Archive for October, 2009

America builds a new embassy in Baghdad

October 27th, 2009

The most expensive embassy in the world

In these times of hi-tech surveillance equipment, hi-tech spying games and hi-tech international politics, just about the most sensitive thing any government can do is to build a new embassy in a foreign country.

The shift in Iraq

The US presence in Iraq is slowly moving from peacekeeping activities to reconstruction and one of the focal points is the construction of a brand new embassy – not just another embassy, but the largest and most expensive embassy in the world. The grounds along the Tigris River cover 104 acres, about the size of Vatican City. The construction cost is over $700 million and took 34 months, meaning that the contractors earned something like 20 million dollars per month.

The result

According to a report issued last week by the State Department’s inspector general, the construction “is significantly deficient in multiple areas” and may not meet safety codes. It called on the State Department to seek $132 million in damages from the main construction company, First Kuwaiti General Trading and Contracting, principal contractors. Walls and walkways are cracking, sewage gas flows back into residences, wiring is substandard, fire protection systems are faulty and other safety provisions do not meet contract specifications.

To sue or not to sue?

The US Bureau for Overseas Building Operations is considering whether to seek reimbursement, although they stated that “the deficiencies are not adversely affecting embassy operations.” The scale of the embassy is massive while its aesthetic appeal is minimal. The campus comprises 27 buildings in boxy, tan concrete, including apartments for 1,100 people. The heavily guarded site has a 15 foot thick perimeter wall around it and was built by a Kuwaiti contractor who employed only foreign staff.

The faults

The report on the completed building lists problems with water, wiring, design, automation, sewage, walls, ceilings, power generators, emergency safe areas and structural reinforcement to protect the embassy from earthquakes. It says that First Kuwaiti charged for $33 million worth of design services that were either incomplete or undocumented. The report says construction was also mismanaged by the government overseers. In order to speed construction, the Bureau of Overseas Building Operations created a standalone agency to act as contractor, outside the normal review process. This agency failed to enforce contracts or to maintain quality control, the report says. The

Iraqis are disappointed

Basically the Iraqis are saying that if the US couldn’t do a proper job on the embassy project, how will they fare on the entire Iraq project?

Budget overrun

The original 2005 budget was supposed $592 million, but as in every construction project there were “extras”:

• $4.6 million in restitution from First Kuwaiti to repair safe areas for staff members, which were not built to specification;
• $14 million to install seismic bracing against earthquakes;
• $11 million to compensate for an inefficient power plant;
• $4.6 million to replace fire protection systems; and
• $1.5 million to repair faulty plumbing in 200 locations where sewage gas could escape.

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Oil’s up, Gold’s up but the dollar? Down, down, down

October 26th, 2009

Oh mighty dollar, where are you?

What’s happening? Could this the beginning of the demise of the US dollar as the dominant currency in the world? Is it about to be to be replaced by the next big thing in the history of economics and finance, namely the Chinese Renminbi or Yuan? What’s going on?

International trade

International trade is traditionally carried out in dollars. Suddenly things are changing. The Chinese government is making agreements, first with Brazil and now with Malaysia, in which trade will be conducted in the currencies of the countries concerned: renminbi and reals, or renminbi and ringitts. The US dollar will be standing outside the fence and watching.

The dollar

The immediate impression is that the dollar is imminently doomed, consigned to the proverbial garbage can of history, whereas the relentless rise of the renminbi is inevitable. But before you race off to enroll in “Mandarin for dummies” classes and mastering the use of chopsticks, let’s consider a few aspects of the “renminbization” of global finance.

We’ve been there before

The Western world went through a similar bout of angst and pessimism exactly 20 years ago with the Japanese yen, and the outcome was that the Japanese economy imploded in 1990 and has never recovered, whereas the American economy did recover and went on to much bigger and better things.

China is different

There are many arguments why China is different from Japan and why America is also different today. Very simply Japan committed national suicide by failing to procreate and so allowing their population to age and decline. This has sapped the vitality of the economy and continues to do so.

America

In contrast, the American economy is the beneficiary of fresh blood pumped in, both by natural growth and by new immigrants. The massive immigration of the 1990s and early years of this decade will be a strong influence on the American economy for many years to come.

I am dollar linked

I live in a dollar-linked economy and with the fall of the dollar, I am suffering. Look at this example. An article I wrote in April 2009 brought me about $25. In my local currency that was equal to 106.25. A similar article, which I hope will also bring me $25, will, at the exchange rate quoted by the bank today, bring me only 92.29, 13 percent less. And there is no way I can cut the link!

Dollar linkage

I know that 13 percent is not serious, but the point is that everything is linked and everything has fallen by that same 13 percent between those two dates. When it comes to buying an American car, for instance, we are talking about major money. If it is an apartment, and there are apartments priced in dollars, it can easily put an end to the deal. Of course there is a good side to linkage, but I’ll save that for another article.

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Sales Season is here

October 25th, 2009

Change in the weather season brings change in the sales season

It’s October, the cooing off month, the month when we take out our winter wear and the month I need money to update my wardrobe. I take one look at the latest sweatshirts, tracksuits and sneakers and I want everything I see. But there’s big spending competition out there. October is also sales month, the time when the stores hang out all the stuff they couldn’t sell to make place for the winter goods.

Just look at it!

Have you taken a look at the shoes in the windows? And at the clothes hanging on racks outside the stores? All the stuff I couldn’t afford before summer is now on sale at half price and I’m determined to buy and buy and buy. At least I’ll have it for next summer. I may be able to even wear some of those clothes and shoes this month.

The sandals

The problem with sales shopping, as all we women know, is that you start with one little item, say a pair of sandals. They are light, they are pretty, they are something you will wear only a few times when you go down to the beach and they are cheap. So you buy them. It’s no big deal, and buying on a sale and getting a bargain is like getting a vitamin shot, it makes you feel good. The assistant puts them in a bag, you pay and turn to walk out and you see that pair of shoes that you have been looking for the whole year. Is this where they’ve been hiding?

The shoes

You try them, they fit well so you buy them too. They were not exactly on the sale, but right next to it and anyway the assistant said they were reduced. The shoes are Burgundy, a deep shade of red almost unknown in the fashion industry. They need a dress to make them look good.

The dress

Now the hunt starts. You go from store to store, the cheap ones, the expensive ones, the ones with the sales and the ones that never hold sales. You find a red dress. It’s not exactly burgundy, more Bordeaux. You’ll have to put the shoes on to make sure these colors are in sync and don’t clash. The color match is good. The price of the dress is no joke, but as the assistant assures you, it’s the only one in town. I think a little bolero jacket would go well on that dress. We have something in black in wild Thai silk, Madam. There, isn’t that stunning?

The glasses

At home you put all the shopping on and stand in front of the mirror. Not a bad day’s work, you think. There are still a few adjustments necessary. Change in nail varnish and lipstick for sure and oh my, new spectacles. Super high density progressive bifocals and brother do they cost!

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