Sunday, September 30, 2007
We're approaching the 20th anniversary of the 1987 stock market meltdown, not that that means anything. The stock market seems very happy with its .5% rate cut; maybe that means they expect the Fed to bail them out of any problems, like failed banks, not to mention failed hedge funds.
Friday, September 28, 2007
So, the Fed action aided speculators, hurt savers, and aided debtors. So, it's encouraging borrowing money to speculate in the stock market. That's definitely the behavior we want to encourage -- NOT!
Thursday, September 27, 2007
To critics it is now the "Bernanke put" - the belief that, as under Alan Greenspan, the US Federal Reserve will always ride to the rescue of Wall Street. The jubilant response of traders to the Fed's 50 basis point cut in the short-term interest rate might justify this suspicion. But saving Wall Street from its follies is not the Fed's objective. It is an (unfortunate) by-product of the attempt to do its job.The "unfortunate by-product" reference is similar to Alan Greenspan's reply to Jon Stewart on the Daily Show. Stewart asked Greenspan why it was that the Fed 50 basis point interest rate cut sent the stock market up over 300 point, thus benefitting the rich, while it meant that banks would pay less interest to the ordinary people who had savings accounts in banks, rather than stock market investments. Greenspan responded that this was an "unintended effect."
I agree with Wolf that one inflationary risk the US runs is that the dollar's value will decline against other currencies (as it has already), thus making everything imported more expensive. However, inflation is the easiest way for debtor nations to try to get out from under their debts; as the dollar's value decreases, the absolute value of the debt decreases, too. So, you pay off your debt in cheaper dollars. This is usually only attempted by pariah states, currently Zimbabwe comes to mind, but George Bush has such contempt for the international community that it is not beyond possibility that he will try it. He may think it will help him pay off his Iraq War debt. As Wolf describes the situation:
Externally, the US is a huge net debtor. A large dollar devaluation is then a far less painful way to turn it into a net creditor than running current account surpluses, since its liabilities are denominated in dollars.In retrospect it looks as if Volker may have been a better Fed chairman than Greenspan, if only because Volker had more difficult issues to deal with.
Given these facts, it is going to be an enduring struggle for the Fed to convince those who have put their faith in the dollar that it is safe. This is not some remote danger. In financial markets, the future is now. If holders of the dollar conclude it is no longer a secure store of value they will dump both the currency and assets dependent on its future value. If that were to happen, the Fed would confront a dreadful dilemma - whether or not to cut rates as the dollar plunged and long-term interest rates soared. Its freedom of manoeuvre would be gone, as in 1979, when Paul Volcker became chairman.
Wednesday, September 26, 2007
...the US Federal Reserve remains a puppet of private banks, which also ultimately owe their allegiance to the ubiquitous Rothschilds.
The thing that most shocked [the author, Song Hongbing], he says, was his “discovery” that the Fed is a privately owned and run bank. “I just never imagined a central bank could be a private body,” he says.
The Fed does describe itself “as an unusual mixture of public and private elements”. While its seven governors are all appointed by the US president, private banks do hold shares in its 12 regional reserve banks.
But Mr Song ignores the government’s role and argues that the Fed’s key functions are ultimately controlled by five private banks, such as Citibank, all of which have maintained a “close relationship” with the Rothschilds.
Mr Song is defensive about his focus on the Rothschilds and what the book depicts as their Jewish clannishness.
“The Chinese people think that the Jews are smart and rich, so we should learn from them,” he says. “Even me, I think they are really smart, maybe the smartest people on earth.”
I was inclined to dislike New York anyway because:
- The families of New Yorkers killed on 9/11 got millions in compensation from the US government, while those killed in the Oklahoma City bombing got nothing. It might show the power of the New York congressional delegation, but more likely it shows the greed of New Yorkers, compared to regular people who live in Oklahoma.
- Wall Street's stock market continued to go up during the worst of the Iraq War, which according to at least one explanation (0f many given by Bush), was in response to 9/11. I saw no gratitude on the part of New Yorkers for the sacrifices that young people from middle America, including Oklahoma, were making for New York when they died or were injured in Iraq.
- Now with the Ahmadinejad visit, New Yorkers have shown their contempt for the Constitutional guarantee of free speech, not to mention the fact that they should be grateful that their city is the site of the UN which must invite all types of world leaders if it is to advance the cause of world peace. New Yorkers reviled the assertion that if Hitler were invited, he should be allowed to talk. But wouldn't that talk have been worthwhile if it could have avoided the Holocaust, not to mention the tens of millions of gentiles who died in WW II. One problem in the lead up to World War II was that the League of Nations had ceased functioning.
There are lots of other candidates not from New York. Why not choose one of them. Of the New Yorkers, the least objectionable is probably Bloomberg, not least because he is fondly spoken of by Senator Chuck Hagel, whom I respect.
The New York Times' report on the incident closed by saying:
It remains unclear whether Columbia’s leaders were able to mollify critics through their critical treatment of Mr. Ahmadinejad. But they made some headway: the American Israel Public Affairs Committee sent out an e-mail message shortly after the speech with the subject line, “A Must Read: Columbia University President’s Intro of Iran’s Ahmadinejad today.”
Inside was a transcript of Mr. Bollinger’s introduction.
Saturday, September 22, 2007
As a US Army veteran of the Vietnam War and a retired Foreign Service Officer, I believe that it is important for the United States to hold the moral high ground. Recent revelations about Blackwater’s activities in Iraq raise questions about whether the State Department is undermining its honor and credibility by continuing to employ Blackwater. How can we call on Iraq to adhere to the rule of law when our own contractors flout the rule of law in Iraq? It certainly does not help us overcome our image, in Iraq and around the world, created by Abu Ghraib and other atrocities.
In addition, I do not like the fact that the State Department is promoting the use of mercenary soldiers by the US Government. As an Army veteran, it offends me that the State Department refuses to rely on the US military to protect it. The State Department and the Marine Corps have a long tradition of Marine Security Guards protecting American embassies overseas. Yet, when there is a real security threat, the State Department says, “We don’t trust the Marines to protect us.” It’s ironic that Ambassador Crocker appeared before Congress with General Petraeus to praise the performance of the American military in Iraq, but Ambassador Crocker says by his actions, “I don’t trust the US military to protect me personally.”
Thursday, September 20, 2007
One is "tribe-like politics." "You had to make sure that if someone violated you in any way -- even the smallest way -- you would not only punish them but punish them in a manner that signaled to all the other families, clans, or tribes around that this is what happens to anyone who tampers with me."
Two is "authoritarianism -- the concentration of power in a single ruler or elite not bound by any constitutional framework." It comes in two flavors: gentle and brutal. The Ottoman Turkish empire was gentle. Two examples of the brutal variety were Hafez Assad of Syria and Saddam Hussein. They survived "not only because they have been brutal (many of their predecessors were just as brutal), but because they have been brutal and smart. They have no friends, only agents and enemies...."
Three is the modern nation-state imposed by Westerners. "What happened in the twentieth century when these new nation-states were created was that in each one a particular tribe-like group either seized power or was ensconced in power by the British and French -- and then tried to dominate all the others."
So, after the invasion of Iraq, one would have thought that someone would have thought it important to suppress tribal rivalries and to assert authority when looting broke out after the fall of Baghdad, for example. By the Middle Eastern standards listed by Friedman, the US looked woefully weak the morning after.
Thursday, September 13, 2007
- Failure in Iraq meant the Bush administration had reduced power domestically and internationally, for example the failure to pass an immigration bill in the US, and "scant regard paid to US efforts to influence Israeli-Palestinian developments";
- Adversaries of the US believe "they will prevail if they manage to draw the US into a prolonged engagement";
- Iran is flexing its muscles in the Middle East;
- Iraq has caused the US to fail to focus as much as it should on other parts of the world.
So, Bush's old buddies in the oil patch correctly have no confidence in, or respect for, him.
Wednesday, September 12, 2007
Tuesday, September 11, 2007
Among the points he makes in the FT article:
- While short-term federal deficits are coming down, they are still too high, and
- Longer-term, the Medicare prescription drug benefit has increased Social Security and Medicare liabiities from about $20,000 billion to $50,000 billion.
Like Rome, in the US:
- There has been a decline in moral values and political civility;
- The military is overextended; and
- There is fiscal irresponsibility.
George Washington said that we should avoid "ungenerously throwing upon posterity the burdens that we ourselves ought to bear."
He also says he coordinated it with Jay Garner, his predecessor, who in interviews in Woodward's State of Denial claims that he did not like the de-Baathification proposal, but I suspect that at least some of Garner's comments are self-serving, made after the strategy had begun to fail. Garner was himself very close to the Israelis, which is why I thought he was chosen for the job before he lost it to Bremer.
I don't know why Bremer got the job. At the State Department, I remember him mainly as being the ultimate staff assistant, the head of S/S, the Secretary of State's secretariat, who made sure all the briefings, decision memos, etc., were properly prepared on time. He went on to be an ambassador, a reward for his staff work, but I don't think that's how he made his mark. Ironically, maybe he was chosen because he was known to be a staffer who would not go off on his own, but would do a good job of implementing the policies of his bosses.
Monday, September 10, 2007
It is more than coincidence that Petraeus and Crocker will be testifying to Congress on 9/11. The Bush administration has clearly scheduled the testimony to link the Iraq war to the 9/11 attacks, although there is no connection, except in Bush's mind. The Republicans, in their pre-testimony remarks, criticized Move-On.org for the Petraeus/Betray-us ad in the NYT, with some justification, but the Republicans started the dispute by turning to the military to give a political justification for the war. The Republicans have politicized the military, while they send thousands to die in Iraq. The Republicans, under the leadership of Sen. John Warner among others, are destroying the military establishment, both in terms of fighting capability and intellectually.
Rep. Duncan Hunter's comments before the testimony were particularly interesting because he praised Gen. MacArthur, who was fired by Pres. Truman because MacArthur failed to obey civilian direction during the Korean War. It's odd that a civilian Congressman would hint to a general that the general should not obey civilian orders.
Saturday, September 08, 2007
Ackerman says "nobody is noticing the threat to civilian control" of the military. "Despite the president's grandiose pretentions as commander-in-chief, the future of the Iraq war is up to Gen. Patraeus." As a contrast, Ackerman cites Harry Truman, who fired Gen. MacArthur, rather than have McArthur decide how the Korean War would be fought. He says that as Bush sends Petraeus up to Congress on the 9/11 anniversary, "it is now up to a military man to defend the principle of civilian control."
If you are cynical, you think:
1) Bush is too cowardly to face Congress himself and call for continuing the war; so, he sends Patraeus, dressed in his uniform, like Reagan sent up Ollie North to defend Iran-Contra; and
2) Bush has chosen Patraeus because he can manipulate Patraeus like he and Rumsfeld did Chairmen of the Joint Chiefs Myers and Pace.
It's a real problem as Maher may have unintentionally illustrated by one of his questions to Col. Wilkerson: "Why is the military so loyal to Bush?" Think of the alternative! What if the military were not loyal to Bush? Would we have a coup? We had better hope the military is loyal, but that is one reason why they should be insulated from the politics of declaring war.
Wednesday, September 05, 2007
Interestingly, the NYT just ran an long article on Condi Rice's failure as Secretary of State. Josh Bolten, Card's replacement, was just on the PBS News Hour tonight saying that Condi would stay through the end of Bush's administration.
You can be pretty sure that nothing major is going to happen in the Middle East, or anywhere else. Condi's supposed to be a Russian expert, but relations with Russia are going down the tubes. North Korea is somewhat of a success, but mainly because she got rid of John Bolton and let Chris Hill do his thing.
The military has been pretty much tarred by the Iraq campaign. Bush keeps talking about how great they are, but they're losing. Part of the problem is that Rumsfeld put cowardly yes-men like Richard Myers and Peter Pace in senior positions. In general, peacetime conditions breed a military that's not much good for fighting. When a war comes, somebody like General George Marshall has to put some fighting generals in charge. In Iraq, nobody ever did this.
In any case, before the US invasion, there was no civil war in Iraq. After we defeated Saddam for his invasion of Kuwait, things were relatively quiet. The no fly zone and other limitations kept Saddam in his box. It was a successful containment (a la the cold war) on a small scale. So if Saddam could prevent civil war among the Iraqi populace, the US should also be able to, but it would require many more resources that we are willing to put in.
We should go back to square one: re-occupy the country with something like 1,000,000 men, and mete out something close to Western justice (not Abu Ghraib justice) to Iraqis who do anything wrong, from stealing hubcaps to insurrection. The US occupation failed when looting broke out after we entered Baghdad, and we did nothing to stop it.
Saddam kept order by terror; we could keep order by establishing a real occupation with real justice, but we won't do it.
Tuesday, September 04, 2007
Tom Friedman talks about how well things are going in Iraqi Kurdistan. It sounds as if the Kurds have long been one of the motivations for the Iraq war. Bush 1 basically abandoned them to Saddam's treachery after the first Iraq war. Then according to one of the Iraq war books --
Fiasco, Cobra II, State of Denial -- a lot of the people who pushed for the war liked, visited, and helped the Kurds, including Wolfowitz, some of the military men, and Jay Garner, who was originally designated for the job to head the Iraq occupation that Jerry Bremer ended up getting. I don't know exactly what the connection is, but Jews seem to like the Kurds, perhaps they see the Kurds as less threatening Muslims than the Arabs. In any case, I think the Jews that wanted the Iraq war -- Wolfowitz, Perle, Adelman, Feith, Kristol, et. al -- were motivated in part by their impressions of Kurds and Kurdistan. This may also include Jay Garner, who as a general before he retired had close connections with Israel, which may have been carried over to his retirement as some kind of armaments dealer. So, it's not surprising that Tom Friedman would find Kurdistan is wonderful. Maybe it is, but Jews love of Kurds helped get us into a horrible war in the rest of Iraq.
David Brooks' column on how the tribes are going to bring democracy to Baghdad probably has some merit. But there is also the possibility that success at the tribal level is as much about ethnic cleansing as about democracy. The test will be whether tribes from other regions, sects, etc., Kurds and Sunnis, or Sunnis and Shiites will be willing to work together. I'm not so sure. They want security for their tribes. They don't care that much about Iraq as a country.
My question is, "What happened to FISCAL policy?" Basically, with the Bush tax cuts and deficit spending, fiscal policy is based on a perception of the economic climate as, "Oh my God, we're all going to die!" The government has to spend and encourage businessmen with tax breaks as if we were in a deep depression and there was no tomorrow. Of course, that is not the case. It's just that businessmen like you better if you give them money; so, Bush and his cronies have given them tons of money. And he has a 27% approval rating to show for it.
But that puts Bernanke and Treasury Secretary Paulson is a tough spot, because half of their tools -- the fiscal policies -- are gone. Dick Cheney has already shot his friend in the face and doesn't have any ammunition left. So, it's all on Bernanke, who so far seems to be taking his job seriously, much more seriously than Congress, Tony Snow, or George Bush. Bernanke may actually care about this country. If so, hooray for him! But he should not have to fight this battle alone. (Somehow, he, unlike Tony Snow, can live on a government salary.)
And what does Tony Snow's resignation say about government service. For Snow, working for $168,000 a year was a tremendous sacrifice that he wouldn't continue. What about an enlisted man serving in Iraq? I don't know what he makes, but it's a lot less than $168,000 per year. Of course the deep pockets Republican sector is hiring the best special forces soldiers away from the military at something like Tony Snow's government salary to serve in the private security services in Iraq, such as Blackwater, Triple Canopy and their ilk.
It's pretty clear that Republicans and maybe most Americans of any political persuasion, love money more than they love their country.