppose the plan and support among Democrats may be weak.

Ultimately, infrastructure renewal in the US will depend on murky congressional back-room deals, tough legislative cycles and the fickle political trends of the coming years.

Despite the Obama administration’s attempt to bring the issue to the forefront of domestic policy, quick action on a vital issue seems increasingly unlikely. And this is bad news for America.