Kyrgyzstan and the costs of empire

Just in from 5min forecast:

Kyrgyzstan, it turns out, has been quite the money sink for the United States in the “war on terror.” A quick recap of our recent history there…

• 2001: The United States sets up the Manas air base in Kyrgyzstan to support troops in Afghanistan. In an unusual move, the military agrees to pay international civil aviation rates for the rights to the airspace. Much of the money goes straight into the pocket of the president, a Soviet-era apparatchik still loyal to Moscow
• 2005: The “Tulip Revolution” overthrows the government. Like other revolutions on Russia’s periphery at the time, this was likely funded in part by quasi-government U.S. foundations like the National Endowment for Democracy
• 2006: The new government, biting the hand that fed it, demands higher payments for the rights to Manas, now the only U.S. base in the region after Uzbekistan kicked Gen. Petraeus and his buddies out. Negotiations continue on and off until…
• 2009: The government tells Washington it plans to close Manas, days after agreeing to a foreign aid package from Russia. After Washington agrees to triple what it pays for access to Manas, to $60 million annually (plus its own foreign aid package worth $109 million), the Kyrgyz government relents.

The leader of the new government promises Manas will remain open for now, but said something lame like: “We still have some questions on it. Give us time and we will listen to all the sides and solve everything.” In other words, after the new sheriff extracts another round of bribes from your pocket by way of D.C.

You can’t make this stuff up.

And this is just one base out of the 716 that we maintain in 38 countries, according to the Pentagon’s latest “Base Structure Report.” Lord grant us the strength to maintain our empire.

The Pentagon has confirmed it’s giving some $50 million in aid to Georgia, Croatia, Hungary, Latvia, Lithuania and Estonia. This will keep all six countries committed to sending troops to Afghanistan. Of course, they make up barely 1% of all the troops there, but when you’re in Washington, money is no object. “Pay all that you want, we’ll just print more,” seems to be the order of the day.

Years ago, Osama bin Laden made it clear his ultimate goal was to bankrupt the United States. Executing Sept. 11 cost him the wicked sum of $500,000. The Iraq war alone will cost the U.S. $3 trillion, if Joseph Stiglitz’s estimate is correct. The Afghan war currently costs $1 million per year per soldier on the ground.

Somewhere in a cave on the Afghan-Pakistan border, Osama’s laughing his ass off. And just wait until we invade Iran. That’s going to be fun, too. Check out Byron’s report on $220 oil, here.

Related: Afghan Supply Flights Suspended from Kyrgyz base - NATO (expect to pay more kickbacks for the new boss)

Enter Phase 2 of the Bailout Scam: Taxes and Cuts in Entitlements

(I wonder if all this will end in a pitchfork party)

From ZeroHedge, by George Washington on 04/08/2010

Ben Bernanke has funneled trillions of dollars worth of bailouts, guarantees and sweetheart deals to U.S. (and foreign) banks.

This money was pickpocketed from you and me, directly (through government spending) and indirectly (increasing debt costs, future inflation, etc).

Bernanke is now calling for tax increases and raising the possibility of reductions in entitlements such as Medicare and Social Security.

Tax increases means we keep less from each paycheck. Reduction in services means that money we've already paid to the government (through social security, etc.) will now instead be paid to the bankers to service the U.S. debt.

Isn't that like a guy who stole our money now trying to steal our paycheck, too?

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More: On The Inevitable Surge Of Tax Rates

For all who doubt the Obama administration will raise tax rates into the stratosphere in the very near future, here is a chart created by dshort.com which compares the total level of debt to GDP with Federal tax brackets over the past century....

Read all

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(Maybe) Related: The Queen's Jet: "Let Them Eat My Lofty Footprints"

This is Queen Pelosi's New Jet!!!

She wasn't happy with the small USAF C-20B Gulfstream III jet that comes with the Speaker of the House job.

The Queen was aggravated that that little jet had to stop to refuel, so she ordered a big fat (to fit her arse), 200-seat, USAF C-32, Boeing 757 jet that could get her back to California without stopping.

Former Speaker of the House, Newt Gingrich, flew commercial most of the time.

Queen Nancy's big fat jet costs hard-working and out-of-work Americans literally thousands of gallons of fuel every week.
Since she only works 3 days a week (Tues-Wed-Thu), this gas-guzzling jet gets fueled and she flies home to California every Friday and returns every Monday.

That is at a cost to the taxpayers of about $120,000 per weekly round-trip!
That is $480,000 per month and that is an annual cost to us of $5,760,000!!!

Keep in mind the figures above do NOT include the cost of plane or crew ... just the fuel!!!

No wonder she complains about the cost of this war... as it cramps her style of riding on our backs as royalty only sees fit.

I think of this "woman"-weasel, who heads up the most corrupt Congress in the history of our country, as we keep fueling that jet she can ride on our backs with her sense of being owed even more.

Queen Pelosi wants you and me to conserve our "carbon footprint" and wants to tax us so she and her cohorts can live even higher on our backs.

She wants us to buy smaller (or no) cars.

Obama wants us to get a bicycle pump and air up our tires.

Who do these people think they are?!

California's debt riskier than Kazakhstan's

When interests rates on public debt will increase (soon), the Great Depression II will begin.

By Spencer Jakab for the Financial Times (www.ft.com):

Maybe Bill Lockyer not make benefit glorious state California?

Taking a page out of Greece's playbook, the peeved treasurer of America's largest state fired off letters this week to the chiefs of Goldman Sachs and other banks questioning their marketing of credit default swaps on California's debt . The instruments, he complained, "wrongly brand our bonds as a greater risk than those issued by such nations as Kazakhstan."

Insulting indeed, but who exactly should be insulted? Home to Hollywood, Californians may derive their hazy image of Kazakhstan from Sacha Baron Cohen's satirical take on a country where he claims the main forms of entertainment include the "running of the Jew", the sport shurik "where we take dogs, shoot them in a field and then have a party", and where the favourite plonk is made of fermented horse urine. The real Kazakhstan, though not problem-free, looks fairly solid compared to California and many other states - a fact that should worry investors in America's $2,800bn municipal bond market.

On paper, California's debt of $85bn supported by 37m citizens and the world's eighth largest economy looks more manageable than Kazakhstan's nearly $100bn heaped on its poorer population of 16m. Go beyond headline figures though and Kazakhstan, with the world's 11th largest oil reserves, an economy that grew more than 8 per cent annually from 2002 through 2007 and unemployment of just 6.7 per cent looks positively vibrant next to the Golden State's joblessness of 12.4 per cent.

Meanwhile, Kazakhstan's modest budget deficit and $25bn rainy day fund make it a paragon of fiscal virtue compared to a state forced to pay bills with IOUs last year and possibly again this summer. Unlike US states, Kazakhstan has its own currency and central bank. If it were to raise taxes or cut public services, wealthy Kazakhs could hardly defect to Kyrgyzstan the way Californians, already facing some of the highest levies and worst schools in the nation, might decamp to, say, Utah.

But such head-to-head comparisons do not even begin to spell out the relative woes of American states compared to many developing nations. In addition to their headline borrowings, equal to almost a quarter of national output, states and cities have made trillions more dollars in promises to current and future retirees. Pensions are nominally underfunded by an already scary $1,000bn according to the Pew Center for the States, but that uses their own rosy actuarial assumptions. Former Social Security administrator Andrew Biggs reckons the shortfall would be up to $3,500bn if calculated using a more conservative private sector methodology. Tack on another trillion or so for unfunded health benefits and America's states appear to have dug a hole so deep no amount of austerity can fill.

Demographics, too, favour developing countries. Even with a relatively restrained birth rate, the median Kazakh is four years younger than the median American and will live ten years less, cutting down the country's dependency ratio. And while California's innovators may or may not crank out future iPods, Kazakhstan will soon export even more oil as its giant Kashagan field and pipelines to booming China come on stream.

States' borrowing costs are supported by a minuscule historical default rate on traditional municipal debt but also by the distortion of being tax-exempt. Lacking this feature, taxable California "Build America Bonds" given a direct federal subsidy yield 6.3 per cent for a 2022 maturity, some 2.4 percentage points above comparable US Treasuries. A more modest spread than Greek bonds over Germany's, to be sure, but then Greek credit protection is also pricier.

After resorting to Hellenic-style fiscal sleight-of-hand to plug this year's budget hole, it is alarming to hear California's officials blame the messenger in similar style. They must grasp that markets don't lie and creditworthiness is unrelated to superficial wealth. For example, Californians who illegally employ Mexican migrants as maids or gardeners might be surprised to learn that swaps traders consider its poor southern neighbour about half as risky a borrower as their state. Jagzhemash!