Moving to a New Domain

To all our Loyal readers, we would like to announce our move to a new Domain: http://thebondproject.net/. All our future posts and others from the archives will be available there. We hope to see you all there.

Many Thanks,
-The Staff of The Bond Project

Viva Brasil, Viva

Order and Progress, the motto of Brazil, the fundamental basis of Brazilian society and economic success. We often hear “actions speak loader than words,” but in Brazil’s case the words and the actions are equally matched. Brazil is represents the “B” in BRIC. As the world becomes smaller and smaller America will need to bolster her overseas markets, and international relations. Bettering economic and political relations with Brazil will be far easier than attempting to connect with the other nations that comprise BRIC. Although these two nations are very different their, economic, social and political structures are reasonably similar. These two nations are most similar because America and Brazil fundamentally share the same “western” values. This can best be seen by looking at the way America and Brazil interact with the rest of the world. Both the United States and Brazil have had reasonably recent changes in their respective executives. Barack Obama and Dilma Rousseff presently are less controversial than their predecessors. These presidents share common values that they must work with the world rather than dictating to it. Besides political similarities, America and Brazil’s economic practices are more often than not considered “honorable,” unlike their fellow world power the unyielding China. This ideal was epitomized this fall during the G20 summit in Seoul, South Korea. After being lobbied by the world to allow their currency’s value to rise, after years of unfair regulation of it by the government, China refused to do so, claiming that it would have too big of a negative impact on their economy. Of course they continue this practice to allow their products to be bought at far less expensive prices than those of other “western” nations whose currencies change in value in relation to the world economy on the stock market, rather than being regulated and held down by the government. This example clearly shows the difference in fundamental values of China as compared to “western” nations, including America and Brazil. Some will say that China is being unfairly picked on by the world, all countries put their economic success above that of the world, and that’s OK. What is NOT OK is the fact that when most of the other G20 nations of the world come together and condemn the same economic practice and an arrogant nation, in this case China, rejects the world, then and only then are the worlds actions and opinions acceptable. America and Brazil are clearly different, to some their values are in the right and others fell them to be “western” bullies. Whatever one’s political beliefs may be it is clear that these two nations are similar and that is why they would be the most likely to better relations with one and other, America and Brazil, it’s gonna be a great partnership.

    -D. Scollan

China: Taming the Dragon

China is an interesting spot. It has had very robust economic growth in past few years. However, there are arising problems in the seemingly strong country. This will hinder their ability to surpass the United States economically and potential supplant the U.S. as the primary superpower of the world. Among the problems, the largest is the housing boom in China

Similarly to the United States, there was a housing boom. However,there will be a bust. That has yet to come in China. But we have already seen the effects of a widespread housing bust in the United States. Forbes and Time Magazine other are envisioning a future Chinese housing bust. This could bode horribly for the Chinese economy. Others have stated that the inflation in China will become a major problem, squeezing the poor. On the issue of competitiveness, the Chinese worker is seeking for a salary increase. This has the potential to hinder Chinese growth. Factory workers in places such as Vietnam and Bangladesh are paid less on average than their Chinese counterparts. Companies such as H&M, a clothing retailer are in the process of moving operations. The ubiquitous Made in China label may not be so ubiquitous in the coming years. This means that the Chinese must grow other fields of their economy. This should not necessarily be a major problem but could present an obstacle for the Chinese.

In the meantime, the Chinese must tame the dragon before it is too late. They many advantages including a surplus of revenue, they own large amounts of assets, and China is a rising intellectual power. These are things that other governments would be yearning for. However, there are issues in China that must be addressed for success of their nation. 

    -S. Martin 

India’s Better Lit Future

BRIC Nations include Brazil, Russia, India, and China, all developing new markets that are going to change the face of the world for the future. Putting the I in BRIC India has the most potential going forward. They have the ability to become a technological shining star guiding the new way to the future. Why does India have such potential, so much to put it ahead of the rest?

The Indian government led by Prime Minister Manmohan Singh, is in terms of infrastructure striving to create a generation acclimated to the future and ready to change it. India needs focus on developing the ability to become the shining star of the future. This shows in the steadily increasing tech based economy, 2005- 2010 we saw the numbers rise from 17% to a now 31% technological based exports. Getting this number up to 50% like a post WWII Japan had, becoming the technological giant of the early 90’s. They are going to be able to do so because of how much the government will be making now and later. They will be making so much because of outsourcing; India is a very appealing area for such companies that need a cheap but large workforce. Normally under these circumstances, the U.S. government tould take steps to restrict such a flow of jobs out of the country,especially in the depths of a recession in which Americans desperately need jobs. The government has only not taken such steps because it fears India's retribution, as well as the happy occurrence of reverse outsourcing. Companies base themselves in foreign countries and save money by doing business in India. Companies' saving of money lead to lower prices and thus increased sales, to make sales they have to set up shop world wide, such as back in America… Reverse Outsourcing. It lowers prices, creates jobs over time and keeps companies intact. This all plays back into the growth of India as a nation and bringing it towards the technological goals it wants to reach to be the “shining star” of the future. 

India prevails as the most prominent prospect among BRIC nations and the US has the ability to help create growth in these areas. President Obama has already created a 15 billion dollar investment plan in India’s technology economy shift. If India can set itself up for reaching Japan like ability the possibilities are limitless, and the future much brighter.

   -J. Sullivan

The Forgotten I

            While there is much talk about the “BRIC” nations, recent economic analysis seems to point less towards a bloc of BRIC’s, but rather of BRICI’s. This last “I” stands for Indonesia, the most recent emerging power. In 2001, when the original BRIC concept was created, the country was still in turmoil, just two years after the first free parliamentary elections in that nation for nearly 30 years. The country has made enormous strides since then. According to the World Bank, its economy has grown over four percent annually for the last five years, placing it in the same territory as Brazil and Russia. It also managed to escape the late recession with a growth rate of 4.5%, in contrast to the decline in nearly every western nation. With its large population, and vast natural resources, it certainly seems to fit the bill of a new BRIC perfectly.

            Unfortunately, it also has more than its fair share of problems, both those in common with other BRIC nations, and those that are all its own. The nation continues to have sky-high corruption, making it a far less attractive place to outsource jobs, both from western nations and from other developing nations. These are probably the most important for the nation, which will be able to benefit as China’s workers become too expensive for much of the low margin manufacturing in the Pearl River valley. The most iconic of these industries is, of course, the textile industry, which “Always chases the cheapest needle”. Jobs are already fleeing the country for place like Vietnam and Bangladesh, but Indonesia obviously has the ability to take the lion’s share of these jobs, with its higher population. The industry in Indonesia is already growing, possibly by upwards of 12% on the year, sounds excellent, but not compared to Vietnam’s 60% jump in textile exports to Japan this year. However, Indonesia will not be able to advance its manufacturing sector without the cleanup that is promised by their President Yudhoyono.

            -G. Ferrante

This Week

This week, we will be discussing the BRIC nations and other developing markets and their future in our rapidly changing world.
    -G. Ferrante

Winning Over the World

The United States is a global superpower. Many analysts state that the United States is in decline and that there are foreign policy problems that the United States has. The wikileaks are just the tip of the iceberg. The United States is partly in trouble due to the rise of China. China has the potential to use their rising economic strength. They are already using this to their own advantage.

  The United States needs to apply a combination of its economic and military power as well as diplomacy to craft a foreign policy that is not just pro-America, but also good for the vast majority of the world. The United States remains the world's largest economy. China, a future competitor for the World's top economy, has internal structural problems at home. According to a recent article in Time Magazine, China is facing problems with containing inflation and maintaining the rising living standards that help to keep the government in power. They, similarly to the United States, must focus on their domestic situations.  This gives both nations an opportunity for success in matters of foreign policy. 

However, the importance of establishing diplomatic relations with other countries is to have allies somewhere in the world. This is obviously crucial. Wikileaks' release of diplomatic cables is a burden but the United States must forge ahead and be able to set an example. We do not have to be the world's policeman in everything but need to be a positive force in the world. This will show a positive image for other nations.  We must evaluate on a country by country basis and not a one size fits all approach. For a nation like North Korea we must ease our position and then cripple the nation when they try to act unfavorably to American interest. We must ratify the START treaty based on the fact that it is good policy, because it will set a good example. In dealing with Iran, we must avoid an aggressive Iran and to do so must not be too heavy-handed. 

-S. Martin

Wikileaks and Wikiwatertights

Between the four of us writers you the reader is going to hear a lot about Iran, Korea, Russia, and Israel. This is because of a certain Mr. Assange of Australia and his website Wikileaks, that’s what your going to hear here. The over 250,000 cables (analysis reports) have been mainly focused towards the countries above. 

More specifically I would like to revisit the hostility between Iran and Israel and how our newly publicized secrets will play into this. We now, and have for centuries recognized Israel as one of our greatest allies in the Middle East and they have been key as to our general influence in the area. Netanyahu is very aware of the grounds on which we base our relations with them and how Israel acted as almost a puppet government under the USA for some time. More and more now we see them taking independent and conflicting actions to deal with Palestine. This in turn upsets Iran who we have been trying so hard to reach a diplomatic ground with. Wikileaks has published hundreds of our intelligence tabs and notes on Netanyahu as a person and the actions he has taken leading Israel (being certain I would be arrested for visiting the site I chose not to look to deep into it). These cables display America’s true intentions for Israel and why they are so key to our relations with Iran. Dually, both countries nuclear programs are also things we have been keeping tabs on. Iran’s program has gone to the point where I could say we fear it. Added tension from these published cables could break the so fragile relations we have with not only both countries but the area in general.

Mr. Assange’s future is unpredictable at this point, but he will be charged with something eventually. His actions have been too sinister to go unchecked or unwatched. The effects of his publications are disastrous to the United States foreign relation stature now not only in the Middle East but globally. Does this pose a serious threat elsewhere? What should become of Assange and his site? Is America directly threatened? Answer in the comments!

-J. Sullivan

The Bear and The Eagle

The U.S has missed the boat to St. Petersburg. In the wake of the fall of the Soviet Union, the U.S. made it clear to the new Russian Federation that they would never be welcome in the new NATO. This was one of the greatest foreign policy errors in the history of the U.S. This proved that Washington and Moscow would continue to be enemies, or at least rivals, into the 21^st century. Despite The “reset button” of President Obama, this has become a self fulfilling prophecy. The U.S. now finds itself in conflict with Russia over Russia’s sphere of influence in Eastern Europe, which the Unites States wants to engage, but Russia considers to be a region over which it still has large amounts of control.

The Eastern European question is, in all likelihood, the greatest intra-European conflict in the next twenty years. Many of the former Soviet republics have gained membership in the European Union, but the U.S. needs to do more to make sure that the others do not fall back into the Russian orbit, especially as Russia seems to grow more authoritarian every year. Ukraine is one of the great prizes of east, is still completely up for grabs. In 2005, the “Orange Revolution” threatened to turn them into an entirely proto-western nation, but recent political shifts have changed that. The ruling party of the Ukraine is now not only pro-Russian, but is supported by the Russian ethnic minority in the east and southeast of the country. Russia certainly plans to maintain her dominance in the region, extending its lease on a port on the Black Sea in the Crimea for several years, and even beginning to offer passports to ethnic Russians in the Crimea. For this reason, the United States must do more to expand ties with Ukraine, as it is very important to maintain U.S. ties in the region as their current influence is due to decline. Russian influence could undermine the fragile democracy of the nation. Meanwhile, the United States must continue to work for a more cordial relationship with Russia, as the U.S. simply needs as many allies as she can get. For this reason, it is an absolute necessity that the United States ratify the new START treaty.
-G. Ferrante 

This Week

This week, we will be discussing the Foreign Policy of the United States, both before and in the light of the Wikileaks Scandal. Enjoy!

  -G. Ferrante

Moore's Law

In the Computer world, there is a term called Moore’s Law. It was pioneered by one of the founders of Intel, the leading semi-conductor corporation worldwide. Essentially this means that processor speeds will double every two years due to more transistors on silicon. Nvidia’s GTX 580, a graphics card released last week, has 3 billion transistors. The Pentium Processor, the original one, had 2 million transistors. This was released in 1995. That is 1500% increase in the number of transistors in a 15 year span. The chips have also been getting smaller down to 32 nm today. This is meant to reduce power consumption and increase efficiency. However, due to the limitations on small a chip can be, Moore’s Law may becoming to an end. Sandy Bridge, Intel’s new microarchitecture, will be released on the 32 nanometer technology and its successor will be manufactured on 22 nm technology. However, by 2020, the chips will get to a point where they are too small. 

Intel’s main competitor, Advanced Micro Devices, is attempting to attack the Netbook market that was powered by Intel’s Atom Processors, with an APU (Accelerated Processing Unit). This is the combination of a processor and a graphics processor, the brains and eyes of a computer. This revolutionary product is set to be more efficient, and strike Intel across the bow. AMD has been losing money had it not been for the Anti-Trust violations of Intel that were paid to AMD. Intel has a wide advantage at the moment, and Intel is expected to maintain its performance advantage with Sandy Bridge. It is expected to bring a 25% boosts while using 10% percent less power. But one question on the minds of many in the industry is will there be this exponential growth in performance in the Future? Time will tell. This greatly effects other industry and the American semiconductor industry. 
-S. Martin 

This is the Internet

This is not an article about how the Internet works. Nor is it an article about where it came from, or its history. It isn’t about the millions of servers and connected devices that make it up, or the kinds of scripts and plug-ins that power the web pages you visit daily, or the web browsers that display them. Sure, that’s what the Internet is, technically, after all is said and done. But as I said, this article is about none of those things. It’s about what the Internet is as a whole and what it represents for the human race. As a whole, the Internet is an easy way for billions of people to connect to perhaps the greatest source of knowledge and literature ever assembled. And this content is visible to roughly a third of the world’s population. Never before has there been a medium extending to that many people. But it isn’t so much the reach of the Internet as it is how accessible it is. While it is true that anyone could write a book, that doesn’t mean anyone will actually see it. Not so on the Internet. If you want to share your opinions on politics or food or music or whatever, you can write something and publish it, with the potential for millions of people to see it. And THAT is what the Internet is about. The Internet’s original purpose was to create and easy way for scientists to share information and files. While it now permeates every aspect of our lives, from entertainment to interacting with other people, at the core information is what the Internet is still about. No stronger example of the power of the Internet can be found than Wikipedia, perhaps one of the largest sources of human knowledge in the world. While it is patrolled and moderated heavily, anyone with sources and information is free to contribute. Blogs like this one allow people to share their own information, people who otherwise would have no voice. And as the Internet continues to grow, the power of the ideas and opinions of millions of people all merging together and being shared will show the power of a global community of ideas. This is the Internet, and information is what it’s all about.

-C. Mancini, a special contributor

Happy Thanksgiving!

Happy Thanksgiving to all our readers, we hope you all manage to eat more turkey than is necessarily prudent, and have more fun than should ever be allowed.
    -G. Ferrante and the Staff of The Bond Project

In Praise of Innovation

            The United States needs a second act. Or maybe at this point it would be something like a 12^th act. But semantics aside, there needs to be something new to remake the economy for the next century. However, it seems like it will be quite some time before the main character of this second act is made known. Until then, the past successes need to make a comeback. The U.S.’ great tech boom a decade ago has not spent all its power to improve the economy of the United States. Facebook, one of the last great stories from Silicon Valley, has yet to even have an I.P.O. Unfortunately for all of us who saw The Social Network, it is abundantly clear that United States needs to pull a few more tech Start-Ups out of its hat.

            Local governments continue to chase the web’s power to create an enormous amount of high paying, high-knowledge jobs, but the Federal Government has done nearly nothing. In a time when state level austerity will threaten any efforts on the part of localities to create more tech innovation, the Federal Government needs to step in. A simple incubator program is all that is necessary to restart the U.S.’ potential for innovation. The idea of an incubator program is to provide young entrepreneurs with the money and office to develop their ideas. These programs are already in place in Detroit and New York. A national version, creating a network of centers in the ten largest cities in the United States could not only spur innovation that would rejuvenate the most decaying of America’s inner urban areas, but also unite the country. Such a system could connect aspiring small business owners with those whose skills would allow them to realize their dreams. The United States’ geography had lent itself to small regions dominating certain industries, Wall Street in Finance, Silicon Valley in technology. Business incubators could spread the economic benefits of new businesses across the country, using the social networking technology of the last decade to put together people who otherwise would never have met, helping to avoid the economic disparities that have plagued the U.S. in the recent past. This is the best way to expand the United States’ economy today and for the future.

            -G. Ferrante  

This Week

This week, we will be discussing upcoming advances in technology and how they will affect our world. Enjoy!
   -G. Ferrante

To a Reader

A missive to all our readers...
    We adore your comments and hope to respond to each of them, and so create a more balanced dialogue. Our first commenter stated that all post dividend income should be taxed at a 100% rate. While in a perfect world, this Liberal might stand behind such an idea, we live on a planet that is far from perfect. To implement such a tax would be politically unfeasible and economically disastrous, as corporations would abandon the country in droves. A lower corporate tax rate would encourage more businesses to stop outsourcing and begin creating jobs in the United States once more. Kudos for the idea, please, keep reading!
    -G. Ferrante

A Tax Policy for 2010 and Beyond

            The Bowles-Simpson Commission is a step in the right direction. My colleagues are correct in saying that we need to cut the corporate tax rate in order for the United States to become more competitive and to give small to mid-size companies a break when they need it. A tax rate cut of 10% would pay for itself and put the American tax rate closer to the levels of our competitors.  The proposal to close the vast majority of the loopholes in the tax code makes sense. It is mainly wealthy people and medium to large business that are able to exploit these loopholes because they have the money to pay for the accountants necessary for this to happen.

            But long-term entitlement spending is going to be a problem. Social Security, Medicare, and Medicaid are expected to be about the size of the entire federal tax revenue. Important actions must be taken to extend the longevity of the programs. This includes increasing the age for collection. It is estimated that this alone would cut the deficit by 200 billion by 2030 and 42 billion by 2015 People such as Paul Ryan are correct in keeping this under control by indexing it for inflation. Additionally, changing inflation measures could save additional money. Another step could be taken for Social Security and its funding mechanism, the payroll tax. It would be wise for there be a rate cut down to 5.5% but make the tax subject to $250,000 of compensation. This would help out the average worker and his employer. Additionally, it would bring in more revenue in order for the program to be solvent long-term.

On the issue of medicare, its tax must also be subjected towards more income. The Congressional Budget Office states that medicare will became 50% of the deficit in this country. The FICA tax for Medicare is about 1.45% for both the employer and the employee. This should be increased to 1.7%  We must control this spending. Reducing the tax break for employer based insurance would also bring in a substantial amount of revenue. By 2015 it would increase revenue by $41 billion and by 2030 cut the deficit by $157 billion.

 What remains is the final entitlement, Medicaid. The Congressional Budget Office found that the federal government funds 57% of all Medicaid expenses.  Potential options to funding Medicaid for the Federal Government includes, a bank tax for risk investing banks, a millionaires tax, slightly higher rates than the Bowles-Simpson proposal, and a more aggressive estate tax.

These could raise hundreds of billions and make the country more sustainable long term. The point is clear the United States must cut spending and raise more revenue. The consequences are too great. 

-S. Martin

The Commission

         Yes, you are all aware that we are facing a recession and I don’t have to tell you that it’s bad. Now the government is getting the big picture as to making strides in the right direction. President Obama has taken Erskine Bowles (D) and Alan Simpson (R) and made them co-chairs of the National Commission on Fiscal Responsibility and Reform. This bi-partisan thinking is a step in the right direction 2 years too late. A compromise deal is only going to get us so far. From the Democrats we have seen tax cuts to the lower classes, loss of revenue means then the need to over tax big business to offset the cost and stunt our economic growth. The Republicans have given us just the opposite tax breaks to the big businesses to promote the creation of jobs and more individual or small-scale tax to make up for it. Either way our economy isn’t responding to conventional pick me ups, and that’s the problem. This commission needs to see something else some outside the box thinking. The people of America are so scared by inflation and recession that they have lost the will to spend. Allowing spending is going to get us on course. So before actions can be made to adjust the economy they need to reinstall trust in the American people. That’s the kind of out of the box thinking that’s going to get us started up. I’d like to hear comments and concerns below, do you have a better idea?

     -J. Sullivan

The Case For Tax Reform

In the New York Times today, there appeared an editorial describing possible tax reform. This publication stands firmly behind true tax reform. However, this liberal stands firmly behind the rich paying their share. A few (including Mr. Hubbard, author of said article), have made the argument that the Rich pay too much in taxes, and that it is mere correlation, not causation that the rich tend to be taxed at the highest rates during  times of great prosperity. Simple logic shows that this cannot be the case. The poor and middle class spend far greater proportions of their incomes on basic, and not so basic, needs. Once a few goals are achieved, though, these people being to save. Warren Buffet, Bill Gates and The Koch Brothers could not spend all their money if they tried (although the Kochs seem to be doing their level best in terms of campaign spending). Wealth redistribution is a four letter word in American politics today, but taxing the rich at rates that do not impoverish them, but still allows the government the revenue it needs is pure economic sense. However liberal he may be, this columnist still stands for lowering the taxes of businesses and corporations within the United States. Between state and federal taxes, American companies spend far more to the government than even countries with far sounder fiscal stati, like Germany.

            Taxing the people who make exorbitant amounts of money from large corporations, rather than the corporations themselves, is far less likely to hurt the country economically. GM and GE both can (and have) moved jobs overseas. Other corporations have also moved their headquarters overseas. The interesting thing is that these corporations almost always keep their functional heads in the United States. This is because the leaders of these companies would rather not move. Thus, lowering taxes on corporations but raising them on heads would encourage companies to create jobs in the United States, spurring domestic spending, and hopefully dragging the economy, kicking and screaming, out of the recession, allowing tax revenues to rise even further, and hopefully financing the federal government without bankrupting its citizens, which is the primary goal of any tax policy.

 -G. Ferrante

Next Week

In the week coming up, we will be discussing the Deficit reduction commission and possible solutions to the United States' debt problems. Enjoy.

Japan, No Longer America’s Most Important Partner in Asia

            In the late 1980s, the United States saw Japan as a future economic threat. However, after 20 years of Japan’s economic stagnation this is no longer true. China and India has risen up and they are contesting for power in the region. There is a rivalry between the two nations but it could become chilly very soon. Both are also looking to have the world’s largest economy in the coming decades.

            As both China and India vie for supremacy in Asia, the United States must partner with both nations. This is significantly easier in India than it is in China. This stemmed from the ownership of India by Great Britain and the fact that India is a commonwealth nation with the world’s largest Democracy, over 1.1 billion and growing. India is poised to become the most populous country in the next 30 years with the world’s largest Gross Domestic Product (GDP). There are also challenges to America’s reliance with India. The United States, acting in its own best interest, is set to pursue policies that would stymie outsourcing. The outsourcing of American jobs has been a factor in India’s recent economic success. This point will be contested in the future. There are other important issues, which include India’s ability to defend themselves and aid the United States in a war on Terror.

            China is another nation that is pivotal. Obviously, there is room for economic partnership. However, this has been marred by America’s passage of tariffs and the rare earths disputes. These are ongoing and must be addressed. America’s debt is also pivotal as we continue to rely on China for money. China has signs of a superpower. The dispute with their captain and Japan clearly displayed an emerging Chinese dominance in the East. This is one that the United Stats must respect. On the other hand, America must support India. Even though both nations are in a rivalry now, we can benefit from an alliance with both. This is necessary to the United States just as much as it is for India. 

     -S. Martin 

Amerindian

        Many have said that India is one emerging market that the United States will never quite crack. It has been said that they are just too different, just too suspicious, of both The U.S. and her ally in Pakistan. However, this is clearly not true. While Indian-American political relations have not progressed in any significant way since the two nations’ signing of a landmark nuclear deal in 2007, economic pressure will continue to drive the two countries closer together. At first glance, India seems less integral to the United States than India, but when one looks closer, an entire new array of cultural and economic bonds come to light. The services that many Indians provide to those in the United States clearly tie the United States to it South-Asian Partner. Americans of today will grow up thinking of Indians as those who provided efficient services, their view of the Chinese will be the opposite. China has made its name building products that carry the names of brands that were established, and are sold, in the west. Thus, there will be no record of collaboration between the two countries in the coming years. Chinese companies will be forced to build their own identities from scratch, with little help from an inoculated populace. As Tata motors expands into the United States, there will be no great outcry against an invasion of Indian business, controlled by a potentially hostile government, as there would (or more likely, will) be when Geely attempts to do the same.
         These commercial contacts will go a long way toward strengthening the U.S.-Indian relationship in the realm of statecraft as well. With the impending sale of billions of dollars worth of arms to India, the United States has already shown that it trusts India more than China, as for India alone was it willing to lift bans on the export of certain possible military use technologies. This freeing of trade between two giants holds many portents, of a possible end to the conflict between the two nations at the Doha round of world trade talks, and even, in the distant future, the first seeds of a free trade agreement between two of the world's largest economies. As the United States and India grow closer, the “Chimerica” relationship is bound to suffer, as rising wages in China drive manufacturers from the country, multinationals will search for the nation that makes it the easiest to export to the United States, and it is almost certain that that nation will be India.
 
    -G. Ferrante

This Week

In honor of President Obama's Trip to South and East Asia this week, we will be discussing the various issues facing Obama's host nations, as well as their relationship with The United States.

The Aftermath and a New Way Forward

The GOP’s reclaiming of the House with the support of the Tea Party is being interpreted by many as the rise of Conservativism and Populism in the United States, and the heralding of the big-government, pro-spending, Democratic party. This is, to be frank, a shallow misinterpretation of what happened during this bout of midterm elections. The biggest loser in this election was not the DNC, but was moderate Republicans such as, Olympia Snowe, George Pataki, Scott Brown and Colin Powell.

To display this, let’s first determine what a “Tea Partier” is. To do this, it is best that victorious candidates for the House and Senate who claim to be Tea partiers are examined, as they are the ones who will truly influence policy decisions. Start with Senator-Elect Rand Paul, one of the most popular Tea party candidates—his campaign promises, in essence, were to shrink the debt and alter President Obama’s healthcare bill. Nan Hayworth, Representative Elect of New York’s 19^th district, wishes to make social security more solvent, and alter the heathcare bill. Marco Rubio, Senator-Elect of Florida, wishes to extend Bush tax cuts, end the estate tax, and opposes an energy tax. In short, Tea partiers want an end to any form of government intervention in markets, wish to lower taxes, and wish to shrink the size of government. They are strong fiscal conservatives.

            Now that there is a solid definition of a Tea partier to work with, what is a moderate Republican? Olympia Snowe, from Maine, can be looked to for an example; she voted against the Bush tax cuts in 2003. George Pataki, former Governor of New York, can also be looked to as an example of a moderate Republican, as he provided billions to help the sick in New York. These politicians aren’t anti-government, and don’t want to wildly slash spending or end health care, but do have Conservative reservations to Democratic policies.

In the old Republican party, these members were a small, moderate voice in a right-leaning party. Now, with the Tea Party in seats across the nation, it is easily stated that the GOP has shifted right; now, moderate voices are a small voice in a very right-wing party with less of an ability to moderate its party. Why? Let’s use an analogy—if a weight is ten feet away, a person with x amount of power could pull the weight five feet with y energy, leaving the weight at five feet away. If the same said weight was fifteen feet away, a person with the same x amount of power could pull the weight five feet wit the same y energy, leaving the weight ten feet away. The moderate Republicans would have to exert more political capital to moderate the GOP with the tea party in it, as it is further right, it is unlikely that they can or will do this because the GOP has roughly the same amount of moderate Republicans as it did in the last session of Congress. Simply, moderate Republicans have lost power and thus their voice. This is important as it has been shown that the populace does not like either party and prefers a centrist way forward.

Needless to say, this might help Democrats in the long term—if the Tea party forces the GOP right on issues that America (or at least the parts of America that matter in a Presidential election) are moderate on, the DNC can make an attempt to be the ‘party of moderation’ and reclaim center-left and center voters that it lost in this election cycle.

What can the Democrats do in the long term? Outgoing Sen. Evan Bayh has a fantastic article op-ed at New York Times (link: http://www.nytimes.com/2010/11/03/opinion/03bayh.html?partner=rss&emc=rss) outlining what Dems can do. In short he advocated pushing center and moderate, working on what is agreeable (deficit reduction, tax reform, energy security, and improving current legislation). This should give them the needed political capital to win in the upcoming 2012 elections.  

-J. Abys-Smith 

Epinicium

EPICINIUM! For those who don’t speak Latin this translates to, THE AFTERMATH! Yes, you all know Tuesday was Election Day for the Senate, the House and the Gubernatorial race. More important than simple, raw figure, is the effect of this election on both our struggling President, and his plans for the future of the United States and her citizens. 

From the Democratic side of things we saw some serious losses. In the House dropped from 256 seats (20 open Democrat Seats) to 186 seats in a body where 218 constitutes a majority. This 60-seat drop was found in a couple of huge turnaround states. Now to the Senate where the Democrats didn’t exactly stay strong but held their ground… that is better than nothing. Last term they led 59 to 41, a crushing majority, but one that couldn’t hold on to popularity. This is shown in the complete 180 turns of North Dakota, Arkansas, Pennsylvania, Illinois, Wisconsin, and Indiana with pretty juristic party changes, especially in the Senate. We see that times are changing and without the government making progress people are looking to do it for them. I find no problem with the people taking the initiative its how things are going to get stuff done.

Over to the right we see just the opposite. The House saw gains from 179 seats to 239 seats, a huge shift in the balance of power. Over in the Senate, the Republicans jumped from 41 to 47 seats, only 4 away from the majority. This was again due to a lot of the turnarounds in both chambers. The numbers are not yet set in stone, with a few races still counting votes, but general results are all tallied. I am here to talk about the aftermath of this election. Obama is going to have to really work as a bipartisan leader to get stuff done. Economic problem solvers are going to have to appease to not just their interests but really those of the people.

This brings me to leave you all with a couple of things. The big shifts of power means the president is working harder to fix America now. What is he going to have to do to please the masses? Power being differentiated among chambers though makes this an odd situation. To close I will ask what do you think can be done to please the Liberals, Conservatives, Moderates, and most importantly the people?

-J. Sullivan

Sitting Ducks

Gone in 24 hours. Gone are the firm majorities but for now the country has pressing matters, and the Democrats have control over Congress until January 3^rd,  2011. There are pressing issues. There are debates that must be made. President Obama had the opportunity to govern nearly unopposed, these two months will be his last chance.
The most important regard the estate tax and the Bush Tax Cuts.

            Starting with the Estate Tax, the Congress must come up with a compromise. My proposed compromise would be to have an estate tax rate of 35% for individual estates of 2.5 million and 5 million for families. Once the estate reaches $10,000,000 it will be taxed at the rate of 50 percent. Both rates are lower than the historic average and also represent a necessary compromise. The problem is republicans are adamant about an extreme proposal that would do away with the estate tax or limit its effects. The estate tax must not go away because it is inherited wealth, not earned wealth. This would raise revenue without waging true class warfare. In all likelihood, Democrats would force the Republican hands while they have the opportunity to do so, so something will be done. A proposal along these lines is necessary.

            Regarding the Bush Tax there have been many proposals. This ranges from total repeal, which would raise 370 billion in revenue per year. Some such as Alan Greenspan have advocated for this. On the more radical side, some republicans have pledged more tax cuts. Obviously the new way forward for Congress would be a compromise. I along with President Obama would advocate letting the cuts expire on the most affluent.  President Obama’s number is 250,000. I would propose retaining the cuts for those making the lowest four tax brackets and repeal tax cuts for those that fall into the top tax brackets. This would reduce the deficit more than President Obama’s proposal. Republicans clearly do not want to obstruct and force the expiration of the Bush Tax cuts. This would make them appear even more favorable to the rich and not to the common man that supported them on Tuesday.

           

            Ultimately, this forced bipartisanship will not last forever. There will be tough fights in the upcoming session of Congress. The 112^th Congress will face big, pressing issues. Compromise is necessary. Republicans run the risk of a ‘do-nothing Congress’ and Democrats want to appear strong and help show the President as a uniting figure, fighting for his people. Something that was not apparent if one looked at the results of last Tuesday's election. It was a clear referendum on the role and size of government. 

            Now if you thought that there was obstruction in the last Congress, there will be even more this Congress. One potential move is to continue his course, which is unlikely. Another extreme move is to turn to the left or the right, neither of which is good. He can triangulate like Bill Clinton. This is likely. He would make proposal that he would hope Congress would pass. The other possibility, though not good for the country, is to run against a “Do nothing” congress in the style of Harry Truman in 1948. If the proposal passed by Obama with bipartisan compromise is popular with the people, he could run as a fighter and a moderate that is interested in helping is people. This would put in a strong position to win in 2012. Potential proposal could include social security reform, tax reform, immigration and energy. Since my colleague focused on Energy and Immigration, I will focus on Social security and Tax Reform.

            One possible proposal is a payroll tax cut but subject the regressive tax to more income. The cut would last until December 31, 2012. In other words to say $166,666 around the top of the 3^rd highest bracket currently. This cut would save business money and allow the people to spend more money. In the long-term it would allow social security to become more solvent over time. Social Security is expected to become insolvent 2037. This would also have stimulative effect on the economy more so than regular tax cuts according to Time Magazine. Additionally, the Congressional Budget Office stated that payroll tax cuts create more jobs per million dollars invested than tax cuts or infrastructure spending. This could palatable to Republicans as it would indicate a tax cut for small business. It would help both the poor and middle class.

              Tax reform is a longer and more complicated debate. It too must be addressed. There are many loopholes in the system. According, information weekly and the New York Times on November 2, 2010, there are 1 trillion dollars lost due to exemptions each year. This exceeds tax revenue. Thus it is imperative to limit exemptions and credits, in order to reduce tax rates for all and limit some of the ambiguity of the American Tax Code. The World Bank rates America as the 5th easiest country to do business. However, when it comes to paying taxes it ranks 62nd in the world. This must be changed, in order to increase American tax revenue and competitiveness. This will stabilize the economy and put Americans on a path to prosperity. If President Obama was orchestrating these necessary reforms it would put him on a good path for 2012. 

Are our leaders up to the challenge? We will find out soon.

-S. Martin 

And So It Begins

Wow. That was the general consensus of Democrats in the last 24 hours. Most House projections were blown out of the water. Republicans are now set to gain 60 seats in January. However, now the question is, What will Republicans do with this newfound power? The answer is not much. With Democrats still in control of the Senate, there will be no repeal of healthcare reform. President Obama will have to pick his goals more wisely. Mr. Obama has two remaining priorities, left over from the 2008 elections. They are Immigration reform and an Energy overhaul. Neither seems particularly likely to pass at this point. In fact, Joe Manchin was widely shown to have been shooting the Cap and Trade Bill in one of his election ads, meaning that any true Energy package would be nigh impossible. On the subject of Immigration, though, there is hope. In the Senate, a John McCain that emerged from an election with an Anti-Immigration zealot may find his old dreams of comprehensive reform, including amnesty, rekindled. In addition, the new Senator from Illinois, Mark Kirk, is a potential Democratic pickup for the measure. The most important possible partner for Democrats on Immigration legislation would be Marco Rubio. A tea-partier, he has long stated that his goal was to avoid working with the Obama administration on most issues. However, in his election speech, he made clear his own American success story, made possible by a liberal immigration law towards Cubans following the takeover by the Castros. Were President Obama to get him behind any piece of  legislation, it would not only increase its chance of success, but also give it a P.R. boost from bipartisanship, especially from a Senator so far to the right. This is in addition to Republican senators from traditionally blue states, such as the two ladies from Maine, and Mr. Brown of Massachusetts.

         In the House, President Obama will face his largest problems. Michelle Bachmann has been reported to be seeking the number three position in the Republican caucus, and position in which she has not committed, according to MSNBC (11-02), to not using subpoena power to set up a new House Un-American Activities committee. The greatest hope for Immigration is that many of the new House Republicans would see it as a way to woo Hispanic voters back to their party, in a time when Democrats seem, more and more, to have locked up that demographic. If President Obama was able to sell the legislation in the proper manner to the American people, he has the chance to convince a fair number of freshman Republicans to vote his way. President Obama will not have his agenda come easily, but he is by no means barred from making progress in the next two years.


    -G. Ferrante 

Prospects For Each Party

Domestic Analysis:

It has always been a matter of money and there are a lot of ideas floating around from both sides and every angle. What is exactly going on in the American government’s money issues? Let’s start with the Republican proposals we have seen in light of recent event.

         The “compromise” tax bill proposed in early August sums up generally how the Republicans are going to fix the problems we face. It starts with the elimination of estate tax altogether, a little radical but could be effective. The tax now under current standards will be set to collect just over $ 50 billion, a miniscule amount as depicted, the elimination of this tax in theory promotes excess luxury spending, which comes back around to pay substantially more revenue and window for expansion. The only down point seen here as with any idea to promote spending is the frugality of the general public and lack of even frequent bank goers. The second very similar change is a reduction of the capital gains tax. The IRS will collect about another $ 50 billion in capital gains. Reducing this will put the money right into the hands of the top 5% of the economic community. These savings again promotes serious growth and the expansion of domestic business. Though it seems to be flawed because of the lack of immediate distribution and the again frugality of the people of America. Subsequently it goes on to lower alternative minimum tax, more contributions from the IRA to the people and expanding current tax programs to a wider variety of businesses. 

          The Republicans have seen mixed feelings about the compromise but the core values of the Democratic ideas differ much. They are really going after just the opposite groups with the same ideas. The Democrats have the Made in America Act which sums up current efforts. This list of ideals starts with the taxation of outsourcing and other corporate loopholes that prevent the Americans from getting the jobs. These loopholes prevent small businesses from being effective competitors as well. Taxing them will not only raise cost, making an equal level for small and large business alike but promote the creation of American jobs in America. It goes on to focus on small business, expanding on credit and reducing expansion tax. These both act as incentives for small businesses everywhere to shine. The expansion tax reduction seems as if it would work well. To address this I would like to look to the 3 separate acts passed by Democrats all doing the same thing: The Small Business Jobs Act, The Manufacturing Enhancement Act and the Unemployment Compensation Act. These all address similar issues with the same means, it didn’t work 4 months ago its not working now. Moving to the credit, as with anything too much of a good thing is usually bad. Extending credit to those who normally wouldn’t have the option… hmm sounds like a certain plan that sent us into the recession we face now. Making loans sound too appealing leads to defaulting, failing banks and the crack in this idea. New horizons are also seen with the act, those of green and government works. Adressing the climate issue with tax breaks, I can see no flaw this is perfection in the making, exactly what the country needs. Government works on the other hand is a different story. Many will say it worked for FDR it will with Obama, nay I say to them. Government works programs are a false sense of hope almost setting the dollar higher on a cliff ready to jump. 

We see both sides have their benefits and flaws very present. It did seem that I favored the Republicans on this matter because I do believe with the proposals shown the Republicans are better addressing the issues correctly. Found something, want to prove me wrong and best my wit, leave it in the comments which are there for debate. I would like to see what you think is the best or if the government should do nothing at all.

-J. Sullivan 

2010 election projection

Now, my colleague addressed the approval of the President, but in many ways this is irrelevant because of the public disdain of the Democratic leaders in  Congress such as Nancy Pelosi and Harry Reid. The latter is in  a dead heat against the extremist Sharon Angle. If the Republicans in Nevada had a candidate that was more centrist or simply a more pragmatic and credible, the Majority Leader would be toast. This race in some ways is the microcosm for the rest of the Country. The increasingly conservative republican party is in a fight against Democrats and this is alienating the 'Center.'  The republicans could have had even larger gains than what I am predicting. 

I am predicting an 8 seat pick up for Republicans in the Senate and I expect John Boehner to have a 15 seat majority in the house. This is nearly identical to the projections of 538, albeit with fewer Republican gains in the House. The Republicans will have substantial influence in Congress. However, this will hurt them going forward and give the Democratic party a stronger enemy. In terms of governorships, the Republicans will hold 29 of them along with more clout in state legislatures. This will essentially wipe out much the Democratic gains in the previous to elections that were strongly Democratic, 2006 and 2008. 

- S. Martin

The 2010 Elections

Projection, 2010:

            There have been numerous estimates as to Republican gains, and Democratic losses in this year’s campaign. And yes, this point has been belabored over and over, but Republicans are on a roll. However, many of their possible gains have been exaggerated, at least according to this liberal. The Democrats’ recent “comeback” has not been given much credence in the Media, but it may play a key role in determining the course of the nation. The Hill Newspaper today wrote on the topic of “Obamacans” or Republicans who voted for Obama, many of whom now say that they would vote for him again. This is in clear contradiction to the notion that Moderate Republicans and Independents have abandoned Mr. Obama in droves. The odds of the Democrats keeping the Senate now seem relatively high, according to numerous sources. According to the poll of experts by Chris Matthews today (10/28), predicted the Democrats remaining in power by a margin of two seats. Note, we will normally not use blatantly partisan sources, but in this case, as Pat Buchanan was a commentator, and the results being generally aligned with other projections, we will admit it. This will make any Republican attempts to pass legislation very unlikely to go anywhere. 

         

           Back to the House for a moment though, Charlie Cook has long been famed for not only being a levelheaded politico, but also having a “gut feeling” that Republicans will take 85 or 90 seats. However, 538.com (a New York Times affiliate), predicts a 53 seat gain for the G.O.P. within striking distance of their 54 seat gain in 1994. However, this may not necessarily be the case. The Economist Magazine (10/21) casts doubt on the veracity of the Republican wave. It makes the valid point that many Republicans are indeed leading in their polls, but not with more than 50% of the vote. This, according to nearly all pollsters, makes a race extremely volatile, especially in the wake of a Democratic spending frenzy that appears to be in the works over the next few days. Democrats are said to have saved much of their money (no small amount, by the way, as Democrats have routinely raised more than Republicans over the course of this election cycle), for this crunch time. In addition, there have been polls out in the last week that the so called “Enthusiasm Gap” is closing, meaning Democrats may be able to pull out a strong turnout from their base, especially first time voters, and minorities. Unfortunately, that may only be enough to offset a major loss from their long time supporters, the elderly, who may not only be swayed by the Tea Party Movement, but also, be persuaded not to vote at all, given the rain predicted for next Tuesday. In short, this correspondent predicts a final tally in the Senate 53 Democrats or caucused, 47 Republicans or caucused. In the House, a net gain of 44 seats, leaving Republicans with a 5 seat Advantage over Democrats.

-G. Ferrante

The Bond Project

Welcome, Ladies and Gentlemen,

In a world where everyone is too far left, or too far right, why not have a few people come together to speak to the news as it happens, from all points of view? We shall endeavour to give honest reporting, reasonable opinion, and facts, facts, facts.

-The Staff of the Bond Project