India Gov't: Climate Billions an Entitlement, not Aid

India: Climate Billions an Entitlement. By Chris Horner
Planet Gore/NRO, Tuesday, February 17, 2009

I recall being in the room at the Hague in November 2000, when then-French president Jacques Chirac’s opening remarks praised the Kyoto Protocol as “the first component of an authentic global governance" (and I remember my editor with UPI, for whom I was writing from the talks, berating me and refusing to run my piece reporting this as hysterically making up something no one would ever say . . . )

I even more clearly recall Rep. James Sensenbrenner (R., Wisc.) holding an impromptu press availability afterward in the hallway outside the media cubes, instructing European reporters that if there is a better way of making sure that the U.S. stays out of any such pact than praising it as “global governance,” he doesn’t know what it is. (I also remember one of the Brit reporters, from the Guardian I believe, snapping back “Bollocks! Bollocks!” at the congressman.)

With Chirac’s departure to other pastimes such as being “mauled by his own ‘clinically depressed’ pet dog,” I think we may have found that better way to keep the U.S. out of such absurdity.

Sitting down? Good. Here’s a Climate Wire story’s headline and opening today:

Climate funding is entitlement, not aid, India says

The West owes billions of dollars to developing nations in order compensate
for climate change, India's government says.

In a submission to the U.N. Framework Convention on Climate Change, the
Indian government warns rich countries against defining funding for adaptation
or sustainable development in vulnerable nations as traditional development aid.
Rather, it says, it is an "entitlement" for poor countries whose development
will be further set back by global warming.

"There is a tendency to equate such resources to foreign 'aid' or Overseas
Development Assistance," the government wrote, adding that financing should not
be left up to the legislatures in wealthy nations, nor should it be in the form
of loans.

"The providers of finance cannot be discretionary 'donors,' but must be
legally obligated 'assessees,'" the document says.

Yeaahhh.

North Korea's Missile Gambit

North Korea's Missile Gambit, by Bruce Klingner
Heritage, February 17, 2009

Full article w/references here.

North Korea may be preparing to test-launch a long-range Taepo Dong-2 missile from its eastern coast. A missile launch, or even observable preparations for such a launch, would be the next step in Pyongyang's escalating efforts to pressure the U.S. and South Korea to soften their policies toward the North Korean dictatorship. Needless to say, it would be deeply embarrassing to the Obama Administration, which, prior to Secretary of State Hillary Clinton's Asia trip, seemed to be climbing down from some of the firmer positions President Obama held during the campaign.

Pyongyang is sending a signal to the Obama Administration that, despite the change in U.S. leadership, North Korea will not adopt a more accommodating stance in nuclear negotiations. Pyongyang's increasingly bellicose campaign is also directed--perhaps primarily--at forcing South Korean President Lee Myung-bak to abandon his requirements for conditionality, reciprocity, and transparency in South Korean engagement with the North.


Target: North America

Scientists remain uncertain over the range and payload capabilities of the long-range Taepo Dong-1 and -2 missiles as well as of potential variants. A 2001 National Intelligence Estimate by the U.S. intelligence community assessed a two-stage Taepo Dong 2 "could deliver a several-hundred-kilogram payload up to 10,000 km--sufficient to strike Alaska, Hawaii, and parts of the continental United States." The report projected that including a third stage could increase the range to 15,000 km, which would allow the missile to reach all of North America with a payload sufficiently large to accommodate a nuclear warhead. [1]

North Korea may not intend to actually launch a missile--that is, if Pyongyang seeks to achieve its diplomatic objectives without escalating tension beyond a counter-productive level. Its launch of a Taepo Dong-2 missile in 2006 angered ally China to such a degree that Beijing acquiesced to a U.S.-sponsored UN resolution against North Korea. Knowing that any activity at its missile test facility would be observed by satellites and interpreted as launch preparations, Pyongyang might hope that concerns over escalating tensions would cause South Korea and the U.S. to weaken negotiating positions. After all, the Bush Administration softened its position when North Korea threatened to reprocess plutonium in late 2008.

North Korea's actions may also be an attempt to trigger a resumption of bilateral negotiations which stalled at the end of the Clinton Administration. At that time, Pyongyang demanded $1 billion annually in return for a cessation of its missile exports. The U.S. rejected the demand and sought a more comprehensive agreement. But North Korea's demand for a presidential summit and refusal to discuss details of an agreement during Secretary of State Madeleine Albright's October 2000 trip to Pyongyang and November 2000 bilateral meetings in Kuala Lumpur doomed the initiative.


A High Risk Gambit

A launch would be a high-risk gambit. If North Korea were to successfully launch a Taepo Dong missile, it would significantly alter the threat potential to the U.S. and its Asian allies. Pyongyang's previous Taepo Dong missile launches in 1998 and 2006 failed and its nuclear test in 2006 was only partially successful. A successful launch of a missile theoretically capable of reaching the United States with a nuclear warhead would reverse perceptions of a diminishing North Korean military threat. Pyongyang calculates that international concerns over rising tensions would soften demands for North Korea to fully comply with its denuclearization commitments. Pyongyang would seek to defuse international anger by claiming, as it did with its 1998 launch, that it was simply launching a civilian space satellite.

On the other hand, another North Korean long-range missile failure would not only once again provide fodder for late night comedians; it would also further reduce the perception of North Korea as a military threat, thereby undermining its negotiating leverage. Such failure could reduce any sense of urgency for making progress either in missile negotiations or the Six Party Talks. Pyongyang could compensate by increasing tensions elsewhere, perhaps by initiating a naval confrontation with South Korea in the West Sea as occurred in 1999 and 2002.

A missile launch would be the Obama Administration's first foreign policy test. During the presidential campaign, Barack Obama declared that "if the North Koreans do not meet their obligations, we should move quickly to re-impose sanctions that have been waived, and consider new restrictions going forward." [2]How will the President react to a North Korean missile launch? Will the strong words of the campaign and Secretary of State Clinton's confirmation hearing be matched by resolute action?


What the U.S. Should Do

Emphasize that North Korea's actions are provocative, counterproductive, and call into question Pyongyang's viability as a negotiating partner. Highlight that North Korea's threatening belligerence, not U.S. "hostile policy" as Pyongyang claims, has hindered negotiations.

Affirm U.S. commitment to defend our allies against any North Korean provocation, including missile launches or naval confrontation in the West Sea.

Underscore Secretary of Defense Robert Gates' pledge to shoot down the North Korean missile if it approaches U.S. territory.

Emphasize that North Korea's missile threat demonstrates the continuing need for the U.S., Japan, and South Korea to develop and deploy missile defense systems. It is ironic that President Obama's Secretary of Defense has suggested using missile defenses that Obama would likely not have funded had he been in office during their development.

Declare that the U.S. is willing to resume negotiations to eliminate North Korea's missile threats to its neighbors. Such negotiations, however, must comprehensively constrain missile development, deployment, and proliferation rather than simply seeking a quid pro quo agreement--cash payments in exchange for not exporting missile technology. Nor should such negotiations deflect attention from Pyongyang's denuclearization requirements in the Six Party Talks.

Demand that all UN member nations fully implement their existing requirements. A North Korean launch would be a clear violation of UN Resolutions 1695 and 1718. In response, the U.S. should Washington should insist that the UN Security Council adopt a follow-on resolution that includes chapter VII, article 42 of the UN charter which makes sanctions mandatory and allows for enforcement by military means.

Initiate a multilateral effort--comprised of financial, military, law enforcement, and intelligence organizations--to sanction North Korean and other foreign companies and government entities that are involved in North Korean missile and WMD development and proliferation.

Adhering to the above-noted recommendations will ensure that the U.S. sends a clear message to Pyongyang, America's Asian allies, and the rest of the world: A nuclear North Korea will not be tolerated.

Bruce Klingner is Senior Research Fellow for Northeast Asia in the Asian Studies Center at The Heritage Foundation.

Does anyone believe that a smaller fraction of Americans lived in absolute poverty in 1973 than today?

Poor Statistics, by Nicholas Eberstadt
The American economy is in the midst of a severe recession, and increasing material hardship is an unfortunate but inevitable consequence. Now more than ever, we must find a better way to measure poverty.
AEI, Tuesday, February 17, 2009
http://aei.org/publications/pubID.29401,filter.all/pub_detail.asp

With the economy in an ominous recession of uncertain depth and duration, the incidence of material hardship in America will surely spike in the year (or years) ahead. But amazingly, Washington lacks the statistical tools to assess--and thus address efficiently--the coming surge in need.

America's official poverty rate--for over four decades the main indicator for all our antipoverty policies--is an outdated and badly broken index. Its built-in defects make it incapable of providing accurate information about poverty trends. If the Obama Administration hopes to wage an effective fight against domestic poverty, it will need a much more reliable yardstick. The rate calculation dates back to 1965, during LBJ's war on poverty.

Essentially it matches a family's reported annual income against a "poverty threshold"--a hypothetical bare-bones budget, based on household size and composition, that is adjusted with the inflation rate. If a family's reported income falls below that given threshold, it is counted as poor. The poverty rate is the percentage of the population that is officially poor. The government's aim here is to track absolute poverty rather than relative poverty or inequality. If the least prosperous families are doing better, then the poverty rate should be going down, even though these families may remain as far behind the rest of us as they ever were. According to official figures, America's lowest poverty rate ever was in 1973, at 11.1%; in 2006, a prerecession year, America's official poverty rate was 12.3%. This is nonsense with decimal points. Does anyone seriously believe that a smaller fraction of Americans lived in absolute poverty in 1973 than today?

According to the Census Bureau, inflation-adjusted per capita income was well over 50% higher in 2006 than in 1973--and median family income (for smaller families today, remember) was over 20% higher. The unemployment rate--a key driver of poverty in all industrial societies—was lower in 2006 than in 1973 (4.6% versus 4.9%).

Educational attainment (and thus productivity potential) for the adult population was also significantly higher in 2006, and yet means-tested spending on government antipoverty programs is now at least twice as high as in the Watergate era.

Only a misprogrammed computer would designate 1973--that Vietnam War and "stagflation era" year--as America's golden age of progress against poverty. Yet this is what the official rate asserts. This isn't the only fault in the statistics: They also miss the improvement in living standards among the officially poor. Consider: In 1973 over half the families in America's poorest fifth didn't own a car. By 2003 over 73% of them owned some sort of motor vehicle--and 14% had two cars or more. By the same token, about 27% of American children below the poverty line failed to see a doctor annually in 1985; 20 years later, the figure was 11%. Thus poor children nowadays are more likely to have an annual doctor visit than nonpoor kids a few years ago.

What is wrong with the official poverty rate? It measures the wrong thing--and always has. That thing is income. But poverty is a matter of consumption, and a huge gap has come to separate income and consumption at the lower strata of our income distribution. In 2006, according to the annual Bureau of Labor Statistics Consumer Expenditure Survey, reported purchases by the poorest fifth of American households were more than twice as high as reported incomes.

For reasons still only partly understood, the surfeit of spending over income among poorer U.S. households has increased dramatically since the 1970s--making income an ever less dependable predictor of living standards for the disadvantaged. Indeed, while the official poverty thresholds are meant to be constant over time, a whole host of data confirm the (welcome) fact that material conditions for our population in "poverty" have been steadily improving. The official statistic is incapable of documenting--or even recognizing--any changes in living standards among America's poor.

Now, more than ever, it is urgent for America to be capable of monitoring the material need in our midst. Our official poverty rate is ill-suited for that task and cannot be repaired by inventive tinkering. It is time to discard this broken compass and start over.

Bottled Water and the Overflowing Nanny State: How Misinformation Erodes Consumer Freedom

Bottled Water and the Overflowing Nanny State, by Angela Logomasini
How Misinformation Erodes Consumer Freedom
CEI, February 17, 2009

For the past couple decades, bottled water had been growing in popularity as an environmentally preferred choice and as a healthy beverage alternative. Yet in recent years, environmental activists have begun attacking its value and quality. The activists’ claims do not hold water, yet, based on those claims, they are promoting bans, taxes, and regulations on bottled water—taking the Nanny State to a whole new level. The following analysis counters this “new wisdom,” questioning the justifications for this new assault on consumer freedom.

Some key facts include:Bottled water regulation is at least as stringent as tap water regulation. Under federal law the Food and Drug Administration (FDA) must pass bottled water regulations that are “no less stringent” than Environmental Protection Agency (EPA) regulations. The law does not allow the FDA to set standards that produce a lower quality product. As a result, FDA regulations mirror EPA regulations very closely and are more stringent in some respects because FDA applies additional food, packaging, and labeling regulations.

Bottled water is substantially different from tap. About 75 percent of bottled water is from sources other than municipal systems such as springs or underground sources. Much of the bottled municipal water undergoes additional purification treatments to produce a higher quality product that must meet FDA bottled water quality standards, packaging, and labeling mandates. In terms of safety, tap water has more documented health-related case reports compared to bottled water. The Centers for Disease Control and Prevention recommends bottled water for individuals with compromised immune systems to reduce the risks associated with tap water.

Bottled water containers are a tiny fraction of the solid waste stream. Many people have turned to bottled water to replace other portable drinks containing sugar and calories, producing little increase in total waste. In any case, single-serving plastic water bottles amount to just 0.3 percent of the nation’s solid waste. Bottles used in water coolers are recycled at high rates and have even less impact on landfill waste. Taxing and banning either type of container will not matter much in terms of overall waste.

Plastic bottles are safe for consumers. The chemicals which environmental activists suggest are a problem are not even used in the PET plastic used for single-serving water bottles. Bisphenol A, a chemical found in large five-gallon water cooler jugs and other food containers exists at such low trace levels that there have been no reported health problems and the FDA, along with several scientific organizations around the world, have not found any problem with this substance.

The public has freely turned to bottled water as an alternative to drinks with calories, for convenience, freshness, and whatever other reasons they themselves find worthy. Misinformation spread by activists should not determine who can access this product. People who do not like the product can make their own choices. They should not have any right to make them for the rest of us.

See the full report.

To save the planet, build more skyscrapers—especially in California

Green Cities, Brown Suburbs. By Edward L. Glaeser
To save the planet, build more skyscrapers—especially in California.
http://www.city-journal.org/2009/19_1_green-cities.html

On a pleasant April day in 1844, Henry David Thoreau—the patron saint of American environmentalism—went for a walk along the Concord River in Massachusetts. With a friend, he built a fire in a pine stump near Fair Haven Pond, apparently to cook a chowder. Unfortunately, there hadn’t been much rain lately, the fire soon spread to the surrounding grass, and in the end, over 300 acres of prime woodland burned. Thoreau steadily denied any wrongdoing. “I have set fire to the forest, but I have done no wrong therein, and now it is as if the lightning had done it,” he later wrote. The other residents of Concord were less forgiving, taking a reasonably dim view of even inadvertent arson. “It is to be hoped that this unfortunate result of sheer carelessness, will be borne in mind by those who may visit the woods in future for recreation,” the Concord Freeman opined.

Thoreau’s accident illustrates a point that is both paradoxical and generally true: if you want to be good to the environment, stay away from it. Move to high-rise apartments surrounded by plenty of concrete. Americans who settle in leafy, low-density suburbs will leave a significantly deeper carbon footprint, it turns out, than Americans who live cheek by jowl in urban towers. And a second paradox follows from the first. When environmentalists resist new construction in their dense but environmentally friendly cities, they inadvertently ensure that it will take place somewhere else—somewhere with higher carbon emissions. Much local environmentalism, in short, is bad for the environment.

Matthew Kahn, a professor of economics at UCLA, and I have quantified the first paradox. We begin by estimating the amount of carbon dioxide that an average household would emit if it settled in each of the 66 major metropolitan areas in the United States. Then we calculate, for 48 of those areas, the difference between what that average household would emit if it settled in the central city and what it would emit in the suburbs. (The remaining 18 areas had too little data for our calculations.) A few key points about our methodology follow; if you’re interested in all the methodological details, click here.

First, by “average household,” we mean average in terms of income and family size, so that we aren’t comparing urban singles with large suburban families. However, we don’t want to standardize the physical size of the home. People who move to suburban Dallas aren’t likely to live in apartments as small as those in Manhattan. Smaller housing units are one of the important environmental benefits of big-city living.

Second, we try to estimate the energy use from a typical new home in an area—specifically, one built in the last 20 years—which sometimes means something quite different from an average one. The reason is simple. We aren’t playing a ratings game to figure out which city pollutes least; rather, we’re trying to determine where future home construction would do the least environmental damage.

We calculate carbon emissions from four different sources: home heating (that is, fuel oil and natural gas); electricity; driving; and public transportation. Residential energy use and non-diesel motor fuel are each responsible for about 1.2 billion tons of carbon dioxide emissions each year, out of total U.S. emissions of 6 billion tons. So these sources together reflect about 40 percent of America’s carbon footprint. Our procedure is admittedly imperfect and incomplete: for example, we do not include carbon dioxide generated as a by-product of workplace activity.

The table below shows some of the results of our research. The five metropolitan areas with the lowest levels of carbon emissions are all in California: San Francisco, San Jose, San Diego, Los Angeles, and Sacramento. These areas have remarkably low levels of both home heating and electricity use. There are cold places, like Rochester, that don’t air-condition much and thus use comparably little electricity. There are warm places, like Houston, that don’t heat much and thus have comparably low heating emissions. But coastal California has little of both sorts of emissions, because of its extremely temperate climate and because California’s environmentalists have battled for rules that require energy-efficient appliances, like air conditioners and water heaters, and for green sources of electricity, such as natural gas and hydropower. (Some analysts argue that this greenness is partly illusory—see “California’s Potemkin Environmentalism,” Spring 2008—but certainly, by our measures, California homes use less energy.) Also, despite the stereotypes about California highways and urban sprawl, some of these five cities, like San Francisco, have only moderate levels of transportation emissions, since their residents actually live at relatively high densities, which cuts down on driving.

Read more.

Edward L. Glaeser is a professor of economics at Harvard University, a City Journal contributing editor, and a Manhattan Institute senior fellow. His article describes research jointly performed with Matthew Kahn of UCLA.

Large-Scale Test to Inject One Million Metric Tonnes of Carbon Dioxide into Saline Formation

Carbon Sequestration Partner Initiates Drilling of CO2 Injection Well in Illinois Basin
Large-Scale Test to Inject One Million Metric Tonnes of Carbon Dioxide into Saline Formation
US Energy Dept, February 17, 2009

Washington, D.C. — The Midwest Geological Sequestration Consortium (MGSC), one of seven regional partnerships created by the U.S. Department of Energy (DOE) to advance carbon sequestration technologies nationwide, has begun drilling the injection well for their large-scale carbon dioxide (CO2) injection test in Decatur, Illinois. The test is part of the development phase of the Regional Carbon Sequestration Partnerships program, an Office of Fossil Energy initiative launched in 2003 to determine the best approaches for capturing and permanently storing gases that can contribute to global climate change.

The large-scale project will capture CO2 from the Archer Daniels Midland (ADM) Ethanol Production Facility in Decatur, Ill., and inject it in a deep saline formation more than a mile underground. Starting in early 2010, up to one million metric tonnes of CO2 from the ADM ethanol facility will be compressed to a liquid-like dense phase and injected over a three-year period.

The rock formation targeted for the injection is the Mt. Simon Sandstone, at a depth between 6,000 and 7,000 feet. The Mt. Simon Sandstone is the thickest and most widespread saline reservoir in the Illinois Basin, with an estimated CO2 storage capacity of 27 to 109 billion metric tonnes. Analysis of data collected during the characterization phase of the project indicated that the lower Mt. Simon formation has the necessary geological characteristics to be a good injection target.

In January, ADM — in collaboration with the Illinois State Geologic Survey at the University of Illinois, which leads the MGSC — was issued an Underground Injection Control permit by the Illinois Environmental Protection Agency for the injection well. Obtaining the permit is significant because it allows the consortium to proceed with drilling, making the MGSC the first DOE Regional Partnership to begin drilling a development phase injection well. The drilling is expected to take about 2 months to complete.

Following injection, a comprehensive monitoring program will be implemented to ensure that the injected CO2 is safely and permanently stored. The position of the underground CO2 plume will be tracked, and deep subsurface, groundwater, and surface monitoring around the injection site will be conducted. The monitoring program will be evaluated yearly and modified as needed.

The project under which this effort is being performed will, on average, create nearly 250 full-time jobs per year. These jobs will be supported throughout the project’s life of more than ten years, thus resulting in more than 2,500 job-years (calculated as the number of full-time jobs per year times the number of years that the jobs are supported.)

MGSC is one of seven regional partnerships in a nationwide network that is investigating the comparative merits of numerous carbon capture and storage approaches to determine those best suited for different regions of the country. The consortium is investigating options for the 60,000 square mile Illinois Basin, which underlies most of Illinois, southwestern Indiana, and western Kentucky. Emissions in this area exceed 304 million metric tonnes of CO2 yearly, mostly attributed to the region's 126 coal-fired power plants.

Obama Should Play Hardball

Obama Should Play Hardball. By Matthew Rothschild
The Progressive, February 17, 2009

It’s time for Obama to start playing hardball.

Forget about bipartisanship. The Republicans have.

And take the fight to them.

He should fan out across the country several days a week, targeting states with contested Senate and House seats.

And he should tell the voters in these states that their own elected officials voted against jobs in their area.

Their own elected officials voted against rebuilding schools in their neighborhood.

Their own elected officials voted against repairing roads and bridges in their county.

Their own elected officials voted against tax relief for people like them.

Their own elected officials voted against giving families like them a $2,500 tax break for sending their kids to college.

And then he should ask these same voters to contact those legislators and register their disapproval, and then register their disapproval again at the polls the first chance they get.
This is how Obama can turn the heat up on Republicans and make some of them come to their senses—or lose their jobs.

Playing nice didn’t get Obama anywhere.

Flexing his muscle and his popularity will get him a lot further.

State Sec Hillary Clinton Remarks on Japan: A Cornerstone of U.S. Foreign Policy

Japan: A Cornerstone of U.S. Foreign Policy. Remarks by Hillary Rodham Clinton, Secretary of State
Secretary of State Hillary Rodham Clinton With Japanese Foreign Minister Hirofumi Nakasone
Tokyo, Japan, February 17, 2009

FOREIGN MINISTER NAKASONE: (Via interpreter) A while ago, I had a meeting with Secretary of State Hillary Rodham Clinton and myself, and I think we had a very good meeting, and let me discuss the content of that meeting. I told her that I welcomed the fact that she chose Japan as the destination for her first overseas trip as Secretary of State, because that is an indication that Secretary Clinton and the U.S. Administration attaches importance to Japan and the Japan-U.S. relations.

At the Senate hearings, the Secretary mentioned that the Japan-U.S. alliance is the cornerstone of U.S. policy and for the peace and security of the Asia-Pacific region - that this alliance is indispensible for that. And I certainly agree that this is very important, the alliance is very important, so I couldn’t agree more, that being our relations. But also, globally, as we face various challenges, I believe we have to further step up Japan-U.S. alliance, and we agreed on that. In the meeting, as a foreign leader to be invited to the White House by the U.S. President, President Obama – as you conveyed to us, an invitation by President Obama to invite Prime Minister Aso on the 24th of February, that the Japanese Foreign Minister will be the first foreign leader to be invited – again, a reflection of the importance of Japan-U.S. relationship that we most welcome this.

Prime Minister Aso very gladly accepts this invitation and would like to visit the United States with the consent of (inaudible). And through Japan-U.S. cooperation, we would like to make the necessary preparations. This early bilateral summit meeting, I believe, will indicate to the entire world that the first and the second economic powers in the world will together address the financial and economic difficulties that are confronting the world.

We too see instabilities in the Asia-Pacific region, and Secretary Clinton expressed the U.S. commitment to the defense of Japan, including nuclear deterrents, and we welcome this. With regard to the realignment of U.S. forces, we agreed that we will steadily implement this realignment on the basis of a roadmap from the viewpoint of alleviating burdens on Okinawa and local communities while maintaining deterrents. The Guam Agreement we signed is a reflection of that firm commitment of the two countries vis-à-vis the realignment of U.S. forces in Japan. We agreed to aim at building an affluent, stable, and open East Asian region, and in that, we shared the hope that China will play a constructive role in the international community.

With regard to the North Korean issue, we agreed on the importance of resolving, in a comprehensive manner, the abduction issue, nuclear, and missile and other pending issues. And we also agreed to further step up Japan-U.S. coordination and Japan, U.S., and South Korea coordination at the Six-Party Talks towards the realization of complete denuclearization of the peninsula. And we also agreed that our two countries will further step up our efforts with regard to Afghanistan and Pakistan, because the stabilization of Afghanistan and Pakistan is a challenge for the entire international community. I also proposed our preparedness to host a Pakistan support conference, and towards this realization, I meant that we agreed that we will step up cooperation between our two countries, as well as consult with other countries and institutions concerned.

Now, the international community today is faced with numerous difficulties and challenges such as climate change and energy, financial and global economic issues, nuclear disarmament and nonproliferation, development and healthcare in Africa, global – other global challenges including UN Security Council reform as well as international situations such as the Middle East peace, counter piracy measures off Somalia, et cetera. And we agreed to further strengthen our partnership in addressing these issues.

As I mentioned, we had a very good meeting and we agreed to further step up the information exchange and policy coordination on strategically important challenges. And especially between I, myself, and Secretary Clinton, we agreed to get in touch and consult with each other at any time by phone and other means, even when there is no specific agenda or issue. Thank you.

MODERATOR: Thank you very much. Secretary Clinton, please.

SECRETARY CLINTON: Thank you very much, Foreign Minister Nakasone. I first met the foreign minister 18 years ago, and so it was a great pleasure to renew our acquaintances in this new setting. And I thank you for your hospitality, and for the broad-ranging discussion that we had today.

The alliance between the United States and Japan is a cornerstone of our foreign policy. And working together to deal with the multitude of issues that affect not only Asia, but the entire world, is a high priority of the Obama Administration. I was very pleased to extend an invitation on behalf of President Obama to welcome Prime Minister Aso to Washington, D.C. on February 24th. This will be the first foreign leader visit that President Obama will be receiving at the White House.

We have just signed the Guam International Agreement on behalf of our two nations. This agreement reflects the commitment we have to modernize our military posture in the Pacific. It reinforces the core of our alliance, the mission to ensure the defense of Japan against attack and to deter any attack by all necessary means. It enshrines our two nations’ shared contributions in carrying out the realignment of our forces and the relocation of marines from Okinawa to Guam.

This is one more example of the strong and vibrant alliance that we enjoy. Mr. Nakasone and I ranged across the world. Of course, there are matters that we are concerned about on a bilateral basis. But equally, we are concerned about what we can do together to address the challenges and seize the opportunities of this time. We addressed the economic challenges facing our two countries and the world as a whole, which demand a coordinated global response. As the first and second largest economies in the world, we understand those responsibilities, and we also know the importance of making sure our economies work on behalf of our own citizens. So it is a great responsibility that both Japan and the United States assume. Japan has been a leader in laying the groundwork for a clean energy future, and we look forward to working together on a bilateral and multilateral basis on energy and climate change.

With respect to North Korea, we discussed the importance of very close coordination in our approach to the Six-Party Talks. We must advance our efforts to secure the complete and verifiable denuclearization of North Korea. The possible missile launch that North Korea is talking about would be very unhelpful in moving our relationship forward. I know the abductee issue is of great concern here in Japan, and I will be meeting with families later today to express my personal sympathy and our concern about what happened to those who were abducted.

I want to commend Japan because this nation has been a leader in promoting stability and prosperity in Pakistan and Afghanistan. The minister shared with me in very particular detail the amount of work and the financial contributions that Japan has undertaken, and I pledged high-level U.S. participation in the Pakistan donors conference that will be held later. I also want to thank Japan and the Japanese people for your support in Operation Enduring Freedom. It’s been very important for our overall success of the coalition mission in Afghanistan. I also appreciate Japan’s dispatch of two naval vessels to the Gulf of Aden to help fight this scourge of piracy.

There is so much that we discussed that it is hard to do it justice in this short review. But let me underscore how closely we will be working together. We’ve already discussed how we will have our ministries – the Foreign Ministry and the State Department – work on economic, climate change, clean energy, and other issues of great responsibility and importance.

I am delighted to be back in Japan. I looked at that old picture of us, Minister, and a lot of time has passed, 18 years since we first met in the United States. But I know that our enduring relationship on behalf of our two nations is as strong as ever. And it will be our responsibility to chart that course into the future. I’m looking forward to hearing from some of the young people in Japan when I later am privileged to be at Tokyo University, because everything we do is about their future, and we share a great hope for the kind of future that the young people of both Japan and the United States will have in a world of peace, progress, and prosperity. Thank you.

MODERATOR: Thank you very much. We would like to entertain questions from the Japanese press first. Please, (inaudible).

QUESTION: (Via interpreter) A question for Secretary Clinton. The fight against terrorism in Afghanistan, and so on, I wonder how you appreciate Japan’s contribution, and what you would hope to get from Japan? And you also signed the relocation agreement, but Okinawa prefecture is seeking the correction or modification of the air station replacement facility.

And now, in the meeting you were having with Mr. Ozawa, I wonder if you can exchange views on the Futenma station – Air Station issue.

SECRETARY CLINTON: Well, with respect to Afghanistan, we greatly appreciate the work that the Japanese Government has already undertaken in supporting coalition efforts and in contributing to the improvement of life for the people of Afghanistan. I invited the minister to have someone work with us on our policy review of Afghanistan and Pakistan, because we want to have the benefit of the experience of the Japanese involvement as we go forward to determine the approach that we will be taking. I’m very pleased that we were able to sign the agreement concerning Guam. It embodies the understandings that exist between our two nations, and we intend to move forward to implement it.

MR. WOOD: Next question will be Paul Richter of the Los Angeles Times.

QUESTION: Yes. Madame Secretary, Pakistan has reached an agreement with militants in the Northwest Territories that will halt government military offenses there in the hope of reaching peace, and I wonder if you have any concern that this might end up being a capitulation to a strategy that hasn’t worked in the past.

And Mr. Foreign Minister, I’d like to get your specific thoughts about what you’d like the U.S. to do on the abductees issue.

SECRETARY CLINTON: Well, Paul, I think that the decision that was announced by the Government of Pakistan has to be thoroughly understood, and we’re in the process of pursuing that at this time. Obviously, we believe that the activity by the extremist elements in Pakistan poses a direct threat to the Government of Pakistan, as well as to the security of the United States, Afghanistan, and a number of other nations not only in the immediate region.

So before I comment on what its meaning might be, I want to be sure that we have as good an understanding of both the Pakistan Government’s intention and the actual agreed-upon language. And that I don’t have at this time, so I want to wait until we can provide that.

FOREIGN MINISTER NAKASONE: (Via interpreter) With regard to what sort of support we would get from the United States concerning the abduction issue, well, over the years – well, or President Obama and Secretary Clinton have been saying that they are very much concerned about this abduction issue, concerned by North Korea, and that they have expressed their deep sympathies.

Having had my meeting with Secretary Clinton – and of course, North Korean issues are not just abduction issues, but there is the nuclear issue, missile issue, as well as the abduction issue, but especially with regard to the abduction issue, she expressed that she will continue to support us strongly and help us.

Following this meeting, I understand the Secretary is going to meet with the families of the abductees. So, from this fact alone, you can see that the Secretary is very much concerned about this abduction issue. And it’s not just an issue for Japan and the United States, but we also need the cooperation of other countries, Republic of Korea, et cetera, for the earliest possible resolution of the problem.

I would like to receive third question from the Japanese press, (inaudible).

QUESTION: (Via interpreter.) A question first for Foreign Minister Nakasone. From the experience of the U.S.-North Korea rapprochement under the Democratic Clinton Administration and the delisting of North Korea by the Bush Administration, there are people who are concerned here in Japan that the Obama Administration might become more easy on North Korea. And I wonder if that concern has been allayed.

Now, with regard to reconstruction contributions in Afghanistan, I wonder how you appreciate Japan’s support, and what you would expect of Japan, Secretary Clinton.

FOREIGN MINISTER NAKASONE: (Via interpreter) Well, let me first answer the question. As I have mentioned earlier, with regard to North Korea-related issues, the U.S. is very concerned. And also through the Six-Party Talks, we believe we need to work on the denuclearization of North Korea. And also, we have been – in fact, over the years, we have been addressing these issues, including denuclearization and missile and abduction issues.

Japan and U.S. should maintain close contacts and also through cooperation with South Korea, Russia, and China. And it is our intent to, through this cooperation, try to resolve these problems. We are not, therefore, concerned that the U.S. policy vis-à-vis North Korea is going to change in any significant way.

And also, with regard to abduction issue, as was mentioned, we can count on further cooperation by the United States. So we would count on that sort of cooperation, and make remaining close contacts and coordination with the United States.

SECRETARY CLINTON: Well, let me underscore the commitment that the United States has to the denuclearization of North Korea, and to the prevention of further proliferation by the North Koreans. This is a matter of great concern. We discussed it in-depth today. And the Six-Party Talks are the framework that we believe is best positioned to make progress on our goals with respect to North Korea.

The abductee issue is part of the Six-Party Talks, and we believe it should be, because it is more likely to yield to progress as part of a comprehensive engagement with North Korea. And I would underscore that the North Koreans should in no way be mistaken. President Obama, on his Inauguration, during his address, made it clear that the United States will reach out a hand to those with whom we have differences so long as they unclench their fists. But the decision as to whether North Korea will cooperate in the Six-Party Talks, end provocative language and actions, is up to them. And we are watching very closely.

I have said on several occasions that if North Korea abides by the obligations it has already entered into and verifiably and completely eliminates its nuclear program, then there will be a reciprocal response, certainly from the United States: a chance to normalize relations, to enter into a peace treaty rather than an armistice, and to expect assistance for the people of North Korea. So it is truly up to the North Koreans. But in the meantime, those of us who are parties to the Six-Party Talks will be coordinating and working together to renew the vigorous outreach that we want to have in order to build on what has already occurred.

I want to express deeply the appreciation to Japan for the reconstruction assistance that has already been provided in Afghanistan. Schools have been built. Children are going to school that would not otherwise have been able to do so without the generosity of the Japanese people. There will be a new airline terminal opening up. And it is, again, a tangible sign of the willingness by the Japanese people to try to help the people of Afghanistan, and there are many other examples. So we are very, very grateful, Mr. Minister.

MR. WOOD: The next question will be from Indira Lakshmanan from Bloomberg News Service.

QUESTION: Secretary Clinton, was it a mistake for the Bush Administration to remove North Korea from the list of state sponsors of terrorism? And what can you do now to pressure the North Korean Government on the Japanese abductee issue?

And Foreign Minister Nakasone, how responsible is the U.S. for the financial crisis that threw your own economy into the worst contraction in the last quarter in 35 years? And what do you want the U.S. to do to address the effects of the financial crisis on Japan, and is your own stimulus package insufficient? Thank you.

SECRETARY CLINTON: A lot of questions, Mr. Minister. (Laughter.)

I’m not going to go into an analysis of the past. We have inherited a set of challenges that we are going to address, and one of those is the fact that in the last eight years, the North Koreans have obtained the capacity to, as we expect from the information available to us, make nuclear weapons through its reprocessing of plutonium.

Now if we could turn the clock back, we would not have let that occur. It is, unfortunately, much easier to obtain the fissile material necessary through the reprocessing of plutonium than through the process of highly enriching uranium. But we are where we are. And what we are underscoring is the obligations that North Korea entered into in 2007. And we expect them to continue on that path. Now, we know that the work ahead of us is not easy. People have acted in good faith trying to determine the best way forward. We will be looking at where we are today and determining what is the best path to take now.

Our goal remains the same: a denuclearized North Korea with the kind of complete and verifiable inspections that will put to rest questions about whether or not they have the capacity to make nuclear weapons. In addition, we wish to end the proliferation that has emanated from North Korea. So those are our goals. They’re goals that we share with our Japanese friends, and it is what we will pursue in the Six-Party Talk framework.

FOREIGN MINISTER NAKASONE: (Via interpreter) Well, the question for me – I think there were two points – one is how we work on North Korea. And the second point was our views on U.S. stimulus policy, or package.

First, on North Korea: U.S. and North Korea relations unfortunately have failed to make progress. On the abduction issue, through the Japan-North Korea consultations on August the 12th, North Korea agreed to establish an authoritative committee on reinvestigation, that they will establish that committee early on and redo the investigation. And in response of that, Japan will lift sanctions –in other words, allow the resumption of charter flights, and also allow the resumption of people-to-people exchanges. So we entered into that mutual commitment.

In September we had a new cabinet. Yet I think if they wanted to see – make sure what the new administration’s policy will be on this matter, but Prime Minister Aso, as well as I, myself, in Diet queries have expressed that our policy will remain the same as in the past. Once North Korea resumes reinvestigation, we are ready to lift sanctions. So we have been making that point time and again.

For more than 30 years, they have not met their families. The abductees and the families are waiting for the earliest return of the abductees. So Japan would like to resolve this issue as soon as possible, and we are working on that with that intent. And yet the reality is what I’ve said just now. So with the cooperation of other countries concerned, we would like to do our best to resolve this problem as early as possible.

On the economic question, in November last year, there was a G-20 in Washington, D.C, and then there was APEC meetings, and then in April, there will be the London summit on the financial crisis. Now this is a global financial and economic crisis, and therefore, all economic powers will need to cooperate with each other, and try to resolve the issue in a concerted manner.

But above all, the largest economy in the world, the United States, has passed a relevant bill in the Congress, which accompanies large-scale spending and tax cuts. And I think this is most meaningful.

Japan today, following the supplementary budget, is deliberating on next fiscal year’s budget. And I think each country needs to work to improve its real economy. I think that is important for our recovery.

Well, thank you very much. With this, we would like to conclude this joint press conference. Thank you very much.
# # #

PRN: 2009/T1-3

Libertarian on Klein's Shock Doctrine, FDR, Lyndon Johnson, and big government

Obama's Shock Doctrine, by David Boaz
Cato, February 12, 2009

"Profound economic emergency," the president says. Failure to pass his spending plan could "turn a crisis into a catastrophe". Any delay will mean "paralysis" and "disaster". It's all out of the "shock doctrine" playbook: scare people to death and then demand that your agenda be enacted without delay.

Naomi Klein made waves two years ago with her book The Shock Doctrine, in which she claimed that conservative governments use crises to ram through free-market policies. As she put it in an interview: "The Shock Doctrine is a political strategy that the Republican right has been perfecting over the past 35 years to use for various different kinds of shocks. They could be wars, natural disasters, economic crises, anything that sends a society into a state of shock to push through what economists call 'economic shock therapy' – rapid-fire, pro-corporate policies that they couldn't get through if people weren't in a state of fear and panic."

And that's just what we're seeing today – only in reverse.

Last year the US economy was hit with one shock after another: the Bear Stearns bail-out, the Indymac collapse, the implosion of Fannie Mae and Freddie Mac, the AIG nationalisation, the biggest stock market drop ever, the $700bn Wall Street bail-out and more – all accompanied by a steady drumbeat of apocalyptic language from political leaders.

And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?

No.

It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.

Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is "an opportunity for us". After all, he said: "You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before" such as taking control of the financial, energy, information and healthcare industries.

That's just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think. "Some people stockpile canned goods and water in preparation for major disasters," Klein wrote. "Friedmanites stockpile free-market ideas." But that is exactly what American left-liberals have been doing in anticipation of a Democratic administration coming to power at a time when the public might be frightened into accepting more government than it normally would. For instance, the Centre for American Progress, run by John Podesta, who was President Bill Clinton's chief of staff and President-elect Obama's transition director, has just released Change for America: A Progressive Blueprint for the 44th President.

Paul Krugman, the Bush-bashing New York Times columnist, endorsed Emanuel's enthusiasm: "Progressives hope that the Obama administration, like the New Deal, will respond to the current economic and financial crisis by creating institutions, especially a universal healthcare system, that will change the shape of American society for generations to come."

Arianna Huffington had called Klein's book "prophetic". As the Obama team began drawing up plans, she proved just how right she was, declaring: "A crisis is a terrible thing to waste. And it might be this particular crisis that will make it possible for the Obama administration to do some really innovative, bold things on healthcare, on energy independence, on all the areas that have been neglected."

None of this should surprise us. It's crazy to think that most governments will respond to a crisis by reducing their own powers and deregulating the economy, as Klein would have us believe. Political leaders naturally respond to crisis by riding in as the man on the white horse and taking control.

As Rick Perlstein, liberal historian, wrote: "The Oval Office's most effective inhabitants have always understood [that a crisis is the best opportunity to make radical change]. Franklin D Roosevelt hurled down executive orders and legislative proposals like thunderbolts during his first hundred days, hardly slowing down for another four years before his window slammed shut; Lyndon Johnson, aided by John F Kennedy's martyrdom and the landslide of 1964, legislated at such a breakneck pace his aides were in awe. Both presidents understood that there are too many choke points – our minority-enabling constitutional system, our national tendency toward individualism and our concentration of vested interests – to make change possible any other way."

Robert Higgs, the libertarian historian, is less enthusiastic. In Crisis and Leviathan, he demonstrated that government growth in the US has not been slow and steady, year in and year out. Rather, its scope and power tend to shoot up during wars and economic crises.

Occasionally, around the world, there have been instances where a crisis led to free-market reforms, such as the economic reforms in Britain and New Zealand in response to deteriorating economic conditions. Generally, though, governments seek to expand their power, and they take advantage of crises to do so. But they rarely spell their intentions out as clearly as Rahm Emanuel did.

U.S. Congratulates Kosovo on One Year of Independence

U.S. Congratulates Kosovo on One Year of Independence. By Gordon Duguid, Acting Deputy Department Spokesman, Office of the Spokesman
US State Dept, Public Affairs, Washington, DC, February 17, 2009

The United States congratulates the people of the Republic of Kosovo as they celebrate the first anniversary of Kosovo’s historic Declaration of Independence. One year ago today Kosovo became a sovereign and independent state.

Over the past year, Kosovo has moved quickly to build democratic institutions and to implement the principles of UN Special Envoy and Nobel Laureate Martti Ahtisaari’s Plan, including strong constitutional protections for minority rights and religious and cultural heritage. Fifty-four countries from every continent have recognized Kosovo, including an overwhelming majority of EU, NATO and OSCE members. As an independent state, Kosovo has welcomed and is coordinating effectively with the EU-led EULEX rule of law mission, NATO, the EU-led International Civilian Office and other representatives of the international community, to build a sound and sustainable economy, a single and transparent rule of law system, and other institutions of a modern, multi-ethnic, European democracy.

The United States commends the efforts of the people and Government of Kosovo to promote stability in the region and work cooperatively across ethnic and religious lines to develop a secure and prosperous future. The Secretary of State looks forward to welcoming the President and Prime Minister of Kosovo to the State Department on February 26 to reaffirm our pledge of friendship and support for Kosovo.

PRN: 133

Americans are losing faith in the fairness and wisdom of economic policy

Don't Believe the Stimulus Scaremongers. By Amar Bhidé
Americans are losing faith in the fairness and wisdom of economic policy.
WSJ, Feb 17, 2009

Our ignorance of what causes economic ailments -- and how to treat them -- is profound. Downturns and financial crises are not regular occurrences, and because economies are always evolving, they tend to be idiosyncratic, singular events.

After decades of diligent research, scholars still argue about what caused the Great Depression -- excessive consumption, investment, stock-market speculation and borrowing in the Roaring '20s, Smoot-Hawley protectionism, or excessively tight monetary policy? Nor do we know how we got out of it: Some credit the New Deal while others say that that FDR's policies prolonged the Depression.

Similarly, there is no consensus about why huge public-spending projects and a zero-interest-rate policy failed to pull the Japanese out of a prolonged slump.

The economic theory behind the nearly $800 billion stimulus package may be cloaked in precise mathematics but is ultimately based on John Maynard Keynes's speculative conjecture about human nature. Keynes claimed that people cope with uncertainty by assuming the future will be like the present. This predisposition exacerbates economic downturns and should be countered by a sharp fiscal stimulus that reignites the "animal spirits" of consumers and investors.

But history suggests that dark moods do change on their own. The depressions and panics of the 19th century ended without any fiscal stimulus to speak of, as did the gloom that followed the stock-market crash of 1987. Countercyclical fiscal policy may or may not have shortened other recessions; there are too few data points and too much difference in other conditions to really know.

Unfounded assertions that calamitous consequences make opposition to the rapid enactment of a large stimulus package "inexcusable and irresponsible" are likely to offset any placebo effect the package might have. Shouting "fire" in a crowded theater, as our last Treasury secretary did to peddle the Troubled Asset Relief Program (TARP), didn't restore financial confidence. Similarly, a president elected on a platform of hope isn't likely to spark shopping sprees by painting a bleak picture of our prospects.

Stimulus therapy poses great risks. Years of profligacy have put the federal government in a precarious financial position. We don't have the domestic savings to finance much larger budget deficits. Unlike the Japanese, Americans don't have much stashed away under their mattresses: We are reliant on capital inflows from abroad. An insurrection by bond vigilantes or the long-predicted run on the dollar triggered by fears of a flood of new government debt is a real possibility.

Large increases in public spending usurp precious resources from supporting the innovations necessary for our long-term prosperity. Everyone isn't a pessimist in hard times: The optimism of many entrepreneurs and consumers fueled the takeoff of personal computers during the deep recession of the early 1980s. Amazon has just launched the Kindle 2; its (equally pricey) predecessor sold out last November amid the Wall Street meltdown. But competing with expanded public spending makes it harder for innovations like the personal computer and the Kindle to secure the resources they need.

Hastily enacted programs jeopardize crucial beliefs in the value of productive enterprise. Americans are unusually idealistic and optimistic. We believe that we can all get ahead through innovations because the game isn't stacked in favor of the powerful. This belief encourages the pursuit of initiatives that contribute to the common good rather than the pursuit of favors and rents. It also discourages the politics of envy. We are less prone to begrudge our neighbors' fortune if we think it was fairly earned and that it has not come at our expense -- indeed, that we too have derived some benefit.

To sustain these beliefs, Americans must see their government play the role of an even-handed referee rather than be a dispenser of rewards or even a judge of economic merit or contribution. The panicky response to the financial crisis, where openness and due process have been sacrificed to speed, has unfortunately undermined our faith. Bailing out AIG while letting Lehman fail -- behind closed doors -- has raised suspicions of cronyism. The Fed has refused to reveal to whom it has lent trillions. Outrage at the perceived use of TARP funds to pay bonuses is widespread.

The Obama administration assures us that it will only fund "worthwhile" and "shovel-ready" projects. But choices will have to be made by harried and fallible humans; witness the nominees who failed to calculate their taxes properly. What's more, subjecting projects to scrutiny conflicts with a strategy of sparking the economy with a jolt of new spending. We may get the worst of all worlds -- savvy and well-connected operators get funding while good projects languish.

The alternative isn't, as the stimulus scaremongers suggest, to turn our backs to the downturn. We do have mechanisms in place to deal with economic distress. Public aid for the indigent has been modernized and expanded to provide a range of unemployment and income-maintenance schemes. Bankruptcy courts and laws give individuals another chance and facilitate the orderly reorganization or liquidation of troubled businesses. The FDIC has been dealing with bank failures for more than 70 years, and the Federal Reserve has been empowered to provide liquidity in the face of financial panics for even longer.

These mechanisms are not perfect or to everyone's taste -- liberals and conservatives obviously disagree about their scope and generosity -- but they have been forged through a much more deliberate, open process than the stimulus bill or TARP. Legislators, the executive branch, judges, competing interest groups and the press have all had their say in their initial design and evolution. As a result there may be occasional mistakes and fraud but not widespread favoritism.

If the current crisis is indeed unprecedented, why not increase the funding and resources to battle-tested measures? When earthquakes or tsunamis strike, we rush in more doctors and supplies. We don't use untested medical procedures or set up new relief agencies on the fly.

Increasing unemployment insurance, bankruptcy judges, and the FDIC's capital and staff would certainly cost money, but these targeted expenditures would be much smaller than grandiose measures to revive overall confidence. And while the cautious approach might lead to a slower recovery, we wouldn't jeopardize the venturesome, pluralistic foundations of our long-run prosperity.

Mr. Bhidé is a professor at Columbia Business School and author of "The Venturesome Economy" (Princeton University Press, 2008).

Japan's Downturn Is Bad News for the World

Japan's Downturn Is Bad News for the World. By Michael Auslin
The U.S. can't count on Japanese savers.
WSJ, Feb 17, 2009

As Hillary Clinton visits Tokyo for her first trip as secretary of state, she will find a country in the midst of its worst recession in 50 years. Japan's economy is contracting across the board: Exports have cratered, industrial production is on track to plummet 30% from a year ago, and the Japanese government projects that GDP will drop 12% from last year. The world's second largest economy, Japan is also the largest holder of U.S. Treasury bonds.

Recently, many economists and scholars in the U.S. have been looking backward to Japan's banking disaster of the 1990s, hoping to learn lessons for America's current crisis. Instead, they should be looking ahead to what might occur if Japan goes into a full-fledged depression.

If Japan's economy collapses, supply chains across the globe will be affected and numerous economies will face severe disruptions, most notably China's. China is currently Japan's largest import provider, and the Japanese slowdown is creating tremendous pressure on Chinese factories. Just last week, the Chinese government announced that 20 million rural migrants had lost their jobs.

Closer to home, Japan may also start running out of surplus cash, which it has used to purchase U.S. securities for years. For the first time in a generation, Tokyo is running trade deficits -- five months in a row so far.

The political and social fallout from a Japanese depression also would be devastating. In the face of economic instability, other Asian nations may feel forced to turn to more centralized -- even authoritarian -- control to try to limit the damage. Free-trade agreements may be rolled back and political freedom curtailed. Social stability in emerging, middle-class societies will be severely tested, and newly democratized states may find it impossible to maintain power. Progress toward a more open, integrated Asia is at risk, with the potential for increased political tension in the world's most heavily armed region.

This is the backdrop upon which the U.S. government is set to expand the national debt by a trillion dollars or more. Without massive debt purchases by Japan and China, the U.S. may not be able to finance the cost of the stimulus package, creating a trapdoor under the U.S. economy.
So far, Japan's politicians have been unable to find a way out of this mess. While another $53 billion stimulus package works its way through parliament, fully one-third of Japan's prefectures have instituted emergency economic stabilization measures.

But the big issues elude short-term solutions. Though Japan's leaders are currently cutting back on military expenditures and domestic services, they're unable to agree on budgets or reform plans. They have no strategic road map for reining in the yen, opening up to international competition, or taking an economic leadership role in Asia that will promote growth and strengthen democratic, market-oriented societies.

Things don't have to turn out this way. If Japan's leaders can craft a monetary policy that ends Japan's deflationary spiral by carefully expanding the money supply, recommit to structural reform, and halt the yen's rise, they can jump-start economic growth. They should also ignore the powerful domestic agriculture lobby and embrace a robust free-trade agenda, which would help them as well as the rest of Asia.

Mrs. Clinton's visit cannot be a simple photo opportunity. This trip needs to result in a clear U.S.-Japan approach to restoring confidence and rebuilding a robust and open international system. Without action, Japan and America may go over the cliff together, dragging Asia and the world down with them.

Mr. Auslin is a resident scholar at the American Enterprise Institute.

WSJ Editorial Page: The left is already doubting Obama's Afghan surge

Barack of Afpakia. WSJ Editorial
The left is already doubting Obama's Afghan surge.
WSJ, Feb 17, 2009

The regents are on the ground and commanders are crafting new battle plans: President Obama is girding for a war surge in Afghanistan. Let's hope he's willing to see it through when his most stalwart supporters start to doubt the effort and rue the cost.

As a statement of principle, the new Administration's preoccupation with Afghanistan signals a welcome commitment to what has been known by that out-of-favor phrase "global war on terror." The Taliban claimed responsibility last week for coordinated suicide attacks in Kabul, which killed 28 people and reinforced perceptions that security is eroding. America's recent success in Iraq showed that the key to victory lies in shifting those perceptions. That means improving security.

More U.S. troops will likely be needed, and Central Command General David Petraeus is undertaking a review of goals and the resources to meet them. Mr. Obama has talked about doubling forces by another 30,000, and we hope he's willing to give his Afghan commander, General David McKiernan, the number he needs to clear and hold areas and protect the population. However, size of force matters less than having the proper counterinsurgency strategy for a conflict that is different than Iraq.

Among other useful things, Mr. Obama's surge may help to educate his friends on the political left about Islamist terror. The National Security Network, an outfit that never missed an opportunity to bash President Bush, has quickly come into line behind the new President. The group says Mr. Obama's strategy must be focused "first and foremost on preventing the Afghanistan-Pakistan region from becoming a staging ground for terrorist attacks against the U.S. and other nations or a source for instability that could throw Pakistan into chaos."

Sounds good to us -- and sounds a lot like the Bush strategy. America's goal isn't to turn a backward Central Asian country into the next Switzerland, but to keep al Qaeda and its Taliban allies from using it as a safe haven. Toward that end, the U.S. and its allies can help build Afghanistan's institutions and army and help a weak Pakistan government flush out the terrorists in its wild west.

No doubt the strategy can be tweaked. That started well before Mr. Obama's election, as America took back ownership of the Afghan mission from an unwieldy NATO command. Though Britain and Canada pull their weight, Secretary of Defense Robert Gates has learned that Americans can't count on Europe to fill the troop and equipment gaps, so the U.S. did.

Also like the Bush Administration, Team Obama recognizes the Pakistan dimension to the Afghan problem -- even calling the place "Afpak." The Taliban came back in the past three years only after finding sanctuary around Quetta, in southern Pakistan, and in the country's northwest tribal regions. The U.S. has also won Islamabad's sotto voce cooperation to strike terror leaders, though more should be done around Quetta.

Mr. Obama's special envoy, Richard Holbrooke, has been in Afpak for a week's fact-finding. Before arriving, he said, "In my view it's going to be much tougher than Iraq." Even by Holbrookeian standards, that's hyperbole. The government in Kabul isn't in danger of collapsing, the Taliban isn't popular where it has ruled, and the insurgents are no match for the U.S.-led force on the battlefield.

Ultimately, as in Iraq, the Afghans will need to stand up more for themselves. That may take a while. But start with expanding the increasingly able Afghan army, a bright spot. The force of 80,000 is too small for a country the size of Texas and bordered by enemies. The police are a shambles, alas. Corruption, narco-trafficking, a weak central government: Afghanistan shares vices with other Western protectorates like Bosnia, and could improve on all counts.

However, notwithstanding President Obama's swipe last Monday that "the national government seems very detached from what's going on in the surrounding community," the rulers in Kabul are legitimate. Hamid Karzai has tolerated too much corruption, but any change of leadership should come from an Afghan challenge, not a U.S. desire to play kingmaker. Mr. Obama and Vice President Joe Biden -- who stormed out of a meeting with Mr. Karzai last year -- need to avoid JFK's mistake of toppling South Vietnam ally Ngo Dinh Diem.

The Obama team wants to play up Afghanistan's troubles so it can look good by comparison a year from now. But soon enough Mr. Obama will own those troubles, and talking down Afghanistan carries risks. Our allies and the American people may come to doubt that the conflict is winnable, or worth the cost.

Already, canaries on the left are asking a la columnist Richard Reeves, "Why are we in Afghanistan?" The President's friends at Newsweek are helpfully referring to "Obama's Vietnam." Mr. Obama may find himself relying on some surprising people for wartime support -- to wit, Bush Republicans and neocons.

Congress Gets Punitive on Executive Pay

Congress Gets Punitive on Executive Pay. By Lucian Bebchuk
We want compensation tied to performance.
WSJ, Feb 17, 2009

In a last-minute addition to the stimulus bill passed Friday, Congress imposed tight restrictions on pay arrangements in all financial firms that have or will receive funds from the federal government's Troubled Asset Relief Program (TARP).

While I have long been a critic of corporate compensation practices, these restrictions leave me concerned. They weaken executives' incentives to deliver the long-term performance that is needed to benefit banks, the economy, and taxpayers who have injected vast amounts of capital into these institutions.

While the new restrictions seem to have been motivated by a desire to limit total pay, it is the pay structure that they tightly regulate. The Obama administration's proposals focused on constraining pay unrelated to performance. The stimulus bill takes the opposite approach -- constraining incentive compensation, limiting it to one-third of total pay.

To be sure, incentive compensation in many public companies has been flawed. Some incentive compensation has been so in name only, and some of it has provided perverse incentives to focus on short-term results to the detriment of long-term performance.

But these problems require tightening the link between pay and long-term performance -- not giving up on it altogether. Mandating that at least two-thirds of an executive's total pay be decoupled from performance, as the stimulus bill does, is a step in the wrong direction.

Another wrong step is the bill's categorical prohibition on using any form of incentive compensation other than restricted stock. In the first place, some executives covered by the bill (up to 25 in some firms) run limited parts of the company's operations. Their incentive pay might be best tied to the performance of their unit's particular results, not to that of the whole company.

But even for top executives, the banks' special circumstances may make exclusive use of restricted stock contrary to taxpayer interests. In many banks, the shareholders' equity, which is junior to the government's investments in preferred shares and the claims of bondholders, now represents a small fraction of the bank's capital. Indeed, the value of some banks' common shares might largely represent an "out-of-the-money option," expected to deliver value only if things considerably improve.

In such circumstances, restricted stock may provide incentives for executives to take excessive risks with the bank's survival. Consider the case where an infusion of additional capital would greatly dilute the value of common shares but would be best for the bank, while failing to get that capital would put the bank's future at risk. In such circumstances, compensation in restricted common shares would provide executives with an incentive to avoid raising capital (which would wipe out their shares' value) and gamble on survival without additional capital.

The compensation restrictions have another adverse effect on incentives. Executives can sidestep them by returning TARP funds and avoiding them in the future. Some observers argue that such actions would be unlikely because they would be costly to the bank. This overlooks the divergence between the interests of the bank and its executives. The bill provides executives with counterproductive and unnecessary private incentives to terminate or avoid TARP funding, even when doing so would not be in the bank's best interest.

The stimulus bill's adverse incentives deserve special attention because of the government's current approach to the banking sector. While infusing large amounts of capital into banks, the government has chosen to leave their management largely to the discretion of bank executives. This makes executive incentives of paramount importance.

Compensation structures with distorted incentives may have already imposed large losses on investors and the economy. Public officials should be wary of introducing new distortions and perverse incentives. With so much hanging in the balance, ensuring that those running the country's banks have the right incentives is as important as ever.

Mr. Bebchuk, director of the Harvard Law School program on corporate governance, is co-author of "Pay without Performance: The Unfulfilled Promise of Executive Compensation" (Harvard University Press, 2004).

Viktor Yushchenko: Consumers of Russian gas must show a united front

Fueling European Cooperation. By Viktor Yushchenko
Consumers of Russian gas must show a united front.
WSJ, Feb 17, 2009

For those of us who lived under the Soviet Union, there is a certain irony about energy supplies. We may have been in a Cold War with the West, but Soviet gas always flowed uninterrupted across the Iron Curtain. Nowadays, thankfully, the Soviet Union is no more -- and yet Russian gas has become a strategic weapon. Those of us who are net importers cannot help but wonder: Is Moscow saying that gas supplies will be a problem unless it can have its sphere of influence once again?

So long as those countries which rely on Russian gas are divided, we put ourselves in a dependent position. Since 2006, though, alarm bells on the gas issue have been largely ignored. Of course Russia deserves a fair price for the exploitation of its natural resources, but the relationship needs to be rebalanced. The politics need to be taken out of the equation and a more normal commercial relationship established.

Whether Moscow is motivated by political concerns or simply a desire to increase the return on its assets, it is in the interests of all importing countries to coordinate our response. Only by cooperating can we maximize our collective bargaining power and secure our individual national interests.

As significant net importers of energy, Ukraine and the European Union have a clear common interest. Energy security for Ukraine, a major transit country, is also the best guarantee of energy security for our European neighbors. The energy security of the wider European space is therefore indivisible.

A strong response to the challenge we face must have at least three elements: liberalization, diversification and conservation.

By 2030, the International Energy Agency predicts, European gas imports will double because Europe won't be able to supply its own energy needs. Much of the extra supply could come from Russia if the necessary investment is made in new production. But unless action is taken now, importers could be in a very vulnerable position.

Liberalizing its energy industry would be in Russia's own best interests. But it will probably resist appeals to do so until the European Union leads by example: encouraging network operators to invest in interconnectors to build the energy grid and pipeline networks of the future, thereby reducing the risk of one customer being played off against another. Energy independence will come through energy interdependence. We all need international trade in energy to be open, transparent and competitive.

The current economic crisis is causing considerable suffering for both households and businesses. This situation provides an added incentive to solve the problem that arises from all of us, Ukrainians as much as our European friends, being at the mercy of a self-interested monopolist.

Working together, we can secure our mutual interests -- and, in the long term, reduce unnecessary friction with Russia. A single, competitive gas market would help depoliticize the EU-Russia gas relationship, with major foreign-policy benefits for Europe. It would also improve the security of supply for all European gas consumers.

The European Energy Community is the obvious building block for this approach, but its scope needs to extend beyond market liberalization and include more proactive and practical forms of cooperation. For our part, Ukraine is determined to reform our gas sector to encourage investment, increase efficiency by upgrading the pipeline infrastructure to minimize energy loss in transmission, and create a modern EU-compatible energy sector. The EU can further those aims by helping transit countries like Ukraine to reduce reliance on Russian gas, and hence vulnerability to energy blackmail.

One way to reduce reliance on Russia, and an important part of the policy package for any country planning for the long term, is diversification. In Ukraine's case, for example, our untapped Black Sea gas reserves needed to be quantified and exploited with European cooperation. But putting all of our faith in gas is not the answer: The emphasis should be on cleaner technologies. All of us in the European neighborhood can learn from each other to increase the proportion of renewable sources in the energy mix. In other words, limiting global warming and improving our energy security can go hand in hand.

Short-term deals between Moscow and any country, including Ukraine, are no substitute for this kind of comprehensive energy security strategy. Some of the measures will take time to implement, and so it is essential that the Transit Protocol of the legally binding Energy Charter Treaty is concluded as soon as possible. Agreement and ratification would reassure investors in the pipeline network that transit would occur, and our European neighbors that gas will be delivered.

Action, not further debate, is needed. The EU in particular has the capacity to change the entire dynamic of energy relations across Eurasia. But first it must unite and lead.

Across Europe, the pace of energy reform needs to be increased. Equally, we all need to be more forthright in reacting to the use of energy as a tool of foreign policy. Ending divisions in the European house is the only way to assure energy security for our citizens and industries for the decades to come.

European solidarity can bring warm homes -- and warmer relations with Russia.

Mr. Yushchenko is president of Ukraine.

Bushfires and extreme heat in south-east Australia

Bushfires and extreme heat in south-east Australia. By David Karoly
Real Climate, February 16, 2009 @ 3:12 PM

Guest commentary by David Karoly, Professor of Meteorology at the University of Melbourne in Australia

On Saturday 7 February 2009, Australia experienced its worst natural disaster in more than 100 years, when catastrophic bushfires killed more than 180 people and destroyed more than 2000 homes in Victoria, Australia. These fires occurred on a day of unprecedented high temperatures in south-east Australia, part of a heat wave that started 10 days earlier, and a record dry spell.

This has been written from Melbourne, Australia, exactly one week after the fires, just enough time to pause and reflect on this tragedy and the extraordinary weather that led to it. First, I want to express my sincere sympathy to all who have lost family members or friends and all who have suffered through this disaster.

There has been very high global media coverage of this natural disaster and, of course, speculation on the possible role of climate change in these fires. So, did climate change cause these fires? The simple answer is “No!” Climate change did not start the fires. Unfortunately, it appears that one or more of the fires may have been lit by arsonists, others may have started by accident and some may have been started by fallen power lines, lightning or other natural causes.

Maybe there is a different way to phrase that question: In what way, if any, is climate change likely to have affected these bush fires?

To answer that question, we need to look at the history of fires and fire weather over the last hundred years or so. Bushfires are a regular occurrence in south-east Australia, with previous disastrous fires on Ash Wednesday, 16 February 1983, and Black Friday, 13 January 1939, both of which led to significant loss of life and property. Fortunately, a recent report “Bushfire Weather in Southeast Australia: Recent Trends and Projected Climate Change Impacts”(ref. 1) in 2007 provides a comprehensive assessment on this topic. In addition, a Special Climate Statement(ref 2) from the Australian Bureau of Meteorology describes the extraordinary heat wave and drought conditions at the time of the fires.

Following the Black Friday fires, the MacArthur Forest Fire Danger Index (FFDI) was developed in the 1960s as an empirical indicator of weather conditions associated with high and extreme fire danger and the difficulty of fire suppression. The FFDI is the product of terms related to exponentials of maximum temperature, relative humidity, wind speed, and dryness of fuel (measured using a drought factor). Each of these terms is related to environmental factors affecting the severity of bushfire conditions. The formula for FFDI is given in the report on Bushfire Weather in Southeast Australia. The FFDI scale is used for the rating of fire danger and the declaration of total fire ban days in Victoria.

Read more.

Greenhouse Gases Up, Global Temperatures Down

Greenhouse Gases Up, Global Temperatures Down. By Chip Knappenberger
Master Resource, February 17, 2009

Over the weekend, a widely-distributed story by AP science writer Randolph Schmid voiced the concerns of several scientists that humans were emitting greenhouse gases in the atmosphere at a rate much faster than anyone expected. Funny thing is, Schmid failed to mention that during the same time, global warming proceeded at a rate much slower than anyone expected.
Schmid described the situation like this:

Carbon emissions have been growing at 3.5 percent per year since 2000, up
sharply from the 0.9 percent per year in the 1990s, Christopher Field of the
Carnegie Institution for Science told the annual meeting of the American
Association for the Advancement of Science [AAAS].

“It is now outside the entire envelope of possibilities” considered in the
2007 report of the International Panel on Climate Change, he said. The IPCC and
former vice president Al Gore received the Nobel Prize for drawing attention to
the dangers of climate change.

The largest factor in this increase is the widespread adoption of coal as
an energy source, Field said, “and without aggressive attention societies will
continue to focus on the energy sources that are cheapest, and that means
coal.”

When it comes right down to it, carbon dioxide emissions are not bad in and of them selves; in fact, they are a direct fertilizer for the earth’s plant species. The potential problem surrounds how and how much they may impact the climate. So to complete his coal-is-bad tale, Schmid should have included some comments about how badly the earth’s climate was behaving.

Problem is, such data is getting hard to come by. In fact, while Schmid was busy covering the AAAS meeting in Chicago, Dr. Patrick J. Michaels testified before the U.S. House Subcommittee on Energy and the Environment that global warming was proceeding at a rate that was at the lowest values projected by a large suite of climate models. Dr. Michaels further told the Subcommittee members in the nation’s capital that another year or so of little warming would put global temperature trends outside the accepted range model prognostications.

So, clearly, the picture is a lot more complicated than CO2 in/catastrophic climate change out. It is just that most environmental alarmists (reporters included) don’t like to think of it as such.
I wasn’t the only one who noticed the slanted reporting coming from the coverage of the AAAS meeting. University of Colorado researcher and renowned climatologist Roger Pielke Sr. had this to say at over at his ClimateScience blog:

Since papers and weblogs have documented that the warming is being
over-estimated in recent years, and, thus, these sources of information are
readily available to the reporters, there is, therefore, no other alternative
than these reporters are deliberately selecting a biased perspective to promote
a particular viewpoint on climate. The reporting of this news without
presenting counter viewpoints is clearly an example of yellow
journalism;

“Journalism that exploits, distorts, or exaggerates the news to create
sensations and attract readers.”

When will the news media and others realize that by presenting such biased
reports, which are easily refuted by real world data, they are losing their
credibility among many in the scientific community as well as with the
public.

Good question.

New Jersey Solar Initiative Illuminates Photovoltaic Costs

New Jersey Solar Initiative Illuminates PV Costs, by Bill Sweet
Energy Wise/IEEE, February 12, 2009 2:55 PM EST

Public Service Electric and Gas announced a five-year plan this week to outfit utility poles, subsidized housing, schools, and sundry other public buildings with solar cells. The total amount of photovoltaic cells will come to 120 megawatts and cost an estimated $773 million. That's equivalent to about 6.5 dollars per watt, which is in line with recent historical costs, worldwide, and consistent with a statement Secretary of Energy Chu made yesterday. The generally accepted breakeven point for photovoltaics is $1/W. Chu said that PV needed to improve by a factor of five.

WaPo: Domestic abuse suspects shouldn't be able to keep their guns

Armed and Dangerous. WaPo Editorial
Domestic abuse suspects shouldn't be able to keep their guns.
WaPo, Tuesday, February 17, 2009; page A12

GAIL PUMPHREY came to dread meeting her ex-husband to transfer custody of their children. Sometimes he would curse at her. Once, she said, he spit in her face. On Thanksgiving Day two years ago, he fatally shot Ms. Pumphrey and their three children -- ages 7, 10 and 12 -- before killing himself. He used a .22-caliber rifle, the same gun Ms. Pumphrey had asked a court to confiscate just three weeks before.

The Maryland General Assembly is considering two bills that would make it harder for those accused of domestic violence to keep their guns. The legislation comes too late to save Ms. Pumphrey and her children but would help prevent such tragedies in the future.

One bill would give judges the option of confiscating the firearms of domestic abuse suspects against whom temporary protective orders have been issued. The other would require judges to order the seizure of guns from suspects once final protective orders are in place. A number of states, including North Carolina and California, already have such measures. Even Virginia, not known for limiting gun ownership, prohibits domestic violence suspects from buying or carrying guns when protective orders have been issued against them.

Inexcusably, such legislation has died in the House Judiciary Committee in past years. The committee, chaired by Del. Joseph F. Vallario Jr. (D-Prince George's), has a reputation for protecting the rights of the accused -- sometimes at the expense of reasonable policy. Mr. Vallario, a criminal defense lawyer, told The Post's Lisa Rein that his main concern was that law enforcement officers accused of domestic abuse would not be able to carry their guns for work. It seems to us that Mr. Vallario should be more concerned about the safety of an abused spouse than the ability of an officer suspected of domestic violence to carry a gun.

Other critics contend that the bills unfairly target firearms. After all, they say, a spouse or partner can be harmed with a baseball bat or a knife. The statistics tell a different story: Female victims of domestic violence are more likely to be killed in shootings than through all other methods of violence combined. In Maryland, guns accounted for more than half of domestic-violence-related deaths from June 2007 to July 2008.

Lt. Gov. Anthony G. Brown (D) spoke passionately last week before the Senate Judicial Proceedings Committee about the need for tougher domestic violence laws. Mr. Brown no doubt drew upon a recent family tragedy: His cousin Catherine Brown was shot to death by an estranged boyfriend last year. Advocates for victims of domestic violence believe the legislation has a chance this year because of the O'Malley administration's support. We hope they're right. Mr. Vallario and his colleagues have the chance to save the next Gail Pumphrey.