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Good News or Bad?

After a somewhat slow December, there is a lot of good news and bad. The problem is that both seem to come at the same time, leaving anyone following the flood of information bewildered.  Two main categories of news, economy and national security, are running at odds with each other.  Are things getting better or are they getting worse?  It depends on how you look at it.

This is what a time of revolution and restructuring looks like.  Anything can happen.  Times like these are what separates romantics from pragmatists, optimists from pessimists, and if we aren’t careful politics from any semblance of reality.

The first story that is worth following is the ongoing restructuring of the US economy, which added a strong 200k jobs in December.  Initial claims for unemployment benefits, a measure of layoffs, are down to 375k per week, giving job growth a solid chance.  Granted, at this rate the 8M-10M jobs we need will take four more years to develop, but it’s a solid start.  What could go wrong to put a stop to it?

Ah, there’s always Europe.  The European Central Bank (ECB) is acting to help ease the crisis as EU governments start fussing over permanent changes that will give them the kind of central bank and structure they’ve needed all along to take care of the problems they have.  But Euro banks are borrowing money to puff up their balance sheets only to put it back into the ECB with nearly no interest, losing a net 0.75% in the process.  They are that desperate to keep enough cash on hand to stay in business.  There has to be a crisis coming soon, even if the sovereign debt crisis is figured out.

So that remains the economic story – the US job market is setting in the base for what should be real (if slow) growth, assuming Europe doesn’t blow up and wreck everything.

A similar situation is playing out in our Defense department.  Obama went over to the Pentagon to brief the military on his plans – more of a “heads up” than a real policy statement with solid numbers.  The roughly $684B (depending a lot on how you count) that we spend on defense every year is the largest single category in our budget and completely unsustainable.  Getting out of Iraq will help get a handle on it, but the goal is a leaner military with fewer troops in Europe and a greater reliance on technology to keep costs in blood and money more reasonable.  It’s very much in line with what was proposed before 9/11.

Republicans, naturally, have already started squawking.  They label it a retreat from the world at a time when things are dangerous and require a firm hand.  Which brings us naturally to the situation in Syria.

The conflict in Syria is degenerating into a civil war, with elements of the military openly defecting to the “Free Syrian Army”.  At least one defector claims that dictator Assad no longer has control over the situation as it descends into sectarian violence and brutality for its own sake.  What can the USofA do about it?  Apparently, the answer is nothing at all – because we have no leverage over the nation and the politics of the region.  The Arab League is doing its best to contain the problem, but they do not have the resources either.  Syria will have to burn for the foreseeable future regardless of what we do.

Syria is both a case for a leaner military and a stronger one at the same time.  But the potential for some kind of intervention in the region depends a lot on how it plays out if the violence crosses international borders.

No matter what we do here at home to get our act together the potential for danger ahead around the world is higher than ever.  In a closely linked global system turmoil eventually hits everyone.

Will 2012 be the year when we finally get our act together, gaining control over our runaway budget and our economy?  Or will the world intervene to destroy the good things that are happening here at home?  Reading the news there is reason for hope and reason for panic all at the same time.

All we can do is struggle to keep it real as we do the best we can.  Oh, and there’s an election this year.  Sorry about that.

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9 thoughts on “Good News or Bad?

  1. I think the economic news is good but not very good. Something tells me that even if European banks collapse we will do OK because we have dealt with this before (in 2008) and know what to do with it. There is progress and that will be hard to stop once it really gets moving even if it takes a long time to get any where. Syria is one of those scary things that probably is not worth thinking about because as you say we really can’t do anything about it.

    • I honestly don’t know what to make of Europe right now – they are so close to the brink and yet so casual about it. I think they are expecting us to bail them out. But if we don’t, what will happen to us? Doesn’t seem good no matter what. And there is momentum right now, it just has to pick up a lot more steam before it’s anything really good.

  2. Erik, your eternal optimism continues to shine brightly! That’s what I used to consider myself – an eternal optimist – but methinks I may have swung a bit too far from a ‘reality check’.

    The situation with Europe is IMO the same as it is for so many other issues around the planet. Obama is flirting with war against China, for crying out loud, which makes a war with Iran seem rather miniscule. The corporate ownership of our government and politicians (with only a few exceptions) is on a precipice of incredible magnitude, and yet the vast majority of U.S. people are oblivious. I could go on for hours, but hopefully I’ve made my point.

    What exactly is it going to take to wake up America??

    • Funny you should call me an optimist – back when I was just about the only person calling this a Depression (that was 2008 or so) people called me a permabear. My argument, that this is a Depression but we can manage it if we open our eyes, was seen as negative. I think you’re closer to describing me than people were back then. 🙂
      As for a war with China, what Obama is proposing appears to be a re-set back to early 2001 thinking. Remember when our spy plane was shot down by China? The reason we were at it then and will be in the future is that our allies and potential allies in the area demand it. They are scared of China and want a counter-balance. That does not mean it will come to war, and I think the Chinese expect us to take the position we’re taking. I’m not too worried about that, at least in the short term.
      Excellent article on it, BTW: http://www.washingtonpost.com/national/national-security/turning-the-page-on-iraq-and-afghanistan-obama-shifts-focus-to-asian-security-threats/2012/01/06/gIQAMKmOeP_story.html
      I’ll talk more about this as we get more details – I think Baratarians in general could do a good job figuring out what is important in the Defense proposal(s) as they come out.
      Europe? I really don’t know anymore. See below. 🙂

  3. There isn’t any good news out there that can’t be swamped by the bad. The proposed defense cuts are a day late and many billion dollars short. What you just told us about Europe sounds like its absolutely terminal and theres not a thing we can do to stop it at this point. I would like to be optimistic but there is no way.

    • Defense cuts on the order of $300B a year are definitely called for IMHO, but we’ll see what is really proposed.
      Europe is a real problem that continues to fester and I’ll stay on top of it – but there isn’t a lot of useful news now that the problem appears to have turned from soveriegn debt to the murky world of banks. This could be terminal, yes, but it’s not clear to me that it’s a systemic failure across Europe. The collapse of a few small banks might actually help speed the integration and reform needed, much like MF Global’s collapse here had little collateral damage but a big boost for those of us calling for reform.
      But yes, I agree that Europe has at least the potential to totally swamp what is actually some positive news on jobs here in the USofA. I want to be optimistic but really can’t be. This will either work slowly or fail spectacularly, IMHO.

  4. No matter what happens around the world we have to take care of our selves first. This is all like Katrina when we had troops all over the world but no one to sent to Louisiana. I’m not saying we should quit everything around the world but we can learn to work more with out allies and set ourselves up so that we don’t have to worry about Europe as much. Obama is handling Syria pretty well from what I can see by letting the arabs take the lead and I would hope he could do the same in asia. I’m not saying that things look great but there is reason to believe we might be heading the right direction.

  5. Pingback: Obama’s Job and Yours | Barataria – The work of Erik Hare

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