The once almight dollar

The dollar is being propped up, believe it or not, by the Chinese yuan. Although the Chinese run a positive balance of trade with virtually everyone on the planet, they have currency that, due to its close connection with the greenback, is actually depreciating in relation to the really strong currencies like the Euro and the Canadian petro loonie.

The artificial tie between the greenback and the yuan has been pulling the yuan down and eventually the connection will be broken. When it does, the dollar will drop further. Probably a lot further. We have no option except to import oil at whatever the producers choose to charge and we have eliminated so much manufacturing capacity that we have little choice except to buy Chinese. American commodity farmers and Boeing will benefit, but it will take an enormous growth in those areas to offset the increasingly expensive imports.

There will be serious inflation. A central bank can prevent inflation through monetary policy only if there is something close to foreign exchange equilibrium, but that is lacking. The Fed cannot lower interest rates without sinking the dollar completely. Inflation will result from import substitution, not cost-push.

Sarkozy and Stahl

The headlines say that Sarkozy lost his temper and ended his interview with Leslie Stahl after she kept asking about his marriage. I don't know where the "temper" part comes in. The video clip shows that she asked him again after he said he wouldn't answer. Sensing that he was dealing with a tactless dolt, he gave up and left.

The French have a more sensible view of private and public lives than we do in America. I applaud President Sarkozy for telling Stahl that he had better things to do with his time. I wish the headlines had been "Stahl proves that she isn't ready to interview international leaders."

For half a trillion, we could be energy self-sufficient

I'm tired of hearing how it's naive to think that America could become energy self-sufficient. It's just money. At the outset of World War II, the physics of nuclear chain reactions were only hazily understood. At the end, we had a bomb with explosive power orders of magnitude greater than anything theretofore known. How did we get it? By expending money at a rate never before contemplated on physics research and the production of fissile material. At its peak, the Manhattan Project was comparable in size to the pre-war domestic automobile industry.

It cost billions of dollars at a time when a billion dollars was a lot of money. The country spent the money because it felt that it was necessary to win a war. We are now in a self-proclaimed war against terrorism, in addition to two "hot" wars in Afghanistan and Iraq. The people we are fighting only have enough money to fight us because we consume so much oil. Otherwise, oil would be $25/barrel and a lot of Arab countries would be barely staying afloat economically. If we didn't need their oil, we wouldn't care who ran their countries. If we weren't in Saudi Arabia, al-Qaeda would really not much care about America. The Saudi royal family would have to pay cash for their next 747 because their credit wouldn't be good, but otherwise everyone would be happy.

I guess this doesn't quite apply to Afghanistan, but there it's a different product -- heroin. We can't stamp out heroin use. We've been trying for two or three generations with little success. So let's give it up. Legalize it, tax it, use the proceeds to provide treatment for those who want it and let the others have enough that they can shoot up till they die. And stop funding the Taliban with the money that our addicts steal in order to support their habits.

Turks, Armenians, Stupidity and Hypocrisy

It looks like we're going ahead and branding the Turkish suppression of Armenians during World War I as genocide. I'm trying to figure out why we're doing this. It's not as though Congress is required to pass judgment on every outrage in history. This goes back nearly a century. Why stop? What about Genghis Khan?

More to the point, why is America criticizing the Turks for ancient history when we're pretty comfortable owning all the land that once was populated by Indians. We're quick to judge the Ottoman Empire but slow to hold the US Army to account.

But even if we supposed that it was generally a good idea for the US Congress to establish who had or had not committed genocide in history, is this the time to tick off the Turks? We have damned few allies in the region. The Israelis naturally side with us because we pay them to and they wouldn't survive otherwise. The oil producers are people we wouldn't be seen in public with if it weren't for their money and oil.

All in all, we aren't going to do much better than the Turks. Is this some kind of death wish? Congress is controlled by Democrats so we can't lay this one at the feet of George W. Bush.

Mark Twain once began a piece with, "Suppose I were a Congressman. Suppose I were an idiot. Ah, but I repeat myself."

Weekly Unemployment Claims

Today's headline: Jobless claims rise more than expected. Last week's headline: Jobless claims unexpectedly fall.

There are thing about which we cannot be certain with absolute precision. Then there are things like the weekly jobless claims, where the noise in the weekly statistics exceeds the trend by a factor of ten. In truth, there is hardly any trend.

But every week, there's the "expected" value. It is derived by asking a lot of economists what they think the number will be and averaging the answers. It reminds me of an old, politically incorrect joke. Nobody has ever seen the emperor of China. How do you calculate the length of the emperor of China's beard? Answer, you ask 100 Chinamen how long they think the beard is and take the average.

So every week, the news services calculate the average of a few dozen opinions from people who don't know, and compare it with a government report that contains no statistically significant information. They then always have a headline, because the two are never the same. OK, it's possible that due to some fluke they would match, so there would be a headline, "Economists finally get one right."

It's much the same thing when the Weather Channel broadcasts some ninny breathless announcing that the high temperature in Des Moines today will be 12 degrees "higher than it should be."

Public education would be well served by taking an hour a week for two weeks for each graduating high school senior and explaining the uses and misuses of statistics and probability. Not the formulas, just the rough principles. It would be really useful.

Here's a pop quiz. If you have a room with 35 randomly selected people, what are the odds that you'll have two of them with the same birthday? Day and month, not year. email me with your guess and I'll explain it to you. You're almost certain to be far wrong. Statistically speaking.

If you like Iraq and Aghanistan, you'll love Darfur

A few days ago, a rebel group in Darfur (not the rebel group since there are several) overran an African Union peacekeeping camp, immediately killing ten and taking others who have not been found and are probably dead. Later, the Sudanese government forces retook the camp and, in a show of solidarity with UA, looted it.

We decided to bring economic revival and political freedom to Afghanistan, after rooting out its old government. President Karzai is now ready to talk to Mullah Omar of the Taliban to end the escalating violence.

We decided to bring economic revival and political freedom to Iraq, after rooting out its old government. We're going to have troops there for ten years and anyone who thinks we'll leave a democracy in place deserves a drug test.

People keep telling us that if we have any moral fiber at all, we'll rush to the help of the defenseless souls in Darfur, in order to ...

Exactly what?

The only plus for Darfur is that it is already in the midst of a civil war, so we couldn't be accused of having started one. It's pretty cold comfort.