It was long argued that having fiscal policy without monetary policy is akin to showing up to a gun fight with a knife. Unable to control the value of their currency vis-à-vis their trading partners, nations will be deprived of the most fundamental tool for managing their economies.

It’s almost like returning to the gold standard!

Come to think of it, why is that a bad thing? The gold standard forced the fiscal polity to behave: they couldn’t borrow endlessly then inflate their way out of trouble. They couldn’t manipulate their currency to gain advantage in the international market.

Ok, so you couldn’t control the liquidity either, and that put a crimp on growth in certain cases.

But the Euro doesn’t suffer from that defect. In fact, and assuming a truly independent ECB that focuses on sound currency as their only goal, the Euro has all the good attributes of the gold standard and none of the bad.

Euro is in trouble because Greece, Italy et al cheated that’s all. The present drive to save the Euro by bailing out these states is a misguided effort that will create the exact kind of moral hazard the Euro was designed to avert.

I say let Greece fail and let them leave the Euro zone. This will send an unmistakable message to all European capitals that they need to really manage their fiscal policy lest they end up like Greece.

A transnational currency exogenously controlled might be the only governor to a democracy’s tendencies to profligate.

My earliest and fondest childhood memory was the launch of Apollo 11 on July 16th, 40 years ago. I remember how inspired and awed I was by that event. It, more than anything else, drove me to science and engineering. I won’t wax nostalgic too much, but suffice it to say that my office is still dominated by a 6 foot by 4 foot photo of Armstrong’s first boot print in lunar dust.

Apollo was a symbol of greatness. Of can do. We lost men, but we pressed on. It was something the nation could rally around in troubled time (summer of ‘69 wasn’t such a hot period for America).

Those days are over because as of today, July 8th 2011, America is no longer able to put a man in space.

How do I feel about it?

Not too bad actually. NASA served its purpose, it bootstrapped the space race by funding the development of needed technologies and showing that space travel can be done.

But like all government agencies, time hasn’t been kind to NASA. The single minded, driven overachiever of the 60th is now a bloated, slow moving, risk averse behemoth.

Government is good at marshaling national resources for a grand purpose with national consensus: WW II, Moon shot, … But eventually the bureaucracy takes over, inefficiency and risk averseness become the norm. Consensus breaks down and strategy and vision become directed by a Congress than changes every 2 years.

NASA is not the right framework for the next chapter in this story. The free market is.

The good news is that, thanks to NASA, there now exists a number of private companies leading the way in space research.

The traditional aerospace companies will be there but also exciting newcomers such as SpaceX which is developing cheap traditional liquid fuel, reusable boosters.

Burt Rutan’s Scaled Composites continues to break the mold in manned space flight. That suborbital flight of Space Ship One in September of 2004 was, to me, as exciting as July of 1969.

So, the final score? Space Ship 1 – Government 0

My father was an uneducated intellectual, he was born in the post-Ottoman Levant (look it up) living the 14th century pastoral life in a one room shack with no running water, eking a living through shear will from stubborn mountainside.

Though his dad died when he was 12 and he had to leave school to support his mom and older brother, he taught himself how to read, taught himself English and French.

By age 25, he had become a modern man, bought a car, a television, and raised a family. And though he never got rich, he lived a richer life than many millionaires. He wasn’t all that religious, but had a stronger moral compass that many clergymen.

He believed in right and wrong. He believed in good and evil. He lived his life for its legacy not its pleasures.

Though he was the younger sibling, he was the patriarch of the family. He understood his role as a role model to the next generation, he never lied, he faced events as they came with nary a complaint. He never blamed others. He was a man.

When he died in 2003, the whole town cried at his funeral. They told us, his kids, the best thing one can ever hear: “Simon was a good man”.

China seems to be on quite a winning streak lately: robust economy and strong growth have propelled them into the forefront of news coverage.

Investments are pouring in, western companies desperate for growth are trading technological know-how for a piece of the China pie. All eyes on the China now, and given the situation in the US, you are now hearing calls from the elks of Tom Friedman that China’s directed economy might be better than our messy free market system.

China is a one trick pony, and that trick is working for now. Enjoy it while you can, comrade Jintao.

Here’s how we should think about it: industrialization is a wave that hits a country, lifts its standard of living, and then leaves in search of cheaper labor markets.

This happened in the US in from about 1850 to about 1950. Then, as living standards rose, and with them education levels and expectations, it became unprofitable to manufacture low-priced items in the US.

Japan took the mantel in the ‘60 and leveraged cheap labor and a motivated workforce to rise to the top (remember when everyone in the US was worried about Japan?). That wave peaked in the early 1990 and Japan’s growth stalled as an aging population lost its drive and vitality. Korea took the baton around 1995 and became the center for cheap labor that many companies, including Japanese ones, used. It’s China turn, for now.

Three factors will insure that China’s position on top will not last for long:

1. Demographics: with nearly 20% of the world population, China is a ticking demographic bomb. China’s population is hardly growing (rank 152 our 220 in the world), and with only 17% of the population under 15, China labor pool and with it consumer demand are set to decline within a decade.

2. Cheap Labor Doesn’t last: Countries can count, at best, on a decade or two of booming economy based on cheap labor. If a middle class is created, labor gets expensive, if it doesn’t the cycle ceases to be sustainable and growth stops.

3. Centrally Directed Economy: The biggest joke of all is that a centrally directed economy outperforms the free market. From Japan’s 5th generation computer project, to France’s search engine initiative, to the many Soviet schemes,  I can name hundreds of failed ‘5 year plans’ initiated by governments. The Communist party might have gotten it right for now, but circumstances will change, and they will be unable to adapt. Bank on it.

As promised, I took a break from politics for a while, and dabbled with all things firearms and a bit of mobile application development. The later is a fascinating world that will, more than the PC, revolutionize how we do business.

But that is a story for another time. Back to politics.

I watch with fascination as many Arab ‘Ancients Regimes’ fight an existentialist battle with the forces of modernity. Their reactions, and outcome, are eminently predictable: ‘our despots’ simply couldn’t exert enough force to prevail, so they were the first to go.

‘Their despots’ on the other hand have no problem with mass killings, so they hang on.

How long they hang on remains to be seen, but their demise is inevitable. Not because of anything the US is likely to do or say, but because once educated youth reaches a certain threshold, and the economy deteriorates to another, the pot simply boils over.

So what’s next? As the west struggles with an aging population and a stagnant economy, the middle east holds vast potential for growth and vitality with a young and growing population.

Yet this potential has little chance of materializing. As we speak, dark forces are hijacking Egypt’s revolution the same way Lebanon’s Orange Revolution was preempted a few years back. People are falling back on what is comfortable, they are fracturing into smallish groups incapable of fashioning a national mandate.

Arabs are always accused of tribalism, but that is only because they do not have an trustworthy alternative. Arab “circle of trust” is relatively small, because, through experience, they’ve been conditioned that way. Years of bad government, bad economy, and terrible leadership led to deep mistrust of larger, non personal, institutions. These feeling are not only rampant, but also justified.

So what is left is tribal allegiances and zero sum game mentality that will , for the foreseeable future, slow down economic development in the middle east. And slow economic development a radical fertile grounds always make.

Progress will be made in he middle east, but that progress will be slow and uneven until the present generation of leaders passes on and a new, more educated crop takes their place.

Meanwhile, brace for more uncertainty and violence.

This must, in every nation be regulated by two different circumstances: first, by the skill, dexterity, and judgment with which its labour is applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed.

— Thus spake Adam Smith in “The Wealth of Nations” quite a long time ago.

Translation: It ain’t outsourcing that’s the problem man, it’s the bums sitting on their thumbs and the growing labor portion of non wealth creators .

Minot Daily News: WEATHER BULLETIN Up here in the Northern part of North Dakota we just recovered from a Historic event — may I even say a “Weather Event” of “Biblical Proportions” — with a historic blizzard of up to 25’ of snow and winds to 50 MPH that broke trees in half, knocked down utility poles, stranded hundreds of motorists in lethal snow banks, closed ALL roads, isolated scores of communities and cut power to 10 ‘ s of thousands.

FYI: Obama did not come.

FEMA did nothing.

No one howled for the government.

No one blamed the government.

No one even uttered an expletive on TV.

Jesse Jackson or Al Sharpton did not visit.

Our Mayors did not blame Obama or anyone else.

Our Governor did not blame Obama or anyone else either.

CNN, ABC, CBS, FOX, or NBC did not visit – or even report on this category 5 snow storm.

Nobody demanded $2,000 debit cards.

No one asked for a FEMA Trailer House.

No one looted. Nobody – I mean Nobody demanded the government do something.

Nobody expected the government to do anything either.

No Larry King, No Bill O ‘ Reilly, No Oprah, No Chris Mathews and No Geraldo Rivera.

No Shaun Penn, No Barbara Streisand, No Brad Pitts, No Hollywood types to be found.

Nope, we just melted the snow for water. Sent out caravans of SUV ‘s to pluck people out of snow engulfed cars. The truck drivers pulled people out of snow banks and didn’t ‘ t ask for a penny. Local restaurants made food, and the police and fire departments delivered it to the snow bound families.. Families took in the stranded people – total strangers. We fired up wood stoves, broke out coal oil lanterns or Coleman lanterns.

We put on an extra layers of clothes because up here it is “Work or Die”. We did not wait for some affirmative action government to get us out of a mess. Even though a Category 5 blizzard of this scale is not usual, we know it can happen and how to deal with it ourselves. Because at the end of the day, the world does not owe you a living.

But not before a parting shot.

I’ll start with Peggy Noonan’s excellent article from which I stole this headline. Noonan’s posits that American voters are adults, they rejected the Democratic party’s liberal agenda, but also the more extreme Republicans candidates. A good message needs a good messenger. Good for us.

I laugh as the losing party starts to talk about our ‘broken system’ where nothing ever gets done. You know what: we adult voters like the system the way it is. Since everyone agrees that, by and large, politicians are crooks. So why do we want to give them more power over our lives?

<sidebar2> Similarly, I always wondered why liberals who think that cops are all fascist pigs, insist that they should be the only ones allowed to have guns. Someone ‘splain it to me please. </sidebar2>

But what was proven this year, yet again, is the amazing political system that was put in place by our founding fathers. A unique system that has no equal anywhere else in the world. A system that diffuse power greatly and puts the individual in charge.

Nothing illustrates this more that the primary system. Pundits complain that it polarizes the dialogue since only diehard partisans vote in primaries. But the flip side is that in every other place on this planet, party bosses pick the slate of candidate and voters are permitted to pick from one or more piles of feces. No other country in the world would have produced a Marco Rubio, Rand Paul, or even a Christine O’Donnell.

Even when we’re scared and cannot think straight, the wisdom of the crowd reasserts itself.

In the last 40 years the cost of education has gone up 375%, that’s almost 100% per decade, with no improvement in student achievement whatever. Is there any stronger repudiation of the spending argument?

Yet the teacher’s unions have convinced this country that any attempts at controlling cost will have a disastrous effect on the education of children and the future of this country.

Over the same period, student population grew by 10% the teacher population grew by 100%. Class size did not change much, for all of these resources are now deployed as ‘layers of experts’ adding overhead and reducing accountability. Who’s at fault if a student fails? The classroom teacher? The reading specialist? The curriculum coordinator? Special Ed? Lunch lady? Overlay of responsibility equals plausible deniability.

Here’s a simple mind experiment: If the growth in teacher population kept pace with the growth of student population, the average teacher would be making $150K per year. That would attract a completely different type of individual to the teaching profession, and we wouldn’t be arguing about class size.

The only way to fix this system is to bring accountability back. I say this as Michelle Rhee exits her position of Chancellor of the DC school district, her attempts at reform thwarted by an uncooperative Democratic congress, an unsympathetic populace that voted the reformist mayor Adrian Fenty out, and overly powerful teacher’s union.

You can wait for Superman; just don’t hold your breath

As I read through the 22 books, a curious pattern emerged: Prior to 1920, the heroes, movers and shakers that the worlds turned to in times of crisis were inevitably strong individuals and entrepreneurs. These industry scions harnessed and focused capital and resources in the defense of earth from evil invaders.

Then, somehow, in the popular psyche government was handed that job: they became our protectors, the fountainhead of power and resources. The individual faded into the background to become a small part of a larger machine. This world view persisted throughout the 20^th century: Big government and big business took center stage as the need for scale drove the concentration of capital and power.

More recently, in curious way, the pendulum shifted. Government and institution formed the first line of defense. The protagonist/hero, however, almost always was an individual that bucked the system and, singlehandedly achieved what a whole country couldn’t.

As we close the first decade of the 21^st century, recent events, and there are so many, have shown how impotent government is at dealing with systemic problems. After a century of placing our full trust in them, we are now reevaluating our options.

The rise of the Tea Party in America, the lurch to the right in Europe are all signs that the populace understand the choice at hand: double down on Big and move towards a more centralized, command and control government, or we can go the other way and allow the individual to flourish again.

As Gen-X start to replace baby boomers in positions of power and influence, they bring with them a different, more individualistic world-view. I won’t be around to see it, but I’m betting historians will label 21^st as the Libertarian Century.