Is the United States Second Amendment to blame for the destabilization of Mexico?

Fox News Sunday featured Representative Nita Lowey (D-NY) this past Sunday to discuss the recent outbreak of chaos between the Mexican government of President Filipe Calderon and the country's many large drug cartels. Rep. Lowry stated clearly when asked what she thought to be the cause of the turbulence that, "Mexican laws are too strict, so cartels come to the US to buy their guns", citing specifically "200 small gun dealers along the border".

Representative Lowey prescribed as the solution a renewal of the ban on assault weapons put in place under the Clinton Administration but allowed to expire by President Bush and the GOP Congress in power at the time the law's sunset provision came due.

This is not the first time a politician has chosen to fault the easy access of guns, particularly assault rifles and other automatic weapons, for the flaws of men who use those guns to perpetrate a violent crime. Domestic drug dealers and gangs have long been held up by advocates of stricter gun laws as evidence of how the right to bear arms has been grossly abused and misinterpreted in modern American society. However, is it reasonable to say that the problems of our neighbor could have somehow been avoided, or would be in anyway curtailed if the US were to ban the legal sale of heavy firearms? I think not.

Representative Lowry gives far too much credit to the Mexican authorities. The laws of Mexico should not be applauded, for they are deeply misguided on many fronts. Calderon has been a proactive president, but he is a lame duck nonetheless, as is any Mexican government. Calderon is hand-cuffed by the single six-year term limit (called a sexenio) placed on the presidency by the Mexican constitution, which combined with largely nationalized industry and national resources, stifle real economic growth and prevent policymakers from having any serious effect on the Mexican black market. This failure of institutions in Mexico leads Mexicans to flee to the US for a lot more than just guns -- they come for jobs, health care and a new life.

The cartels are going to get guns from Venezuela, Russia, or whomever else they can, and no ban on assault weapons will change that reality. I think that Rep. Lowey is taking advantage of the serious problems being experienced by the Mexican government to serve her own anti-gun political agenda, and to suggest that somehow the effect of the Second Amendment on the lives of Mexicans should be considered relevant to the domestic debate over the just nature of protecting gun-rights is misguided.

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Special Drawing Rights (SDRs) and the end of the Dollar's dominance...

Zhou Xiaochuan, Governor of the Central Bank of China (seen to the right with Hank Paulson), has called for an internationally endorsed shift away from the Dollar as the world's reserve currency "as soon as possible" in advance of the G20 Summit.  Zhou urged the International Monetary Fund (IMF) to expand use of Special Drawing Rights (SDRs) and move toward a "super-sovereign reserve currency". 

Special Drawing Rights are defined on the IMF website as "The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas. The SDR also serves as the unit of account of the IMF and some other international organizations. Its value is based on a basket of key international currencies."

This is a very radical idea and cannot be dismissed because (a) Zhou truly does hold the fate of the Dollar and the US economy in his back pocket; (b) the IMF Board of Governors has advocated expansion of the SDR allocations since 1997, with 131 members (77.7%) officially endorsing the proposal. 85% is needed to implement recommendations from the internal SDR review committee, which convenes every 5 years (next 2010).  The US controls 16.75% of the total IMF vote, which granting the Obama administration de facto veto of all IMF resolutions. Zhou's plan called for additional currencies to be added to the basket used to value SDRs; encouraged SDRs to be accepted in international trade and investment so they can become established reserve; SDR denominated securities to be introduced.  Obama has indicated he opposes any and all such measures.

It is hard to imagine the Dollar, the underlying grease that makes the world work smoothly for American businesses and politicians, is actually on the verge  of becoming merely "part of the basket" as opposed to the peg to which each currency is valued.  China is the largest holder of US debt and has tremendous leverage in the debate over the realignment of international currency regimes.

What is to prevent Beijing from coordinating a massive pooling of US debt holders in a Chinese managed international and developing market counter-part to the Federal Reserve?  The collective Treasury holdings of the central banks in the 131 dissenting IMF member-states, Ivy League university endowments and personal fortunes of Billionaire philanthropists like Warren Buffett and Bill Gates alone would be enough to leverage a new mint for global reserve notes. It would be like stock-piling gold in Fort Knox to guarantee US debt to its creditors during the Depression (or at least I think it would be).

At what could have been a watershed in American history, Obama and his half-staffed Treasury Department have gone nearly 100 days in the opposite direction of the hopeful, Reagan-esque vision that candidate Obama was so widely praised for forging during his two-year campaign. The president has been either uncertain or unsatisfied with the qualifications of applicants for many critical bureaucratic appoints under his chief deputies.  These posts are critical for managing relations with foreign central banks and finance ministers.

Beijing ordered Zhou to make his aggressive proposal at a crucial moment for Tim Geithner, who had only begun to unveil their plans to combat the morgaged backed securities ailing the financial markets and clearly failed to fully ascertain the significance of Zhou's comments. Geithner was initially receptive and open to suggestions from Zhou, but his comments spurred a 4.2% decline in the Dollar across all currencies in less than 10 minutes. 15 minutes later he backtracked, and in his second press conference Obama reaffirmed the strength and long-term viability of the Dollar as the global reserve currency.  Perhaps Geithner has yet to be briefed by his Under-Secretary for Foreign Affairs on the concerns of Chinese policy-makers.

**I searched for photos of Secretary Geithner with the Zhou, and found none - though I did find dozens of candid snapshots of Geithner's predecessor Hank Paulson enjoying face-time with China's top banker.  Perhaps Geithner should call on Paulson to fill the void while he continues to recruit his underlings...

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Is the Live Nation-Ticketmaster merger anti-competitive?

“Vertical integration on steroids” is how Jerry Mickelson, chairman of Chicago-based Jam Productions, characterized the plan to merge the nation’s largest concert promoter and ticketing agency. “This merger is much larger than just the ticketing business,” he warned. It could “monopolize the entire music industry,” because the two entities manage or have business agreements covering all music-related revenue streams with hundreds of major artists. (Chicago Tribune)

The new company will form a firewall to separate ticketing and promotion, Live Nation Chief Executive Officer Michael Rapino, who would be CEO of the combined organization, told lawmakers last week. “We would absolutely make sure that both divisions are separately run,” Rapino told a Senate subcommittee on Feb. 24. (Bloomberg)  Senator Chuck Schumer (D-NY) made no secret of his opposition to the deal, dismissing it as "monopolistic behavior plain and simple".

Ticketmaster investors will receive 1.384 shares of Live Nation for each held. The value of the deal, $216 million at yesterday’s close, has dropped 48 percent since the deal was announced February 10th. Live concert promoter Anschultz Entertainment Group (AEG) has resigned to terminate their agreement with Ticketmaster if the deal is approved by regulators, according to a letter AEG sent to the SEC on February 6th, four days before the deal was announced.

I first read of the proposed merger between Live Nation and Ticketmaster, the world's largest concert promoter and top ticket seller respectively, in a cover story on Ticketmaster CEO Irving Azoff in an edition of the Weekend Wall Street Journal from early February.  I had heard of the man but knew little about his story, which I admit to be very impressive.  The piece was biased, and understandably so considering it was a feature on Azoff's career and life, so there was no critical analysis of the merger or details of the terms. I finished reading with no opinion of how the deal would affect the music industry.

In Monday's Financial Times, the editorial board concludes that the deal "...would work against the fans in the longer term, no matter what innovations were on offer initially".  After reading the FT's compelling argument against the deal I began to think about the implications for the music business of the merger's success.  After reading Jerry Mickelson's full statement before Congress (see below) it became clear what the larger implications of the merger would be for the independent live music business- eradication.

Hopefully Chuckie Schumer has the last word...

Technorati Tags: Live Nation, Ticketmaster, Music Business, Jerry Mickelson, JAM Productions, Charles Schumer, Senate Judiciary Committee, Michael Rapino, Irving Azoff

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