What you can do for your country

A Worrisome Middle East Strategy

As the media stays fixated on the Petraeus love affair, it is more worrisome to look at what has happened to our Middle East strategy in the last few months:

• Sept 11, 2012 – Death of US Ambassador Stevens in Libya.  Steven’s was recognized for his skill at persuading regional factions to support secular government.
• Set 22, 2012 – Turkey sentences several generals to prison and diminish roles of several others, removing the “Protectors” of Turkey’s fragile secular government, thus weaking Turkey’s alignment with US forces.
• Oct 2012 – African Command General Ham’s role is changed to rotate him out of overseeing US African Forces (Libya, Egypt, etc)
• Oct 31, 2012 – Rear Adm. Charles Gaouette removed from command of Middle East aircraft carrier group for “Inappropriate leadership Judgment”, what ever that is.
• Nov 7, 2012 – CIA Director Petreaus resigns over sex scandal
• Nov 13, 2012 – ISAF Command General Allen embroiled in Petreaus scandal In a manner likely to lead to end of his career.

It is unclear any of these items are related.  However, the net effect of all of these changes is instability in US security policy in the Middle East, Pakistan, and Afghanistan.  Its important to note, that Al Qaeda sometime ago articulated its long term term strategic plan for the Middle East, which essentially sought further regional instability in anticipation of weakening US power.  It sought to leverage this weakness into regional conflict (Syria, Egypt, Libya) that could ultimately lead to a Pan Arabic theocracy.

As part of its long term plan for a regional theocracy (Caliphate), it seems reasonable for Al Qaeda and its supporters to further weaken US military leadership.  Its perfectly reasonable to think Al Qaeda and other nation states are running intelligence operations against US officials.  Any intelligence officer knows that somewhere between 30%-60% of people cheat on their spouse.  They also know everyone uses Gmail, and US officials using Gmail have been hacked.  American media loves a scandal, so its easy to take out someone in leadership with a story about sex.  So, if a foreign intelligence officer monitored the habits of 3 key officials, statistics says 1 or 2 of those officials will be cheating on their spouse.  If you monitor enough officials email and activities, you will find a suitable patsy somewhere along the way.  In this case it happens to be General Allen and Petraeus.  It could have just as easily been the Joint Chiefs or Panetta.  China, Israel, India and perhaps Russia have the skills required to hack Gmail and track government officials on a large scale.  China and India need a lot of oil to keep growing.  China would be more than happy to use oil from a new Middle East theocracy. Al Qaeda, through friends, can get to our Gmail.

With a less engaged United States, disruptive forces in the region see opportunities to threaten weak regional governments with various forms of instability driven by religious radicals.  Saudi and other established governments tend to ameliorate these forces,  tolerating their existence to a point.  US support in the past has given Saudi, Egypt, UAE, Jordan, and other leaders the needed strength to maintain balance.

Al Qaeda generally believes that the US does not have staying power or long term willpower to lose more troops in the Middle East.  Between 9/11 and the subsequent wars, the US is not looking for more conflict.  Current US leadership is less engaged in controlling the Middle East outcome.  Which brings us to Iran.  Some people feel its silly to worry about Iran and a nuclear bomb.  If they used the bomb, Iran would be destroyed in an instant.  We quickly forget the value of a nuclear bomb is not using it, it’s the geopolitical benefit of fearing its use. 

Assuming more regional instability, as soon as Iran has enough nuclear material or the bomb they could simply say to weak governments in the region “We will protect any Islamic nation in the region against western aggression if you support a theocracy.”  Some will capitulate immediately (Egypt, Syria).  While others will do it slowly (Saudi, UAE).  But they all will capitulate because of the power of radical groups in each one of these nations.

However you get there, it makes one think Petraeus and others might be on the receiving end of an intelligence operation.  Frankly the threating letters to Ms. Kelly could easily be the product of a foreign intelligence service.  Petraeus and Broadwell have no credibility to claim otherwise.  China has more than enough interests to help Al Qaeda in the Middle East.  The continued leaks about the sex case/investigation seems designed to further damage Petraeus’s credibility.  Legally, the FBI can not leak this information.  It would be very revealing to know who and why this data is being leaked.

My analysis is likely not correct.  But its ignorant, given the pattern, to assume this is just a story about a horny general.  Al Qaeda has articulated a clear and consistent long term strategy.  Its timing and key elements are falling in place as planned.  We should worry a bit more.

Related Articles:

• Asharq Alawsat editor claims Syria, Iran instigated escalation between Israel, Gaza to aid Assad regime
• Benjamin Netanyahu: Leader of the Free World

Anonymous Women Harasses Another via Email, Major FBI Investigation Ensues

Several years ago some men broke into my mother’s house.  They stole several things including my dead fathers car.  The car had a built in Cell phone.  We tried to get the police to get AT&T to track the car.  AT&T and the Police refused to try, they were to busy.  Several weeks later with the help of a private detective we finally found the car.

A women in Tampa calls the FBI.  "I am getting harassing emails from some unknown person telling me to 'Stay away from my man'. I am not sure who she is talking about.  What should I do?"  Well of course, the FBI launches a major investigation that included many months of work:

1. Review Tampa women's email
2. Review all the header files to determine IP sources and routing
3. Back track IP sources
4. Determine IP sources have a common user (Across multiple locations, hotels, etc) 
5. Resolve that these locations related to Broadwell's travels (Because some how they know that)
6. Get a subpoena, read all the email, find another email account that is full of sex notes, violate that persons civil rights.
7. Dig into those other emails, find the IP addresses, travel, hotels etc - relate them back to Petraeus

Violent criminals invade a home and almost no investigation ensues.  A woman receives harassing emails and its FBI most wanted.  I am not sure it happened exactly this way, but combing through several news reports it seems:

• None of the FBI field agents knew Petraeus was involved until recently
• The emails never used anyone’s name
• The investigation took several months

If it were a matter of National Security, the technology exists to determine the source of the emails and all other related emails (you should worry about that) in a matter of seconds, minutes or hours.  If it were just harassing emails, its unlikely any action would ensue.  Jill Harris, the women targeted with harassing emails, likely suggested to the FBI agents that the harassing emails related to Petraeus, triggering the national security concern. In short order, FBI Director Mueller would know all the details.  What happens next is unknown, but I have some thoughts:

• FBI did nothing: The FBI has a history of keeping secret files and using them when needed
• FBI told Holder: Director told Attorney General Holder and he sat on it
• Holder told White House: Valerie Jarrett got hold of the information and decided to use it when the time was right to leverage Petraeus

What follows is all guess work......

The tools used to data-mine all the emails are only to be used for national security.  Because of how intelligence agencies collect the data, it is difficult to use data mining results to prosecute a case.  With the answer known from the data mining, to create an alternate path to the facts, it is likely the FBI field agents were told to pursue the case using all the conventional resources required.

Rolling back the clock several months, coincident with this investigation, recall that Petraeus was the leading candidate for Romney's Vice President.  The White House could easily have called Petraeus and said "Dave, here is what we have".  He was then toast as a candidate, but fine as CIA chief.

Latter when Benghazi occurred, the facts all confused, the White House could easily have leveraged the information to keep Petraeus in line.  His integrity was compromised.  Petraeus joined the chorus, despite FBI terrorism center saying Benghazi was a terrorist attack. 

Mueller, an FBI man and a Bush appointee is a total boy scout.  All modern FBI directors are total Boy Scouts.  Mueller could very well have kept the field investigation alive so he had leverage against the White House deception. When the conventional case was ready in early October, Holder probably stopped Mueller from moving forward until after the election (Don't embarrass the boss).  Holder also would have stopped the briefing from going to the Senate Intelligence Committee (didn't want Republicans leaking it).  Someone (FBI Agent?) then leaked the story to Rep. Cantor.  Cantor could not nail down the facts quick enough to release the information before the election.

The hearings for Benghazi were scheduled.  Petraeus realized he could not perpetuate the Benghazi lie.  Romney loses.  Petraeus resigns.

I am not sure my fiction is right, but it is an explanation of the facts.  I just cannot believe the FBI would pursue this investigation unless early in the process they realized the magnitude of the issue.  Once realized, the White House would most certainly have been informed instantly.  How do you think they would have used the data?

Key things to look for going forward:

• Discredit Petraeus: Further details no one can confirm - “1000’s of emails”, pictures, donkey’s, toys, financial problems, etc. Anyone around the core of this story will start looking sleazy.
• CIA Was Rouge: Benghazi etc. was a rough CIA operation.  Its all Petraeus’s fault.  End of Story.
• More Sex: There will be further stories about sex, affection and improper communication all designed to weaken the people that know the full story.  Against the media hype, it is nearly impossible for the target to communicate truth.

Ultimately this sex scandal is a side show.  There is a lot more to Benghazi, but we have a few more episodes left. 

The Budget Deficit is Simply So Large, There are Not Enough Rich People to Tax

Its Time to Bring Voting into the Modern Era of Real Time Transparency

In a world of real time information why is our voting system so arcane?  Why for example are election results held until after all voting is over? We have polls that suggest how we are going to vote, but in the 2012 election we learned that there are D+8 and R+2 models that reflect how many Republicans or Democrats are going to to vote.  Why don't we provide the real answer in real time:

1. Tally Results as they Occur: If the election is on a single day, or months long with early voting, the results should be posted in real time.  People should know immediately which way the vote is headed.  Based on that information, they can decide if they need or want to vote.
2. Open Source the data: Provide a common "Open Source" XML schema that provides constant update of # of registered voters in each district, compares it to residency, reflect the number of provisional votes, etc.  Show every bit of "Meta Data" that reflects on key trends.  Let third parties (Democrat, Republican, Media, etc.) mine this data for fraud.
3. Change your vote: Voters should be able to elect to change their vote.  This reduces elements of privacy, but if a voter wants they should be able to change their vote back and forth up and until midnight of the election.  Everyone already knows how I vote because of political donations and other demographics.  There is no privacy.  We should be able to go a step further and actually secure a voting profile with 2 factor authentication to determine if someone has voted in my place.
4. Voter ID: When I get a loan or make an on-line transaction, some times the systems ask me a question for which only I would know the answer - "What kind of car did you have in 1995 - Jeep, VW or GMC".  Its a variation on voter ID, but perhaps easier than assuring photo id's for everyone (why photo IDs are hard is a whole other question).
5. Registration Plus: People are all worried about voter ID leading to suppression or violating someone's rights.  Alternately, if you offer an advanced form of registration you can incentivize people to strengthen voter ID.  If you develop a program like TSA PRE (A program where TSA checks your back ground and stream lines you through security) its possible to motivate people to reduce voter fraud.  For example, if you are willing to use Voter ID that is double checked, then you can vote on-line, vote early, re-vote up until poll closing, etc.  By electing a higher level of registration and disclosure, you get services that make it easier to vote. 

Please post this on Facebook/Twitter so we can get other peoples thoughts/support.

We started a petiton for this on the White House web site - we need 25K signatures

Affordable Care Act and Utillilties

Hurricane Sandy destroyed much of the North East power infrastructure.  Customers wonder "Why weren't the utilities ready". Angry customers want all infrastructure underground. Governors want answers. Why are the utilities so bad? And how does this relate to the affordable care act?

Utilities develop investment plans looking at a range of issues from carbon emission, growth, efficiency, and resilience. Utility infrastructure is capital intensive. It often takes 30-40 years to pay back on their capital investment in generation, distribution, and other infrastructure. In most businesses, a company would look at profit/loss, access to capital, and customer needs to determine the best course of investment. Utilities however take this plan to a government run Rate Commission. The Rate Commission has its own opinion on what a utility could charge a customer for energy. That Rate is of course how utilities pay the capital cost of their infrastructure investment. The Rate Commission often is concerned about the near term rates of voters. So, it works hard to push rates as low as possible, forcing the utility to reduce investment in long term plans like outage management system, distribution and generation. 

Rate commissions are political in nature. After the 2008 economic down turn, many municipalities pushed for a Green Energy agenda. The Department of Energy created several large incentives/stimulus programs designed to shift utility focus on wind/solar power, energy efficiency, and smart meters. Rate commissions collaborated with the department of energy to drive utility investment in the direction of these Green strategies. Rate Commissions, through a complex political process, in the end control the strategy for infrastructure investment. These strategies often bias towards the near term.

Ironically, once a big storm like Sandy hits, Governors, Senators, Congressman, Commissioners, etc. all point their fingers at utility executives and set blame on the utilities. In fact if you review rate case materials you will likely find extensive documentation explaining the need for new infrastructure, over turned and rejected by the Rate Commissions. But rate payers and the news rarely look at these filings. Its easier to demigod the utility.

Post Sandy power failures, and the inability to quickly recover, are a window into a potential future of healthcare. The Affordable Care Act is less a takeover of health care, and more a takeover of the systems processes and rules. Some might consider that the same, but its actually worse. In many ways, the best analogy for ACA is how we regulate utilities across several dimensions including the price, the means of delivery, the investment by providers, etc. In a "Utility" model, there is a disincentive to invest in innovation. Price of the service is often driven below is real long term cost, which may or may not increase availability, but certainly constrains quality. With low investment, regulatory constraints and restrictions on profits, innovators will seek other markets. 

Like utility customers harmed by Sandy, when health care starts to fail us the source of failure will be elusive. Politicians will use hearings and their media pulpits to vilify the providers. Some will suggest single payer or some other sort of further regulatory action. As is true with Sandy utility customers, and other regulated markets like mortgages, few will turn back the clock and recall a time when other better options existed.

Some believe the expansion of services to those without health care outweighs the loss of innovation.  Its sad that they think that is the only trade-off.  Companies like Whole Foods provide low cost high quality care using means like heath savings accounts.  There are strategies that lower cost, drive innovation and expand availability.  Utility models are a century old solution to monopolies.  After more than 100 years of this old business model, we know that competition beats out monopolies.  If we truly wanted to provide universal health care, the competitive market will be the incubator of that plan.

• A Layman's Plan for Healthcare
• Obamacare: Competition just like Expedia.com....
• Evil rich guy who does not care, apparently.....
• Perpetual Majority Hidden as Health Care
• A Doctors View: Government healthcare already rations
• How Health Care is Killing Us
• How American Health Care Killed My Father - The Atlantic (September 2009)
• WSJ oped article from Whole Foods CEO
• Safeway - WSJ article
• What is more important personal freedom or universal care?  
• Do you know your cost of Health Care? A reality test for congress

A Financial Plan for the 57% of Us that Politicians call the 1%

On November 6, 2012 America decided to vote for no change, keeping the balance of power between the House, Senate, and Executive branch.  The election seems to have turned on President Obama's appeal to single women worried about birth control, Hispanics worried about immigration, students worried about coolness, and stay at home conservatives.  It perhaps also turned on revenge against the 1%.  The Media abetted the story line with shallow commentary, hyping for an election "To Close to Call" just in time to push $100M in media buys.

Whatever the reason for America's decision, the reality is that taxes and government will continue to consume disproportionate resources to pay off our past excesses and future entitlements.  43% of those that voted, a large fraction of those voting for President Obama, think government should do more.  Since government ultimately gets money from taxpayers (through the IRS or Fed QE 1, 2, 3 or X), that means 43% of the voters want things from the other 57% of voters.  Politicians call this 57% the 1%.  If you are part of the 57% you might consider the following steps to protect your finances.  Actually, since the Government won't be able to offer more goodies for the 43%, they may also want to pay attention for when the music stops.

Please do not get sanctimonious about how we need to help the poor.  We help the poor in this country in incredible ways.  We could probably do a better job yet if those who are not poor did not put themselves in the handout category.  While the poor represent 15% or less of our country, almost 34% of households receive some form of “Means Tested” benefits from the government.  Programs like social security, aimed a destitute widows, is now a means to take investment income and redirect it to middle class retirees with more than enough retirement income and resources.  Programs like SNAP, designed to feed the poor, have gone from 17M to 40M people in the last few years.  Under federal guidelines, a family of four with an household income of $50K qualifies.

If you believe that government needs to do more to help those in trouble, take some responsibility to understand what you are talking about.  Take some responsibility to be sure these programs are targeting the people that really need help.  Hold these programs accountable for transitioning people out of bad situations.  Take some responsibility to be sure that others, who have enough of their own means, do not game the system.  Ultimately the failure to assure the welfare system is focused on the most needy puts a tax on growth and opportunity, the very same opportunity that will transition people out of the welfare state.  It is unlikely that the vocal among the “43%” will realize the system is unstable and cut their own throat.  The best way to transform the system at this point is to accelerate the breaking point.  The way to accelerate the breaking point is to save money and highlight hypocrisy.  Some ideas include:

Entertainment

• Cable TV: Cancel your Comcast etc. cable TV subscriptions, but keep high speed internet.  Buy an antenna from Antennas Direct to get high quality free live TV for things like sports.  
• Kindle: Buy a Kindle.  You can get the movies/shows/books you want at a lower price than the Apple mafia (I also think Apple is cool, but they cost 25%-35% more for essentially the same service).  Amazon also provides Netflix/Hulu like services.
• Cancel Hulu: Hulu is owned by a consortium of media companies that all pumped up the Obama story.  They don't need any help - Link to Canceling.
• Newspapers: Cancel all your newspapers and magazines.  You can get the ones that survive on-line for less (or free as they spiral into nothing).   
• Main stream Media: Stop watching TV news.  Its all crap and misleading.  Sooner or later drops in viewership will show up in Nielsen ratings.  Read Wall Street Journal Opinion and Financial sections to improve your ability to interpret the news.  You can probably get a better sense of world news from Al Jazeera (at least they are clear about their bias).  Christian Science Monitor is also very good for international news.  If you see misleading information on TV send a note to the Media Research Center so they can follow up.  Not the shows advertisers, inform them of your concern.  Tweet about the bad media/related advertiser with hashtag #OpSLAM.

Financial

• Thrift: There is a good old word in economics called thrift.  It means "Savings".  Unbeknownst to many, people who consistently save actually can accumulate a great deal of money.  That Baptist minister down the street living in the modest home may have put away 200k-300k of extra savings.  Your Grandparents home, purchased 40 years ago for 60K, might be worth 1.5M today.  Why do you think there are so many reverse mortgage commercials?  ITs probably best to avoid the stock market for a while.  Cash is king in this market.  Put money in your savings account (its a bother to move it out).  Save for retirement using an annuity (social security may not be around).
• Reduce Mortgage: We may enter a deflationary period. If you have a mortgage, you will be caught between declining wages and a fixed cost of mortgage.  You need to get that down as much as you can so you don't run into a cash flow problem (Salary drops in half but mortgage doesn't).  Perhaps sell securities to pay down mortgage, or better yet sell your house and rent.
• Tax Bracket: If you can cut your budget enough, try to defer income into form of equity or other later payments (that you can extract after 4 years). 
• Estate Planning: If you think you will have extra assets in your estate, figure out how much money you can gift to your children each year (say $1000).  Then buy an insurance policy against yourself where the premium is equal to that annual gift ($1000).  Gift them the $1000 each year, and have them redirect it to pay the policy.  When you die, the insurance policy will offset the cost of ever increasing death taxes.
• Charitable Contributions: Your ability to deduct charitable contributions is going down, so provide your time instead of donations to charities.  Support charities that are innovating social services rather than ones stuck on government grants.  Colleges and planned parenthood have more than enough money.
• Capture Capital Gains: If you have capital gains, sell stocks before the end of 2012 to get a lower capital gains rate.  If you really want the stock long term, buy it back after 30 days (it will probably go lower yet in the near term cap gains driven sell off).  
• Small Business Owners/Workers: In the end, its all about take home pay.  Salary etc before taxes means nothing.  Government, Company and spousal work benefits all need to enter into the calculus income/benefits.
  • If you have Employees: If you run a business with more than 50 hourly employees, as much as it will hurt doing this to them, you need to reduce their hours below 30 hours/week avoid Obama care requirements.  
  • If you are an Hourly Employee: If you are an hourly employee, its better to find a part time job with less than 30 hours per week because your net take home pay after other benefits is higher than full time.  (30 hours/week and Medicaid vs. 40 hours and company health care).

Education

• College: Have your kids apply to get into the best college they can. Then tell the college you don't have enough money, can you defer admissions.  Take classes on line via MIT/Stanford.  Attend local community college to get academic credit using MIT Open Courseware/Stanford On-line materials.  After 2 years, attend the original college for the final 2 years.  Graduate with brand name university but only pay for 2 years of college.
• High School: Use Khan Academy to self teach advanced placement courses and classes.  Improve quality of your education to help get scholarships and place out of college courses (reduce your time in high school to 3 years, and college to 3 years).  That adds 2 years of full time income production.  Remember to save, save, save (thrift).
• K-12: Home school or demand charter schools.  Push local community to pay students to complete education in shorter period using self paced/on-line education systems.  
• Grand Parents: If your parents have extra resources, have them pay for elements of your kids education.  This is a tax free transfer to get around estate taxes.  When your grand child graduates open up an annuity for him and pay in the first installment.  The lessons of thrift yields life long benefits.

Household

• Automobile: Buy used cars from leasing companies like Enterprise.  Today's cars will last 8-10 years.  Enterprise runs a straight forward no haggle used car business.  Because these are typically leased cars, not rentals, the cars are in good shape and a good price.
• Food: Make meals at home.  Quality at quick serve restaurants will be going down because they will be keeping employees under the 30hr/wk limit to avoid Obama care.  Take a look at free on-line cooking classes (Todd Mohr)
• Telephone: Get rid of telephone, use only mobile phone

Other

• Do not accumulate education debt.  It does not pay back any time soon.  On line solutions are good enough.

While it may seem destructive to others to curtail personal spending, it is important for voters to see the connection between economic activity and prosperity.  Somewhere in our discourse, 43% of voters think that there is an endless supply of money from the 1% (really the 57%) that can underwrite the needs of everyone else in the United States.  Frankly everyone in Washington knows the 1% can not possibly carry the bulk of costs or even a small amount of the costs.  Its a deception by both sides of government. Some voters think redistribution will improve their lives more than productivity and prosperity.  They are wrong (see Atlas Shrugged).  For those the believe we are all better if government focuses on its core responsibilities, the example of our own success outweighs a politician's promise.

We Choose Divided Government

The election resulted in no change.  The House, Senate, and Executive branch remain the same.  There were a few small changes that had more to do with weak candidates than policy.  America often seeks divided government in its elections.  Exit polling showed 53% of voters believed government is "doing too much".

Some are saying "Now the republicans are forced to compromise" while others are saying "Now the President needs to compromise".  Harry Reid is looking to end the filibuster so that he does not need to compromise.

If a majority of Americans think we are doing too much, maybe the right answer is to do less.  Rather than boil the ocean with 1000's of fix it programs, now is a good time for the President, House, and Senate to sit down on a weekly basis focused on 2-3 key things - fix tax code, curtail waste, drive growth.  We will still have side debates from oversight (that is congresses role), but make them side debates.

The leaders that say "we are not going to address x, y, and z" will garner the electorate's respect. By focusing on a few key objectives, the rest of us can focus on our own lives and stop worrying about what Washington will do next.  Its two years until the next election, I am sure compromise on a few things will not fundamentally unseat any of the current political leaders.  

Conservatism is Calling

• Fundamentally transforming the United States of America
• "We will cut the deficit in half by the end of my first term in office"
• 4 Years, $5T in Debt, $1.25T/year
• 100 Rounds of Golf = 10 work weeks of playing
  • “My administration will not rest until every American can find a job.”
  • “We will not rest until we are succeeding in generating the jobs that this economy needs.”
  • “I will not rest until businesses are investing again and businesses are hiring again.”
  • “I’m not gonna rest in our efforts to help people who are looking to find a job.”
  • “We will not rest until we build an economy that’s ready for America’s future.”

The Speech by Romney that Every Voter Should Watch

I saw this speech on TV in its entirety.  Before you vote, I recommend you watch this speech.  The strength of our nation is a product of debate and differing opinions.  But that debate ultimately needs to be transformed into action.  Watch the video and decide for yourself who is the most capable of leading our country.