GOP Members AND Other Conservative Types

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Republican Party of Santa Fe County
Santa Fe GOP Presents . . . Stephen Moore!
When
Friday March 14, 2014 from 6:00 PM to 8:00 PM MDT
Add to Calendar
Where

Santa Fe Woman’s Club
1616 Old Pecos Trail
Santa Fe, NM 87505
Driving Directions

You can still register for this exciting event!   Your Santa Fe GOP presents Stephen Moore–our Countries top economics expert! Mr. Moore is in high demand as speaker on economic issues–including budget, tax, and monetary policy.  
 
Mr. Moore’s presentation, “A Growth Agenda for New Mexico!” brings us his insight on a subject of vital importance to all New Mexicans.  As the Chief Economist for the Heritage Foundation & frequent guest on FOX, CNN, MSNBC and other news outlets, we are fortunate to be able to bring him to New Mexico!
 
Options
Private Reception & Presentation:  $100
6:00-7:00 pm; Includes:
–One on one time with Stephen Moore
–Photo opportunity with Stephen Moore
–Autographed book for 1st 25 to arrive
–Wine
–Hors D’oeuvres
–Reserved seating for Presentation
 
Mini-Reception & Presentation:  $45
6:30-7:00 pm; Includes:
–Non-alcohol beverages
–Hors D’oeuvres

–Stephen Moore Presentation

–Seating for Presentation

 

Please click on the links below for more information & to register for this exciting event!
 
 
We want to thank you, one and all,

for your continued support of the Santa Fe GOP. We look forward to seeing you at “SF GOP Presents–Stephen Moore!”
 
Your Executive Committee
 

 

Republican Party of Santa Fe County | 2535 Camino San Patricio | 2535 Camino San Patricio | Santa Fe | NM | 87505

 

 

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He Who Controls The Energy … Controls The People

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Marita finds the pieces of the puzzle in her piece below:

He who controls the energy controls the people

Like many conflicts before it, the current battle brewing between Russia and Ukraine has a strong energy component.

Russia has a history of using its energy supplies as a control mechanism—such as the 2006 and 2009 gas wars when it cut natural gas supplies in the midst of winter and left many European nations, which rely on Russian natural gas that is shipped through Ukraine, without energy. The supply disruptions were due to “disputes over politics, price, and late payments,” says the Washington Post. Back in November, before the current conflict erupted, Reuters reported: “Ukraine has for years been a politically troubled buffer state between Russia and the European Union, and has used its status as a gas transit corridor to play Moscow off against Brussels.”

Russia supplies virtually all of Ukraine’s natural gas and Ukraine serves as a critical transit route for sending Russian natural gas via pipeline into Europe.

Aware of its reliance on Russia, and seeking energy independence, Ukraine has taken several steps to move away from the grip Moscow holds over its energy supplies—a move that has not gone unnoticed by Russia. In addition to reducing its use, Ukraine is seeking supplies from other sources and has signed deals to develop its own resources that are thought to be “significant” and “similar to those that unlocked a boom in U.S. energy production,” reports the Christian Science Monitor (CSM).

A 2011 announcement in LNGIndustry.comstates: “Ukraine is going to officially put out a tender for a company to perform a feasibility study for an LNG importation terminal on its Black Sea coastline.” It cites Vladyslav Kaskiv, the head of the state agency for national projects management (Ukrnatsproekt), who said: “construction on the terminal and regasification of liquefied gas will help diversify sources of energy carriers and strengthen the country’s energy security while improving the investment climate in Ukraine.”

In January 2013, Ukraine signed a $10 billion shale gas project with Royal Dutch Shell. In November, Chevron signed a similar deal. Regarding the deals, according to the Financial Times (FT), Ukraine’s president Viktor Yanukovich said: the agreements “will allow us by 2020 to become self-sufficient in gas, and, under an optimistic scenario, to become an exporter.” Before being ousted, the Yanukovich government was in negotiations with a group led by ExxonMobil, which wants to explore for oil and gas in a deep-water block in the Black Sea.

The November 2013 FT report suggested that the Shell and Chevron deals “could increase tensions with Russia.”

Ukraine—which pays some of the highest natural gas prices in Europe—asked Moscow, according to Reuters, to “ease terms it considers excessive and unaffordable.”

In November, weeks before Kiev was due to sign a free-trade agreement with the European Union (EU), Ukraine’s state energy company, Naftogaz, halted natural gas imports from Russia in a dispute over pricing. President Yanukovich then did an “about face” and backed away from the European integration deal in favor of repairing economic ties with Russia. Russian President Putin had been pressuring Yanukovich to, instead, join a Moscow-led economic bloc—The Eurasian Customs Union. Putin threatened trade measures against Ukraine if it signed the EU deal as planned on November 28-29 in Lithuania.

Exercising a form of energy blackmail, Russia offered cheaper gas if Ukraine would join the Eurasian Customs Union. Russian First Deputy Prime Minister Igor Shuvalov told Bloomberg: “No one other than Russia can provide Ukraine with the necessary funds so quickly and in such a quantity. A gas agreement could help relieve Ukraine of a huge problem. We can also give them a loan, but we will not help them without commitments on their part.” The Bloomberg report continues, “Joining Russia’s customs union would shrink its current account gap by cutting energy costs.” Armenia joined the Eurasian Customs Union in September and, according to Shuvalov, is now getting “a specific price for gas because they’re signing the whole package of agreements on the customs union.”

According to Forbes‘ Kenneth Rapoza: “Naftogaz was originally paying over $400 per thousand cubic meters for Russian gas, but once Yanukovych leaned towards Moscow instead of Brussels, the price was reduced to $268.50 and came with a $15 billion aid package as a Christmas present for the pro-Russian Ukrainian.”

Naftogaz owes Russia’s state-owned gas company, Gazprom, $2.7 billion in unpaid bills from last year. The CSM report states: “That debt plays a major role in the economic woes driving the unrest in the streets of Kiev.”

Ukraine’s new interim government is led by “Washington favorite” Arseniy Yatsenyuk. Russian Prime Minister Dmitry Medvedev, Rapoza reports, has warned: “The current political crisis in Ukraine” could mean that the nearly 45% cut on natural gas from Russia would be “reconsidered.”

Moscow sees that its natural gas supplies are a weapon it can, once again, wield against Ukraine. The CSM states: “By cutting a deal for discount gas with Russian President Vladimir Putin last November, Ukraine infuriated its pro-Europe contingent and entrusted its energy security to a fickle ally.” Former U.S. Ambassador to Poland Lee Feinstein adds: “It was at its most a short-term benefit, but in the long run served only to deepen Ukraine’s reliance on Russia.”

Because of Ukraine’s “reliance on Russia,” Moscow was able to exert diplomatic pressure that forced Yanukovych to back out of the trade agreement with the EU and accept terms that thwarted Ukraine’s independence and sparked the protests resulting in his ultimate ouster.

What will happen next is anyone’s guess. In the Washington Post’s February 23 coverage of the story, the Carnegie Moscow Center’s Lilia Shevtsova is reported as saying: “Ukraine’s fast meltdown caught the Kremlin off guard.”

Other Eastern European countries have been watching and are taking steps to reduce their dependence on Russia.

A report on energy security in the FT, states: “The Lithuanians insist that they will no longer tolerate paying some of Europe’s highest gas prices or live with the perpetual sense of vulnerability that comes from knowing that Russia could shut off pipelines at any moment in a political dispute.” Vaclav Bartuska, the Czech Republic’s national energy ambassador says: “The Russians tailor their negotiating position to each country’s weakness. …They know how independent you are and factor that in.”

For the Eastern European countries, Liquefied Natural Gas (LNG) is seen as their salvation.

Poland is due to complete a large LNG import terminal on the Baltic this year—and Poland is already supplying some of Ukraine’s natural gas needs.

If President Obama wants to help our allies, he can do so without having to fire a shot. Now that U.S. natural gas supplies are so abundant, thanks to the companion technologies of horizontal drilling and hydraulic fracturing, he can expedite the permitting of LNG export terminals on U.S. shores and encourage Congress to overturn the restrictions that prevent exporting natural gas to any country without a trade agreement. Rep. Michael Turner (R-OH) has already proposed the Expedited LNG for American Allies Act.

The FT reports: “The EU’s access to American LNG exports is one of the most critical questions in determining Europe’s energy security and industrial competiveness.”

Ukraine knows that developing its own resources is imperative to its energy security. Being dependent on Russia for its natural gas has forced Ukraine to abandon a trade agreement with the EU—lessening its independence and renewing ties with its former master.

As this current conflict highlights, he who controls the energy controls the people—and this is why America’s continued energy abundance is important for our own energy security and that of our friends.

Marita82313

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.

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Final Notice: Edgewood Council Candidate Forum

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LEADERSHIP EDGEWOOD 2014 

  CANDIDATES’ FORUM 

showcasing all three candidates for Edgewood Town Council will take place at 6pm on Thursday February 27 at the Masonic Lodge.  Moderators will be Rory McClannahan, Editor and General Manager of The Telegraph, and Leota Harriman, Editor and part owner of The Independent. Incumbents Rita Loy Simmons and Chuck Ring and candidate Mike Turner will answer questions from the moderators and written questions from the audience after the break.  This is a great time to listen so that you can make an informed decision on March 4 at the ballot box.

 

Continued: No Schools Closing

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EDITOR: As promised, here is additional information regarding the previously requested closure of Edgewood Elementary and Mountain View Elementary.

The following is a copy of correspondence Secretary of Education Hanna Skandera sent to the Moriarty-Edgewood School District Education Board President, Mr. Todd McCarty and  the district’s superintendent, Mr. Tom Sullivan.

The letter is self-explanatory and needs no clarification:

2hannaskanderaHannaSkanderaMoriarty

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Edgewood Municipal Election Campaign 2014

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CHUCK RING’S FACT SHEET

Edgewood Municipal Election Campaign 2014

It is that time again. I currently serve as a councilor on your Edgewood governing body, and have done so since 1999, except for a two-year hiatus. During the two years I was absent from the town council, I remained active working hard to improve Edgewood’s financial well-being while planning serious town projects for future benefit. I was re-elected to a new four-year term in 2010 and it is that term which will end this coming March 4th.

During the preceding four years I have been privileged to work with a dedicated council eager to see Edgewood become the community it seems destined to be. Roads have been paved and maintained far beyond what had occurred since Edgewood was first incorporated. During the last four years your governing body built a public works facility which allows your dedicated employees to maintain road and similar equipment under the comfort of heated space or cooled space depending on the need of the seasons. The town governing body, its staff and our volunteer planning and zoning commission, formulated a renewed plan for Edgewood Commons (also known as section 16) which along with revised zoning and sub-division ordinances will become the guide for Edgewood Commons and some other areas in our community.

Edgewood’s Police Department is under new direction by your police chief Fred Radosevich. Improvements in supervision and other facets of the department’s operation have been made and will continue to be made during the future. During the coming years, Chief Radosevich will make training, equipment and personnel additions to see our department keep pace with the needs of a safe community. I retired as Captain in charge of the New Mexico State Police Criminal Division in 1985. Prior to my retirement from that agency I attended and graduated from the Federal Bureau of Investigation’s National Academy, the Drug Enforcement Agency’s Academy and obtained accreditation at the Executive level of New Mexico’s Law Enforcement Academy. The training and accreditation will continue to be helpful in ensuring Edgewood has fully trained and professional police as the governing body seeks to assist our Chief of Police.

Edgewood has been fortunate to have the Mountain & Valley Family Health Care Facility (FCFHC) here since 2003. What came as a 7800 square foot medical, dental and mental health services facility has outgrown its present space and plans are to construct a new health commons of approximately 42,000 square feet with an urgent care component, and other ancillary services, such as a community wellness center open to the community. The facility presently employs over fifty dedicated providers and staff. Total employment will reach over 100 once the new facility is completed. We believe the facility will continue to partner with the University of New Mexico in medical provider training.

Edgewood recently joined with the Edgewood Chamber of Commerce (ECC) in formalizing a memorandum of understanding allowing ECC to organize as Edgewood’s primary economic development organization. ECC is organizing for recruitment of businesses, services and other vital needs with economic components. We expect to see firm results though ECC’s efforts.

I have served on various committees during my tenure as a town council member and currently (Since 2003) serve as a “consumer” member of FCFHC Board of Directors. I continue to serve .on the Northern Region Transportation District Board of Directors which provides transportation to and from Edgewood with a mid-day service to be added soon.

I currently hold certification as a graduate of the Municipal Officials Leadership Institute under the auspices of the New Mexico Municipal League and I will continue to improve my knowledge and efficiency with in-service training.

I humbly ask for your vote during this election cycle ending March 4th. In turn, I will continue to serve you with honesty, integrity and full dedication.

Respectfully,

Charles (Chuck) Ring

Edgewood Town Councilor

PAID FOR BY CANDIDATE

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MESD Plans Special Meeting on 2/6/14

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MESD Is holding a special meeting on 2/6/14. Parents, community citizens and leaders should plan to attend.  Click on the link below to access the agenda.

MoriartyEdgewoodFeb6BoardAgenda020314

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Minimum Wage VIA NM Constitutional Amendment — Very BAD Idea

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EDITOR: Mr. Crawford is back with his common sense and intelligence.  Perhaps he can hand-off some of both to the legislature (to those lacking both). The work below is Mr Crawford’s and it is very much appreciated.

Following are comments on SJR13 made to the NM Senate Rules Committee for hearing on 2-3-14.   SJR13 can be found here.
Later Jim

——– Original Message ——–

Subject: Oppose SJR 13 Annually Increasing Minimum Wage
Date: Sun, 02 Feb 2014 15:11:58 -0700
From: James Crawford <jamesr.crawford61@gmail.com>
To: Linda Lopez <linda.lopez@nmlegis.gov>, Daniel Ivey-Soto <daniel.ivey-soto@nmlegis.gov>, Jacob Candelaria <jacob.candelaria@nmlegis.gov>, Stuart Ingle <stuart.ingle@nmlegis.gov>, Mark Moores <mark.moores@nmlegis.gov>, Gerald Ortiz y Pino <jortizyp@msn.com>, Cliff Pirtle <cliff.pirtle@nmlegis.gov>, Sander Rue <sander.rue@nmlegis.gov>, Clemente Sanchez <clemente.sanchez@nmlegis.gov>, Michael Sanchez <senatormichaelsanchez@gmail.com>

I am opposed to SJR 13 to annually increase the state minimum wage based on CPI indexes and to make increases retroactive back to 2009.

First of all, I oppose this  session’s wild flurry of constitutional amendments to enact legislation that should be the responsibility of the legislature and governor and are not structural problems with the NM constitution.  The constitution provides overall guidance and it should be very difficult to amend and only rarely happen.

The proposal is to amend Article XX which has nothing to do with wages and does not mention anything about minimum wage.  Minimum wage determinations should be the business of the legislature and governor and not a constitutional issue.  The legislature sets the minimum wage which is not specified in the constitution.  With the retroactive payment and any future increases businesses will be forced out of business and/or reduce hiring.

If the CPI declines, the minimum wage will not decline accordingly.   If the movement of CPI is a legitimate index for the minimum wage it should track down as well as up.  In other words this bill is just a way to blindly raise the minimum wage level every year no matter what happens to the cost of living.

Minimum wage and automatic increases end up hurting the very employees the bill claims to help.  A tiny portion of the work force works for minimum wage and they quickly advance if they are competent.  Workers are paid based on their productivity.  Badly needed entry jobs for young people and unskilled people will dry up.  Wage increases for other workers will be under pressure to increase causing more business and job losses.  There will be no net increase in spending power since the extra wages have to come from somewhere and will result in higher prices overall and wage earners purchasing power will remain relatively the same.

This is a bad idea in any form and is a travesty as a constitutional amendment.  All aspects of minimum wage legislation should remain with the legislature and governor and not be locked into the constitution.

Thank you,
James Crawford

Thanks to Jim Crawford and others of like mind, we might  head this off at the stupid gate!

 

 

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Sig Silber: What Would NM Look Like As A Nation

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I hope everyone will read the article found below and take seriously what may happen to this great state.  There are serious issues with which to deal. If people of this state continue to lollygag around, we could find ourselves without a viable economy.  There is already a serious rumor Intel will leave in 18 months, there is always a danger Los Alamos and Sandia could shutdown with little warning and some of our military installations could be candidates for the dustbin.

I’m sure there are other options which will not bode well for this large state with the small economy.  We thank Mr. Silber for allowing us to use his work and unless he pulls permission for our use you can expect much more from him on this blog, and others maintained by us and other conservative organizations.

Mr. Silber’s article was originally published in The Global Economic Intersection or http://econintersect.com/b2evolution/blog2.php/2014/01/21/the-nation-of-new-mexico-1

English: Seal of New Mexico

English: Seal of New Mexico (Photo credit: Wikipedia)

The Nation of New Mexico

January 21st, 2014
in Op Ed, syndication

Random Thoughts from the High Desert: What if New Mexico became an Independent Nation with its own Central Bank?

Written by

The land area which today we call New Mexico was part of the new nation of Mexico until it was basically seized In 1848 and became the United State Territory of New Mexico in 1850 and a State in 1912. It is the fifth largest state by land area in the U.S and has abundant natural resources. I am not advocating secession but simply wondering what the implications of nationhood would be for the people of New Mexico. Also this is an exercise in understanding how states within the U.S. are in many ways similar to nations within the Eurozone i.e. those Members of the European Union which do not have their own currency but instead use the Euro.

When considering the impact of being a separate nation one way to begin is to ask what the pros and cons are of so doing. The table below is one way of looking at it.

Pros

Cons

1. More flexibility in deciding on the legal framework under which one is governed.

2. Separate currency facilitating adjustment of competitiveness without waiting for wage rates to adjust

3. Ability to increase or decrease the money supply

4. Perhaps increased borrowing power since debts become sovereign debt

1. Relinquish or need to renegotiate aid from existing Federal sponsor

2. Need to assume certain functions currently performed by the existing Federal sponsor.

3. Increased vulnerability to foreign attacks.

4. Increased vulnerability to anything that impacts the economy of part of a smaller nation.

How does New Mexico fit within the above framework?

First of all let us look at the data on the transfers of taxes to the Federal Government and the receipt of funds from the Federal Government. For New Mexico, it looks like this:

Federal Taxes 1990-2009, $bn

Federal Spending 1990-2009, $bn

Taxes minus spending, $bn

GDP

2009, $bn

Federal taxes minus spending. 1990-2009, as % of 2009 GDP

New Mexico

115.7

316.6

(201.0)

76.9

(261)

The fact that New Mexico is substantially supported by the rest of the U.S. is very apparent. Thus New Mexico can not afford to lose its Federal sponsor. This sponsor provides essentially $5B a year to New Mexico over and above tax receipts received from New Mexico taxpayers which is equivalent to our State General Fund.

Some of the Federal spending is for two National Labs and multiple military installations which we could do without but currently provide income for many New Mexico residents. I have not gone through the exercise of netting out those Federal Expenditures which are in some ways intended to benefit the entire U.S. not just New Mexico so perhaps they can be subtracted from the receipt of funds to New Mexico.

But we have many other funding requirements including the management of forests and other Federal Land, management of many of our reservoirs, assistance to Native Americans, social security payments, Medicaid funding, etc. In many ways, New Mexico is not really a State but a very expensive Territory for the U.S. to maintain.

So New Mexico can not afford to be an independent nation. When you are too small to survive, one solution is to get larger. So what about what the U.S. Bureau of Economic Analysis (BEA) calls the “Southwest” which is Texas, Oklahoma, New Mexico and Arizona.

The send/receive ratios for the Southwest and other states are shown in the following map:

http://media.economist.com/sites/default/files/imagecache/original-size/20110806_WOM959_0.gif
Source: Census Bureau; International Revenue Service;The Economist estimates

Because the map is difficult to read if printed in black or white, I have also included a table of the data in that map for the states of the Southwest.

Federal taxes 1990-2009,$bn

Federal spending 1990-2009, $bn

Taxes minus spending,$bn

GDP 2009,$bn

Federal taxes minus spending, 1990-2009 as % of 2009 gdp

New Mexico

115.5

316.6

(201.0)

76.9

(261)

Texas

2,738.6

2,348.8.

389.8

1,146.6

34

Oklahoma

385.0

434.3

(49.3)

142.4

(35)

Arizona

424.9

631.7

(206.8)

249.7

(83)

Total

3,664.0

3,731.4

(67.3)

1,615.6

(4)

Uneven Economic Performance

But even if the sends and receives from the former Central Government would be essentially balanced out in the new Nation of The Southwest, the relative performance of the four economies have recently diverged as shown on this map.

http://agorafinancial.com/wp-content/uploads/2013/12/5min_WhatDiff_123113Big.png
source: Census Bureau

You can clearly see here the recent poor performance of New Mexico and Arizona as compared to Oklahoma and Texas. Thus we could easily see a difficulty emerging between a prosperous East Southwest and a deflationary/depressed West Southwest. In some ways the Southwest might resemble Europe.

Of course we know why Oklahoma and Texas are doing well. It is called fracking and horizontal drilling. These are concepts which are culturally anathema to many in New Mexico and Arizona so that could be an obstacle to confederation. But a good public relations campaign might overcome this and there exists some uniform culinary preferences of the residents of the Southwest and similar attitudes towards oppressive Central Government.

There may even be some reason for thinking that part of the northern tier of Mexico might fit in nicely with this new possible nation. There already exists pretty much free movement of people back and forth across the border between Mexico and three of the states in the Southwest. There is also considerable integration of the river and reservoir systems between the Southwest and Mexico. There is also to some extent for a substantial part of the population of the Southwest a shared language, religion, and cultural values. But I will leave the expansion of the discussion on the potential merger of the Southwest with part of Northern Mexico for a subsequent article.

We may want to look at some other characteristics of this potentially new nation.

State

Land Area Square Mile

Popu-lation 2010 Census in 1000s

Annual Precip-itation in inches

Proved Oil Reserves 2011

Millions of Barrels

Government

owned

land

%

Personal Income tax rate single person moderate income %

Sales tax state plus local

%

New Mexico

121,589

2,059

14.24

866

34.7

4.9

7.26

Texas

268,581

25,145

35.0

7,014

1.8

0

8.14

Oklahoma

69,898

3,751

37.62

879

1.6

5.25

8.67

Arizona

113,998

6,392

11.5

Small

42.3

4.24

9.16

Total

574,066

37,348

About the same as Mexico.

16.9

Did not calculate

Did not calculate

Total U.S.

3,794

308,745

Conti-nental U.S. 30

Perhaps 20 – 25 Billion

Overall the New Southwest would have generally lower personal income tax rates but higher sales tax rates than the residual U.S. This would tend to create income inequality. As sales taxes are regressive and low income tax rates often are associated with higher property taxes. To be complete I should have considered corporation tax rates.

Access to Federal lands would provide Southwest with a substantial amount of land currently owned by the U.S. Federal Government. This includes over 61 million acres or approximately twice the size of New York State. This might but would not necessarily spur development and increases in property tax receipts. U.S. control over subsurface oil and gas extends in some case beyond the amount of surface land owned by the U.S. and many minerals such as gold and silver are controlled by the U.S. Federal Government with the ability of citizens to stake and patent claims.

A small percentage but still significant amount of Federal Land is used as military installations and if these military installations and their equipment were included with Southwest, it would be among the World’s major nuclear powers which is not surprising since the atom bomb was developed and tested in New Mexico.

How this land became Federal Land is interesting as to some extent it is land stolen from the Mexican settlers who became U.S. Citizens as a result of conquest by the U.S. of Northern Mexico. In the case of New Mexico the ownership of land was by the Treaty of Guadalupe Hildalgo intended to remain with those living in the conquered land but key entrepreneurs and other scoundrels enticed the Federal Government to essentially steal the land from the Hispanic citizens. This is a process that continues to this day.

The Central Bank of the Southwest.

There are many reasons to have a Central Bank. Many nations in Europe have learned the hard way what it is like to not have a Central Bank, not be able to issue currency, and to depend on a Central Bank over which you have very little control.

Although one could argue that the major benefit of having a Central Bank is the ability to generate money out of thin air which can often be convenient, perhaps the major benefit of having a Central Bank is to have ones own currency. For the Southwest I have decided that our currency will be called the Desert Tortoise or Tortoise for short. For some short time there would be interchangeability of one Tortoise per U.S. dollar. After that transition period, the Tortoise would float against all currencies.

The advantage of having ones own currency is that it is a lot easier to adjust in a world market by having ones currency appreciate or decline in value relative to other currencies than it is to have price levels adjust to allow one to achieve a balance of trade.

It does not matter whether this is trade with another nation or trade with another state. Well it would not matter except if one was receiving subsidies or paying subsidies or other transfer payments to allow ones trading partners to be able to afford or tolerate their relationship with you.

The U.S. provides foreign aid to Egypt and Israel among others and we have examined earlier in this article the very different ratios of money sent to D.C. versus what is returned.

One way or another, everything that enters a state within a nation or a nation must be paid for. That payment can be by money, borrowing, or seizure. To the extent it is money, workers must be willing to work for sufficiently low wages to make their products attractive to ones trading partners and wages must be sufficiently attractive to entice workers into the labor force. The U.S. is doing a poor job of handling this balancing act. Perhaps a smaller unit such as the Southwest would be able to achieve better performance.

There are many reasons to manipulate ones currency but a major reason is to impact your trade surplus or deficit. Some explanation of this is provided below:

Economic Variable Impacted by Current Account

Current Account Deficit

Current Account Surplus

Savings Rate as Compared to Investment Rate

Decrease

Increase

Employment

Decrease

Increase

Household Income

Higher

Lower

Inflation

Lower

Higher

Interest Rates

Lower

Higher

GDP Growth

Lower

Higher

Thus the devaluation or currency appreciation is the use of currency adjustments in lieu of other mechanisms to manage the trade balance. This occurs both naturally in the marketplace and by policy i.e. the Central Bank of the Southwest which I would structure to be a full service bank i.e. it would deal with both the state chartered banks and individual citizens. Thus if there was a need to stimulate the economy of the Southwest, there would be the usual option of stuffing money into the banks but also the option of bailouts directly of residents.

  • Too much foreign debt denominated in Tortoises, devalue the Tortoise.
  • If wages are too high, devalue the Tortoise.
  • If too much hot money is entering the Southwest, cause the Tortoise to appreciate.

It is not clear what the trade balance of the Southwest would be. In terms of manufactured goods and food it would be a net importer. On the other hand, it would be a significant net exporter of energy for now hydrocarbon based but long term to include solar and wind energy.

Presumably part of the motivation would be to improve the economy of the Southwest and create job opportunities and a better qualified work force than exists currently. This means enlightened fiscal and monetary policy. In general monetary policy is more effective than fiscal policy so having a Central Bank and ones own currency is critical.

This of course only will work relative to the Residual U.S. and the rest of the World. It would not address imbalances within the Southwest.

Without the ability to have a currency that adjusts relative to the relative competitiveness of the Southwest relative to the residual U.S. and the rest of the World, adjustments would have to be made by prices rising or falling to avoid non-competitiveness.

But there remains the issue of legacy debt. Some residents of the Nation of the Southwest would owe money to others denominated in U.S. Dollars and some would own loans denominated in U.S. Dollars. So devaluing or appreciation the “Tortoise”,the new currency of the Southwest, would have certain implications. In general it is likely that the Remaining U.S. will be in a debtor position relative to the citizens of the Southwest who own U.S. Treasury obligations and will be exempt from any obligations with respect to the U.S. National Debt which clearly would not be very popular in D.C.

Economic Potential of the Southwest

Between the arid settings, mountain air, and saltwater locations, the potential for providing medical services, and tourism as well as being a retirement destination all of which is facilitated by having abundant low-cost land, the economic growth potential of the Southwest would appear to be significant.

As just one example, it might be able to become a healthcare center especially if the U.S. were to accept Medicare claims filed with the Southwest or under current rules (http://www.medicare.gov/Pubs/pdf/11037.pdf) there may be opportunities to develop medical centers close to the borders of the Southwest with the Residual U.S. Providing free or highly discounted medical services to U.S. Legislators might lead to the proper rules being put into place.

And the nation of Southwest might easily become an onshore/offshore sanctuary for those concerned about the safety of their U.S. Dollars.

As an aside, secession is not the only way to create economic subregions within the U.S.. States can cooperate and negotiate Interstate Compacts that supersede State Laws and are enforced by the U.S. Supreme Court. It is not out of the question to create regional currencies and there may be other ways to achieve the same benefits without having separate currencies i.e. indexing of compensation of government employees to the trade balance of the region to make adjustments less difficult than the current process of using Detroit-style financial collapse to force a decline in labor rates.

With respect to governance, the concept of dividing Texas into a larger number of smaller states might have some appeal. Texas at one time might have had that right as part of their Treaty with the U.S. when they joined the Union but apparently they have over time surrendered that right and it is prohibited by the U.S. Constitution. But of course that would no longer be a constraint within a new nation of Southwest.

Border security is an issue partly related to the large amount of U.S. owned land and sparsely settled Native American land near the border with Mexico in New Mexico and Arizona.

This New Nation of the Southwest would have many miles of shoreline along the Gulf of New Mexico including deep water ports. But border security would be a problem. Here is what the situation looks like today.


Source: U.S. Geological Survey Jacquieline v. Notan, Cartographer 21 September 2011

The large amount of Federally Controlled land complicates achieving border security in Arizona and New Mexico. Decisions on the former Federally held government land would have to be reviewed to determine the best use of this land. I have to assume that the citizens of the Southwest would prefer to have those decisions made locally rather than in Washington D.C.

We may want to look at some of the other chacteristics of this potential new nation.

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