Team USA Made in America Act

If ever there was a nonsensical piece of legislation addressing a farcically trivial issue it is the introduction of the "Team USA Made in America Act". If ever there was proof that US senators and congressmen do nothing useful, here it is.

A hullabaloo started when it was discovered that the US Olympic Team's uniforms for the London Olympics were actually made in China. Senators clambered over each other in expressing righteous indignation at this outrage. They are now passing a law that seeks to mandate that future olympic team uniforms have to be made in the US of A.

This triggered some admittedly nostalgic memories of my first ever post when I took up blogging three plus years ago. My very first post addressed precisely this issue; so much so that I couldn't resist dredging it up. 

Has much changed in three years ?

Big is Bad

This blogger doesn't mind telling a story against himself. A couple of decades ago, he made his first trip to the US of A. Two experiences stand out in the trip. The first was his  seatmate on the flight. The gentleman was, to put it mildly, a mountain of lard. Having encountered many Rajalakshmis - she of the ample proportions -  this blogger thought he had seen it all. But "he ain't seen nothing yet". The specimen he was now witnessing would put all Rajalakshmis combined into the svelte and petite category . The worthy had boarded the flight first as "a passenger requiring assistance" and occupied the two seater we were to share. When I boarded, I discovered that both the seats had been "taken" (this was before the era which now requires man mountains to buy two tickets). I managed the two hour flight by standing next to the seat !

The second stand out experience was when I ordered a cup of tea at some cafe. Small size please. I got a plastic monstrosity which held some 2 litres of boiling water. And one sad looking tea bag . I have never ever asked for hot tea  in the US ever since. This is, after all the country where the smallest size in Starbucks is called Tall

This was 20 years ago. The connection between the two has only now been grasped in the US. Or at least in New York. Mayor Bloomberg now wants to ban soda fountains serving portions bigger than 16 oz (half a litre) in his crusade against obesity.

This blog has carried consecutive posts on economics and politics. That is rather heavy. Readers are now invited to wash that down with this rather "easy" post.

New Yorkers are up in arms protesting against the encroachment of the fundamental right to consume 3.4 litres of Coke in one go. I have some fundamental questions regarding how anatomically possible this propensity of New Yorkers is. I am fairly convinced that human body systems for dealing with liquids, do not have a combined capacity of  3.4 litres. Therefore if there is ingress of the stated quantity, there must also be a steady egress ! And what happens to the enormous quantity of CO2 inherent in the soda. Is this the reason for the generation of the vast quantities of hot air that The Tea Party and Michael Moore followers do each day. Or is it that all that gas adds a certain amount of buoyancy to people who are gravitationally challenged enabling them to transition from the horizontal to the vertical ?

Bloomberg is arguing that he is not banning New Yorkers from drinking 3.4 litres of Coke in one go. He is only banning them from drinking that from one glass. They can buy 7 glasses of 16 ozs each and slurp to their heart's content. Apparently his theory is that they cannot carry seven glasses at one time; so they will consume less !!

I am applying to the good Mayor for a clarification. Are the 14 kgs of ice cubes that are shovelled into each drink to be counted in his 16 oz limit or not ??  For , you see, no self respecting New Yorker will drink a soda, unless the entire Arctic ice cap is in his glass.

I am also unclear how the good state of Texas views all this. You see, all Texans believe that New Yorkers are wimps because they serve such tiny portions of food and drink. You want to see a Big Mac, come to Texas, where about two cows have to lay down their lives in the cause of doing justice to one burger. The Texan concession to the war on obesity is that he has reluctantly agreed to settle in for an order of "1 Big Mac and a Diet Coke please" !

Never mind Greece, there's a bigger basket case

Its the world's ninth largest economy. Its six times the size of Greece. Its actually bigger than India. And its hopelessly bust . Yet; we aren't hearing much about it. Only because ,  its not a country. Its a state. The State of California. The world's biggest basket case ! This has been a favourite topic of mine having blogged before here and here.

California has a state budget of some $90 bn. And it just projected a deficit of $15 bn. What sort of an economy runs a deficit of 18% of the budget ?? This has been going on for years . And what does that state do - simply borrow . And borrow. And borrow.  And with no hope of ever bridging that gap. If California had its own currency, I would be merrily shorting it. It would be a prime candidate for begging at IMF's door. 

For once you can't blame the political leaders for the mess, although they are the ones being vilified and quartered. The blame must squarely rest on the citizens of California. For they are the ones who have brought this mess upon themselves by indulging in direct democracy.

California is a perfect example of democracy run wild. For decades they have been passing laws through referendums without the level of serious evaluation and trade offs that are necessary for good governance. The infamous Proposition 13 of 1978 drastically limited property tax and imposed a requirement for a two third majority to raise any taxes , making it virtually impossible to do so. Then they passed scores of spending laws like Proposition 98 of 1988 which mandate 40-50% of the general revenue to be spent on education. And Propositions like 117 of 1990 that mandated a minimum spend of $30m on wildlife habitat. Proposition 49 of 2002 increased spending on before and after school programs by some $450m. There are tons of such mandated spending with barely a thought on how they would be funded. They also pass whimsical Propositions that mandate that a chicken must be able to spread its wings and turn a full circle without touching another chicken as I outlined in this post !

The problem is simple. California depends for more than 50% of its income on personal income taxes. These unfortunately fluctuate. Recessions drastically reduce tax revenues. In boom times the revenue increases are spent away and nothing is saved. In hard times, there's a massive hole in the budget. There is zero political will ( read citizen appetite) to do anything about it. Budgets are never passed on time. Fiscal irresponsibility has a new meaning in California that would make Greece blush. California is the perfect example of how not to run an economy.

The puzzling thing is that California is also home to the smartest people in the world.  It is arguably the most intelligent place on earth. And yet ..... 

Maybe intelligence is no insurance against stupidity !

Frankly, my dear, I don't give a damn

Immortal words from an immortal movie. If you don't know where this quotation is from, click here (excusable because this was before you were born)

I am however writing about more prosaic things. Like the American nomination of Jim Yong Kim for the Presidency of the World Bank. Readers of this blog may recall that I had railed about the practice of nominating an American for the head of the World Bank and an European for the Head of the IMF here. The IMF vacancy came rather suddenly after the antics of Dominique Strauss Kahn. After some pious sermonising about how it wasn't an European stitch up, the post went to Christine Lagarde, another French person !

Now there is a vacancy coming at the top of the World Bank as Robert Zoellick is completing his term. The Americans are now wanting to stitch this up. But its the American they have nominated which is raising eyebrows. Kim who ??

Jim Yong Kim is an eminent American, no doubt. But he is an anthropologist and physician by profession. He is currently the President of Dartmouth College and was the former director of the HIV/AIDS section of the World Health Organisation. He is a highly respected figure in his circles. But he is not a banker. So what's an anthropologist going to do as head of the World Bank.

Convoluted justifications are being given. Apparently it would be good to have a "development expert" as head of the World Bank. Balderdash. Its simply America trying to make it more palatable to have their nominee as the boss. Kim is Korean by descent and is not a white man. They can even pass him as an "Asian". Its just an effective fudge to continue the tradition of stitching up. Or else a more interesting logic might have been in the mind - Bankers are too dangerous to be allowed to run the World Bank (I can begin to have sympathy for such a thought !)

There is some muted opposition to this. A Nigerian and a Colombian are standing against him, but are unlikely to have much of a chance. But the more interesting development is that nobody seems to care. Deafening silence from the chief lender to the world - China. I don't know how to say it in Chinese, but I can almost hear Hu Jintao saying "Frankly, my dear, I don't give a damn" !

Storm in an ice cream cup

Schweddy Balls ice cream is brewing up a storm. It has caught the ire of One Million Moms, who are protesting about it. Wow !

Ben & Jerry's seems to be the flavour of the month on this blog. They are the lot who are churning our a limited edition Schweddy Balls ice cream, which they claim has risen to the top of the charts - presumably charts exist for ice cream flavours too.  Apparently it is "fudge covered rum balls" , whatever that means. Schweddy Balls is a take on a Saturday Night Live skit (a television show in the US). An innuendo laced old skit aired on that programme has the "memorable" tag line - no one can resist my Schweddy Balls.

On Million Moms is some obscure conservative organisation based in Mississippi of all places. They are up in arms. They say the language is unsuitable for children. They have forced some supermarket chains not to carry Schweddy Balls and are petitioning the company to stop the production. Little wonder Ben & Jerry's is revelling in the publicity and refusing to do anything of the sort. I thought motherhood was a pretty taxing full time job - are One Million Moms having enough idle time to be protesting about some trivial stuff ?

B&J of course has a long history of quirky names. The initial lot were simply just that; quirky  - Chunky Monkey, Cherry Garcia and the like. They seem to happily coexist with the more prosaic Banana Split and Chocolate Fudge Brownie. Presumably uncolourful lot like me would prefer Chocolate, but a breezy sulo would want Bonnaroo Buzz !  But then they graduated to Karamel Sutra, which was apparently lapped up by the kilo litre. They had a Chubby Hubby flavour, which was fair enough considering that most hubbies in real life are fairly chubby, if not downright tubby. But when same sex marriages were sort of in the news, out came  Hubby Hubby. 

Perhaps Hopfrog or J or Deepa, who have access to the miracles of modern day indulgences can pronounce on the relative merits of Schweddy Balls vs Karamel Sutra vs Hubby Hubby !

Ah ; what a storm in an ice cream cup.

The hazards of flying

Even if you didn't suffer from aerophobia, there are some non trivial hazards of flying. Missing baggage for example. Or delayed or cancelled flights leaving you stranded in some god forsaken land. Some even allege deep vein thrombosis. Insomnia due to your neighbour's high affliction of stertor could be another. But even the most wildly imaginative sort could not have thought of adding "going to the loo" in that list. But it is now conclusively established that this is a real hazard. Consider the evidence.

Last Sunday Frontier Airlines flight 623 from Denver to Detroit was escorted by F16 fighter jets. Why ?? Apparently two men and a women were seated in a three seater. One guy got up to go to the loo. The other guy stood up.  And the guy spent a "long time" there. That was it. F16s escorted the plane and on landing the three were handcuffed and led off to be questioned. The poor lady did nothing. She was simply sitting and yet was considered suspicious because she sat next to a guy who went to the loo. The wonderfully investigative press even reported that there was a "mile high club" membership application going on in the loo ! We'll let it pass that even a cursory familiarity with an aeroplane loo would convince anybody that such an act is an anatomical impossibility.

American Airlines flight 34 from Los Angeles to JFK was equally bizarre. The F16s were up again. This time, three men were suspected because they were making "frequent trips" to the loo. Apparently there is some standard as to the number of times you can go. For their "crimes" the three were handcuffed and led away.

What about Ryanair's proposals, which thankfully did not materialise, of charging passengers for the pleasure of a visit to the loo midair. Perhaps they might have stuck a notice on the door, not unlike the statutory warning on cigarette packs - "Entering this door would be seriously injurious to your wealth". Ryanair's profit improvement plans didn't stop there. They evaluated removing two out of the three loos on their plane because they could then add six seats, thereby providing an accurate valuation of the service they are providing in giving you a pleasure of a  visit.

All Nippon Airlines tried another tack. They claimed that they were green because they encouraged passenger to lighten themselves prior to boarding the plane. Lighter weights meant less fuel burnt ; so the airline was being very environmentally conscious. Pretty ground crew were on hand just before the boarding gate. Hello; Welcome to ANA Flight blah blah blah. The loo is that way ma'am; if you could make a visit, you will contribute to reducing global warming on our planet. Thank You. Before boarding, please provide proof of your visit !

And, of course, there is poor Gerard Depardieu, the famous, or should I say infamous, French actor. He had many a glass of wine, as any sensible Frenchman would do,  before boarding the plane from Paris to Dublin. And as the plane was about to start, he simply had to deal with the consequences of all that drinking. But no; the stew wouldn't let him get up until the plane was airborne, seat belt signs were off, etc etc - a good 15mts away. What could the guy do. He took the only option - he simply let go. Another instance of the police coming and escorting a passenger out. City Jet, the airline, then rubbed salt into the wounds by tweeting "As you may have seen on the news, we are busy mopping the floor of one of our planes this morning". Another tweet - " We'd also like to remind all passengers that our planes are fully equipped with toilet facilities."

You better be careful, the next time you fly, OK ? There is a new flying hazard.

The mystery called consumer

Of all the great mysteries of the universe, none is more confounding than that of consumer behaviour. You would have thought that it shouldn't be an unfathomable mystery - after all you and I are consumers too.  But no. It is inarguably established that you can even hope to nail down the Higgs boson, but cannot begin to understand this mysterious creature called the consumer.

Take the example of the Missoni collection and the outage at Target yesterday. Missoni is an outrageously priced design house - designing everything from clothes to patio sets each costing hundreds or thousands of dollars. I cannot imagine why anybody should pay thousands of dollars for something that is essentially similar and available for $49.99, but we shall pass over that lightly. Target is a discount store in the US.

At first glance, its not sure what the two have in common - you would have expected that one would wrinkle its nose at the other and the other should be showing its finger at the worthy. But hey presto, the two decided that they would collaborate and launch a limited edition Missoni for Target range. This was on the theme of "zig zag" - apparently zig zag lines on your dress is high fashion. Instead of of hundreds of dollars, you could could get it for $39.99.

Target has been swamped. Its web site crashed. The demand for items was higher than on the day after Thanksgiving or Black Friday; days when Americans go bonkers shopping. Everybody , it seems, wants to buy. Social media is inflamed. That doyen of intelligent media, Twitter, is ablaze. Many criticised Target for not anticipating demand. Many others moaned and groaned. Some boasted that they could get in during the few minutes that the site was up . Some others tweeted that they would get Missoni supported unlocked iPhones. As this post was written, the Target site is still down.

I would have bet before yesterday that

•  Nobody in the US had heard of Missoni
• It didn't matter one bit whether the lines on your skirt were straight or zig zag , or for that matter, non existent

I would have, of course, lost the bet. I was dead wrong.

Ah the mysteries of that incredibly species called consumer !

PS- Regular readers of this blog might have noticed that this blogger is rather advancing from the status of  "Sartorius Ignoramus" :)

Who is Deven Sharma ?

If I told you that the most important person in the world now is Deven Sharma, you are most likely to be flabbergasted. Deven who ?? I am absolutely certain that not one reader of this blog has heard of him before. In fact I am sheepishly admitting that I had not heard of him either, one week ago. And yet for the next one week, he may actually be the most important man in the world.

Of course, this is hyperbole. But then what is journalism (ha ha) without some excessive exaggeration of reality. You can debate about the "most important man in the world" bit, but the actions of him and his organisation are certain to affect the world very profoundly in the week to come.

Deven Sharma is the President of Standard & Poor's one of the world's three premier credit rating agencies - Moody's and Fitch being the two other. In a short while, all the three agencies have to take a call on downgrading of America's Tripe A rating.

The drama in America on the debt ceiling goes on. This weekend, it has to come to a climax.  There is still a real possibility that the debt ceiling will not be raised, which means that come Tuesday, America will be in crisis, as will the rest of the world. This must be the outcome the three credit rating agencies must be secretly hoping for , as it makes their decision easy and non controversial - an immediate downgrading of America's debt. But the greater (barely) possibility still is that some highly sub optimal deal is struck and the ceiling raised. At which point the rating agencies have a problem on their hands. They need to decide.

The grapevine is that Moody's and Fitch are likely to preserve America's triple A rating. But S&P is tending more towards a downgrade. Deven Sharma and his team then have an important decision to make. If they downgrade, that symbolic act will probably be the last straw on the camel's back and financial mayhem is likely to follow.

The rest of the world has already downgraded America's debt in their minds. But everybody is waiting for that last straw before they can stampede. Something symbolic that will then trigger a chain of events that will be felt throughout the world. 

How has it come about that a hitherto unknown Indian American holds the key to what might happen to the world very shortly. OK may be "just a little" exaggeration, but I am afraid, not far from reality.

US Defence Spending

The Unites States spends some $700 bn on defence. Its spending is more than the combined total of the next 17 countries - a list that includes China and Russia (See The Economist's chart on defence spending here) . It's none of this blogger's business to question whether it should be having so many bombs - that's for American citizens to decide for themselves, although we can have a mild interest as to whether it is sensible to fire a AGM Hellfire II from a drone above North Waziristan at a cost of some $70,000 to hit a donkey in its ass !

This blog, having some pretensions to economic bias, instead ruminates on the sheer scale of cost effectiveness that is possible on defence spending. Without reducing the number of bombs that is. You see, the traditional ingredients by which businesses attack costs are simply not present n the field of defence.

There is very little competition. The best way to reduce costs is competition. But there is little chance of that with US defense. Firstly, no foreign competition is possible. Secondly there are very few domestic competitors and anyway they don't really compete with each other - its all an elaborate dance of a little more or little less - the thought of the chiefs of Boeing and Lockheed Martin in a tango sent me into splits of laughter No chance here of a Walmart equivalent coming and slashing prices.

Then there is almost no innovation to reduce costs. All innovation, and there's plenty, is to build bigger and better bombs. Perhaps targeting a camel's ass or an elephant's ass. Nobody is going to get promoted for reducing the missile cost by half.

Thirdly, no offshoring is possible at all. Outsourcing is possible, but is usually only a measure to take personnel off your headcount (hence the mercenaries in Iraq, Afghanistan and so on).But can production be offshored to China or India, where you can cut costs by 50% ?? Not a chance. 

What about operating efficiencies. Like , what is the cheapest way to hit a donkey's ass in North Waziristan. An old 303 rifle perhaps ? No chance. War is all about "overwhelming military power" - and to hell with the costs.

Transparency in accounting ? Worker quality circles to reduce costs ?  Perish the thought. How about cutting Head Office costs. Like shifting the Pentagon from the middle of Arlington County to Supai, Arizona ? Ha Ha.

Somebody is footing the bill for the missed opportunities in cost reduction. It's the US tax payer , of course. Some of the more common business tools to reduce costs may not be possible to implement in the military. But while the wars in Afghanistan and Iraq are pursued, the US would do well to start another war on costs. It may actually find it more productive than the other two wars mentioned above.

Paul Ryan - Are you listening ?