The United States of Jamaican Economic Policy

Earlier this year, news reports of gloom and doom started to flow into the media:  if we do not raise the ceiling for the amount of debt the Treasury can issue and carry, we are doomed.  Austan Goolsbee, chairman of US Council of Economic Advisors, said if Congress fails to raise the debt ceiling, the "impact on the economy would be catastrophic."  He goes even further to say that doing so would "damage the full faith and credit of the US," and "would be the first default in history caused by pure insanity."  In an ABC News interview, he stated "This is not a game. You know, the debt ceiling is not something to toy with. … If we hit the debt ceiling, that's essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic. I mean, that would be a worse financial economic crisis than anything we saw in 2008."

Here's the rundown currently:  the debt ceiling is currently at $14.3 trillion.  In the past 10 years, we have seen the debt ceiling raise 10 times.  The past three have been the most damaging:  +$1.5 trillion in 2008, +$1.08 trillion in 2009, and +$1.9 trillion in 2010.  (In years previous, the debt ceiling was raised maybe once every two to three years, and then only by $500 billion, but that policy has obviously changed.)  This puts the current debt-to-GDP ratio at 93.5%, dangerously close to default levels.  Just for comparison, Ireland's debt-to-GDP is forecasted to reach 93% this year, and everyone is talking about how the sky is falling there.  However, a forecasted 100% supposedly seems to pose no problem for the United States.

The US should take a hard look at the story of Jamaica.  The following quote is from the CIA's World Fact Book (click the Economy tab):
"The Jamaican economy is heavily dependent on services, which now account for more than 60% of GDP. ...The economy faces serious long-term problems: a sizable merchandise trade deficit, large-scale unemployment and underemployment, and a debt-to-GDP ratio of more than 130%. Jamaica's onerous debt burden - the fourth highest per capita - is the result of government bailouts to ailing sectors of the economy, most notably to the financial sector in the mid-to-late 1990s.  The government's difficult fiscal position hinders spending on infrastructure and social programs, particularly as job losses rise in a shrinking economy. ...High unemployment exacerbates the crime problem, including gang violence that is fueled by the drug trade."

So let's see here:

• Economy's service sector provides about 60% of GDP, check.
• Large scale unemployment and underemployment...... check.
• Debt burden due to government bailouts of... ohgahd

In addition to all of these problems, few creditors are looking to buy US Treasury bonds any more.  The Federal Reserve, which loans the US Treasury money to begin with, has been picking up more of the tab recently through Quantitative Easing.  The Fed previously held between $700-800 billion in US Treasuries, but now is holding an astonishing $2.054 trillion.  They even plan to buy $600 billion more in treasuries this year.  (I'm wondering if that is dependent upon the debt ceiling being raised.)  This practice allows the Fed to print money and flood the market with it.  They were hoping the first two rounds of Quantitative Easing would boost the economy out of the recession, but I think a critical look around would say otherwise.  (If you want another explanation and like those stupid xtranormal text-to-speech videos, check this one out.)

They've got a word for this - it's called inflation.  If they continue with this practice, this could lead to hyperinflation through what is known as The Vicious Circle.

This is why Austan Goolsbee's comment about "damaging the full faith and credit of the US" cracks me up - it has already been damaged, and faith and credit are both drying up.  I'm not sure how creating money out of thin air and obtaining more debt is supposed to help that either.  This is akin to getting one credit card to pay off another that's been maxed out.  You don't have the money to pay either card, but with each successive card, you have the ability to keep running on credit.  Eventually, you're going to run out of credit cards, and then once you no longer have the ability to make minimum payments, you face bankruptcy.  The same thing will happen for the US government eventually.  Right now though, we're just wondering if any more card offers will come in the mail.

We're also wondering if the collection sharks will start calling to beat some money out of us.  China at least has us on speed-dial at the moment.

So, let's assume the US debt limit is not raised.  Let's assume we default on our debt.  Then what happens?  Nobody is for sure.  The fearmongers in Washington have stated it create a catastrophic impact that would be a worse financial crisis than the one in 2008.  Along their train of thought, the markets would probably lose all faith in domestic investments due to immediate de-valuation of currency.  Many social programs, such as Social Security and Welfare, would probably be immediately axed in an attempt to balance the government budget, destroying wealth for many lower-income Americans.

I'm more inclined to believe a world financial institute will try to bail us out though.  The International Monetary Fund will most likely extend their long arm to buy our debt, just like they have with Greece, Ireland, and once again Jamaica.  This will allow the Fed to continue the practice of buying Treasury bills in order to print money and pump it into the economy, leading to more pronounced inflation both domestically and worldwide.  The US government would be in some real trouble then - their grip on the world financial market would loosen at a very fast pace.

So here's my biased opinion, as a free market advocate:  the US needs to hold the debt ceiling.  Mr. Goolsbe was right:  this is not a game, and the debt ceiling is not something to toy with.  The government needs to default.  They need to feel the pain of their out-of-control deficit spending.  Wasteful spending needs to be cut.  Changes need to be made.  The change might be rather radical - something that would most likely to an improved system, because the current one sucks.  We must resist bailouts from both the Fed and the IMF - they would only lead to inflation, which would cripple the economy permanently as it did in Jamaica.

We cannot compromise on this.  Tea Party hacks like John Boehner (more like boner, amirite?) support a debt limit increase if we cut government spending.  Sorry, but we can't possibly hold the promise to cut government spending while increasing the debt limit.  The truth is the US is addicted to debt.  They need to get more to do more.  They make promises to hold back and cut select programs, but the debt still continues to grow and grow and grow.  Handing the government more debt while promising to cut the budget is like giving a heroin addict a large fix, but requesting that they do less each day.  It simply won't happen.

Either way, we're damned if we do, and damned if we don't.  We can hold the debt limit steady and be damned in the short term, continue to increase it and be damned increasingly over time, or hold out on an IMF bailout, which would damn us forever.  Godspeed for this country.

Julian Assange Speaks to Media for First Time Since Incarceration

Watch the video here:

Main points of the interview:

• Journalists are against Assange and Wikileaks are blind to the fact that they are next for censorship.
• The government has the system to act first, but the resistance against the government's actions is slowly building.  Mass media, and even politicians, are realizing the threat to the First Amendment.
• In response to being called a "political terrorist," Assange make it clear who the real terrorist is by using the definition of terrorism, which is "a group that uses violence, or the threat of violence, for political ends."
• Political leaders calling for Assange's assassination are committing incitement for murder, but go unprosecuted because their opinions are popular within the US government.
• Assange questions whether or not the United States still obeys the rule of law, as the current situation would show otherwise.
• Bradley Manning is a political prisoner of the US government.  He is being held in solitary confinement, without ever having being charged for a crime, and without due process of the court of law.  Those who have isolated Manning are taking advantage of his weakening psychological state to brainwash him into testifying that Wikileaks coerced him to leak the documents.

Also, it's funny to watch mass media news anchors.  They're such idiots.  The anchor asks him how he would respond to threats from political leaders, and then essentially re-asks him the same question.  Julian Assange is intelligent, and very well-spoken.  Let's hope he isn't "illegally murdered."

FCC Rules: Net Neutrality Stays

The FCC voted yesterday to support practices that would enforce what is known as "net neutrality."  From the FCC's ruling, ISP's (Internet Service Providers) are required to disclose their traffic management methods, and are restrained from blocking certain websites and services, such as how Skype was not allowed to be on AT&T's iPhone for some time, or how my ISP has thus far refused to support ESPN3 on my Xbox 360.  Bastards.

The bill further restricts ISP's from "unreasonable discrimination" in traffic management, which I suppose is vague enough to mean QoS (Quality of Service) is no longer an acceptable practice for an ISP.  This also takes out a practice known as "paid prioritization," which allowed businesses to pay a premium so that their sites would load faster than their competitors' sites.

I'm going to break away from the libertarian herd on this issue, though not completely.  There are both wins and losses to be had in this regulation.  My heart is pretty torn on the issue.  (I'm thinking about writing an emo song about it later.)

Wins:

• Visibility.  This new regulation should bring more insight into your ISP's traffic management, which so far has been purposely kept dark.  From this, if you have the convenience of being able to select your ISP in your city, you can compare and contrast to make more informed decisions as a consumer.  This holds the company accountable.  The best company will win, the lesser will lose.
• Freedom.  Your ISP is no longer able to block certain websites.  This is great for the Internet as a whole.  Not only does this take a policing role away from your ISP, but it also prevents fragmentation of service.  If every ISP had a different list of sites that it allowed and disallowed, a consumer would have to buy from multiple parties to receive the entirety of the Internet.  It reminds me of when AOL, Prodigy, CompuServe, and GEnie all ran competing "online services," each being completely separate from the other, and none offering true ISP service until the mid-90's.  (It should be noted that in the 80's, the founder of AOL wanted to start an on-demand digital music marketplace - an idea that was struck down by Warner Bros. Records. lol.)
• Integrity.  Quality of Service has, at least for now, come to an end.  That is excellent - QoS in my mind is only one shade of grey away from censorship.

Losses:

• FCC oversight on the Internet.  This is the biggie.  I've already argued in previous posts that one of the great things about the Internet was its lack of regulatory oversight.  While the FCC has done consumers many favors by enforcing net neutrality, it has also established itself as a regulatory agency for the Internet.  I don't like that aspect one bit.  This could potentially be the beginning of a slippery slope toward government censorship of the Internet.  It would be the beginning of the end of Internet freedom if there were any "decency" regulations passed that prohibited "obscene, indecent, and profane" material.
• Paid prioritization ban.  In a way, paid prioritization the inverse of QoS, which I've already argued against.  I'm not sure how I feel about the ban on paid prioritization though.  The argument could be made that it is a form of advertisement, and that businesses should be allowed to pay a premium price for a premium service.  However, doing away with paid prioritization levels the playing field for everyone on the internet.  Win some, lose some.

Normally, this is where I would naturally say the free market should rule.  ISPs that censor would be naturally avoided by consumers.  The more open networks would win out over more closed networks in the free market.

However, it is not quite that simple.  Many ISP's enjoy the benefit of being a natural monopoly, as the Internet is the newest form of a consumer utility.  Because of that, many towns and cities only have one single ISP.  The market has no choice to make in this situation, and thus cannot choose a winner or loser.  Therefore, if Comcast or Time Warner decided to enact QoS to limit Skype because it competes with their digital phone service, or blocked ESPN3 because it competes with their sports pay-per-view service, many consumers would have no recourse to avoid these decisions.

Ultimately, this issue boils down to this question:  would you rather have corporations with profit motives censoring your Internet, or government with self-interested regulatory motives censoring your Internet?

I don't have a definitive answer for this issue.  The FCC has already ruled, so time will tell as to how that impacts us all.  We must keep a watchful eye on continuing FCC regulations for the Internet, and must be vigilant if anything begins to threaten its freedom.

Edit:  PLEASE READ: A PERSONAL APPEAL FROM ALYSON HANNIGAN (NSFW)

Wikileaks: Return of the Anonymous

Despite the government's best efforts, The Internet would not let Wikileaks go down easy.  It seems every disturbance in the Force has an equal and opposite reaction in the Force.

After being shut down for nearly a day and a half, hundreds of mirrors of Wikileaks immediately popped up world wide.  This ensured the continuation of the released documents, regardless of whether Wikileaks itself continued to survive.

Additionally, a group of computer geeks ("hackers" would be a misuse of the term) referring to themselves as Anonymous began to perform DDoS attacks on websites that, in their view, attacked Wikileaks.  In Operation Leakspin (yes, as in Leekspin), those who participated were able to use their computers to overload the servers of both Visa and Mastercard's sites.  This is the technological equivalent of forming a picket line - after the servers had been overloaded enough, nobody could access the site anymore.  Consumer information inside Visa and Mastercard's sites were still secure - any other claims are hoaxes.  However, the message was clear - mess with the Internet, and the Internet will mess with you.

Overall, it seems that those against Wikileaks are now suffering from what is known as the Streisand Effect - the more they attempted to snuff out or remove the leaked information, the more media coverage the story received, and the more resistance they received in return.  Funny how that works.

Personally, I support the mirrors.  These documents have already been leaked publicly, and cannot and should not be "unleaked."  Precedent for this was already established with the Pentagon Papers.  As much as the US Government would like the option, time cannot be turned backwards.  Any attempt to snuff out publicly released information, whether it be direct or indirect, is nothing short of censorship.  Internet censorship is not an area the US needs to dabble in, else we might start drinking the Chinese Kool-Aid.

As far as the Anonymous attacks, I believe they resorted to technological "violence" to make their point.  And it was made. However, it was rather temporary.

The bottom line is, I do not blame Wikileaks - they were simply a messenger.  I do not blame Anonymous - they were simply protesters.  I do blame the US Government in its ineptitude to protect classified information. I do blame Bradley Manning for abusing his security clearance to so freely release these documents.  As I said, I do not support leaking of classified information outright - we do have military secrets for a reason.

There are still more questions that still loom in my mind about this issue though.

• Who leaked these documents?  We know Army PFC Bradley Manning has been captured, but was he really the only one?  With the sheer volume of classified information that has been released so far, I am inclined to think (and hope) that he is not.
• If he was not alone, how is it that nobody else has been found guilty?  Wouldn't the SIPRnet logs show when/where the documents were accessed, how they were copied, and who was logged in while this all happened?  Surely it couldn't have been one person working alone.
• If this information was so secret and so vital, how was it so easily copied?  According to Bradley Manning, he copied the files onto a CD-RW marked "Lady Gaga."  We can't cut off a CD-RW from being used on SIPRnet or JWICS?  There are controls in place to regulate the transfer of data on these networks, and even on unclassified networks, especially when it comes to using removable media.  I'm not sure how this clandestine unmarked CD-RW containing Lady Gaga made it into the network, or how the controls allowed for transfer to and from the disk.
• Better yet, why do those computers even have removable drives?  It makes me wonder if anyone in government technological security ever watched the scene in Mission: Impossible where Tom Cruise copies a set of files en masse from a "CIA top secret black vault" computer readily onto a floppy disk (and that was in 1996).  Lesson number one should have been:  if you don't want someone carrying information out, don't give them the means to do so.
• Why would the US Government ever allow such broad access to so many classified documents?  Classified information is only accessed on a need-to-know basis.  If you don't need to know the information contained in hundreds of thousands of documents concerning Afghanistan, Iraq, and diplomatic comments (and who really would?), then you shouldn't be able to access the documents.  It makes me wonder if they were all sitting in some folder marked "*.* SUPER SECRET STUFF - PASSWORD IS PASSWORD."
• Also, according to the previously linked Wired article, Manning was "rummaging through classified military and government networks for more than a year."  He was allowed to look at documents just at his own will?  I guess that throws the whole "need to know" thing out the window.

Perhaps this situation is why Yoda so famously said, "Military secrets are the most fleeting of all."  Oh wait, it wasn't Yoda, it was... well, nevermind.

Wikileaks: The Empire Strikes Back

Then came the backlash of Wikileaks releases.  You could almost hear the breathing from the collective black plastic helmet of the US government.

Secretary of State Hillary Clinton lauded Wikileaks as "an attack on America's foreign policy interests," and claiming their release posed "real risks to real people."  Senator Joe Lieberman introduced legislation known as the SHIELD Act to make any publication of any classified data illegal (I should re-emphasize this includes publishing, not just the act of leaking).  House Representative Peter King (R-NY), who sits on the House Homeland Security Committee, claimed the Wikileaks releases were "treason" (though I'm not quite sure how as Julian Assange is Australian, perhaps he meant whoever released the documents?).  Other political types, such as Sarah Palin, referred to Assange as "an anti-American operative with blood on his hands."  She also asks why Assange has not been "pursued with the same urgency as we pursue al Qaeda leaders" - though if he were, I guess he would be safe for a while.  (It's been nine years since 9/11, right, Osama?)

Commercial backlash soon followed.  Amazon removed Wikileaks's contents from their servers.  EveryDNS, hosting company of the wikileaks.org domain, soon followed suit.  This effectively shut down Wikileaks for about a day and a half, until they moved to the new wikileaks.ch domain (and gained hundreds of mirrors afterwards).  Though these companies were most likely pressured by the US government to do so, their actions were pretty clear cut - it is illegal to transfer classified data over unclassified networks.  Amazon and EveryDNS pulled the documents in a pretty big CYA move.

Then, in very questionable fashion, Paypal blocked all transfers of money to Wikileaks, cutting off the site's primary source of donations.  Soon after, Mastercard followed suit, refusing to process all payments directed toward Wikileaks.  Visa also hopped on this train a day later.  A couple weeks later, Bank of America cut off its customers from donating as well.  Oh and, this just in:  Apple has removed the Wikileaks iPhone app from the App Store.

It is easy to assume the US government pressured these companies into this decision, as they treat Wikileaks essentially like a terrorist organization, and thus those who support the site financially become complicit in terrorism.  However, there has been no direct claim from either the companies nor the government as to whether or not this is the case.  Most claim Wikileaks was inconsistent with "internal policies" or "terms of service," however these companies had no interest in blocking payments when the Afghanistan or Iraq cables were released.  Interesting for sure.

If it was government pressure though, this sets a terrible precedent for the future of the Internet, media organizations, and the supposed "free market."  While in jail for supposed sex crimes in Sweden, Julian Assange called the financial companies' bluffs, stating, "We now know that Visa, Mastercard, and Paypal are instruments of US foreign policy."  Despite the outcry of private citizens and civil rights groups against such actions, the government did everything within its power to stop Wikileaks.  As stated by one blogger, "The leaders of Myanmar and Belarus, or Thailand and Russia, can now rightly say to us, 'You went after Wikileaks’ domain name, their hosting provider, and even denied your citizens the ability to register protest through donations, all without a warrant and all targeting overseas entities, simply because you decided you don’t like the site. If that’s the way governments get to behave, we can live with that.'"

Burning questions:

• Why wasn't there the same vigor in taking down Wikileaks when hundreds of thousands of documents concerning the Afghanistan and Iraq wars were released?
• Why was there no democratic due process to determine what laws Wikileaks had broken (if any) before any action was taken?
• How did the government so easily convince American ISPs to cut off a website?
• Similarly, how were financial companies swayed so easily as well?
• Shouldn't the market have dictated both moves instead?  (If the market didn't like Wikileaks, they wouldn't have gone to the site, nor donated to its cause.)
• Is the government reserving more power than even a tin-foil-hat-wearing libertarian like myself thought they had?

More to come in Episode 6... I mean, the next article.

Wikileaks: A New Hope

A long, long time ago, in a galaxy far, far away...

No wait, I'm sorry.  Wrong story.

Wikileaks began in 2007 as a whistle-blowing website for "those... who wish to reveal unethical behavior in their own governments and corporations."  Wikileaks encouraged users to submit documents via the Tor computer network, which is a highly encrypted daisy-chain connection of computers, to protect their anonymity.  Some of the first leaks included Somali assassination orders, documents concerning Guantanamo Bay, and illegal activities by Swedish banks (Julius Baer actually succeeded in temporarily shutting down Wikileaks for a short time, only to eventually lose the court case).

Wikileaks is, more or less, the shining light for the Internet.  It offers a place for documents to be digitally sent in an anonymous fashion, and have them posted for everyone to see.  It is the result of a completely open and free network of computers, unrestrained by government censorship (depending on where you live) or some other regulating force.  It is the truth's best friend and secrecy's worst enemy.

So, it came as no surprise that classified US documents began to be submitted to Wikileaks in order to shine some light in areas that were being purposely kept dark by the US Government.  Much like the Pentagon Papers that exposed the real truths behind the Vietnam War, documents exposing the real truth in the Afghanistan and Iraq wars soon found their way into Wikileaks' hands.  Following a good bit of media hype-up (gotta get that money, don't you, Assange?), the documents were released for everyone with an internet connection to see.

(As a side note:  I do not support the leaking of classified information.  However, what is leaked in this fashion cannot and should not be "unleaked.")

Then came the release of the diplomatic cables.  For those that are not informed, a "diplomatic cable" is basically an email sent from a United States diplomat back to their next-in-command to officially inform them of happenings in the country the diplomat communicates with.  (It's called a "cable" because it travels over a cable.  I'll take "Stupid Answers" for 1000, Alex.)  After this release, it seemed Julian Assange and Wikileaks had the political world by the figurative balls.

Until...

Welcome!

Hi all.  This is my new blog.  I hope to share with you some of my thoughts on current events, and how I see them.

First and foremost, I am a civilian employee of the United States government (where, and to what extent, I will not say).  I also happen to agree with many libertarian points of view.  Sometimes I don't though.  Deal with it.

Some may ask, "Wait a minute, don't libertarians hate government?  That's pretty ironic that you work for them if you hate them so much."  My answer is simply:  no, libertarians do not inherently hate government.  In fact, I think I just might love it so much I'd marry it.  The Constitution, even in its strictest interpretations, calls for freedom of speech, freedom of religion, freedom to own firearms, freedom from tyrannical searches, etc., which are many freedoms that citizens of other countries are not readily and naturally handed.  It is fantastic that we live in a land that allows us to be so free - for example, a blog like this would get me life in prison in China (if I continued to live at all).  If you've never really stopped to think about that, now more than ever might be a good time.  However, my love will only continue if government continues to be the entity that it is supposed to be.

Most libertarians agree with the ideals set forth by the founders of this great nation, and the principles that define the federal government's role in the Constitution.  Many point to the Tenth Amendment as the catch-all for what hasn't been defined.  This amendment basically states, "what is not laid out in the Constitution is outside of the federal government's control, so it must be left to the states, or to the people."  Government as a necessary entity for a sovereign nation, and libertarians often want it to stay in its place as defined, while society and free markets provide for the rest.

The Tenth Amendment is often tossed to the wayside though as government continues to grow though.  A liberal federal government looks to regulate, control, and restrict whatever it can to best serve its own interests.  This brings the government more revenue, and allows for more federal employees (like me!).  How great this looks for the government:  "We created jobs!  We have a bigger budget!  We cut back on the debt deficit!  Yay go us!"

However, what is often good for the self-interest of the government is often not good for society as a whole.  It is up to society to keep government in check by staying informed, and letting our politicians know how we feel on the issues.  As GI Joe so famously said, "Knowing is half the battle."  That's where I come in.

Feel free to comment, repost, or flat out steal my opinions.  My only mission is to make people more aware of what is going on.  You are free to feel as you please about the issues.  You might think I'm wrong.  I might think I don't care.