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U.S. Has More Oil Than Saudi Arabia

By Shlomo Maital

oil

A Financial Times report today claims that for the first time, proven oil reserves in the United States exceed those in Saudi Arabia (and Russia).

     The US holds more oil reserves than Saudi Arabia and Russia, the first time it has surpassed those held by the world’s biggest exporting nations, according to a new study. Rystad Energy estimates recoverable oil in the US from existing fields, discoveries and yet undiscovered areas amounts to 264bn barrels. The figure surpasses Saudi Arabia’s 212bn and Russia’s 256bn in reserves.

Not surprisingly, Texas has almost a quarter of those 264 billlion barrels; Texas oil wealth will thus continue. According to the report, “three years ago the US was behind Russia, Canada and Saudi Arabia. ….More than half of the US’s remaining oil reserves are in unconventional shale oil.”

   What does this finding mean? First, at last, the decline of Saudi geopolitical influence. Saudi money has financed worldwide Wahabi Islam, an extreme form of Islam that has at times ‘inspired’ bad guys, as in 9/11. The Saudis may now have to keep more of their money at home, and already have issued an ambitious plan for weaning Saudi Arabia from oil, after its former oil minister purposely flooded the market, bashed the price of oil to historic lows – and was fired.

   Second, greater energy independence of the United States, and hence less pandering to oil-rich Mideast nations. And perhaps, less geopolitical influence on the part of Russia. Both Russia and Saudi Arabia have not been forces for good in the global arena, in the past.

   Those who have written off American global leadership, under a weak Obama administration, may have to think again. Oil and geopolitics are close syblings. One qualification, however. U.S. shale oil costs a lot to recover, perhaps as much as $50 /bbl. Saudi oil has a marginal production cost of just a few dollars, as it is pumped easily out of the desert sand. So Saudi still holds a few Trump cards.

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“Choose Life!” – Kayla Mueller

By Shlomo Maital  

 Kayla

   One of the most powerful and terse passages in the Bible is Deuteronomy 30:19:   “I have set before you life and death, blessings and curses. Now choose life”.   The message is clear.  We DO have a choice.  We can see the dark side of everything,  or we can see the bright side, the ‘life’ side. 

    Kayla Jean Mueller was a 26-year-old Jewish aid worker from Arizona, held in ISIS captivity.  As a teenager in Prescott Arizona, she was voted “best smile” in her graduating year in high school.  She was always drawn toward helping the weak, the downtrodden, according to her parents.  She led marches to help Darfur, and was college president of a student-led movement to end mass atrocities.  Her story is beautifully told by Dana Harman in today’s English edition of the daily Haaretz.

     Mueller had been in Syria, as an aid worker, for one year and a day, when she was kidnapped on Aug. 4, 2013.  Earlier, she had travelled the world, volunteered in India and in Israel, and then in the West Bank. 

    President Obama recently announced that Kayla was dead. ISIS says she was killed in the Jordanian bombing raids.  In any event, ISIS is responsible.  Her family managed to keep her identity secret, hoping this would help gain her release. 

     During her 18-month captivity with ISIS, Kayla wrote a note to her parents.  Here is part of it:

     “I have been shown in darkness, light – and have learned that even in prison, one can be free.  I am grateful.  I have come to see that there is good in every situation, sometimes we just have to look for it.”

       Kayla may be physically dead.  But her message will live forever.  Choose life, even when the forces of darkness choose death.   Choose light.  Choose to see the bright side.  Long after the murderous thugs of ISIS are dead and buried, Kayla’s message to the world will live on.    

 

 Whatever Happened to the U.S. Middle Class?

By Shlomo  Maital

   middle class

   The middle class is the bulwark, the core, of every nations’ democracy and economy.  It provides the labor, the capital and the stability that nations need.  This is why we should worry, when the middle class is disappearing, as it is in the U.S.  (Middle class is defined as a household with income from $35,000 to $100,000.)      

    A report in today’s Global New York Times by Dionne Searcey and Robert Gebeloff, based on their study,  reveals these facts:   

  1. 53 million middle class households, nearly half of all households, are aging; many are headed by those over 65. Why? Older Americans have the safety net of social security, which is politically safe and linked to the cost of living.   While middle class income has declined (median household income fell 9 per cent since the year 2000),  income of  households headed by elderly adults has risen by 14 per cent.  Problem is, that elderly safety net is going bankrupt.  
  2. In the late 1960s, 60 per cent of middle class households were comprised of two married adults with children.  Today?  It is just 25 per cent. 
  3. In the Great Recession, 2008 – ??,  “we lost a lot of middle-income jobs and we gained a lot of low-paying jobs”, says an expert from the American Enterprise Institute.  That is why the strong job figures lately are misleading.  They are Wal-Mart and McDonalds jobs.
  4. The middle class deludes itself. A NYT survey shows 60 per cent of people who call themselves middle class think that if they work hard they will become rich. But this is an illusion.  Social mobility in the U.S. has greatly declined.  To get rich and richer, you need to be rich already.

   I think the article fails to make a key and obvious point.  America’s political leaders were accomplices in shifting America’s manufacturing to Asia.  This destroyed millions of high-paying jobs (as in auto production).   It was done both by Democratic and Republican Presidents.  Nor is Congress even trying to get those jobs back.   Apparently, you cannot have a strong stable middle class unless your country makes things other than hamburgers.  Is that obvious?  America is now paying the price for its leaders’ blindness. 

     Meanwhile, the U.S. middle class has not disappeared, it has simply migrated; middle class families in China and India are booming, thanks in part to well-paying jobs.  

    In his State of the Union address, President Obama called the middle class the “foundation of the American economy”.  Really?    Then, why have you, Obama, and other leaders allowed the middle class to decline so drastically?  And what are you doing to reverse the trend?    

Why ISIS has humiliated the West – and why it matters

By Shlomo  Maital

hostages

  ISIS (Islamic State, known as Da’esh in Arabic) is a radical Islamic organization whose goal is to establish a Caliphate in Syria, Iraq and the rest of the Mideast, based on Islamic law.  ISIS seeks to do this through a  tiny well-organized and well-funded military force that at its peak comprised some 25,000 fighters.   After ISIS gained control of a huge swatch of land in Syria and Iraq,  some 56,000 sq. kms.  (about 16,000 sq. miles),  three times the size of Israel (’67 borders),  a coalition of some 60 (!) mainly Western nations organized to attack ISIS, mostly from the air.

     Here are 21 countries of this 60-nation coalition, whose representatives met on Thursday Jan. 22 in London to take stock of the results of their joint action against ISIS:

       Australia, Bahrain, Belgium, Canada, Denmark, Egypt, France, Germany, Iraq, Italy, Jordan, Kuwait, the Netherlands, Norway, Qatar, Saudi Arabia, Spain, Turkey and the United Arab Emirates.    And of course, the United States, represented by Secretary of State John Kerry.     

      Here is the total result to date.    The U.S. claims that 6,000 ISIS fighters were killed, a casualty rate of about 25 per cent.     Mainly Iraqi Army forces have taken back one percent (that’s 1 %) of the land captured by ISIS.

     And that’s it.   That’s the whole result of the whole operation.  President Obama, in his State of the Union address, said the 60-nation operation has “halted Islamic State’s advance”.   

     If I were a taxpayer in any of these 60 nations,  I would demand my money back.  If this is the best the West can do against a small murderous band of terrorists who claim to act in the name of their religion, who slaughter hostages and civilians brutally and challenge Western culture —  to “halt the advance”,  with aircraft carriers, F-16’s, drones, smart bombs, and all the rest of the West’s technology — 

     I’m reminded of the first Rocky film, starring and written by Sylvester Stallone.  The main achievement of underdog Rocky was simply to last 12 rounds against the world champion Apollo Creed.  Simply by staying in the fight, and holding the vast armoury of the West to a stalemate, ISIS will find an almost infinite number of recruits worldwide among impressionist young people, who see it as “Rocky”.  By letting ISIS fight it to a stalemate, the West is handing victory to ISIS, and the price in future will be extremely heavy.  Recruits worldwide will flock to ISIS to be part of the modern “Rocky” story, and already have. 

    It leads one to wonder whether the soft fat West is able to defend itself against the barbarians at its gates,  or whether it will fall as Rome did in rather similar circumstances. 

      A report just issued report  claims (unverified) that one of the two Japanese hostages held by ISIS has been executed.

 

The Obama Excuse

By Shlomo Maital

 Obama

President Obama, and the Democratic Party, appear to be headed for a larger-than-usual mid-term election defeat on Nov. 4, with the Republicans gaining control of the Senate and retaining control of the House.   But for America, this may not (believe it or not) be a bad thing.

   Obama and the Democrats have often used the obstructionist Republican-controlled House as the excuse for their lack of achievements. And indeed, the approval rating of Congress is abysmally low, lower than Obama’s! Americans are simply fed up with Washington and with both political parties.   Contrast this with German Chancellor Merkel’s 78 per cent approval rating, one other leaders can only dream about.

   But a chart in the recent issue of The Economist sheds some light on the Obama excuse. President Ronald Reagan faced a Democratic House and Senate in 1986-88, yet as a lame duck president in his last two years, passed a major tax cut bill. President George H.W. Bush faced a hostile House and Senate in 1988-90. Bill Clinton had a Republican House and Senate in 1994-2000, for fully six of his eight years as president, yet got the U.S. economy rolling. George Bush faced a hostile House and Senate in 2006-8….     And Obama had both House and Senate FOR him in 2008-10, controlled by Democrats, and… achieved, well,   achieved…. Uh…..?  

   To be an effective president and leader, in the face of House and Senate opposition, you need to be very skillful at compromise, at dialogue and at collaboration. Some U.S. presidents were. Obama wasn’t. It is not too late. He may yet learn, and may yet leverage the fact that if the Republicans do win control of Congress, and continue to obstruct, they will be severely blamed by the American electorate, and may lose any chance of regaining the Presidency in 2016.

   In President Lyndon Johnson, America had a president with long long experience in the Senate, who knew how to compromise and how to deal. In President Obama, America has an inexperienced President who is just now beginning to understand how to work with Congress. It has been six wasted years.

Why We STILL Need America – and Obama

By Shlomo  Maital

Long Ranger

 As a child, I recall listening to The Lone Ranger on the radio.  The Lone  Ranger wasn’t alone; his Indian friend Kemo Sabe rode with him. Together they fought evil, injustice, crime and helped the helpless.

  Today America is again The Lone Ranger.  Ebola outbreak?  America sends 3,000 soldiers to set up as many as 17 emergency treatment centers in Liberia.  Why? No other country can or will.  And Ebola is a threat to all of Africa and perhaps the world. Liberia is an entire nation under lock-down!  And health workers and journalists are murdered in Guinea, by suspicious villagers who think they are bringing the disease rather than fighting it.

  ISIS? (Obama is right.   It is really ISIL,  Islamic State in the Levant, because ISIL believes they will establish the Caliphate throughout the Mideast, including Lebanon and Israel. What you call things DOES matter!).   America to the rescue, leading a ‘coalition’, but have no doubt, most of the military action will be American.  Because Europe has given up defense spending and prefers to shelter under American defense spending.

    If there is a major humanitarian disaster somewhere in the world, that takes resources and abilities,  it will be largely America to the rescue. 

    So, yes, we can criticize America, Americans and their leader President Obama.  But as many have noted,  at present there is no other country who can come close to replacing America, in its will and ability to come to the rescue, like The Lone  Ranger.  And yes, America does stumble, fail to fully understand the cultures in which it operates, and yes, it does endlessly debate its decisions to intervene abroad.  But in the end,  like The Long Ranger, America is there.

    So – thanks, America.  We really do give you a bad rap.

 

 Anat vs Eric: Take Your Pick

By Shlomo  Maital

  Cantor      Admati

Eric Cantor                                             Anat Admati

  Yesterday’s (August 10) New York Times has an editorial, along with a business section article, that offer stark contrast between two people, two world views, and what is wrong and right about America today.

   Eric Cantor is the former Republican House Majority Leader.  He lost a primary election in his district last June, in a stunning and almost unbelievable upset, despite his high visibility and infinite money.   Why did he lose?  Because from Day One, says the Times, he “courted the favor and donations of Wall Street”, becoming the “top congressional recipient of its generosity”. In other words, the top money raiser in Congress lost a PRIMARY (not even an election).  His close ties to big money led to his defeat, apparently, as his opponent focused on that issue.

    Now, Cantor is about to cash in.  He resigned his seat as of August 18, even though he has several more months to serve until the new Congress convenes in January.  Why?  He’s going to work for the same Wall St. firms that he helped so much, as House Leader. He’s going to make money.  He has little real financial genius. But connections?  Infinite.  And Wall St. will pay big money for that. Eric Cantor will be a multi-millionaire faster than you can say,  Public Service?????

   Admati is a Stanford University finance professor, and an Israeli.  She did complex financial modeling until 2008, and published in academic journals.  When the financial system collapsed (or WAS collapsed by the banks, and Wall St.),  she became a powerful advocate of tighter government regulation, battling weak regulators and the incompetent Obama administration.  Admati, says the Times, even took a course on how to write opinion articles that people understand.  She has lunched with Obama and has a powerful simple explanation of what is broken on Wall St. and how to fix it.  And Wall St. despises her.  Guess why.

      Here is what she claims.  1.  We the people lend money to the banks by depositing it.  We don’t worry about how the banks use our money, because the Federal Deposit Insurance Corp. insures each deposit account for up to $250,000.  FDIC is of course the government, which is us.  And FDIC uses OUR money; when it runs out, in bad times, the government refills the coffers.  2.  The banks take large undue risks with our money when they lend and invest it, as they did during 2001-2008,  investing in sub-prime mortgages for instance, because they are “too big to fail” and because if they get in trouble, as they did in 2008-10, they know the government will bail them out.  They get the profit from their risk taking, if it works out; and they dump the losses on us if it doesn’t.  Good deal.  And nothing really has changed in this crackpot system since 2008.   3. The solution?  Regulate not how banks lend and invest their money, but how much they borrow (from us).   

Wall St. absolutely hates that idea, because the money machine that borrows from us at 1 per cent and lends at 5 per cent is a sweetheart of a deal, especially when government bears the risk of that 5 percent. So they deeply dislike Admati as well.

      Admati vs. Cantor.  From public service to millionaire overnight; and from academic professor to public advocate, serving the public, also overnight.

       Take your pick.  Which do YOU prefer?    

    

The World Can Live WITHOUT Perpetual Growth—and It Must

By Shlomo Maital  

                                                            Zero Growth

Today’s Global New York Times (June 5/2014) has a fine column by Eduardo Porter.  He refers to Prof. Tim Jackson’s 2009 book, Prosperity Without Growth, and Jackson’s back of the envelope calculation.   It shows a bitter truth:  The macroeconomic assumption, that continual perpetual growth in GDP per capita is both good and feasible, cannot be sustained.  We have to have policies that seek a stable level of per capita GDP, while redistributing wealth and income from rich countries to poor —  a very tall order.

   Here is the simple arithmetic.   Assume that developing nations citizens are entitled to roughly the same level of per capita income as Europe, by 2050 (that’s 36 years away, about a generation and a half!).  By then there will be 9 billion people in the world. 

  • If European incomes grow by 2 per cent annually through 2050, and
  • If we want to keep the Earth’s temperature from rising more than 2 degrees C. (3.6 degrees F.) above what it was before the industrial era [in order to prevent violent, unpredictable environmental upheavals],   then: the world can emit at most 6 grams of carbon dioxide for each dollar of GDP it produces.   

 

     Hmmm…   Advanced nations emit 60 times that much, at present!   Developing nations emit 90 times that much!    

     If we want to eradicate poverty (we do) and save our planet (we do), we are going to have to reduce carbon emissions by an order of magnitude. A very tall order, one that will take massive investment of resources, huge creativity, a pro-environment mindset, global cooperation, and a wide variety of new technologies.

      President Obama’s new proposal, for limiting carbon emissions, falls far short of what is needed, and even THAT could be sabotaged by Congress (though Obama claims he will implement it as an executive order).    

     Is no-growth economics possible for rich countries? It is. Look at Japan. Despite Japan’s huge efforts, its per capita GDP has grown very little for two decades. Yet Japan remains a prosperous country, with a high living standard. Is Japan a natural experiment, showing that zero growth is not only possible, but desirable – provided we change our mindset?

 

        I’m afraid that my generation is delivering a ruined planet to the younger generation. They have the right to put us all in jail for this.

      

Benchmarking Germany: Job Creation a la Merkel

By Shlomo Maital

job creation

proporiton with jobs

change in proportion of people ages 15-64 with jobs, since 2007

Floyd Norris’ “Off the Charts” feature in the New York Times finds clever ways to present complex data in clear, meaningful visual ways. In his latest effort, today (April 19-20), he charts the “proportion of people with jobs”, by age group, dating from 2007.

This is a much better statistic than the unemployment rate, because when the poll person knocks on your door and asks you, “are you working now?”, if you say “no”, the next question is, “have you been actively seeking work in the past 2 weeks?” If the answer is no again, you are not unemployed, because, you are not even in the labor force. So “proportion of people with jobs” is a good statistic to track.

   Norris’ charts show that both America and the EU (excluding Germany) are abysmal; nearly 5 per cent fewer people aged 15-64 have jobs today than in 2007, and this is after the two biggest economies in the world have ‘recovered’.   Britain is nearly back to what it was in 2007; the Conservative government under Cameron is taking credit for this, giving credit to its austerity program.  I think the job recovery was in spite of austerity, not because of it.  Britain’s pound sterling has dropped a lot, helping its exports, like Germany. 

   But the stellar performer is Germany! Germany has 4 percentage points MORE people working, ages 15-64, than in 2007.    

     Why?

     I have some explanations. Germany has benefited from the plummeting euro, and boosted its exports. Germany has succeeded in boosting exports to China. Germany maintained wage restraint and restrained social benefits, and its unions have been highly responsible.   Germany avoided shedding excess labor during the downturn and hence preserved the high skills of veteran workers, often the first to be dumped.

     But this is not my point. When job creation is the #1 key issue almost everywhere, and when one country outperforms all the rest by a huge margin, should the decision-makers not be beating a path to its door to find out the secret?   I see no evidence this is happening.

     Obama – Send your civil servants to Berlin. Tell them to stay there until they come home with a strong plan to boost job creation, and reduce the huge numbers of discouraged workers, who do not appear in unemployment stats and hence who are invisible. Tell them to get to the bottom of Germany’s success.   And while they’re there, ask them to discover why Chanceller Angela Merkel is an effective competent leader, while you, Obama, seem unable to organize a paper bag (or a simple website).

All That’s Wrong With Democracy:

Roger Cohen Gets It Right!

By Shlomo Maital

democracy brandeis

Roger Cohen, the New York Times columnist, is a fierce critic of my country Israel – sometimes deservedly, sometimes excessively. But lately he’s been a fierce critic of U.S. President Obama, and this time, it’s richly deserved.   In today’s New York Times, he tears a strip off Obama for his weak wishy-washy speech in Europe on how to stand up to Russia.   The problem is, Cohen says, that Western democracies are “failing to deliver”, while despots like Putin actually have been performing rather well.

   The proof? Soaring unemployment in Europe (3 m. unemployed in France, for instance), rising fascist right-wing parties (Marine LePen and the Front Nationale did well in France’s municipal elections last Sunday), European integration is stalled and Europe is internally divided and at odds, the EU is overly bureaucratic and undemocratic; income disparities in Europe and the U.S. are huge and growing; there is “spreading middle-class dystopia”; money has skewed fairness on both sides of the Atlantic, corrupting democracy. Scorched earth Republicans devote their politics to obstruction. “A CEO can earn $80 m. for a few weeks of work while incomes for most Americans are stagnant.” Many young people have lost the sense of possibility and hope.

   Concludes Cohen: “Unless Western societies find a way to shake their moroseness, level the playing field and rediscover [equality], they are going to have a hard time winning the contest of ideas (against the despots)”.

   “Now is not a time for bluster,” intoned Obama. And that is precisely what he provided in his speech – empty words. Saudi Arabia has given up on the U.S.   Israel may soon have to do the same. And Vladimir Putin is laughing up his sleeve.

   A full century ago, Louis Brandeis, U.S. Supreme Court Justice, said that you can’t have both democracy and great concentrated wealth. Israel just passed a law to try to mitigate that concentration. Before the U.S. and Europe can confront Russia, they need to look in the mirror and confront their own problems.

Blog entries written by Prof. Shlomo Maital

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