Alexonomic's Outlook for 2013: South America

Yes, the Brazilians are still the centerpiece of South American economic growth, yet there are competitors arising. While Venezuala faces a period of uncertainty with the potential replacement of Hugo Chavez, Argentina offers a renewed challenge to the Falklands under Cristina Fernández de Kirchner.

Alexonomic's Outlook for 2013: Europe

Europe reminds many historians of conditions during the 1930s. Economically depressed countries are embracing extremist political parties with racial divide, riots, and anger as the symptoms. Currently, most of the population is aware of the European debt crisis. Although a serious as the economic crisis is, the side effects of lower economic output can be more serious.

Americans and their Guns

To stray from the Predictions of 2013 series, I did an infographic of the gun control debate raging in the US, along with some statistics. The objectives of Obama gun control rules come plainly from the White House publication on the topic. As one can see, the proposed regulations are quite practical.

Alexonomics' Outlook for 2013: Africa

Egypt has often been the focus of news in Africa as of late. The removal of Mubarak and election of Mohammed Morsi has proven to be an interesting turn of events, but the excitement is far from over. Morsi symbolically removed ties from the Muslim Brotherhood, but that move hardly removes the influence the party has on the President.

A guide to Environmental Economics

Often, articles will be conclusions with a few supporting facts that will often sway the reader. I find this problematic for two reasons. First, the reader does not have the chance to fully understand the topic because no background is given. Secondly, the reader doesn't really have an opportunity to disagree with the writer's conclusion if the reader has little to no knowledge of the topic.

Wednesday, 20 March 2013

Grappling from the Edge: A Cypriot Tale

When your country is asking Greece for a bailout, you know you're in trouble.

Cyprus is a small country of a million people with a large problem, that just exploded across the international scene this week. This hasn't been a sudden crisis, as Cypriots have been asking for assistance since June. The current situation is a result of the financial crisis, as Cyprus had been known for its attractiveness for foreign deposits.

First, lets go over some basics. A few days ago, it was announced that Cypriot bank accounts with more than 100 000 euros would lessen by 9.9% as part of a 10 billion euro rescue package from the IMF and ECB, while lesser bank accounts would pay 6.75%. Russia is very interested in the outcome of this event, as Russian citizens have been using Cyprus as a tax haven, holding around 20 billion euros cumulatively in the country. As part of the deal, an independent audit of the bloated Cyrpiot banks will occur, as France and Germany accuse the banks of laundering Russian money. Russia, in response, will most likely extend their 2.5 billion euro loan.

However, this deal was rejected by the Cypriot Parliament. The rejection is causing all the media fuss.
Cyprus must now provide a new plan on how to pay their debts and continue financing their country without bankruptcy. Should the nation default, they will relinquish their EU citizenship which will most likely cause contagion in the rest of the European project.

As a result of the uncertainty, banks will be closed in Cyprus for the next week to prevent a bank run. Negotiations will continue, but tensions are high. Russian PM Medvedev stated that the situation reminded him of the Soviet policies that robbed Russians of their savings. However, Russia has been rumoured to be after the vast gas resources surrounding Cyprus in exchange for short term relief. Other sources of potential financing are the Orthodox Church, who has volunteered to mortgage their real estate to raise funds.
Beautiful country hiding some ugly debt. 
Currently, their are plenty of rumours but nothing concrete. Some have suggested the original deal is still on the table while others state that the presence of Cypriot government officials in Moscow mean a deal with Russia is most possible. Either way, private debt to GDP in Cyprus is at almost 300%, while bloated banks still suffering from risks taken during the financial crisis which included being hurt hard by the restructuring of Greek Debt. The Economist states that by 2011 Cypriot banks were 8 times larger than GDP.

CBC had an article stating why this event affects Canadians, stating individual banks were raided, a potential run on the banks, Russia's involvement and somehow linking the plausibility that a similar situation could occur in Canada. These arguments are massively over blown. First, the raid on the bank accounts was one time tax, or levy. Most of the accounts in these banks were not of Cypriot citizens, but of foreigners trying to hide from their homeland's taxman. Russia is involved because their citizens have 20 billion euro's in deposits involved, and is guarding their interests.

In other words, this situation is quite different from North America.

The one point raised is the continual deterioration of the Eurozone, which is quite troubling. Afraid of default, the European Union has continued to offer leveraged bailouts and bond buying programs to solve their crisis, which is simply not working. Most likely, a default will occur sooner rather than later in the EU, which will spark the next debate.

The question of continual existence of the European Union.

Friday, 15 March 2013

North Korea Strikes Sea of Japan

I am writing as Mitt Romney is speaking.

However, something just occurred that is far more important. North Korea has fired short range missiles into the Sea of Japan. Two KN-02 short range missiles were fired in international missiles, fired from SCUD like trucks, and has a range of 120 – 140 km. They can carry a nuclear load.
I guess Dennis Rodman did a poor job as a diplomat.
This has occurred before; however it is the timing that concerns most. Currently, joint US-South Korean military exercises are occurring. Already, it is heating up between North Korea and western relations. Completely destroying ties with South Korea diplomatically, while just today North Koreasaid that the United States shut down their internet access as Loxley Pacific Co, the internet provider to North Korea, said they were investigating an attack on their servers.

The continual tit for tat displays are heating up into what could be a physical military confrontation. North Korea must be careful, as already China has rebuked their antics and most likely their lone friend in the world will not defend them in battle. North Korea has 1.2 million military personnel, but their equipment would not withstand an attack by the technologically superior South Korea. The South Koreans has 700 000 personnel backed by 28 000 US troops, but have vastly superior equipment. Additionally, the North Koreans could not sustain a long term war as their fuel supplies are relatively low.

The latest news suggests that their was an assassination attempt of Kim Jong Un, as a power struggle between the Worker's Party and the Ministry of the People's Armed Forces continues. 

Either way, a war is best avoided, especially for North Korea’s interests. As accountants would say, should North Korea enter into war, they may cease to be a going concern. 

Thursday, 14 March 2013

The Paul Ryan Budget Delusion

Tomorrow should be interesting.

Some of the speakers here at CPAC include Donald Trump and Paul Ryan. Mr. Trump usually is more of an entertaining figure, less likely to be taken seriously. However, Mr. Ryan is a figure that is taken seriously, and has just released a new budget.

Maybe Paul Ryan is thinking too hard. 
Mr. Ryan stated in his Wall Street Journal article that “the most important question isn't how we balance the budget. It's why”. This statement is quite telling, as the very definition of a budget is the allocation of funds for the future; how funds are allocated are quite important and the main reason behind creating a budget in the first place.

Mr. Ryan continues to make gross distortions in his article. He states that “America has the world’s largest natural gas, oil and coal reserves”. This is factually incorrect, as the US imports oil for a reason; it does not have enough to meet consumption needs. It is true the US natural gas production has increased to lead the world, and the United States well known for its massive reserves of coal. However, the US has 1.41% of the estimated world oil total consuming around 20 million barrels per day, while only producing around 10 million barrels per day.

Additionally, Mr. Ryan asserts that “Medicare is going broke”. Again, this is simply not true. Medicare in the United States has four parts: hospital insurance, medical insurance, private plans, and prescription drug plans.  Right now, the hospital insurance fund will have depleted by 2024, so one section of Medicare is facing financial distress. Additionally, Mr. Ryan doesn’t seem to understand how funds will work. Yes, the fund will face a shortfall in that section in 2024. No, that does not mean bankruptcy.

Additionally, the CBO has long predicted the demise of the hospital insurance (or Part A) fund. In 1970, the Congressional Research Service predicted Part A to go broke in 1972.

Mr. Ryan also makes some rather heavy assumptions to conclude that his budget will balance by 2023.

His budget states that Congress should close certain loopholes, consolidate tax brackets by creating only two brackets – 10% and 25% (formerly the top rate was 36%). The Tax Policy Center (a nonpartisan organization) suggested that these policies would cause an increase of $4.5 trillion in the deficit through 2022, as government revenues will be depleted.  Surprisingly, Mr. Ryan’s budget increases the tax load on the middle class as mortgage and charitable deductions would have to be cut, which would hurt the middle class.

It’s interesting to note that Ryan plans to repeal Obamacare, but uses the $716 billion in Medicare savings from the bill in his projections.

Mr. Ryan’s key ideal is cutting the deficit, an issue he has raised multiple times. However the budget deficit peaked in 2009 at $1.4 billion and has fallen to $845 billion. Take in mind that American debt doubled in 30 years after World War Two, but debt as a percentage of GDP fell by 75%. The point being, according to Paul Krugman, that the debt should be looked at with historical comparable as a percentage, not the large numbers thrown around by individuals such as Mr. Ryan.

Paul Ryan is speaking tomorrow at CPAC. It is this writer’s wishful thinking that Mr. Ryan engages with factual statements and not rhetoric and fantasy.

While we’re at it, may as well state that New Gingrich’s moon base implementation by 2020 is possible.    

Thursday, 7 March 2013

In honour of Mr. Rand Paul

Finally, an American politician decided to talk about a valid subject.

That is, the deterioration of American liberty.

Liberty you ask? That may be a strong word. However, that’s exactly what it is, as shown when an American citizen was tracked by a drone on American soil.

First, let’s backtrack a bit.

Rand Paul is a junior senator from Kentucky who spoke for 13 hours to filibuster the senate’s confirmation of John Brennan to lead the CIA. A filibuster is basically when one member or several members of parliament stall a vote by speaking long enough to postpone it. Certainly, Rand Paul did this as he and a few other Republicans spoke for nearly 13 hours, to prevent the confirmation of Mr. Brennan as CIA director. Mr. Brennan was a supporter of the use of torture by the CIA under the Bush presidency, and also submitted controversial intelligence that caused the Orange terror alert in December of 2003. This intelligence was later discredited. Additionally, Mr. Brennan has heavily advocated for increasing the drone program in Pakistan, Yemen, Somalia and other countries. Mr. Brennan did not just advocate drone attacks in warzones, but also for people outside of warzones.
This is why Mr. Paul was so opposed to his nomination.

Chris Dorner was targeted by a drone on US soil, and the outrage was valid. First, this was not the firm time that a drone has been used on American soil, as North Dakota police used a drone to capture three militia members in 2011. It’s not these specific incidents that Mr. Paul is opposing, it’s the scary precedent it may create. Using drones on US soil as judge, jury and executioner is one scary idea, something that Mr. Paul decided to bring to the attention of the White House administration.

As I have referenced in my privacy post, American privacy on quickly declining as right violations are becoming far more common by government agencies. This is not just about the drone program, this is about the general deterioration of American rights, as well as international rights of the people who have their data stored in America. Certainly, the continual government big brother attitude that began under Bush and continued under Obama should be spoken more of, as it is the greatest threat to liberty that not just America, but the world faces today.

Mr. Paul rhetorically questioned “What will be the standard for how we kill Americans in America? Could political dissent be part of the standard for drone strikes?”

This is one scary thought, political dissent driving drone strikes. It’s a good question Mr. Paul is asking, one worthwhile of an answer from Mr. Obama. The White House should not be silent on Mr. Paul’s question, as silence will be viewed as an answer.

Certainly, not the correct one. 

Tuesday, 5 March 2013

American Privacy: A Brief Look

In the next few days I will be posting the 2013 Outlook for the Middle East. However, I wanted to release a brief look at what this blog considers as the biggest issue facing the United States, and Western countries in the world today.

Lack of privacy. 

The issue has not been talked about by either Republicans nor Democrats because both sides have contributed to the deterioration of American privacy. Data collection by the NSA, full body scanners by the TSA, the Patriot Act all infringe on basic constitutional rights on a daily basis. This infographic just provides some basics. For more information, here are some helpful links: