Saturday, January 3, 2009

Same old sad story

I don't really have much to say about Israel and Gaza, only that I think we've all seen this movie before. Israel will pound the shit out of some Hamas fuckheads, but in the process, kill a lot of innocent people, embittering Palestinians even more strongly against Israel, and giving Hamas and the other extremists their next wave of suicide bomber recruits. The UN and most countries not called the United States will condemn Israel with harsh words, and organizations like Amnesty International will criticize Israel for not doing enough to avoid civilian casualties, but no one is actually going to do anything about it. But Hamas will not make Gaza a "graveyard" for the Israeli army. Despite their tough talk, they are no Hezbollah, and are much better at strapping bombs to scared teenagers than they are at fighting the professional Israeli army. They understand military tactics no better than they understand human rights or religious freedom.

To be frank, I find it difficult to fully sympathize with the residents of Gaza. First, some background. This is the Gaza strip:

That scale is correct; Gaza is only 360 square km, with a population of roughly 1.5 million. It has no economy to speak of, with a per capita GDP of around $600. It is entirely dependent on Israel for electricity, and Israel and other nations for food aid. More than 60% of the population lives below the poverty line (I shudder to think what is considered "poverty" in Gaza).

Despite all this humiliating deprivation, Hamas was elected with a majority of the seats in the Palestinian parliament in 2006, and they later seized full control within Gaza, with a coalition government teetering on the brink in the West Bank.

Does Hamas promise an improvement in living conditions? An economic plan for the future? Since neither is possible without Israeli help, and Hamas refuses to even acknowledge Israel's existence as a sovereign nation, the answer is clearly no.

The problem here, as I see it, is the inability of a significant portion of the Palestinian population to accept their defeat in 1948. Until they get over that simple fact, and realize that they will never get their land back through violence, there will never be peace, and there will never be a viable Palestinian state. And if the people let them, assholes like Hamas will continue to steer Palestinian society in an entirely counter-productive direction. Instead of launching stupid little rockets at Israeli towns, the residents of Gaza should be investing in their future and trying to build a better life for themselves and their families. That's the only way out of this never-ending quagmire.

Better than standing still, but the rot runs deep

As we head into the new year, there's a lot of anxiety over where the economy is headed. According to most economists, Canada is probably facing only a mild recession, with a recovery possibly beginning within six months. Historically, bull markets after recessions lead the actual economic recovery by roughly that length of time. Investors speculate on future economic performance, not what has already happened. And the markets have indeed been optimistic over the past week or so.

This article is most likely right that while 2009 will be a positive year, we shouldn't expect a boom right away. This, I think, is the key point:

But even a modest improvement in the economy, which has been in recession since last December, could help stocks extend their recent run.

"If you're standing still, walking is a pickup of speed," said Alan Levenson, chief economist at T. Rowe Price Associates Inc.

Also, this:

In addition, some analysts believe the market will improve because so many investors have pulled out, leaving little room for more selling.

"Given the nasty carnage how much further risk is there?" said David Darst, chief investment strategist for Morgan Stanley's global wealth management group.

It's going to take a little longer for the credit markets to recover, with the banks still in an extremely cautious state after being burned so badly in the crisis of 2008.

And it's important to remember that the US is not out of the woods yet. They still face some very serious problems, new administration or not. That $11 trillion in national debt isn't going away just because the new President has a (D) next to his name. Nor are GM and Ford going to suddenly become competitive simply because the government threw them a few billion dollars to keep them from drowning. Nor is an economy based on people borrowing money to buy shit from China while they struggle to pay for their health insurance and ever more expensive gasoline ever going to be viable in the long run. A lot of things need to change for America's economy to be healthy again, but one of the most immediate problems is a simple lack of revenues.

Bush's tax cuts and resultant deficits have left America's government starved of cash, forced to borrow record amounts of money in order to keep their economy afloat and avoid a longer term depression. The conservative mantra of tax cuts, tax cuts, and more tax cuts was sold on the idea that they were necessary for the health of the economy. Yet the government kept spending money and the economy crashed anyway. Now that it is necessary for the government to spend money, all they can do is borrow imaginary money that will be paid back through some combination of fairy dust, heavenly manna, and magic jelly beans.

The challenge for the new US administration is going to be stimulating the economy without bankrupting the country or resorting to devaluation of the currency. Obama will need to cut some expenditures (military pork spending, Iraq) while increasing others (public works, health care, alternative energy). It's a fine line to walk, and it isn't going to be easy.