Europe continues to kick the can down the road with the PIIGS while the USA plays with fire on the debt ceiling. As the comment stream on my weekly summary article last week shows, there is no consensus on this complicated problem.
The goal on any spending cutbacks is to deliver at least equal levels of support while spending less money. The goal of any tax increase is to not effect economic output. Easier said than done -jump up in the air and stay there.
Many of the budget solutions in the USA and Europe are based on misinformation or distortions of historical evidence. Econintersect has continued to post informative work on this subject (here) (here). Our opinion on this subject is that the solutions must work and not be the smoke and mirrors of the solutions to date. Again there are no GOOD solutions available and that is why there is no consensus.
This week, I want to focus on a particular problem which is the global community continues to kick the can down the road piracy.
Earlier this week the Indian Navy intervened in a piracy attempt on a Greek ship in the Gulf of Aden. The pirates themselves were allowed to skedaddle a normal procedure for the anti-piracy coalition which patrols these waters.
Then a few days ago, the pirates were successful in taking a 2100 ton general cargo ship with 16 souls on board.
One study puts the costs at $7 to $12 billion per year, including increased insurance premiums and the re-routing of ships. A good background article points out that over 4,000 seafarers have been attacked with firearms.
What most land-lovers miss is that going to sea puts you into jeopardy. The laws of the seas in international waters gives no country any real enforcement powers. The seas in practice are lawless.
The current laws of the seas are based on 17th century concepts and are out of place in 2011. The seas by design are lawless.
There are no real jobs around the Horn of Africa and one successful piracy could set your family up for life. There are no real solutions being discussed to stop piracy which is continuing to grow.
Just one more example of kicking a problem down the road hoping it will go away. Piracy is not going away, and its financial impact will continue to grow.