What Should We Do With Our Money Now!
What Should We Do with Our Money Now
© Copyright Vladimir Kagan, March 11, 2011
Part two on the financial crisis
Forty guests at the Coudert Institute meeting receiving an earful of advice
Day two of our financial Seminar at the Coudert Institute was filled with cool information for those that still have money to invest (and Palm Beach has its share). The four Panelists gave us their diverse experience in staying above the fray in managing our assets.
In the “olden days” it was ideas that turned into wealth… today its money that begets money…
Fredrick Alger is a money manager and was the Chairman and chief Marketing Strategist at the firm that bears his name.
He said our fiscal troubles started in 1941 when most countries adopted the Bretton-Woods system, which set the exchange value for all currencies in terms of gold. However, many countries simply pegged the value of their currency to the dollar, thus making the dollar the defacto world currency. Gold was set at $35 per ounce.
The year 1970 was the crucial turning point. Under the Nixon administration, the costs of the Vietnam War increased and domestic spending accelerated inflation. The U.S. was running a balance of payments deficit and a trade deficit, the first in the 20th century. Because of foreign arbitrage of the U.S. dollar, it caused governmental gold coverage of the paper dollar to decline from 55% to 22%. Ever since the dollar has lost value. Back then, a dollar could buy 4 French Francs - 5 Swiss….. Today we get 70¢ (cents) against the Euro and 90¢ against the Swiss.
• The Euro has doubled since its inception in 1999
• Our basic commodities such as food and grain have doubled in the last eighteen months.
• Metals and textile doubled since 2009.
• Meanwhile China’s consumption of these products is up 20%
• We are paying 3-½% interest on our borrowed money – our debt stands at 15.5 Trillion today – in the next five years it will go to 20 Trillion… some say more.
• Interest payments will equal 50% of our Federal revenues.
• Our Debt to Revenue ratio has fallen behind Greece and Iceland (did I hear that correctly?)
• As deficits go up, it increases the Dollar Bubble… When it pops, it will be our children who must pay.
• We should not wait for our children to solve the problem… it is ours now.
Need I go on with statistics???? You, my savvy readers, probably already know them… for me, they were revelations.
The cure is simple: Cut military spending by 50%, BUT nobody wants to cut the Military; Not Congress, not the Generals, nor the purveyors of the hardware…. So let’s cut foreign aid, services and any other spending that won’t affect you or me. (Of course, no one wants to talk about raising taxes… you just can’t get elected on that platform…v.k.)
Back to where we should put our money, Mr. Alger pointed out that the Art Market is one of the only winners in this crisis. Paintings bought twenty, thirty years ago have increased 50 times their original purchase price when they resurfaced at auctions today…. Are you ready too buy contemporary ART? Other good investment opportunities: foreign currency, gold, silver, other metals, commodities.
Dog with Bird is a no-no - Ingre's Nude is passe - exchange for a Rauschenberg... it's money in the bank
He left us with this tidbit: “Economics evolve – they do not recycle.”
Our next speaker was Robert Wiedemer the co-author of America’s Bubble Economy and Aftershock.
Regardless of opinion to the contrary… stimulus did help stem off disaster and is helping the recovery…. Mr. Wiedemer treated us to more statistics:
• A hundred years ago this country’s work force was 90% Farming… today it is 3%
• Demand for resources by Emerging Nations, not China alone has driven the bubble.
• Foreign exchange rates, (not skills) export jobs.
• Firing people does not solve productivity; it’s by increasing technology.
• Invest in Technology: Apple, not too long ago was selling at $3 today it’s up to $360…. This kind of inflated valuation is spearheading an eventual Stock Market bubble.
Bernard Picchi is managing director of Private Wealth Management at Palisade Capital Management, L.L.C. and a former Wall Street energy analyst.
He dove straight into that black sticky stuff called OIL…”heavy and sweet”… Mid-East Oil, Libyan Oil, shale Oil from Canada, Oil exploration here and elsewhere, friendly Oil in Brazil, less friendly Oil in Venezuela, China and India’s insatiable need for Oil. (He personally is all in favor of alternative energy but that’s not where he is investing).
• Wind and solar amount to less than 1% of present production and when in high gear may produce 2%.
• Quality matters - therefore the source matters. Saudi Oil is heavy and needs a lot of expensive refining – Libyan oil is ‘Sweet” and ideal for gasoline…BUT what’s happening in that country affects gas prices as today. (Gas in Palm Beach has jumped 50 cents per gallon in a week).
• Natural gas a nice bi-product, but hard to transport and not easily used in your car.
• A final statistic: Third World oil demands exceed that of the developed nations!
Bruce Helander, a former Worth Avenue Art Dealer is founder and editor-in-chief of the Art Economist Magazine.
His presentation was a sleeper. Did you know that Modern Art has appreciated 260% since the recession? He wasn’t talking about “the bird in a dog’s mouth” pastiche or the buxom nudes reclining by a woodland pool that we all love. NO he meant the jarring stuff of 20th century art: Andy Warhol, whom he considers the father genius of all Pop Art… Remove the comfort art from your walls and start hanging the Rothkos, and all the other stuff you can’t figure out the artist’s message. (There aint no message… it’s converting your money into his or her pocket and everyone gets richer.)
Illya Kagan painting in Palm Beach - Two Nantucket scenes painted "en plein air"... Even his painting have increased in value ten fold since he started painting twenty years ago. (my advice: buy Illya's paintings... good for our family!)
My son, Illya Kagan, is a “plein air painter” who creates beautiful impressionistic images of Nantucket landscapes, Miami lifeguard shacks, Aspen snow scenes and St. Barths’ colorful boats and quaint streets. As a living artist, he will probably never get very rich doing this, but he loves what he does… He says value is all in the eyes of the beholder… it’s basic worth is just the canvas or paper it is created on… everything else is perception. Taking this a step further, he illustrates that our money is the same thing: take a dollar bill and a hundred dollar bill… it is printed on the same paper, uses the same ink, is the same size, looks alike… but we accept the value because we have faith in the government that printed it….This is called fiduciary money. The same is true of an Illya Kagan or a Robert Rauschenberg painting or a Vladimir Kagan sofa. The value of all these things hold firm as long as the supply does not outstrip the demand. The Picasso Estate assiduously protects its value by withholding thousands of images from the open market. The same holds true of our dollar as long as the government doesn't print too much, the value is protected... if they do, we have inflation.
Illya Kagan's simple reflections on the value of art... "It's all in the eye's of the beholder"
William Cathers moderates The Aspen Institute and works with inner-city High Schools to enlighten and motivate the students
He is a philosopher, an entertainer, a song and dance man, a teacher. He regaled us like an old-fashioned Baptist preacher, stirring up a frenzy with his Sunday sermon: “Animal Spirits’ From Fear to Confidence”
Cathers’ multimedia presentation examined the ideas and music born in the 1930’s depression and its impact on the “animal spirits” of the American public during this country’s darkest times…. He intertwines the life and philosophic writings of Ludwig van Beethoven, who suffered terrible depravity as a child and early in his 20s became deaf… to illustrate his struggle with life Cathers played an excerpt from Beethoven 5th symphony… animating the music with a boxing bout!... In a flash, Cathers brought us up to speed with Lois Armstrong’s struggle to escape an impoverished youth through his music…. Count Basie, already the king of jazz, traveling through the south, entertaining in Hotels he couldn’t stay in (sleeping on the train between performances). Cathers kept our spirits dancing in the aisles and wanting more…. He is a great fan of Keynesian optimism; his message was clear:
• In the worst of times, there is always hope.
• Man’s spirit can rise above despair.
• Out of adversity comes man’s ability to rise above the fray – survive and move ever upwards.
A good revival meeting in these tough times!
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Financial Crisis, Problems of Enforcement
The Economy is Rotten… But We’ll Survive (for the time being!)
A report on the latest Coudert Institute seminar
Copyright Vladimir Kagan, March – 2011
By now, the economy and it’s bi-product, the deficit should be old-hat news, but it has taken the country by storm… even revolutions in the Mid-east can’t drive the issue off the headlines.
The gibberish going on in Congress is Band-Aid medicine… No One wants to give up their entitlement… it’s OK if it’s the other guys benefits, but don’t take mine! There can be no real fix without increased revenue… which means taxation.
With its in-your-face approach to current events, last week’s session at the Coudert Institute was a shock treatment.
We’ve been diddled by the banks… and other big-time players!
This revelation came on a pleasant sunny afternoon in Dale Coudert’s garden…
….Laid out in plain language by Robert Monks, the author of Corpocracy and a lifelong expert on corporate governance together with Richard D. Greenfield, a banking, securities and consumer litigator.
• The financial meltdown was a man-made crisis, triggered by corporate greed. It started with reckless husbanding of the sub-prime mortgages.
• Back in 2001 banks had an investment ratio of 7 to 1…. By 2008 it had jumped to 50 to 1.
• There was no accountability
• Many of the Multi-national corporations are bigger than a country…Only the super 8 powers are larger. We’re talking about corporate giants like Citigroup, Exxon, Goldman Sachs.
• They are largely unaccountable to any country’s laws. They write their own rules. Their leaders are the Emperors of today; they vote salaries to themselves that are obscene. Their Board’s are composed of like-minded corporate cronies that create a buddy system.
• Shareholders can’t shake their control.
• In the USA, their favorite state for incorporation is Delaware, with laws that coddle their transgressions.
• They are not shy to incorporate in tax havens like, The Cayman Islands, Sky, Guernsey
• These modern-day villains fall under the banner of Wall Street…. No wonder it is considered the curse of the 21st Century.
• No one has been punished. No one has gone to jail.
In no uncertain terms, Monks and Greenfield implicated the culpritidy of Lloyd Blanfein, Chairman of Goldman Sachs, who, at the onset of the crisis in 2007 received the largest corporate bonus ever of $67.9 Million. Aided by his old colleague Bob Rubin, recently returned to the firm after a stint as Treasury secretary under Clinton. (A recent quote in a financial paper) “The Treasury secretary who presided over the now-bursting bubble might be a logical subject for some of the discussion out there right now. But no: Robert Rubin is invisible these days, lost in the lazy media impulse to blame whoever’s in power now. Rubin along with Phil Gramm, helped kill legislation to make derivatives more transparent”
Sanford Weill, chairman of Citigroup, was one of the worst. His “culpritity” in the crisis that burst the bubble has his fingerprints all over it’s creation.…He spearheaded the sub-prime dilemma by blandly ignoring the risks: Mortgages going to unqualified borrowers, inflated land and real estate values. They traded these amongst themselves, bundling good loans into the bad and creating false profits and values.
Richard S. Fuld, Jr., the arrogant chairman of the now defunct Lehman Bros. The 4th largest investment bank in the USA…. A March 2010 report by the court-appointed examiner indicated that Lehman executives regularly used cosmetic accounting gimmicks at the end of each quarter to make its finances appear less shaky than they really were.
E. Stanley O’Neal, chairman of Merrill Lynch, now a subsidiary of Bank of America, on November 2007, announced it would write-down $8.4 billion in losses associated with the national housing crisis… He got fired for this.
The system had been rotten for years, ever since President Reagan started to strip away regulations, it left the banks and investment bankers to forage on their own. No one paid attention to the underpaid regulators, who were easily bought and brought into the banking system. The bank’s own mandated regulatory systems were ignored. It all imploded by 2007. All signs of their flagrant miss-management and cover-ups were ignored.
In 2009, President Obama considered these culprits too large to fail and bailed them out….. He paid bitterly for this in the 2010 elections.
The bad news was sweetened by an after dinner cabaret featuring my old friend Robert Hardwick and his trio accompanying Nancy Anderson and Patricia Cook, who sang songs with monetary themes…. A surreal ending to a heavy dose of reality.
The next morning’s session was meaty and down-to-earth…. I’ll tell you about this in my next letter.
“What Should We Do with Our Money Now”
“Animal Spirits’ From Fear to Confidence”
P.S. Bob Monks and Dick Greenfield are no strangers to big money…Greenfield, as a class-action lawyer has made millions while the public he battles for make pennies. Monks is old money…Both are familiar with and on a first name basis with the culprits; they went to the same prep schools and colleges; sit on the same charities and eat at the same dinner parties.
For other Vladimir Kagan Blogs, please click this link
Social Networking - The George Orwell of the 21st Century
Social Networking – The George Orwell of the 21st Century
Copyright Vladimir Kagan February 7, 2011
George Orwell’s book, 1984, published in 1949 - tried to predict what it was going to be like forty years hence….“Big Brother is watching you”…. Poor George couldn’t begin to fathom what is going on today!
Most of us (of a certain vintage) are uninitiated into the jargons of today’s youth. We may have a glimmer of what Social Networking is; if you are a movie fan and have seen the movie by the same name (it’s been nominated for an Oscar) you’re obviously very savvy.… You may have been invited to become a friend on FaceBook… If you have great savoir-faire, you may even have brushed up against Twitter, (Sarah Palin’s favorite form of communication)…. I’m almost certain that You-tube is beyond your kin, unless you have grandchildren hovering near you.
This was the context of The Coudert Institute’s second mesmerizing forum of the year titled: “What is Social Media? Where is it Going? Privacy and Governance on the Mobile Net”
….All this movie stuff is not what it is about. IT’S ABOUT YOU and where you’ve been, what you are doing, how you are feeling, what you are buying, what you are eating, who your friends are and lots and lots more. Who’s interested in this?.... Walmart for one, your government for certain, telemarketers, hucksters, Wall Street Bankers, City planners, the Department of Defense and of course, our enemies.
This is an amazing tool for good and evil…. how to control and regulate it was much of the morning’s discussion. We were treated to this erudite information by two of the country’s top experts in the field…. John Henry Clippinger, PhD, currently Co-Director of the Law Lab at the Berkman Center for Internet & Society at Harvard University and Professor Alex “Sandy” Pentland, Director of MIT’s Human Dynamics Laboratory and the MIT Media Lab Entrepreneurship Program.
This was the stuff for advanced students’ four-year graduate course in Cyber Media…. We got a glimpse of the complexity of the subject in three intensive hours of conversation with these experts.
It is inconceivable how sophisticated the technology is in this rarefied field. Why it is going to change everything…. what we can or can’t do about it… It is Email turned inside out. It acquires its knowledge not from your computer (that’s old fashioned), but from your cell phones, GPS, I-Pads, monitoring medical implants and other smart paraphernalia. The “boys” at MIT can predict your health before you can…they know when you might be catching the Flu, they know when you are stressed-out (even if you don’t know it), they can track the flow of infectious viruses, a change in your personal behavior, (even if you are ducking out for a clandestine affair!) they know when you go to the bathroom, they are privy to when, where and what you are shopping, they can foretell who are your friends with 95% accuracy, 40% who are not your friends now but may become so within 6 months…..….The list goes on. All this requires NO new hardware…. the signals already exist…. This thing crosses borders seamlessly! No wonder huge conglomerate merchants will pay dearly for this information: These companies can tailor their marketing accordingly: predict buying trends, control inventory flow, explore new markets with accuracy, adjust for regional proclivity and corner markets at their whim. (And you can’t do a darn thing about it!)
This intrusive technology can also determine
· If you have or are susceptible to Diabetes
· Where cops should be located on a Saturday night
· Where taxicabs in New York City pick up most passengers
· Infant mortality and where it is most prevalent
How to regulate this sensitive material is the joint project of the MIT and Harvard teams.
There’s an upside to this information gathering: It’s called “Shared Mobility”. It can predict traffic jams, people movement, vehicular movement, and social behavior. In emergencies like Katrina and Haiti it can locate victims and survivors, it can find the nearest heavy equipment for clearing roads, mudslides, prevent traffic jams, locate and move medical personnel into the troubled areas.
All this knowledge is the 21st century version of the water cooler gossip at the office. Executive teams had for years tried to break-up this café klatch mentality by staggering, coffee breaks and discouraging discourse amongst its employees. In fact, it has been established that that wasn’t all bad. Gossip is the best form of disseminating information…. A large corporate entity saved $15 million dollars a year when they brought back the communal coffee break!
This flow of information is like the 1993 play (and movie): Six Degrees of Separation… By example, to celebrate the 40th anniversary of the Internet, a contest was established called the Grand Challenge. 10 balloons were hidden throughout the USA…. it took the MIT team 9 hours to locate every one of them!
NUDGE, a new computer economics breaks it down this way:
Associates Rule Based
Frankly, I haven’t the foggiest idea what this means)
But Dr. Clippinger assured me that it means 99% of what we do is habitual and imitative - and not "rational" or conscious!
Our current methods of gauging demographics are over fifty years old. Census taking is inaccurate and costly…the new technology is 10 times better and more precise.
A test study was conducted in San Francisco where they discovered entirely different patterns of activities in different parts of the city…. Like two separate communities… it was a window on tribal behavior. It would allow the city to explore new business models, population growth, and where the people really are and what they are doing!
The world we live in is full of sensors, whether at traffic lights, every corner in Las Vegas, subways, airports, department stores, boutiques, Hotel lobbies, even the lavatory…. What’s most troublesome is lack of accountability.
Adding to this heavy dose of Cyber reality, Dr. Clippinger told us about coming changes…where we’ve been and where we are going…. Not surprising, this explosion of information started with the hackers of twenty years ago…. This morphed into new early technologies such as Tech Model, Arpanet which became the Internet, Richard Stallman’s free software, open licenses, GPL, Browsers, The World Wide Web, Yahoo, Amazon, Portals, MSN, EBay, search engines such as Google…. We are in a fast evolving world of information. New players not dreamed of ten years ago, invaded our virtual world with social networking and chat messaging, BBS, Pod Casting, Friendstel, Twitter, Myspace, Orkut and of course Mark Zuckerberg‘s FaceBook.
Question: Whom can you trust???? No easy way to distinguish friend from foe. It can promote transparency in government. It can also foster revolutions as we are seeing in Egypt today.
IF Professor Pentland taught us how to swim in waters over our heads, Dr. Clippinger took us over the falls!... They jokingly said, MIT invents the Bomb and Harvard tell us where to drop it!
This well greased Mutt and Jeff team introduced us to the interesting correlation of “honest signaling” in the animal world and the Homo sapiens world we live in:
A Peacock’s display of his rainbow colors takes energy and is rewarded with mating privileges. It is an honest signal because it cannot be faked.
Researchers took an ordinary sparrow and tinted his feathers to replicate the dominant bird in the neighborhood. This worked fine for a while until his rivals figured out that he was a fake: then they killed him! Fellow sparrows found out that he was a fraud. Animals are good at that. Nature selects for that ability to detect dishonest signals and punish the deceivers.
Deer, Moose and their ilk, posture with their antlers and win their superior standing with these obvious signs of their masculinity. In the REAL world, organizations posture in a similar fashion: Banks built tall and impressive buildings; insurance companies like AIG built armor around their reputation (until, like the sparrow, they crumbled from their own deceit). Citibank pouted its feathers to attain its dominance in the financial world, Lehman Brothers collapsed when their fabrications gave way to reality. These companies propagated falsehoods just like the little sparrow.
This posturing is regularly promulgated in political defamation. A New Yorker cover two years ago, depicting Obama and his wife as Muslim potentates…. A crude jest that took root and proliferated into a backlash of falsehood still circulating in conservative circles today. This defamation exists on both sides of the political spectrum. President Bush was vilified and political cartoonists practice this on a daily basis in their News Papers.
The Internet is rife with fabricated events, which give legitimacy to falsehoods, BUT it also serves as a conduit for whistle blowers to expose the truth. This brings us to the now infamous WikiLeaks. Time Magazine suggested they could become as important to journalism as the Freedom of Information Act. Others consider Julian Assange, its founder, a traitor worthy of hanging. Actually, both are right. He has made whistle blowing a fine art and given them the stature of celebrated street artists…. He has also put people and governments in unimaginable jeopardy.
What fascinates me is the hardware behind all this cyber stuff. A recent photo in the New York Times showed the subterranean bomb shelter in Stockholm housing WikiLeaks high-powered hardware. It looks like the control center in an ultra-secured military bunker. Mark Zuckerberg’s FaceBook complex is similarly awesome. These “kids” are geniuses not only in the embryonic stage of their innovation, they take their start-ups to the industrial level and have the vision to capitalize on it…. making colossal profits.
This heady stuff calls for reinventing ourselves in 3D. You need to understand where and what you are dealing with…. And most of all, to protect yourself from this intrusion. Your digital footprint is everywhere! There will be 400 million medical sensors floating out in cyber space…. This could become commercial fodder for untold number of industries.
The mobile phone industry is growing exponentially…. cell phones are taking over the world…. remote areas where electricity is out of reach, there will be solar chargers. Inteli-pads that now cost $600 will come down to the $50s.
Cloud computing is the next phase in the evolution of software services…. no physical location…unlimited storage - under no one jurisdiction.
All this progress puts us face to face with the need for governance. Some people call for a Constitutional Convention of the 21st Century. Privacy is the buzzword. There is a call for a global trust framework by regulators in the US, EU and Asia…. Worried corporations are seeking answers: Pay-pal is trying to rewrite their codes, Microsoft, Bank of America, AT&T, Verizon…. are active players in this game and turning to their think tanks for guidance.
Cyber technology is unstoppable. It is a truth that can be used for good or bad. We are fast loosing our privacy…but the world, by-and-large is a safer place to live in…. for the time being!
There Is No Opting Out!
For information on the COUDERT INSTITUTE INFO
Dr. John Henry Clippinger is author of A Crowd of One: the Future of Individual Identity
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A wakeup call on Homeland None-Security
Copyright Vladimir Kagan, February – 2011
Last Thursday, a foursome of erudite experts in the field treated us to an earful of distressing information. It was The Coudert Institute’s first seminar of the year. This eye-opening meeting was held at an exclusive Club in Palm Beach, on a cloudless, benign, sunny day, belying the thunderous news we were to receive on the inside.
Col. Randall J. Larsen, U.S. Air Force (retired), is chief executive officer of the WMD (Weapons of Mass Destruction) Center, a not-for-profit research organization he co-founded with former U.S. Senators Bob Graham (D-FL) and Jim Talent (R-MO). Col. Larsen is author of Our Own Worst Enemy, Grand Central Publishing.
Dave McIntyre is the Vice President for Academic Affairs, and Homeland Security and Defense Programs at the National Graduate School, and a visiting fellow at the Institute for Homeland Security in Washington D.C.
Dr. Akhila Kosaraju is the Vice President for Global Development of SIGA Technologies, a company specializing in small molecule drugs for emerging disease threat and biological warfare defense. Dr. Kosaraju was a White House appointee in the Pentagon, serving as special assistant o the Assistant Secretary of Defense for Health Affairs. She is a member of the International Institute for Strategic Studies, and is a member of the Board of the Alliance for Biosecurity and International Security and Biopolicy Institute.
Craig Vanderwagen, M.D., representing Cleveland BioLabs, (CBLI) is a partner with Martin, Blanck & Associates, a federal health service-consulting firm based in Falls Church, VA. Vanderwagen was the founding Assistant Secretary for Preparedness and Response (ASPR) for the U.S. Department of Health and Human Services. Dr. Vanderwagen is a practicing physician, who spent twenty-five years his life serving the medical needs the disparate Indian tribes (575 sovereign nations - by Federal count) throughout the west and Alaska.
With these heavy credentials, the foursome started to read us the riot act. It was a remarkably casual presentation with an awesome message…. WE ARE NOT PREPARED.
Col. Larsen, as the moderator and first speaker, started the morning by regaling us with his amazing credentials. He was a jet fighter pilot in his early career and finally, operational commander of the 89 squadron, the VIP unit in charge Air Force One and Two! He opened with an appraisal of our security systems, which have survived for over 6o years under the acronym DIME (Diplomacy, Information, Military, Economic), They were very efficient during the cold war and are totally out of sync in the 21st Century. Each Cabinet Ministry working on its own with duplications, obsolescence, unshared information, misguided objectives, and wasted resources… By example, the three branches of the military can’t even agree on a single fighter airplane, wasting tens of billions of dollars.
Today, the proposed objective of screening every shipping container entering our ports with radiation detectors is impractical. This is the least likely route for any nuclear materials entering our country.
Col. Larsen startled the meeting by pulling a small plastic vile out of his coat pocket….”This is all it takes to smuggle three microns of bacterial contaminants into your back yard!”…. He carried the same vile into a secured Senate meeting on Homeland Security, passing numerous checkpoints unchallenged. When he asked the Senators if they had ever seen a biomaterial Bomb…their answer was NO. Their reaction was audible when he pulled the demo out of his pocket…. Our awareness of this Bio risk has been so low that it goes virtually undetected. The suicide pilot, who flew his plane into the Pentagon on 9/11 had been treated for Anthrax burns 10 months earlier in a American hospital! Apparently, even then Al Qaeda was considering Bio versus their fatal flights.
Our enemies functions outside of the box, it’s no longer a government or a predictable military threat, it is generated in caves, in kitchens, on the internet…mobile, illusive and virtually undetectable with our current infrastructure. Our intelligence organizations have too long focused on the wrong enemy. Almost all attacks in the last ten years were foreseeable had we properly put two and two together. In hindsight, “They saw IT coming, but didn’t coordinate or react in a timely fashion”. We are too departmentalized with the right hand not knowing what the left is doing. Our interdisciplinary bureaucracies are inefficient and too expensive. We can’t afford the right stuff when forty cents out of every dollar spent goes to pay off the debt.
Conclusion: Drug Lords in Mexico have more sophisticated communication capability than we…. Their money laundering is sophisticated and reaches as far as China…. The Cartels are like Wal-Mart; they have huge resources, spread all over the world: buy cheap and sell expensive. Our enemies are financed by rogue nations and individuals bent on our destruction.
Opening with this “light entertainment”, he went to the core issue. Controlling nuclear materials worldwide. The ONLY preventative tactic at our disposal is to locate and lock-down. This is expensive, with estimated cost in the Billions, but considering that in the Iraq war we spent a Billion every three days this is cheap! When no funds were available to purchase highly enriched uranium from Yugoslavia, Ted Turner came up with five million of his own and successfully took it out of commission. Our government has done its share in reducing the available supply. Did you know that 20% of our nuclear power today is fueled with recycled Soviet nuke fuel? Getting the stuff off the street is our number one priority.
Building a “clean” nuclear device is complex and requires huge governmental resources; only rogue nations like North Korea and Iran can divert such funds. Contrary to belief, such a device is compact and can fit into a suitcase! (All the Plutonian used in the first atomic bomb in 1944 could fit into a one gallon Milk jug!)…. In military jargon this is called: Lo probability – High Consequences.
A dirty Bomb is different: Hi Probability – Low Consequences is our real threat. Any nuclear waste material will do. Spent reactor stuff, medical x-ray materials can be trawled from hundreds of locations around the world. A dirty bomb can be concealed in a minivan or the station wagon used by the Times Square Bomber. It will kill hundreds of people, not the millions in a sophisticated attack! However gruesome such an attack would be, by comparison, more people die on the roads each weekend than would die in this disaster. The real bi-product will be quelling national hysteria. This is what the enemy wants…. To forestall this, we must be prepared with good preventative planning.
Col. Larsen assured us that there is an up side to this horrid picture. Radiation is dissipated in a very short time. Seven hours after an explosion 90% will have evaporated. In two days 99% is gone. If you are lucky enough to have lived through the first impact, you have a very good chance of survival, PROVIDING you take the necessary precautions. (The bomb-shelters of the 60’s were the right stuff.) The hysteria instinct of getting into your car and driving off is wrong. Stay put. There are measures you can take to prepare your home for a disaster…. go to your basement…get lots of concrete and earth between you and the outside. If a basement is not the option, be certain that your windows are airtight. A good survival kit is a basic requisite… every home should have one. Its contents are logical and simple: (See list below) There is an excellent video available on preventing nuke terror…go to the Internet, to nti.org
Having read the riot act on nuclear, Col. Larsen switched to biological warfare; this is easier, more transportable and deadly. The program shifted to our second speaker: Dave McIntyre, a professional military man, with a long-time record in Homeland Security. Speaking of lack of funds, he pointed to the fact that there is more financial support allotted to the Marine Corp Band than there is to biological clean-up prevention!
The day after 9/11 Ted Kennedy called a bi-partisan meeting to evaluate the new threats against us. It was concluded that Bio warfare was high on the list. A year later, we had the Anthrax attacks! This tragedy killed five postal workers and a Connecticut woman, inadvertently exposed through mail contamination. This “terror” attack was never resolved. There were two suspects: both working in a government lab…. one sued for false accusations and harassment, was cleared and subsequently won a lawsuit for three a half million dollars…the other committed suicide. Much has been written about this strange case…One of the suppositions was that these letters were not intended to kill but rather planned as a graphic heads-up that this could happen on a broader scale…Missing from this hypothesis was an understanding of anthrax’s ability to leach through paper and the deadly nature of it’s delayed reaction.
Dr. Craig Vanderwagen, weighed in on the subject and added more details on the danger of anthrax… It is treatable with Doxycyline (an antibiotic) if administered early enough, but there was no national supply…. symptoms take days to develop and unlike radioactive contamination, take years to disperse. (The British experimented with an anthrax bomb at the beginning of World War II…the tests were conducted on a remote Scottish island and took over 40 years to clean-up!) There is no funding in any governmental budget to deal with an environmental clean up of this magnitude. It is this danger that has led to the conclusion that Public Health is as important a priority as the Military…(and they were not referring to Obama’s Health Care Bill.) We’re not talking about a man on the moon project; we are talking about our public’s health and survival.
Vastly lagging in its appraisal technology, the FDA has barely attacked diagnostic and pre-clinical detection and bio-shield products. Had aspirin or penicillin been invented today, it would not have passed FDA approval! There is no incentive to develop these products. Pharmaceutical companies are “for profit organizations” and there is no profit in developing and stockpiling Bio Shield vaccines. The technology for creating vaccines is well over 50 years old and still is using an egg to produce each dose. To bring this science into the 21st Century, the expertise is there for change, but the incentive isn’t! Far too little government spending is earmarked for this investment…. Both SIGA and CBLI, have been at the forefront of developing the 21st Century technology needed for our protection. Their science is helping to explore other forms of treatments for virus and cancer. (Unfortunately, in today’s climate of budget cutting…let us hope these will not be among the first to go!) This should be a high priority bi-partisan issue not shelved for budgetary reasons.
Our National Alert Systems are out of whack. In an attack, the disaster becomes a regional issue: State-by-State, community-by-community. If we are not prepared at the local level, the government can do little to alleviate the disaster. Our States and communities have zero funding for this.
A survey recently conducted in our best universities, concluded that the largest number of grads in the sciences were Physicists, and the least were Microbiologists. Either way, these top grads didn’t stay in America; they were offered lucrative job opportunities in distant places like Singapore with attractive perks. Many of them took up the offers. We are loosing hundred of these skilled advance degree graduates in this manner…not to speak of the thousands of foreign student training in our universities and who are not invited to practice their skill in our country. Our Homeland Defense industry is shrinking for lack of research and financial support. It was recommended by this team that a Billion dollars should be allocated for better security: 1/3rd going to the Federal Government, 1/3rd to States and 1/3rd to communities at high risk. States today with their strapped finances, allocate nothing! The problem is fund distribution…with the government’s clumsy bureaucracy; it will be squandered in political rivalry.
Dr. Akhila Kosaraju filled us in on the private sector’s struggle to do pure research in the biomedical field. Her company, SIGA Technologies, based in Florida, has specialized in typhoid eradication. This deadly decease was effectively defeated some – years ago. Non-the-less, it looms as a major Bio-warfare threat today. Her company’s research is focused on preventative vaccines…it is largely financed through government grants as research of this kind, has little profit incentive for private investors. Dr. Kosaraju is a knowledgeable advocate and a great spokesperson for her cause.
At the conclusion of this amazing indoctrination session, Col. Larsen was asked the inevitable question, “How can you sleep at night, knowing all this stuff?” his retort: “I sleep just like a baby….. waking up every three hours screaming!”
Preparedness: The basics for survival
The primary threat to a community may come from natural disasters.
The second would be a terror attack using WMD (Weapons of Mass Destruction) either nuclear or bio. Remember that a localized disaster would have repercussions well beyond the area immediately affected.
FEMA (Federal Emergency Management Agency) is responsible for disaster management. However, here are some useful facts you should know:
Myth In a major disaster, the federal government will lead response efforts.
Fact You and your community will likely be on your own for 24 to 72 hours after a large-scale disaster, perhaps longer. Those first days are the most important for survival and recovery.
Myth First responders in your community will provide aid and assistance.
Fact In a large-scale disaster, most people are rescued and cared for by neighbors and citizens at the scene.
What you need for survival
· 14-day supply of prescription medicines
· Medical records
· 3-4 day supply of nonperishable food, can opener if kit contains canned food
· Bottled water – 1 gallon of water per person per day for at least three days – for drinking and sanitation
· Dust surgical mask (N-95), plastic sheeting and duct tape to shelter in place
· Pet supplies
· Cash, coins, traveler’s checks
· Important documents
· First aid kit, manual and thermometer
· Whistle to signal for help
· Flashlights and batteries
· Battery powered or hand-crank radio
· Cell phone with chargers, including car charger
· Trash bags, paper towels and toilet paper, soap, moist towelettes, ties for personal sanitation
· Feminine supplies
· Aspirin or non-aspirin pain relieve
· Anti-diarrhea medication
· Contact lenses and supplies
· Tool Kit including wrench or pliers to turn off utilities
· Cell phone chargers & phone cards
· Matches in waterproof container
· Walking shoes
· Local maps
· Don’t forget the scotch and cookies!
For information on The Coudert Institute and future programs, go to www.coudertinstitute.com
The Coudert Institute is Off and Running
Copyright Vladimir Kagan 2010
Dale Coudert did it again…. her first evening’s soiree for the winter season opened with a brilliant dialogue, featuring Professor Jeremy Wiesen.* He gave us advice on “Entrepreneurship to the Rescue! - How to Start and Build a Business”. (Read Jeremy Wiesen’s recent article in The Wall Street Journal) - September 13th “The U.S. Needs an Industrial Policy”. It is a wake-up call to the new Congress. Better to open the new session with substance than haggling over political trivia.
Professor Wiesen’s book: ENTREPRENEURSHIP TO THE RESCUE served as the foundation for the evening. The book is a no-nonsense primer of 45 rules for starting and growing a business.
The intimate dinner for 25 guests opened with a lively “round table” discussion. Among the distinguished guest were the head of the Palm Beach Chamber of Commerce; the Provost of the Palm Beach campus of Northwood University where 6,500 students have studies that emphasize three things: entrepreneurship, globalization and ethics; and John Brown, a regular commentator on CNBC who predicted the housing crisis and ensuing financial collapse.
The first part of the talk set up the way new business ideas are to be evaluated: the ability to execute the idea is more important than the idea itself. Execution turns on how to acquire "infrastructure" – classes on entrepreneurship teach what you need and how to do that regardless of the money that you have for the project. For example, you might develop the most healthy, delicious tasting cookie in your kitchen but the chance of getting it on the grocery shelf is very unlikely -- the shelves are "controlled" by the big food companies who pay millions in "slotting fees" to hold the space for whatever cookies, etc. they turn out.
Professor Wiesen described how he helped build the Financial News Network into a venture acquired by CNBC. He determined that television is primarily entertainment: selling finance to the lay public had to be entertaining!.…. Bloomberg News is great for the pros, but CNBC puts it out with lovely ladies and attractive male presenters. Anyone tuning is entertained first and wised up in the process.
There’s a simple formula that Mr. Wiesen feels is applicable to most start-ups. He broke it down into 6 categories.
1- Understand your product and be passionate about it
2- Be certain that no one else has already done the same thing… this requires a good lawyer’s research
3- If you own it…. patent it…if possible
4- Exploit your prime asset…. which is probably you. Your location…Your reputation
5- position yourself into high visibility – A good PR firm can pave this road
6- Go to your best friend, the Venture Capitalist living next door and get the financing to get your idea off the ground
Much of the fun repartee during the evening was trying to blow holes into Professor Wiesen’s theory, but he staunchly prevailed!
In these days of stagnation economics, it was refreshing to hear an upbeat dialog that can make sense.