The Agonist - Opinion

Bill Moyers on Afghanistan

Sat, 21 Nov 2009 09:59:28 -0800

Our country wonders this weekend what is on President Obama's mind. He is apparently, about to bring months of deliberation to a close and answer General Stanley McChrystal's request for more troops in Afghanistan. When he finally announces how many, why, and at what cost, he will most likely have defined his presidency, for the consequences will be far-reaching and unpredictable. As I read and listen and wait with all of you for answers, I have been thinking about the mind of another president, Lyndon B. Johnson.

...

Lyndon Johnson secretly recorded many of the phone calls and conversations he had in the White House. In this broadcast, you're going to hear excerpts that reveal how he wrestled over what to do in Vietnam. There are hours of tapes and the audio quality is not the best, but I've chosen a few to give you an insight into the mind of one president facing the choice of whether or not to send more and more American soldiers to fight in a far-away and strange place.

The show is definately worth watching or reading. Whatever The Big O's decision you can rest assured that it will be a political one..., not a moral one. Just as LBJ's decisions were.

LYNDON B. JOHNSON: And I told them, let's try to find an amendment that will-we haven't got any Congress that will go with us and we haven't got any mothers that will go with us in a war. And nine months I'm just an inherited-I'm a trustee. I've got to win an election. Or Nixon or somebody else has. And then you can make a decision. But in the meantime, let's see if we can't find enough things to do to keep them off base, and to stop these shipments that are coming in from Laos, and pick a few selected targets to upset them a little bit, without getting another Korean operation started.

Moyers sums it up...,

BILL MOYERS: Now in a different world, at a different time, and with a different president, we face the prospect of enlarging a different war. But once again we're fighting in remote provinces against an enemy who can bleed us slowly and wait us out, because he will still be there when we are gone.

Once again, we are caught between warring factions in a country where other foreign powers fail before us. Once again, every setback brings a call for more troops, although no one can say how long they will be there or what it means to win. Once again, the government we are trying to help is hopelessly corrupt and incompetent.

And once again, a President pushing for critical change at home is being pressured to stop dithering, be tough, show he's got the guts, by sending young people seven thousand miles from home to fight and die, while their own country is coming apart.

And once again, the loudest case for enlarging the war is being made by those who will not have to fight it, who will be safely in their beds while the war grinds on. And once again, a small circle of advisers debates the course of action, but one man will make the decision.

We will never know what would have happened if Lyndon Johnson had said no to more war. We know what happened because he said yes.

That's it for the Journal. I'm Bill Moyers. See you next time.

http://www.pbs.org/moyers/journal/11202009/transcript1.html

Treasury Yield Plunge Sends Warning

Sat, 21 Nov 2009 09:39:05 -0800

By RANDALL W. FORSYTH | MORE ARTICLES BY AUTHOR
Collapse in note yields suggests economic distress will keep Fed on hold well into 2010 or beyond.

IT'S THE CRASH YOU DIDN'T HEAR. Not in the price of any security market, but in short-term U.S. Treasury yields.

Treasury bills once again were trading at negative interest rates Thursday, a mind-boggling state of affairs that hasn't existed since the panic late last year. That followed the collapse of Lehman Brothers and the assorted knock-on effects, notably the run on money-market funds after the Reserve Fund "broke the buck."

More significantly, the yield on the two-year Treasury note -- the most actively traded security on the planet -- fell to 0.669% Thursday, within a hair of the low of 0.657% set in the dark days of last December, according to data on Barrons.com's Market Data Center.

But now, the economy is supposed to be well on the way to recovery, in contrast to late last year when it seemed we stood on the precipice of a second Great Depression. The Dow is back above 10,000 and bulls claim all's right with the world. Why, then, would any rational investor be willing to lock up money for two years for the paltry return of less than two-thirds of 1%?
break
Wacky things have happened before in the T-Bill market. Over the turn of the year from 2008 to 2009, investors were so skittish about where they stashed their cash that they effectively paid Uncle Sam to hold it, resulting in negative yields on T-bills. Other times have seen odd happenings in the T-bill market, usually during times of stress when investors wanted only the safest assets.

Unlike T-bills, which have only weeks to run until maturity, the two-year note embodies market expectations for interest rates. Longer-term yields are simply the sum of successive short-terms; all else being equal, you should earn the same from two consecutive one-year notes as a two-year note. Nobody knows what the future holds, of course, so what the second year will yield is just a guess.

Majority of Republicans Believe ACORN Stole the Presidential Election

Sat, 21 Nov 2009 05:52:13 -0800

Thursday, November 19, 2009 3:30 PM
Poll: Majority of Republicans Believe ACORN Stole the Presidential Election
Katie Connolly, Newsweek

As his hopes of winning the congressional election in New York's 23rd district fade, conservative candidate Doug Hoffman is clearly getting desperate. Today he's blaming his loss on "ACORN, the unions, and the Democratic party" who he alleges, without a shred of evidence, tampered with votes to rig the election against him. Never mind that ACORN told David Weigel that they didn't have volunteers in the area, or that it largely operates in poor urban communities, which NY-23 is not. For conservatives, ACORN is shorthand for the evils of the left.

On the heels of that news, Public Policy Polling released this shocking nugget on its blog: "a 52% majority of GOP voters nationally think that ACORN stole the Presidential election for Barack Obama last year, with only 27% granting that he won it legitimately." Say what? More than half of Republican respondents believe the president was elected fraudulently! That's a stunningly high number. It's disturbing, not only as a demonstrable lack of faith in America's democracy but as an expression of wanton ignorance. Worse, it illustrates the effectiveness of Glenn Beck, Rush Limbaugh, et al., alongside a well-funded "Stop ACORN" campaign, in creating an atmosphere where unquestioned lies become received wisdom.

Barack Obama won the election by an easy margin. In the end, it wasn't even close. John McCain knew that and delivered his concession speech before 9:30 p.m. Obama didn't just win in the urban areas where ACORN could actually be seen as a force—and which would likely have voted for him regardless of ACORN's participation. He won in places like North Carolina, where ACORN had just eight staffers. There's been no formal challenge to the electoral validity of the votes.There's simply no proof to back up claims that ACORN tampered with ballots. But there is evidence of irresponsible reporting catalyzing misguided fears.

A Retail Disastor

Fri, 20 Nov 2009 01:02:43 -0800

It is midnight. The IT processes I stayed up to babysit at this critical time for retail companies have completed. I am anticipating the likely bankruptcy of the business I've worked for these past years. To say sales are "soft" does not really do justice to what is happening. I will most likely join the ranks of the unemployed sometime before Spring; perhaps sooner if the Bank pulls the line of credit out from under us.

We sell across the US and we know that one of our competitors is in the same trouble; this competitor is much much larger than us and you, dear reader, dear consumer, most likely know their name. They were suckered in by those first few weeks of October when it seemed like it might, just might, be a decent holiday season for retailers. Its not going to be a good retail season; imagine that in a period of just four weeks sales have plummeted 70% even as we begin the holiday shopping season. Its not just our main store but all of our sales channels; even the Amazon channel is down.

Something happened back in mid-October to knock the wind out of retail's sales. I cannot vouch for other sectors of the retail industry but our sales are virtually stopped. It is a Tsunami of consumer despair washing away these few good jobs in an already devastated community.

'Unreasonable' to Expect al Qaeda to Ignore Success of Somali Pirates

Thu, 19 Nov 2009 12:48:19 -0800

In charting how far afield (or a'sea) that Somali pirates are venturing into the Indian Ocean, Gadahn at maritime blog Information Dissemination also points out. . .

With Army Generals in Afghanistan now pointing out that Al Qaeda has almost entirely shifted out of Afghanistan to Pakistan and Somalia, Somalia should be treated as an emerging asylum for the global jihad with intent to attack the United States. It is unreasonable to suspect Al Qaeda movement and activity in Somalia only to additionally assume they will ignore the incredible effectiveness of piracy originating from Somalia. The tactics, training, technology, and revenue streams surrounding the Somali piracy problem suggests an ideal environment for further expansion of Al Qaeda capabilities and techniques, and the absence of any containment off the coast of Somalia is an invitation to future disaster for western nations that depend on trade at sea. The ranges involved in recent attacks highlight that containment must be examined as the next step, because if the global community does not move to contain the expanding problem of piracy in the Indian Ocean, we are playing with gasoline in one hand, and a flamethrower in the other.

Do Agonist readers think al Qaeda would attempt to take over from the pirates or initiate copycat operations?

Thanks to Eric Martin at Progressive Realist for the link.

http://www.informationdissemination.net/2009/11/somali-piracy-continues-expanding.html

The downside of a weak dollar

Thu, 19 Nov 2009 06:52:34 -0800

MarketWatch First Take

Nov. 13, 2009, 2:03 p.m. EST
The downside of a weak dollar
Commentary: Inadvertently driving a bigger trade defici

By MarketWatch

SAN FRANCISCO (MarketWatch) -- The latest international trade numbers border on blasphemy.

For the generations of college kids who learned the ABCs of global economics from Paul Samuelson, a weak dollar is supposed to tip the balance of trade in favor of the nation's exporters. So why is the trade deficit exploding?

The dollar has lost 16% of its value against six other major currencies since March. In one quarterly report after another, companies doing business abroad showed they padded their profits every time they converted sales in local currencies back into U.S. dollars -- effectively enjoying the equivalent of a price hike without actually hiking prices.

The weaker greenback also gives American companies a competitive edge over the foreign rivals when bidding on big projects.

So why in the world did the U.S. trade deficit widen in September? Not just a little, either.

The Commerce Department reported Friday the deficit surged 18% to $36.5 billion from $30.8 billion in August, its biggest one-month jump since 1999. Read about the September trade gap.

What gives?

The answer is pretty easy, really: Oil. Despite the nation's manic obsession with bank bailouts and unemployment, crude oil remains its Achilles heel.

Do They Subscribe to GQ in the Pentagon?

Mon, 16 Nov 2009 20:13:31 -0800

Something hits me every time I see American troops in Iraq or Afghanistan. Several World War Two veterans and fellow Vietnam veterans I know have the same reaction. It has nothing to do with the politics of the wars. It’s the uniforms of our soldiers today, the ones in combat zones. They’re astonishingly tidy. Parade-ground tidy, one might even say. I know the reason and it’s partly my fault.

Even though there are no Vietnam veterans in the military anymore (unless there’s a white-walled sergeant major somewhere with hash marks like the Union Pacific railroad), the military looks back on the disciplinary troubles of the Vietnam War with horror and disgust – as a Calvinist minister would a drunken weekend in a Swiss whorehouse. The wayward minister could deny it ever happened, but our generals can’t. There’s news footage and a lot of us were there. Insubordination and AWOLs were on the rise. Morale and cohesion were on the decline. Discouraging words were heard as the peasants were daring to question the regime.

The Pentagon aristocracy and their socio-consultants think they know why. It had nothing to do with incurring several hundred thousand casualties in a pointless war. Nah, couldn’t be. Anything wrong with the leadership? Well, two of the most admirable people I’ve ever known were a sergeant and a captain over there, but choi duc oi there were a lot of truly bad NCOs and officers back then. Couldn’t read a map, hated minorities, and assumed three chevrons or a bar or two made them natural leaders of men before whom lower enlisted personnel must bow. Nah, that had nothing to do with the problem.

The home office concluded it was the uniforms of the guys out in the field. Yeah, that and the hair. It was letting the guys go without shaving for a couple days and without buttoning up their jungle fatigues. Signs of the apocalypse. It was the slovenliness of soldiers that brought anarchy. Forget the Mayan calendar.

Man, I’d like to see one of today’s four-stars go back and tell these guys on Guadalcanal and at Dak To that they need to straighten up and look STRAC.

“You’re all disgraces to the uniform!!!”

“We know that . . . sir. Now excuse us but we’ve got to get the wounded out and set up Claymores.”

A reckless disregard for officialdom’s idea of what the American fighting man should look like was our war-given right. Our attire and demeanor – War Casual, let’s call it – was something we’d earned in the deal to fight in a hot, malarial, god-forsaken country where, unbeknownst to us, one day our tennis shoes would be made and other people's resorts would be built. It was a source of pride. We were a band of disheveled brothers who could push aside the Pentagon foppery that rolled so rapidly downhill. All in all, I’d say War Casual actually helped cohesion and morale.

Most of our NCOs and lieutenants let it go, though they abided by the regs. They wanted to be platoon sergeants and captains. We wanted to be PFCs: Proud Fuckin’ Civilians. We did our jobs; we just bitched more and shaved less. The better sergeants and LTs knew that. We were adopting the War Casual look our fathers had made fashionable from New Guinea to the Siegfried Line.

No one’s knocking today’s GIs here. It’s hotter in Anbar than it was in An Khe; the mountains of Paktia are even tougher than the ones in the A Shau. We knew to the day when we got out and never heard of stop-losses or fourth deployments. I just wonder how many casualties there’ve been from being buttoned up tight like that under those conditions. But I’m sure that’s all been factored in.

The generals don’t understand our soldiers. They eat chow with “their boys” and chat demotically with them, but they don’t understand them. They honestly think those guys would be less effective soldiers if they ignored a uniform reg or two while walking patrols in the Middle East and Central Asia.

The generals don’t understand “their boys” because they’ve never been in a war. They’ve commanded battalions and brigades, but they’ve never done patrols in 95-degree heat, or climbed a mountainside with a rucksack and a Prick-25, or had to confront their own mortality at nineteen or so. If they had, they’d have a better perspective on their regulations, and a better understanding of the troops they order around.

Brian M. Downing is the author of several works of political and military history, including The Military Revolution and Political Change and The Paths of Glory: War and Social Change in America from the Great War to Vietnam. He can be reached at brianmdowning@gmail.com.

Benefactors or Piranha ? Our Foreign Friends

Mon, 16 Nov 2009 11:50:46 -0800

Like Blanche DuBois, the United States is "down on its uppers." We rely on the kindness of foreigners to finance our government.

A Whole Lot of Kindness

U.S. Department of the Treasury, Oct. 16, 2009

These customers must be extending kindness. How else do you explain the massive purchase of Treasuries Securities? They're ignoring wars that we can't afford and defense expenditures equaling 50% of the world's total spending. They're also ignoring the giveaways to failed Wall Street firms and others plus the forgiveness of the executives in charge by assuring their ongoing positions and bonuses.

It would be easy for an investor to look at the United States and say forget about it. But they don't. As a result, we're able to function, at least for a while, as though we're not totally upside down. Of course, there's self interest involved. If we hit the skids, they're likely to feel the back draft. But their self interest serves us well right now.

But there's another take on our benefactors. A "new kid" on the advocacy new block is sounding the alarm. Economy in Crisis is the new media group and their publication is America's Economic Report Daily.

"The American sellout is happening faster than ever as our companies are being taken over in a buying frenzy by foreign investors – like piranha fish consuming its weakened prey. Many of these companies have taken one hundred or more years to develop and were the source of our wealth, strength, and living standards; now overnight, gone. We should be concerned and even outraged that our government let this happen." About Economy in Crisis

Economic Emergency has some well known political figures signed up. These include Senator Byron Dorgan (D-ND), Pat Buchanan, Paul Craig Roberts, and former Sen. Fritz Hollings (D-SD) are the headliners. There also Democrats listed including Danny Schechter, Dan Mercia, and independent commentator Thom Hartmann.

There is a good deal of finger pointing in the group's mission statement. Foreign investors are like a school of piranha rippling the flesh off this country by devouring our businesses. And it's the "government" that let it happen. This is curious. Is the government some sort of discrete entity operating on its own rather than an arm of the financial interests that buy and control those who make up the three branches?

The people are left out in favor of offering, "solutions to return America's former economic glory" by becoming a key information source showing how the "US economy is being drained by foreign competitors and how our standard of living is being diminished."

Where were these people in the 1980's when Ronald Reagan systematically destroyed the union movement? Where were they over the past three decades when wages have been essentially flat? Where were they when money polluted election after election giving us a bought and sold Congress and White House? Did they notice that we've been spending half of our budget on war and fighting a few lately that have nothing to do with defense? We've had a tech bubble and a housing bubble. The former ended poorly. The latter triggered the current disaster. What glory? When would that have been?

It looks like our benefactors are losing faith based on these percentage changes from Dec 08 through Jul 09. Is this a good time to start calling the foreign governments that keep us afloat nasty names?

You can tell a lot about a political advocacy group by what they leave out. This organization has some good points on trade agreements etc. but there is hardly any mention of people, other than in reference to "our living standards." Who knows? That might mean the living standards of the membership.

Even if the foreign investors are piranha, the feeding frenzy wasn't arranged by the fish. It was home grown; Made in the USA by the very people screaming for protection right now.

END

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The Disunification Church

Mon, 16 Nov 2009 06:27:26 -0800

Everything in Rev. Sun Myung Moon’s sprawling religious enterprise is about family.

His Divine Principle, the core of his religious teachings, posits that Rev. Moon and his wife Hak Ja Han Moon are humanity’s True Parents. They were placed on earth by God to rescue humanity from war and want by creating exemplary families that will through behavior and example show the way to world peace and unification. Rev. Moon claims that Jesus did not succeed in his mission to save humanity, because he did not marry. Jesus has therefore anointed Rev. Sun Myung Moon as the true Messiah. In the heavenly realm, Rev. Moon asserts that evil men like Adolf Hitler and Joseph Stalin have repented and have now declared Rev. Moon as the true Messiah. Rev. Moon’s Unification Church’s proper name is the Family Federation for World Peace and Unification.

Mr. Moon and his wife have 14 children. As you may expect, they are described on the Unification Church website as having raised exemplary families. They are accomplished religious leaders (many of them are referred to as “reverend”), business executives, community organizers, artists, and of course, peace advocates – though no mention is made of Moon Young-jin, who died of suicide in 1999.

Naturally, with so many talented children, many of them have found their way into employment in the family business. In fact, all the critical management positions in the Moon conglomerate are held by his children – an arrangement as nepotistic as it could possibly be, though conceivably justifiable since the companies are privately owned by Moon.

More after the jump.

Rev. Moon is turning 90 this year and has decided to retire to the Garden of Eden, as he refers to a private resort he is building in Hawaii. He therefore announced his successor to be Moon Hyung-jin, age 30, known as Sean. Technically, Sean Moon has been named head of religious missions, but that is the “whole enchilada” when it comes to ultimate authority and power in a church whose founder is the Messiah, sent to deliver salvation for you and me.

This appointment has not set well with Preston Moon (Moon Hyun-jin), who is head of International Operations, which includes primarily management of The Washington Times, Rev. Moon’s conservative mouthpiece founded in 1984. Preston Moon has expressed his unhappiness by going rogue – two weeks ago he fired the top management of The Washington Times, had them escorted out of the building by security guards, and confiscated their laptops and cell phones. This has left the newspaper in turmoil, with a lot of speculation as to whether it can survive this upheaval. The newspaper has run deficits from the beginning, and is supposedly suffering dearly in this recession.

What Preston Moon expects to achieve from this coup is unclear. His newspaper has survived only on the subsidies from profitable Moon businesses, especially True World Foods, which provides over 75% of all sushi to US restaurants, and counts 9,000 customers currently. Preston Moon’s recent title as head of International Operations may give him control over the fisheries business, though that is unclear because in the past Rev. Moon himself has kept his hand firmly on this, his biggest money earner.

Another possibility is that Preston Moon has an ally in his brother, Justin Moon (Moon Kook-jin), age 39, responsible for what are described as Korean Business Ventures. This includes a variety of activities in South Korea, as well as the largest commercial hotel in North Korea (Rev. Moon is as close to Kim Jung-il as he is to George H.W. Bush, on whom he has lavished hundreds of thousands of dollars in speaking fees). Justin Moon also manages another lucrative franchise, Kahr Arms, located in Blauvelt, NY. This company manufacturers handguns and automatic weapons, and business has been booming since the election of Barack Obama. The church explains this investment in armaments as necessary to effect world unification, though the truth is probably to be found in Justin Moon’s biography. He founded Kahr Arms with money from his father, and he has had a love affair with handguns since age 14.

If Justin Moon is helping his brother, it is being done quietly. For the moment, the official line from the church this week is that Preston Moon operated in an “unprecedented” manner. This was the description provided in a press release issued by Rev. Moon In-jin, Tatiana Moon, who is head of the Unification Church in the US. She said that press reports claiming there was a feud underway between Preston Moon and Sean Moon were completely untrue. Instead, what had happened is that Preston Moon had acted unilaterally and without authority from True Parents.

True Parents are heartbroken and dismayed over what has happened, especially in light of the fact that they have been guiding our movement worldwide, over the last several months, specifically to remain united with their spiritual leadership.

In other words, according to the church, it is time for Preston Moon to come back into the fold, in obedience to his parents. It is easy to imagine Rev. Moon as “heartbroken”. Obedience to one’s parents is the prime virtue in Korean culture, and Rev. Moon is suffering considerable shame from this disrespect. The losses he has piled into The Washington Times have been a small price to pay for the influence he achieves from this newspaper. It is all part of a pattern of subsidies to conservative causes, like his investment in Timothy LeHaye’s Left Behind series, or the millions spent in keeping Jerry Fallwell’s Liberty University afloat. Preston Moon’s action may have damaged the paper irrevocably, and Rev. Moon may be forced to fire him for insubordination.

But if it comes to that, what sort of Messiah is Rev. Moon if he cannot control his own “exemplary” family? All of these children mentioned have been born and raised in America. They all attended Harvard or Columbia (Harvard has profited nicely from the Moon family), and they may be more American than Korean. Someone has to run the business empire when Rev. Moon dies, and Preston Moon may feel his business experience trumps the religious credentials of his much younger brother, Sean Moon. In fact, Sean’s credentials aren’t all that sterling – he left the church for a while after his brother killed himself, and Sean became a Buddhist before returning to his True Parents.

Perhaps the crux of the problem is that it is not clear what Rev. Moon is leaving behind. Is it a religion, or a multi-billion dollar business? These two things are not necessarily incompatible – look at any televangelist today (especially the exceptionally wealthy Pat Robertson). But for the two to work together, you need one person projecting an image of religious sanctity and evangelism, while running a corporate empire in the background. By splitting up his empire, giving each child a business to run, and leaving the least-business like child to carry on the religious mission, Rev. Moon has failed to create a structure that blends business and religion. And if you can’t do that, what’s the purpose of having a religious cult in the first place?

Politicians Have Filled the Pipeline with Pain for Middle America

Sun, 15 Nov 2009 20:59:44 -0800

The announcement of financial overhaul legislation in the U.S. Senate this week smacked of irony as its author, Senator Chris Dodd—the recipient of a sweetheart rate on his own home mortgage—announced a sweeping 1,136 page piece of legislation to “protect consumers.” It appears at this point that the protection consumers and Middle America really need is from this nation’s politicians, who have too long lined their pockets with campaign contributions from big business and who have allowed financial institutions to fleece Middle America.

It wasn’t but a couple of years ago that big business and congress all but eliminated the ability of consumers to effectively discharge their debts in bankruptcy proceedings. At the same time, banks and financial institutions were making loans to borrowers who clearly could not qualify. Banks, financial institutions and credit card companies continued extending generous limits on credit cards and lines of credit to consumers. Now be fair, much of the mortgage activity came from Democrats in congress who believed that everyone had an inalienable right to own a home, evidently whether they could afford it or not. And naturally, Republicans, who long ago sold their soul to big business, positioned their bank and financial institution contributors for all of the mortgage business.

Middle America knew and assumed the risk that what goes up would someday come down, perhaps crashing down, which it did. But when it did and as many Americans lost and continue today to lose their jobs, bankruptcy was and is simply not an available option. Our politicians and big business have virtually eliminated it as an effective option for many consumers.

Now, consumers that are interested in honestly reworking their mortgages cannot even get a return phone call from their lender, and if they do they are told they do not qualify for any sort of loan modification.

So here we are—after encumbering themselves with mortgages they cannot afford, credit cards and credit lines they cannot pay down, financial institutions have the shameless and arrogant audacity to raise consumers’ credit card interest rates to 30%. Clearly, consumers have to take a certain degree of responsibility for their own condition, but how did our elected members of congress and the senate allow big business to systematically repeal consumer protections at virtually every turn?

Middle America really needs to understand how and why our politicians have allowed financial institutions to raise credit card interest rates to a level that is clearly usury. No consumer knowingly consents to a 30% interest rate, regardless of whether there’s a meaningless disclosure on the back of his or her monthly credit card statement on page 3 in tiny type font. Nor do consumers knowingly consent to what has become an ordinary practice by banks and financial institutions of charging consumers $35 for overdraft protection or checks returned due to insufficient funds. Sure, consumers can choose to bank elsewhere, but the practice of fleecing consumers with fees has become so universal by financial institutions that consumers really have no choice.

Without bankruptcy as a viable option for many in Middle America, there is plenty of pain left in the pipeline for years to come as consumers will remain enslaved with unmanageable consumer debt. With no end in sight, consumers will continue to labor under the heavy load of mortgages on devalued homes they cannot afford, credit card bills they cannot pay, and no available remedy in a bankruptcy court that can set them free to start over. It appears that consumer protection is dead and caveat emptor is alive and well.

A. Muser
http://americanmuser.wordpress.com/

Middle America is Disillusioned with the Left and Right

Sun, 15 Nov 2009 20:54:28 -0800

“Disillusioned” is the word that best describes how many Americans feel after eight years of George Bush and the election of Barack Obama a year ago. Republicans had a majority in congress and the presidency, yet achieved little for Middle America. They betrayed voters by inflating the deficit and growing government, sending men and women into nation-building wars whose purposes are still unknown, and created a culture of moral and ethical corruption in Washington D.C. It was under lax and pathetic regulatory oversight that a Republican president and Republican congress allowed corporations to betray shareholders with questionable and highly leveraged credit default swaps, only to be followed by a $700 billion taxpayer bailout created by the Bush administration—so much for limited government. Republicans are a party without a message and without a messenger.

Last week’s election results in Virginia and New Jersey, where Republican candidates for governor triumphed over their Democrat opponents, say more about the public’s rejection of Obama’s big government solutions and less about Republicans articulating a message to help Middle America. If Republicans think the public is embracing the party again, they are simply whistling past the graveyard, drunk on their own greed, and completely out of touch with the needs of Middle America.

Not that Democrats are offering any worthwhile solutions to address the most pressing needs of Middle America—job creation—but at least Democrats are intellectually honest about their desire for big government, universal healthcare, taxpayer-funded abortions, labor union power, and a litigious society for plaintiff lawyers to fleece the public. There is something, dare I say “refreshing and frank” about knowing where Democrats are on issues that impact Middle America, whereas Republicans pretend to be something they are not.

It is time for the Republican party to stop blindly whoring for the business community and begin addressing the issues that impact Middle America—job creation, affordable healthcare for all, and quality public education for our children. Republicans are a one-trick-pony, where “tax cuts” are their solution for all of Middle America’s problems. It’s because the party cannot articulate rational policy solutions to the real problems we face.

Take healthcare for instance; the Republican solution has been health savings accounts (HSAs). Are you kidding me? We can’t get people to save money in IRAs, never mind HSAs. That’s the best Republicans have got? Why don’t Republicans push to allow consumers to shop for healthcare across state lines, require everyone to have healthcare, and deny insurers from rejecting consumers with pre-existing conditions?

If Democrats have any hope of maintaining power, they too need to put viable solutions on the table for Middle America, where people care a hell of a lot more about jobs and the economy than government-run healthcare, union card check, the protection of gays from hate crimes, and cap and trade. Both parties have failed miserably to address the needs of Middle America, which I suppose is why I feel so disillusioned with both parties.

A. Muser
http://americanmuser.wordpress.com/

US finally wise to Pyongyang's ways

Sun, 15 Nov 2009 18:39:58 -0800

Asia Times, By Andrei Lankov, November 12

SEOUL - In the past few weeks, North Korean watchers have been confronted with a sight they do not see frequently: Americans outsmarting North Koreans.

Usually, the opposite is the case. North Korea might be a failing state, balancing on the verge of famine, but when it comes to diplomatic games, North Korean politicians are second to none.

They have studied the dangerous art of manipulating great powers since the 1960s, when they played Russians and Chinese against one another. They perfected their skills in the 1990s, when they managed to manipulate the US, South Korea and China into providing large amounts of food and energy aid while giving essentially nothing in return.

This was a remarkable achievement, and it seemed that the North Koreans would always have the upper hand when confronting Washington. However, this time things are different. North Korea's attempts to use tried-and-tested methods have backfired.

[...]

So, for a while, things seemingly worked in the usual way. However, by October, North Korean diplomats made an unpleasant discovery: the Americans, while smiling broadly and expressing their willingness to talk, were in no hurry to start actual negotiations, let alone shower North Korea with money.

Ambassador Stephen Bosworth, special representative for North Korea policy, is much-waited in North Korea, but he has not visited Pyongyang yet (and, in a telling gesture, did not even retire from his academic job). One can also expect that once negotiations finally begin, the North Koreans will make another unpleasant discovery: it is now far more difficult to squeeze concessions and money from the US.

There are at least two reasons for this change in mood. First, Americans are learning from their experience. This time, they have a much better understanding of both North Korean methods and the likely outcome of negotiations. When in 1993-94 the North Koreans drove tensions high, many people really expected a war and there was even talk about a preemptive strike.

[...]

However, this is an old story by now. It seems that after the second nuclear test in May and all associated statements, virtually nobody in the US government still clings to the belief that denuclearization of North Korea is possible. In other words, the Americans have come to realize the obvious: North Korea will stay nuclear.

I'm Not So Sure About Glass-Steagall

Wed, 11 Nov 2009 10:06:26 -0800

I started this out as a comment to Sean Paul's recent opinion that we should reinstate the Glass-Steagall Act, which kept lending banks separate from investment banks. Doing so would deny investment banks access to cheap credit and FDIC insurance, which would mean they wouldn't be able to over-leverage themselves like they did over the last few years.

It sounds good to me... but frankly I'm not smart enough to know if its a good idea... and I do have one nagging concern... We need to make certain we keep our banking system not only stable, but profitable. Because if we don't, we might cripple part of our economy.

More after the jump.

Back when George Washington was president, Alexander Hamilton set up a financial system for our country. It had scary concepts like federal reserves, central banks, government bonds, etc. There were some financial bubbles and crises during this time... essentially because normal people went nuts and traded stocks instead of doing "real work."

However... Hamilton knew that in order for the US to be a strong country, we needed these things. We needed strong central banks who -- quite frankly -- didn't concern themselves over whether or not people were starving. That's the responsibility of the politicians; not the bankers. It sounded cruel, but that was the only way to create a country strong enough to avoid the tyranny of European powers.

Jefferson HATED Hamilton and his New York money men... and criticized Hamilton relentlessly for his greed. However, when Jefferson became president, did he dismantle the system? No... because it was necessary.

Fast forward to today... if we repeal Glass-Stegal -- but Dutch and English banks do not -- won't that cause capital flight? Won't people get a safe, high interest rate with foreign banks? Won't internet banking just cause people to chase the best deals, regardless of regulations?

UPDATE: And what about Chinese banks? It's usually not a good deal to put cash in savings accounts in European banks, mainly because exchange rates are too hard to predict, and your gains might be wiped out... but China pegs its currency to the dollar at an "official" rate. An insured savings account in China could make HUGE returns.

Yes, blending banks together means that they can take HUGE risks and still get government bailouts. So this is clearly a problem... but only if the banks are "too big to fail." Maybe instead what we need is a "cap" on how much the government will pay out for FDIC insured accounts? The government could make it clear that if you have money in a bank that is "too big to fail," your cash will no longer be FDIC insured.

Likewise... we need very firm regulations about inter-bank investment schemes that threaten the entire system. Things like credit default swaps should go the way of the dodo... but things like collateralized debt obligations might actually be OK.

I'd be perfectly happy keeping $50k in a savings account is an investment bank: it means that I'll probably get a higher interest rate. I'd get an even higher rate in a non-insured money market fund. If my bank fails, I won't see my money market again... but as long as my bank has assets under a certain amount -- say, $1 billion -- my savings account will be safe.

I think the cat is out of the bag, and Glass-Stegal will remain repealed... so we probably need to look towards regulations in other ways that allows banks to safely fail.

Paranoia Strikes Deep

Wed, 11 Nov 2009 03:44:17 -0800

New York Times, By Paul Krugman, November 9

Last Thursday there was a rally outside the U.S. Capitol to protest pending health care legislation, featuring the kinds of things we’ve grown accustomed to, including large signs showing piles of bodies at Dachau with the caption “National Socialist Healthcare.” It was grotesque — and it was also ominous. For what we may be seeing is America starting to be Californiafied.

The key thing to understand about that rally is that it wasn’t a fringe event. It was sponsored by the House Republican leadership — in fact, it was officially billed as a G.O.P. press conference. Senior lawmakers were in attendance, and apparently had no problem with the tone of the proceedings.

True, Eric Cantor, the second-ranking House Republican, offered some mild criticism after the fact. But the operative word is “mild.” The signs were “inappropriate,” said his spokesman, and the use of Hitler comparisons by such people as Rush Limbaugh, said Mr. Cantor, “conjures up images that frankly are not, I think, very helpful.”

What all this shows is that the G.O.P. has been taken over by the people it used to exploit.

The state of mind visible at recent right-wing demonstrations is nothing new. Back in 1964 the historian Richard Hofstadter published an essay titled, “The Paranoid Style in American Politics,” which reads as if it were based on today’s headlines: Americans on the far right, he wrote, feel that “America has been largely taken away from them and their kind, though they are determined to try to repossess it and to prevent the final destructive act of subversion.” Sound familiar?

But while the paranoid style isn’t new, its role within the G.O.P. is.

Why This Economic Recovery is Destined for Disaster

Mon, 09 Nov 2009 17:48:15 -0800

A most revealing comment was made today by The Maestro, Alan Greenspan, speaking at a conference in Alberta on energy and the global economy:

We have been very fortunate that the stock markets moved back and are re-liquifying the whole process.

He pointed to the “wealth effect” created by a rising stock market, especially when investors cash in their capital gains.

In olden times, before Alan Greenspan spent over a decade as Federal Reserve Chairman, Fed officials worried about the growth in money supply, the level of prices in the economy, unemployment, and the strength of the dollar overseas. In fact, if you read the enabling legislation for the Fed, these are the things the Board of Governors should be concentrating on.

Greenspan of course is no longer the Chairman of the Federal Reserve – his protégé Ben Bernanke is. For the most part, when he was Chairman he never spoke about the stock market for fear of influencing its direction. Now that he is a private citizen, he can blurt out whatever he wants to say, and how illuminating it is to hear him talk about the stock market “re-liquifying” the economy.

Not for nothing was he given the sobriquet “Bubbles Greenspan” when he was in office. Economists, Fed watchers, traders, investors – all sorts of people suspected Greenspan never met a financial bubble he didn’t like. He cheered on the 1990s tech bubble as an example of a paradigm shift in the economy. He sat back idly while the housing bubble in this decade blew out of all proportions. The best he could say was that central bankers were helpless in the face of growing financial market distortions, and all they could do was clean up the mess afterwards.

The reality was that he encouraged these bubbles through deliberate inaction. After the end of the tech bubble he was terrified of deflation, pushed interest rates to 1%, and kept them there long enough for a housing bubble to ignite. He gave speeches encouraging home buyers to take out adjustable rate mortgages – the type that have blown up disastrously in the face of thousands of homeowners. He wanted the explosion in consumer spending that resulted from the housing bubble. He didn’t care if he caused asset inflation, as long as it didn’t seep into the general price levels of the economy.

Were he still at the Fed, he’d obviously be very pleased with the stock market recovery this year, because it makes people more confident, it gives them the illusion of being wealthier, and in some cases if they cash in their gains, it gives them real money to spend. Maybe he’d be happy with the weak dollar, and the fact that the infamous “carry trade” has moved from Japan to the U.S. Now the speculators of the world borrow dollars at 0%, driving the exchange rate down for the dollar, and they invest in the hottest commodities, like gold, Chinese real estate, oil, equity markets everywhere, high yield bonds, and even mortgage backed securities.

Does Ben Bernanke believe in the re-liquifying dreams of The Maestro? In the infamous words of Sarah Palin, “You Betcha!” Just look at his actions. He has pushed interest rates to zero and said they will stay there for a long, long time. He is knowingly encouraging the carry trade and devaluing the dollar. Neither the Fed nor the Treasury has lifted a finger to support the dollar on the exchange markets. He has thrown trillions of dollars at the banks and encouraged them to revive their speculative practices from a few years ago before the crash. He is trying desperately to get the securitization business up and running again, and he would love the hedge fund and leveraged buyout boys to get back into the equity extraction game.

Of course, he would also love to see more controls on leverage this time, smaller bonuses being paid to bankers, and less swagger emanating from Wall Street, but he’s not pressing too hard on these points. The important thing is to get the economy back to where it was before 2007. Nor is he alone in this desire; the G-20 countries this weekend said the same thing – it is way too early to remove the excessive liquidity that has been pumped into the global economy.

This stock market rally is therefore both welcome and engineered by our financial masters. So is the bubble in gold, the collapse of the dollar, and in Asia, the construction of even more high rises and industrial parks that are destined to remain empty.

Not a single lesson has been learned from the market collapse last year. Every effort is being made to avoid letting anyone suffer any pain for their mistakes. The great global reflation that is underway is nothing but a repeat of the bubble-inducing liquidity push that occurred at the start of this decade. The whole effort is a tremendous gamble – a hope that real and substantive economic activity will be ignited by all this speculative activity.

But remember what Greenspan said is the end result of the stock market rally – a “wealth effect” – spending on vacations, McMansions, luxury automobiles, and other goodies for the wealthy who happen to own an equity portfolio. You yourself won’t be getting a decent raise in your salary; it certainly didn’t happen during the last two bubbles. The cost of education or medical care isn’t going down. In short, the real economy is not going to rebound based on the most recent bubbles.

Inevitably these bubbles too must burst. Where will we be then? For one thing, there will be a lot of embarrassed economists, almost all of whom now are predicting a slow but steady recovery, because that’s what the Leading Economic Indicators say, along with the stock market, credit spreads, and all the usual auguries. Few people are willing to say “this time is different”, but it really is different. The old tools of the past don’t work anymore. We are not suffering through a typical recession caused by overinvestment, excess inventories, and so on. This is much rarer – a recession caused by the collapse of credit, by too much outstanding debt that must now be paid or defaulted on, by deflation, and by a government that won’t be there this time to lift us up.

Perhaps then our central bankers will learn that asset bubbles are just another form of inflation, one that benefits a few of the wealthiest in the world, and hardly anyone else. Unfortunately, when an asset bubble bursts, we all share the pain.