Mineral Riches in Afghanistan – Risk and Reward

From the NYT: US Discovers mineral riches in Afghanistan. For better or worse, things are going to change.

The good news:

The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe.

This is an amazing thing for an economy whose main export has thus far been illicit drugs. These are impossible to stop because the only alternative is subsistence farming. But, many a mineral rich country has gone bad:

Instead of bringing peace, the newfound mineral wealth could lead the Taliban to battle even more fiercely to regain control of the country.

The corruption that is already rampant in the Karzai government could also be amplified by the new wealth, particularly if a handful of well-connected oligarchs, some with personal ties to the president, gain control of the resources. Just last year, Afghanistan’s minister of mines was accused by American officials of accepting a $30 million bribe to award China the rights to develop its copper mine. The minister has since been replaced.

I have no idea how this is going to play out, but I think, on net, this is good news.

Pay attention to Greece

I assume that readers of this blog are not really paying attention to the debt problems and potential default faced by Greece, but you should. The reason why is that it is an example of a “rich world” country whose politicians gave generous handouts to it’s citizens without the taxes to pay for it. My personal feel is that there is a higher probability that the US will have a debt crisis like Greece than there is of a major climate change problem.

I’ll post at some other time about the specifics of the US debt problem, but here is a summary: if our politicians do nothing, entitlement spending will put us in the same position as Greece by 2030. Yes, just 20 years from now. Debt will be over 100% of GDP, Deficits will be 9.4% of GDP, and debt will be about six times annual tax revenue. And the way it will happen is what is called a “sudden stop” as in, markets have full confidence right up until they don’t any more. The Greeks were doing just fine until the cost to finance their debt jumped:

The primary cause of the US Debt problem is health care expenditures, which have still not been addressed; they have been increased with the new health care bill. Fixing Social Security by increasing the retirement age is unpopular, but simple, and needs to be done sooner rather than later so people can alter retirement plans as needed. Fixing the health care cost problem is unpopular, complex, and much larger.

Eyjafjallajökull’s eruption could transform the economics and politics of Europe

Eyjafjallajökull’s eruption could transform the economics and politics of Europe. – By Anne Applebaum – Slate Magazine.

Already, the events of the last several days have revealed that we rely on air travel for far more things than we usually imagine. Things like supermarkets—all that fresh fruit—and florists. Things like symphony performances, professional soccer matches, and international relations. In fact, “European integration,” as we have come to understand it, turns out to be utterly dependent on reliable air travel. Over the last two decades—almost without anyone really noticing it—Europeans have begun, in at least this narrow sense, to live like Americans: They move abroad for work, live for a while in one country, and then move to another, eventually going home or maybe not. They do business in countries where they don’t know the language, go on vacation in the Mediterranean and the Baltic, visit their mothers on the weekends. Skeptics who thought the European single market would never function because there would be no labor mobility in Europe have been proved wrong.

But if, as some are now predicting, European air travel were to become unreliable for an indefinite period, all this would change. The English Channel and the Atlantic Ocean would suddenly seem deeper, the continent of Europe wider and longer—almost as if we had gone back in time by a century.

Haiti is a Creditor, Not a Debtor

Naomi Klein (admittedly not an unbiased voice) has an eye-opening article up at the Nation about how it is we (powerful, white Euro/American nations) who owe Haiti a debt, not the other way around. Even if you have concerns about her conclusions, the history lesson is required reading, particularly f you’ve ever wondered why Haiti can’t seem to get it’s shit together.

When Haitians won their independence from France in 1804, they would have had every right to claim reparations from the powers that had profited from three centuries of stolen labor. France, however, was convinced that it was Haitians who had stolen the property of slave owners by refusing to work for free. So in 1825, with a flotilla of war ships stationed off the Haitian coast threatening to re-enslave the former colony, King Charles X came to collect: 90 million gold francs–ten times Haiti’s annual revenue at the time. With no way to refuse, and no way to pay, the young nation was shackled to a debt that would take 122 years to pay off.

Some positives to consider in the new year

In the Economist’s year end issue, they have a lead article on progress and how people’s view of progress has changed over time. It is striking to recall (I’d read it before) how the medieval view of ‘fate’ led them to not even try very hard to improve their lot. It wasn’t until the enlightenment that the populace at large got the idea that we could work harder and things might be better for our children. What we have now, in the face of unprecedented prosperity, is the realization that perhaps we are not better off in the sense of happiness, fulfillment, etc. To me, this is where God comes in, but that is not what this post is about.

Rather, it is to recall, at least a bit, how good things actually are for us. We have much to be thankful for. I’m quoting the Economist article which is quoting “It’s Getting Better All the Time” by Julian Simon and Stephen Moore.

For aeons people lived to the age of just 25 or 30 and most parents could expect to mourn at least one of their children. Today people live to 65 and, in countries such as Japan and Canada, over 80; outside Africa, a child’s death is mercifully rare. Global average income was for centuries about $200 a year; a typical inhabitant of one of the word’s richer countries now earns that much in a day. In the Middle Ages about one in ten Europeans could read; today, with a few exceptions such as India and parts of Africa, the global rate is comfortably above eight out of ten. In much of the world, ordinary men and women can vote and find work, regardless of their race. In large parts of it they can think and say what they choose. If they fall ill, they will be treated. If they are innocent, they will generally walk free.

I’m sure everyone can think of exceptions to the above statements. But try to consider what life was like for a person like you even a hundred years ago, and I think you may find yourself thankful to live here and now, even with all the flaws.

UK = the Grinch

From BoingBoing:

Santa Claus was prevented from giving presents to the imprisoned children of asylum seekers at the notorious Yarl’s Wood detention centre by private security guards. Yarl’s Wood is a privately run prison whose inmates are UK immigrants who arrived seeking asylum, but whose claims have been denied. They are dragged out of bed in the dead of night and stuck in mesh-windowed vans without their belongings and without the chance to say goodbye to their loved ones, and then detained in terrible conditions that have been decried by human rights advocates, doctors, psychiatrists and other experts. Their “crime” is trying to escape torture, privation, and disaster.

The rent-a-cops at Yarl’s Wood told the Anglican church’s leading expert on Father Christmas (dressed in a Santa costume) that he couldn’t enter the centre to give the children presents. They also blocked the canon theologian at Westminster Abbey. Then they cancelled a later scheduled visit with detained families at the centre.

I couldn’t get the video to embed, but here’s the link. Reminds me of Children of Men.

Afghanistan

Watching Obama’s big speech on Afghanistan right now. Afghanistan is a big old hornet’s nest. I know comparing it to Vietnam is the perhaps too-conventional wisdom, but I don’t see how Obama can avoid getting screwed with this.

I remain a half-convinced pacifist.

Foreign Policy’s top 100 thinkers of the year

The list starts here. I think “top” here means “most important”, not necessarily “best”. But I could be wrong.

The top ten are:

1. Ben Bernanke
2. Barack Obama
3. Zahra Rahnavard
4. Nouriel Roubini
5. Rajendra Pachuari
6. Bill Clinton / Hillary Rodham Clinton
7. Cass Sunstein / Richard Thaler
8. David Petraeus
9. Zhou Xiaochuan
10. Sayyid Imam al-Sharif

Visualizing the decline of empires

Here‘s a neat visualization of the decline of European colonial empires. Worth remembering how much this seemingly ancient history is still critical for understanding world politics.(HT: BoingBoing)

more about “Visualizing the decline of empires – …“, posted with vodpod

 

Help or Hurt? African Debt Edition

I’m going to start a new recurring series that I’m calling “Help or Hurt” on various popular causes or initiatives frequently advocated by the Church, celebrities, the cognoscenti, etc. Today, we discuss HIPC or “Highly Indebted Poor Countries.”

Bono famously has called for massive debt relief for HIPC’s, and there is some logic to it. If these poor countries are under crushing debt, the it seems that removing some or all of that debt would be a vital step in their recovery. There are two issues here, though, that need to be thought out before diving in.

1. How did they get into debt in the first place? One of problems we’ve already seen with past debt forgiveness (both of countries and people) is that the most common outcome is the simple recurrence of debt. The underlying problem remained so as soon as the massive debt (which was prohibiting any new debt) was removed, debt simply increased again. If the problem is cleptocratic governments, then all we’ve done is line the pockets of the crony thugs who keep these people in power, and done little more than hand billions of dollars to bad governments to waste.

2. The thing these countries need the most is functioning debt markets. Felix Salmon has posted an open letter from Michael Shaheen, recently taken down by Johann Hari in the Independent as a heartless capitalist in search of even more money. Felix had written before about it as well.

So, what is happening here? Shaheen and others like him buy the debt of third world countries, usually very cheaply, and then take them to court to get the full amount back. Since they bought the debt so cheaply, they usually make money, even if they don’t get 100% of the face value. This does, on the face of it, seem to be rich capitalists exploiting poor countries.

But this is how debt markets are supposed to work. If it is deemed politically impossible to actually get your money back when you lend to a country (or a person) then nobody will lend to you. All these “vulture” funds are doing is spending the time and effort to force a country who borrowed to make good on a financial contract. Until these countries know that they will, in fact, have to pay back debt at some point, they will continue to run up large debts and then wait for them to get forgiven. Several Latin American countries have made this a core part of their fiscal policy and until they change it, their people are the ones who pay because it is dysfunctional. They simply spend and spend and spend until they are broke, claim they can’t pay and default. It is the classic tough love argument.

Now, I’m not taking one generalization (we should always forgive the debt of HIPC) and turning it into another (we should never do that). I’m just saying it’s more complicated. Perhaps a small amount of debt relief tied to required governmental reforms may be in order. But broad scale unconditional debt relief for governments does not seem to have brought the results we hoped.

If we really want to help our African neighbors, what we need is unconditional free trade, importing from them anything they want to sell us. But that’s a story for another day.