Tuesday, April 08, 2008

Lobbyists and Presidential Candidates

Two recent articles illustrate the extent to which lobbyists dominate Presidential campaigns. One hope for Obama is that he may be less influenced because he has been in Washington for less time and thus the lobbyists have had less time to get control of him.

The New York Times reported on the role of Hillary Clinton's chief strategist, Mark Penn's, lobbying firm's role in getting US approval of the Columbia free trade agreement. It sounds like his firm, Burson-Marsteller, has lost its contract with Columbia at the same time Mark Penn has lost his position with Hillary's campaign.

Meanwhile The Nation reports on the role of the lobbying firm of one of John McCain's insiders, Charlie Black, in making Ahmad Chalabi one of the most important men in Iraq. Black is a principal at Black, Kelly, Scruggs & Healey, another one of the most powerful lobbying firms in Washington, which is also owned by Burson-Marsteller.

It looks as if Hillary and McCain are not masters of their own destinies, but are rather tools of backroom masterminds intent on bringing Washington under their control. It appears that Burson-Marsteller is America's Rasputin.

Monday, April 07, 2008

Israel, Jews, and the US Election

It appears that there are a substantial number of American Jews who oppose Barack Obama because of what they perceive as his position on Israel, as reported by The Nation in "(Some) Jews Against Obama. As the article points out, there is no basis for most of their concerns. This was followed up by a Nation article on "Smearing Obama" that said a particular target of the false smears against Obama were directed at Jews.

Meanwhile, Mother Jones reports that Hillary is pandering to American Jews and Israel by taking a position that Israel should have "an undivided Jerusalem as its capital." This appears to mean that she believes the Palestinians have no right to any part of Jerusalem. By deciding one of the major issues beforehand, this makes talks on peace between Israel and the Palestinians virtually pointless. The problem with Hillary's position on Jerusalem is illustrated by Helena Cobban's recent posting on Jerusalem, for example.

Finally, John McCain's recent visit to Israel appeared designed to pander to American Jews. Besides visiting the Holocaust memorial in his yarmulke, he seemed to be getting his foreign policy advice from Sen. Joe Lieberman, who advocates an American war with Iran on behalf of Israel. The sight of Joe whispering in John's ear about what to say about al-Qaida in Iraq was not a pretty sight.

I'm reminded of the movie Bulworth, where Warren Beatty's senator character says something like, "My staff knows they always have to put the rich Jews on my campaign schedule." Hillary and McCain need that "rich Jew" money. Obama has enough money coming in from regular people that he doesn't have to pander to any particular group. Thus, it appears that the Jews fear him because they are afraid that they can't control him, as they do Hillary, McCain, and most Presidents, certainly including George Bush, whose Middle East policies are blatantly pro-Israel, to the point of arming Fatah Palestinians in the hope that they will kill Hamas Palestinians.

Friday, April 04, 2008

Wall Street vs. Main Street

The economy lost 80,000 jobs and the stock market barely went down. To me this signifies the disconnect between Wall Street and Main Street, the rest of the country. It's fairly typical that bad news for middle America is good news for Wall Street, but with everybody concerned about the financial turmoil on Wall Street and the potential recession for the whole country, that attitude is particularly poignant. Wall Street is happy that jobs are being outsourced to China and India because it reduces labor costs. Detroit and the rest of the rust belt is already suffering from this Wall Street attitude, but the pain is spreading to the rest of the country outside of the playgrounds for the rich, like Manhattan, Beverly Hills and Aspen. Meanwhile, the fat cats on Wall Street, who got us into this mess, just got bailed out to the tune of $30 billion or more, while the average Joe, who has just been minding his own business, will get a tax rebate of $600 or so.

Tuesday, February 26, 2008

Pimco Loses Confidence in Bernanke

It's not a good sign when Bill Gross of Pimco, probably the foremost bond trader in America, loses confidence in Bernanke, as he has according to this Bloomberg report. Gross does not think that Bernanke is committed to fighting inflation. Bernanke is more concerned about cutting interest rates to keep the stock market up, which seems to be working, since it's up over 100 points at the moment. But what's best for America's future? Probably not another stock market bubble.

Monday, February 25, 2008

Bill Kristol's Patriotism

Bill Kristol's op-ed in the NYT criticizes Barak Obama for making a point of not wearing a flag pin in his lapel. I guess the NYT is printing Kristol to show how open minded it is. It just happens that I agree with Obama on this issue. In the old days when American presidents were patriots they earned military decorations, and chose to wear them or not, depending on their personal attitudes toward public displays.

The most notable example is probably President Lyndon Johnson's Silver Star, a lapel pin that he wore most of his life, although it was probably undeserved. See this CNN story. Many true heros feel no compunction to wear their decoration, believing modestly that their actions were more important than any display. Because most of the politicians in Washington today were cowards who failed to serve their country, they don't have any military decoration to wear and therefore have chosen to wear the flag. No modesty for the Republicans!

I'm guessing that Bill Kristol is not a combat veteran, and probably not a veteran at all. He's a flag man, and a typical Republican coward, who has no hesitation about sending our troops to fight in Iraq, although he would not go himself. Barak Obama shows his patriotism and courage by standing up to cowardly bullies like Bill Kristol.

I still have bad memories of seeing Zbigniew Brzezinski introduce Vice President Al Gore to an audience of Polish World War II veterans at the Ambassador's residence in Warsaw, Poland. Brzezinski introduced Gore as a Vietnam veteran. The Polish veterans greeted the introduction with applause, but the Americans murmured, "Doesn't he know that President Clinton didn't serve in the military?" Military service is no longer admired in the US, especially by slackers like William Kristol.

Thursday, February 21, 2008

Bushies Gut Non-Proliferation Effort

Just for the record, I worked with Linda Gallini and Dean Rust who are mentioned in this Mother Jones article about the Bush Administration's true believers who gutted the US non-proliferation efforts.

Saturday, February 09, 2008

Will America Repeat Japan's Recession

The recession that Japan experienced in the 1990s, and that still pervades Japan today, started out in a very similar way to the way the subprime mortgage/credit crunch started in the US. The real estate market was in a bubble, and when that burst, the banks' problems made it worse. The NYT looked at the similarities and found that a better response by the US will prevent us from following Japan's downward trend.

The people whom the NYT interviewed are probably smarter than I, but I am not so sure we can beat the downturn without following the Japanese example, although I don't think we should be doomed to stay in the doldrums for a decade as the Japanese have been. The NYT sees the big difference as fiscal policy. The Japanese used only monetary policy -- keeping interest rates at almost zero for almost a decade -- but apparently not so much fiscal policy.

First, the fact that the Japanese have kept interest rates at almost zero demonstrates the limits of monetary policy as practiced by the Fed. Secondly, the Republican tax cuts mean that we have been running our fiscal policy as if we have been in a recession for the last seven years. Now that we are in one, inplementing a strong anti-recession fiscal policy is likely to ignite inflation, because we are not starting with a balanced budget. We are starting with a budget already badly in the red. Printing money is a recipe for inflation.

I don't think the Republicans care much about inflation, because it allows them to decrease the value of the debt they have run up the last seven years. It allows them to pay if off in cheaper dollars. Of course, for everyone else, it means that they are stuck with cheaper dollars when they get paid, when they buy things and for everything else.

The lesson of inflation, and low interest rates in general, is don't save. Spend what you've got and borrow at low interest because you can pay it back in cheaper dollars. But look at Latin America: the chickens come home to roost. People won't invest in your country, because their investments lose money as the inflated currency depreciates. We are already seeing foreigners (Chinese, Saudis) talk about diversifying out of the dollar into the Euro or a basket of more stable currencies. At some point, inflation and the depreciating dollar will force interest rates to rise, back to the high rates of old days (the 1970s) of 15-20 percent, or more if things get really bad. Such high rates are very bad for domestic business. Maybe globalization will make the coming scenario different from the 1970s scenario, but it will be a first test; so, who knows.

I would like to know what Paul Volker thinks, who got us out of the 1970s stagflation painfully, but successfully.

Thursday, February 07, 2008

Tom Friedman on Israeli Attitudes toward Race

Tom Friedman deals with Israeli attitudes toward race in his book From Beirut to Jerusalem, first published in 1989. Since he's Jewish, I cite him as someone who should not be anti-Semitic. On page 269 of my paperback copy, he says:
The Lebanon invasion [in the 1980s] reopened the fundamental division in Israel over the questions: What kind of society is Israel to become? What kind of values does it stand for? Is it going to be a Jewish South Africa, permanently ruling Palestinians in West Bank homelands, is it going to be a Jewish Prussia, trying to bully all of its neighbors, or is it going to be a state with borders that will be based solely on considerations of what will preserve a secure, democratic, and Jewish society at peace with its neighbors?
These are almost exactly the same questions Jimmy Carter raised in his book, Peace Not Apartheid, and for which he was severely chastised by the Jewish community.

Friedman also deals with Israeli attitudes toward the Holocaust a few pages later. He describes how fatalistic and pessimistic Israelis are, in part because of their connection to the Holocaust. But then he says:
If Israel wasn't founded on the basis of such a fatalistic outlook, then how did it take over? ... In the early years of the state of Israel it was common for nativeborn Israelis to feel contempt for the Jews who died in the Holocaust, and even for some of those who survived, because they were viewed as sheep who simply went off to slaughter, while the Zionists were men of bold initiative, who went ou and found the British and Arabs and built a Jewish state.
Ruth Firer, an Israeli who came to Israel from Poland via Siberia during World War II said:

"When I was a student here [in Israel] in the 1950s, the Holocaust was a family secret -- a shame.... The feeling, the whole atmosphere, was that the future must triumph over the past. All of us, parents and kids, tried to cover up what had happened. When we taught the Holocaust then, we taught the heroism of the Warsaw Ghetto -- that was it."
Friedman continues:
The change began, I believe, with the trial of Nazi war criminal Adolf Otto Eichmann in 1961, which brought both the Holocaust and the survivors out of the Israeli closet.... Today -- unfortunately -- the teaching of the Holocaust is an essential element of Israeli high-school education and in the Israeli officers' course. No one goes to Kibbutz Degania [an early kibbutz founded in 1909] anymore. Most Israeli younsters I met had no idea what it represented. dEgania is not viewed as the gateway to Israel. Instead, that role has been taken over by Yad Vashem, the massive hilltop memorial in Jerusalem honoring the 6 million Jews killed in the Holocaust.... Israel today is becoming Yad Vashem with an air force. The past has caught up with the Zionist revolution and now may be in the process of overtaking it. The Holocaust is well on its way to becoming the defining feature of Israeli society.

Wednesday, February 06, 2008

Republicans Are the New Communists

Rice's decision to call the US's UN Amb. Khalilzad on the carpet, as reported by Reuters, for appearing publicly with the Iranian ambassador at Davos smacks of the old Communist methods. Condi should know them well, since she used to be a Soviet analyst. She was probably under pressure from the right-wing apparatchiks like John Bolton, who emulate the methods of the old Soviet Union to maintain thought control.

While on the subject of X is the new Y, it looks like Israelis are the new Nazis. The turmoil in Gaza, with imprisoned Palestinians breaking out into Egypt, has shown that Gaza is the new Warsaw ghetto. Jews have all kinds of racist profiling methods that they use against Palestinians and other Arabs, but locking them in the Gaza ghetto is clearly reminiscent of Nazi policies against Jews during World War II. The race hatred that is seething in Israel is hard to fathom.

Monday, January 28, 2008

What about Inflation and the Dollar?

Bernanke's rate cut, expected to be followed soon by additional rate cuts at the next Fed meeting, helped the stock markets and the rich investors avoid a deep drop last week, but what effect will it have on inflation in the US and the value of the dollar? It's likely to be negative on both counts. The usual monetary tool to stop inflation is higher interest rates, which also depresses business. Unfortunately, cutting interest rates tends to encourage inflation, and it is likely to do so in this case. Furthermore, currency traders tend to invest in currencies that give a good rate of return, interest, on their holdings. Lowering interest rates discourages people from investing in that currency, the dollar. Therefore the rate cut will likely have the effect of lowering the value of the dollar. The effect may not be immediate, because the dollar is currently at almost historic lows against most major currencies, the yen, euro and pound. It may take a while for people to get used to even lower values for the dollar.

The US has a great incentive to allow inflation and devaluation of the dollar because of our huge debt. It's a common practice for third rate developing countries to run up huge debts with foreign lenders and then devalue their currencies so that they pay off the debt with cheaper money. Thus, if the dollar eventually is worth many less Chinese yuans, the US will have to sell a lot fewer goods overseas to pay off the billions we owe China. That's not going to happen immediately because the Chinese persist in pegging the yuan to the dollar, but if the dollar really starts to tank, they may change their mind. But it's a complicated case, like the one where if you owe the bank $1,000 and can't pay, you are at the bank's mercy, but if you owe the bank $10 billion and can't pay, the bank is at your mercy. Thus we and the Chinese each have leverage on each other.

The Economist magazine takes Bernanke to task for his precipitous cut in interest rates, mainly because it smacks of panic. But it's also likely to have some harmful long-term effects.

Thursday, January 24, 2008

The Bernanke Put

It will be interesting to see how Fed Chairman Bernanke's rescue of the stock market works out. It may be easy to compare his approach with a less activist approach, since all the other central bank governors appear to be resisting the temptation to rescue their stock markets. The Bernanke put seems to have replace the Greenspan put, allowing big investors to maintain an option to sell their stocks at a higher price if the market goes down too much. In essence this administration has said that it will rescue the rich investors immediately, and maybe later it will do something for the small fry.

The Europeans so far seem to think that the stock markets and the rich investors can take care of themselves. If they make some bad investments, they should have to live with them. This runs the risk of being a drag on the economy in the short term, but it gets the trash out of the financial system and creates a foundation for future growth. Bernanke and Greenspan are acting in the present, but are they mortgaging the future? Greenspan had twenty good years, which argues that his approach may work out. But the turmoil we have today is at least in part due to Greenspan's decision to keep credit cheap and let the good times roll.

Friday, December 14, 2007

Banks in Trouble

An excellent op-ed in Friday's Wall Street Journal (which I can't access on the web) explained the credit crunch problem well to me, and why the Fed has so far been unable to solve it.

The problem is that banks don't trust each other. Therefore, it's clear that there is another shoe to drop. Banks have expanded their risks enormously because they used securitization (selling loans as some kind of paper) to get loans off of their books. If the loans stayed on their books, the banks would have been limited in their loan making by their capital and their access to funds. Once banks were close to being limited in making loans by the size of their capital, the Fed could regulate new lending by expanding or limiting the banks access to additional funds.

If they moved the loans off of their books, however, they were never limited. Furthermore, at least in theory, moving the loans off of their books also moved the risk off. But now all of this junk that the banks thought they had gotten rid of is coming back home. Citibank has recently taken several of the "SIV" off-books sham entities it created back onto its own books, thus limiting the amount of new lending it can do.

To the extend that Citibank or other banks become capital limited, the Fed can help in its traditional way. However, if the majority of the loans are floating around as commercial paper being held by who knows who, there is not much the Fed can do. In essence the banks created money that was beyond the control of the Fed.

The rub is that the banks know how much trash is out there, because they know how much trash they sold. Therefore, banks are reluctant to lend to other banks, because they don't trust the other bank to stay solvent to repay the loan. The scary thing is that the banks know better than anybody what risk is out there, and they are too scared to lend to their colleagues. That makes it look bad.

Everybody talks about the subprime housing crisis, but what if there is other bad stuff out there. Banks have been "securitizing" everything, getting loans off their books. What about credit card debt? Car loans? Business loans? If banks lowered their lending standards considerably in these other sectors as they did for mortgages, won't some of them start to go belly up, too?

Paul Krugman has an article in the NYT saying that we are in more than a liquidity crisis. A liquidity crisis is when you have the capacity to pay off a loan, but you just don't have the cash on you. In this case, somebody (the Fed) can loan you the money to pay it off now, and then you can pay them (the Fed) off later as you continue to get salary paychecks, or your house finally sells, or whatever. But if you can never pay off the loan, it's a different problem. The money is gone for good. In this case the banks may have paid themselves huge profits on bad loans in a giant ponzi scheme. If the debtor can never pay, a Fed loan is not going to help. It may be that the banks believe this, and that's why they won't lend to each other.

If only a small percentage of the loans are bad, the system can handle it, but at some point this could grow from a liquidity crisis into a financial crisis.

Monday, December 10, 2007

Chalabi's Back

Ahmad Chalabi is back in power in Iraq. I had been wondering what happened to him. The LA Times reports that he is now in charge of restoring the Baghdad infrastructure -- electricity, water, trash collection, etc. No doubt he is using to good personal advantage his ability to give away politically valuable stuff that is paid for by someone else, probably the US. Since he was one of the main people responsible for starting the Iraq war, it is not surprising that he is benefiting from it. His ability to make Bush, Cheney, Rumsfeld and Wolfowitz his puppets who danced to his instructions showed how clever he is. Now, to come back like the phoenix from the ashes of his banishment from Baghdad shows it again. It probably does not bode well for Iraq, since Chalabi is much more interested in helping himself than in helping Iraq. It just shows how American policy in Iraq has failed, failed, failed, while Chalabi has won, won, won at America's expense, figuratively and literally.

Wednesday, November 21, 2007

How Are Services in Baghdad?

There has been a lot of press about how well the surge is working in Baghdad and how many people are returning from Syria and Jordan. But how well is the reconstruction of the Iraqi infrastructure going? Until now, a major problem has been security. We couldn't build things like sewage plants, electrical generation stations, etc., because people kept getting killed working on them. Now what's it like? How many hours do Baghdad residents have electricity? Do they have water?

The other question is what has happened to the neighborhoods? Has violence dropped because the neighborhoods have been ethnically cleansed, because neighborhoods that were once mixed Sunni and Shiite are now only one or the other?

And, has the violence dropped because we defeated al Qaeda and other opponents, or have they just faded into the woodwork until the surge is over? It appears that the surge is about over. Troops are coming home that are not being replaced, because there are no troops to replace them.

It looks like the surge proved that we needed more troops than we had for most of the war. Why did it take us four years to learn that? Just how bad are our military planners and leaders?

Sunday, November 18, 2007

Bush Lessens US Standing in the World

The Financial Times had an excellent editorial saying that the US needs to make some more friends in the world to help it achieve its objectives. Bush loves to stick his finger in other countries' eyes and call for regime change, but it doesn't work that well, as Iraq illustrates. This editorial is apparently based on a a report by the Centre for Strategic and International Studies. It says, "One of the chief casualties of the Bush administration's foreign and security policies has been US standing in the world. This loss of reputation matters. In testing the limits of its 'hard power', the administration has sacrificed precious 'soft power' resources too. It hurts the country that so many people around the world no longer trust it to act responsibly, and that (according to a recent BBC poll of 26,000 people in 25 countries) one in two says the US is playing a mainly negative role in the world."

It adds, "Dethrone the 'war on terror' as the organising principle of US action - not because containing terrorism is unimportant, but because subordinating everything to that aim makes it harder to achieve."

But in general, even of the this report, the FT says, "there is a whiff of hubris about it."

Saturday, November 17, 2007

Send the State Department to Change Regimes

The op-ed in the NYT on "Send the State Department to War"

  1. Criticizes the State Department for a reorganization that was mandated by Sen. Jesse Helms, a Republican who hated State, and
  2. Implies that the main job of State should be regime change.

On both counts it is misguided. Helms mandated that USIS (the public affairs diplomatic arm) be merged into main State, along with AID and ACDA (which he doesn't mention). No doubt merging them into State has made them somewhat less desirable, but that's what the Republicans wanted because they generally hate State and what to see it stymied in whatever it's doing. But I doubt that separating them out again will make much difference in the short term.

He complains that State has not been involved enough in Iraq and Afghanistan, but part of that is due to Rumsfeld and his colleagues at Defense, who fought hard to keep State out of Iraq and to make Defense responsible for things that would normally be done by State. Only after Defense failed at these tasks did insiders start to call for State to take up the tasks and to criticize State for not having done it earlier.

Without specifically mentioning regime change, Max Boot calls for State to aid moderate Muslims, flex our political and diplomatic muscles to achieve vital objectives peacefully, gather intelligence, and build the rule of law in ungoverned lands.

I am one of those, who as he says will "object that to build up these capacities will encourage reckless 'imperialism' or 'militarism.' But improving our abilities in nation-building, strategic communications, security advising and related disciplines will actually lessen the chances that we will need to mount a major military intervention such as the one in Iraq."

Who Hates More - Republicans or Democrats

The Wall Street Journal ran an op-ed called, "The Insanity of Bush Hatred." Apparently the author forgot that the Republicans tried to impeach Bill Clinton for an offense unrelated to governing the country. He didn't lie to us about invading another country. Plus, Ken Starr followed Clinton around like a little dog with a death grip on his ankle. In any case, I don't think that any Democratic hatred of Bush can be more irrational than the Republican hatred of Clinton. And now it looks like they are going to get another Clinton, because Bush has been such a bad President that he makes Bill Clinton look like George Washington by comparison.

Friday, November 16, 2007

Few Veterans in New York

On Veterans Day, the NYT noted that New York has the lowest percentage of veterans of any state in the union.

I would have thought this, but I would have thought that I was prejudiced for thinking it. I think Wall Street is one of the most unpatriotic streets in America. It's a street of greed, a street that says, "Send some rednecks to die in Iraq and Afghanistan for us." And as a further note of prejudice, New York is full of Jews. Jews did fight in World War II -- Norman Mailer is an example -- but they don't fight so much now. They pay Anglos and other ethnics to go fight for them, while they stay on Wall Street and get rich.

They don't have a monopoly on this attitude; Mitt Romney did the same thing. Being a Mormon missionary in France is not equivalent to being an infantryman in Vietnam. Sorry, Mitt, I'm prejudiced on this issue, too. But Mitt's the exception for Mormons, many of whom did and do serve in the military. Jews tend to fight for Israel, not for America, even if they are born in America. Mitt, of course, has another problem, which is that after he got back from France, he went into the private equity business with Bain Capital, where he did not pay a tax rate as high as most working men and women, while he was becoming a millionaire. Romney does not love America enough to pay his fair share of taxes.

So, the leading presidential candidates for both parties come from New York -- Hillary Clinton and Rudy Giuliani, with Mike Bloomberg waiting in the wings -- but their state is the least patriotic state, despite Rudy's claim to 9/11 fame. More and more there seem to be two (or more) Americas who don't talk to each other.

Monday, October 29, 2007

Hillary as Evita

The election of the President's wife in Argentina brings to mind the story of Evita Peron, and makes you wonder about the election of a President's wife in the US. Is Hillary America's Evita? While Evita relied more on her husband than Hillary claims to, she was independent, and Hillary may rely more on Bill than she lets on during the campaign.

Sunday, October 21, 2007

Support the Troops

A great op-ed in the NYT points out the hypocrisy of the Bush administration, the Republican party, and politicians in general on the Iraq war. Nobody supports the troops, except their families. America is in party mode! Let those soldiers die! America doesn't give a damn!

As the op-ed says, a draft would sort things out. Let's have a draft now! Of course, that's a little problem for Bush and Cheney, both of whom dodged the draft during Vietnam. They don't believe in fighting for their country. They believe in sending somebody else to fight for the United States. That's why we have thousands of mercenary troops like Blackwater fighting in Iraq, in addition to our "volunteer" military.

Wednesday, October 10, 2007

AIPAC, Iran and Gravel

See this link to The Vineyard of the Saker for info on how AIPAC is trying to get the US to attack Iran, and how Presidential candidate Gravel spoke out about it.

Sunday, October 07, 2007

Regressive Income Taxes

A news article that the EU finance ministers are going to meet to discuss how US financial problems will impact the EU raised a question in my mind about how the US would fit into the EU.

Previously the Wall Street Journal printed an op-ed suggesting that the US join some larger currency scheme that would take the pressure off the dollar as an international exchange currency. The problem with that is that when you join such an international scheme, you have to conform to certain standards.

The above article on the EU says that EU countries must keep their budget deficit below 3% of GDP to meet Euro guidelines. That made me wonder if the US would qualify to join the Euro regime. It took me a while to find what appeared to be a reliable table giving budget deficit estimates as a percentage of GDP. Finally, I found this one by the Congressional Budget Office done in 2004, with projections for future years.

What surprised me was that we would meet the 3% guidelines overall, by taking into account the Social Security "off-budget" SURPLUS. The projected overall budget deficit for 2007 is only 2% of GDP. But the "on-budget" deficit is 3.6%. The 3.6% is the budget actually approved by the President and Congress. BUT, there is a 1.6% Social Security SURPLUS. So, the working people who fund Social Security through payroll taxes are in surplus, while the rich people, who got the huge Bush tax cuts and who pay no payroll tax on the millions they earn above the approximately $90,000 ceiling on income subject to the payroll tax, are causing a budget deficit in excess of the EU guidelines for good government.

This is truly a government of Robin Hood's Sheriff of Nottingham that takes from the poor and gives to the rich. A fat cat who paid social security payroll taxes on maybe 5 or 10 percent of his income during his earning years (as opposed to most salaried workers who pay the tax on 100% of their earnings), and who then retires and lives off of his investments, can collect 100% of his social security, while workers who still earn a salary after age 62 have their social security payments reduced by a formula linked to how much they continue to earn.

Neocons the New Liberals

Roger Cohen has my number in his NYT column on Neocons being the new L-word, instead of "liberal." He says with some contempt, "Neocon, for many, has become shorthand for neocon-Zionist conspiracy, whatever that may be, although probably involving some combination of plans to exploit Iraqi oil, bomb Iran and apply U.S. power to Israel’s benefit."

I think AIPAC played a large role in the policy making process that led to the US invasion of Iraq. Cohen may not, but look at those arguing for invastion: Perle, Adelman, Krystal, Wolfowitz, Feith, et al.

Friday, October 05, 2007

Obama Stops Wearing Coward's Flag Pin

It's indicative of the cowardice of George Bush and Dick Cheney that they lead the pack of lapel flag pin wearers, because they are draft dodgers from the Vietnam war. If they had fought in the war they would have had some kind of little ribbon to wear on their lapel, a bronze star, an Army Commendation medal, something. But they didn't serve; so, they wear a flag. It's a sign that they didn't serve their country.

Congratulations to Obama for ending the charade that wearing the flag pin somehow symbolizes patriotism. Where were Bush and Cheney on 9/11? Bush was reading "My Pet Goat," and then got in Air Force One and hid out for hours when he should have been leading the country. Cheney went into his spider hole in Washington and ran things from remote control because he was afraid to come out. Cheney and Saddam: the spider hole twins!

Blackwater Perils

I recommend the editorial in today's (10/4/07) Financial Times, "Blackwater and the outsourcing of war." A web link is:

http://www.ft.com/cms/s/0/94bc0252-71dd-11dc-8960-0000779fd2ac.html

Two main points are:

"...Privatising war is, in reality, financially, politically and militarily very expensive," and

"Neither [the Senate's nor the Pentagon's efforts to control Blackwater] has a chance, much less moral validity, unless the US and its allies adhere to the rule of law they claim their forces are there to defend."

Sunday, September 30, 2007

Failed Bank No Big Deal?

I was surprised that the failure of Netbank in the US, coming on the heels of the run on Northern Rock bank in England, did not attract more attention. It failed during the day on Friday, and the stock market seemed not to notice. It apparently has been in trouble for a while, but its failure seems to be linked to the sub-prime mortgage mess. So, doesn't that indicate that there are some pretty shaky things out there?

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

US Promotes Speculation and Debt

In an earlier post, I noted that John Stewart had pointed out that the Fed's .5% rate cut had helped stock market investors, a.k.a. speculators, and had hurt ordinary savers with interest bearing savings accounts. I omitted one other class, borrowers or debtors, whose interest rates will also be cut.

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

Worry About Inflation

FT columnist Martin Wolf argues that the Fed can't ignore the risk of inflation as it fights recession. It says:
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.

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.
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.

Wednesday, September 26, 2007

Chinese Buy Rothschild Jewish Conspiracy Theory

The Financial Times reports on a best selling book in China, Currency Wars, which claims that the Rothschild banking dynasty controls money issuance. According to the article:

...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.”

No New York Candidates Please

All the fuss over Ahmadinejad's visit to the UN in New York has reinforced my dislike of any Presidential candidate from New York, and there are at least two and one-half of them: Hillary, Rudy and Mike Bloomberg (the 1/2).

I was inclined to dislike New York anyway because:
  1. 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.
  2. 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.
  3. 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.

Ahmadinejad and the New York Jews

The conduct of Columbia University's President Bollinger while introducing Iranian President Ahmadinejad was reprehensible. It made him and the university look foolish. Why did he do it? I don't know, but I would guess it was for money, in particular money from New York Jews, who have a lot of it. Bollinger probably got a message from some big Jewish donors that his invitation to Ahmadinejad put their future contributions to Columbia in jeopardy. So, Bollinger decided that if he insulted Ahmadinejad sufficiently while introducing him, he might keep his donors under control.

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

My Letter to Condi Rice

I am concerned about the State Department’s use of Blackwater Security to protect State Department officers in Iraq.

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

Do Republicans Read Books?

Did anybody in the administration or the Pentagon read Tom Friedman's book From Beirut to Jerusalem? It might have given them some clue about what to prepare for when they invaded Iraq. Chapter 4, "Hama Rules," says that "politics in the Middle East is a combination of three different political traditions all operating at the same time."

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

US Suffers Decline in Prestige under Bush

The Financial Times reports that the US has suffered a significant loss of power and prestige under Bush. The International Institute for Strategic Studies survey found:
  • 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.

Bush Abandoned by Oil Patch

Bush has been abandoned by his Texas oil patch buddies. Hunt Oil has signed an agreement with the Kurds that ignores the central Iraqi government in Baghdad, according to the Wall Street Journal. So, Texas oilmen have no confidence in George Bush's ability to get an oil law through the Iraq parliament that would put the federal government in charge and require sharing of resources. Right on cue, the New York Times reports the Iraqi compromise on the oil law is collapsing.

So, Bush's old buddies in the oil patch correctly have no confidence in, or respect for, him.

Wednesday, September 12, 2007

Abe Resigns. Bush Destroys Another Ally

As I predicted, another one bites the dust. Linking up with Bush is the kiss of death for foreign leaders. Reuters reports Abe resigns.

Tuesday, September 11, 2007

America and Rome

The head of the GAO, David Walker, has been writing and speaking about how American risks repeating the fate of the Roman republic. I think it's an important insight. Just for the record, here's an article in the FT, and here's a transcript of a talk he gave.

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."

Iraq's Army & the Nazis

The NYT op-ed by Jerry Bremer on how he did not personally make the decision to dismantle Iraq's army rings true. What happened is about historical perspective. Other than Bush and Cheney, the main proponents of war with Iraq were Jews, who have always been critical of the US and the other allied victors for being too lenient in dealing with some of the Nazis after World War II, allowing them to escape or remain in low profile positions in Germany. Thus the American Jews who ousted Saddamn Hussein were determined to get rid of all traces of his Baathist party colleagues. They did not want to repeat what they saw as the mistakes of the US after World War II. Bremer specifically mentions coordinating his de-Baathification strategy with Paul Wolfowitz and Doug Feith, both Jews. They of course had a large Jewish back-up network including Richard Perle, William Kristol, Ken Adelman, et al., who were well plugged into this administration's defense policy machinery.

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.

Petraeus Political Spokesman for Bush

Republicans have had a fit about Move-On.org's ad changing Petraeus to Betray-us, but Bush put him in this position. The criticism may not be correct, but the Right has no justification for criticizing it because Petraeus is wearing a uniform. He's not appearing as a soldier; he's appearing as a spokesman for the administration, and thus must be open to criticism. He and Crocker are Bush's shills. They deserve to be suspect and must support their testimony with facts. They have been somewhat, but not totally successful. But they have been a lot more successful than would have been Secretary of Defense Gates and Secretary of State Rice, who in an honest world would have been the witnesses. Gates still has some credibility, but Rice has none; she's been around Bush too long.

Monday, September 10, 2007

Can Abe Survive Bush?

Japanese prime minister Shinzo Abe has staked his job on passage by the Japanese Diet of the continuation of a law that allows Japanese ships to continue to refuel American ships on their way to Afghanistan, according to the Financial Times. He's doing this for George Bush. Friendship with Bush has often been the kiss of death for foreign leaders, e.g., Tony Blair. It will be interesting to see if Abe survives friendship with Bush.

Petraeus Can't Speak to Congress

How ironic that after many introductory speeches by Congressmen pro and con the war, depending on whether they are Republicans or Democrats, General Petraeus was unable to speak because his microphone did not work. Time for the most anticipated testimony in years, and the microphone did not work! Congress in general, and Chairman Ike Skelton in particular, are incompetent, worthless fools! Throw the bums out! They hate America! But they love to hear themselves talk.

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

Improper Use of Military

On HBO's Bill Maher show, Col. Larry Wilkerson, Gen. Colin Powell's aide when he was Secretary of State, talked about the dangers of Bush's use of the military. Wilkerson cited a column by Bruce Ackerman in the September 5 Financial Times.

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

Incompetence Run Amok

I just finished reading Woodward's State of Denial, and he stresses the incompetence of the Bush White House, particularly Rumsfeld. Woodward talks about how hard Andy Card, who was obviously a somewhat self-serving source, tried to get rid of Rumsfeld as the war went more and more badly, but Bush stuck by him.

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.

There Was No Civil War Under Saddam

With all the talk about what to do in Iraq after Gen. Petraeus makes his report, there is a lot of discussion about Iraq descending into civil war. I think that's likely, although today on ABC, Zakaria said that the civil war is basically over; the ethnic cleansing has already taken place. I don't think so, or otherwise things in Iraq would be quieting down. A US departure could well escalate a civil war into a regional war where the Iranians and the Saudis (to whom we are selling $20 million in military equipment to prepare) fight each other in support of their Shiite and Sunni proxies. Maybe some other neighbors will join in.

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

Kurds & Ethnic Cleansing

In recent NYT columns, Tom Friedman has praised the Kurds, and David Brooks has a "center last" process of bringing peace to Iraq.

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.

Fed Rate Cut & Fiscal Policy

It seems like when I studied economics in college, they talked about monetary and fiscal policy. Today it's only about monetary policy. Everybody on Wall Street wants the Fed to cut interest rates. They want Bernanke to reinstate the "Greenspan put" to shield traders from their losses. I oppose the "Greenspan put" but that's not my main point.

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.)

Tony Snow & Average Americans

Tony Snow said he is leaving as spokesman for the White House because he can't live on a salary of $168,000 per year, according to the Washington Post. If the average salary is something like $50,000 per year, what does this say to average people? Inflation is crazy out of control; people in hedge funds and private equity are making thousands of times more than average people, according to the Kansas City Star. Salaries in wealthy sectors are going up so fast that the government can't hope to keep up, especially when taxes on the rich people making these obscene salaries are going down instead of up.

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.

Friday, August 24, 2007

Warner Less than Courageous

The George C. Marshall Foundation honored Sen. John Warner at this 2007 celebration of the 60th anniversary of the Marshall Plan. Winston Churchill praised General Marshall as the "organizer of victory." Looking at the war in Iraq, has Sen. Warner been an organizer, and has the US been victorious? No. Warner, as chairman of the Senate Armed Services committee, has presided over the destruction of the US military. Too few men and women were assigned too large a task in bringing a new government to Iraq. The military has been over-stretched and under-supplied, often lacking flack jackets and armored vehicles, even for the too few troops who were set there.

Now Warner has called for pulling out 5,000 troops of the 160,000 currently there, if the President wants to. It's almost nothing. It's too few to be noticeable, and probably too few to make a difference one way or another. It's symbolic, and that's something, but it's not much. What George Marshall did was more than symbolic. He took a small, peacetime military, much like America's today, and transformed it into a huge fighting machine that made the difference in World War II. He made hard choices; he replaced peacetime generals with generals who could fight. He drafted millions of men; he turned America's industrial base on its heels toward the production of military equipment. Bush and Warner kept their yes-man generals and gave huge tax breaks to the rich. They said, "Keep us in power and we'll give you lots of money and send some worthless farm boys and ghetto kids to die in Iraq. And we'll do it with generals who won't rock the boat." Their contempt for average Americans is boundless.

Warner may not be the worst politician in the Senate, but he certainly does not deserve to be mentioned in the same breath with General George Marshall.

Bush Criticizes Cowards on Vietnam, Injures Foot

By comparing Iraq to Vietnam, Bush shot himself in the foot, as chronicled by many commentators, including this WP op-ed. Bush would have had other, poorer, less educated, less beautiful people fight on for years in Vietnam, while he partied during his ignored National Guard service. At least we tried, putting at least 500,000 troops in Vietnam for a while. Why doesn't Bush try that in Iraq? He's afraid to. But he'll probably do his best to see that the career military gets blamed for losing another war that he tried valiently to win. He'll blame the military for not fighting hard enough and not supporting him enough.

Tuesday, August 21, 2007

Tax Cuts and Moral Hazards

The main recipients of Bush's tax cuts are the same people responsible for the turmoil in the financial markets. The rich are so greedy that they first made bad mortgage loans to people who couldn't afford them. But the bad mortgages created "paper" that they could then sell to more unsuspecting buyers. Thus they could get the bad mortgages off their books and pass them off to someone else. It was a game of musical chairs until the music finally stopped and someone ended up holding some bad paper. Some people are going to get stuck with some losses, but others have made out like bandits and will have huge profits with which to take advantage of Bush's tax cuts, which particularly benefit those in hedge funds and private equity, some of the main villains in the bad-paper game.

In discussing what to do about this situation, the concept of "moral hazard" gets mentioned occasionally, as it does in this Financial Times editorial. The moral hazard concept is that you should not bail out people who got themselves in financial difficulty. It certainly applies to the hedge fund and private equity types; it is less clear that it applies to the average homeowner who might lose his house because he got a disadvantageous mortgage. There should be a level playing field. The hedge fund types certainly knew what they were doing; most have MBAs. Homeowners may or may not have known; they may have been cheated by mortgage brokers who didn't explain exactly what they were getting into. But the homeowners should have been smart enough to understand that if it sounds too good to be true, it's probably not true.

In any case, the moral hazard argument is that we should not bail out those who profited from taking risks that have now come home to roost. Therefore, in general, the Fed should not bail them out by cutting interest rates. But the economy does have a problem if the market turmoil threatens to bring on recession. It's the old story, "If you own the bank $100,000 and can't pay, you're in trouble. If you owe the bank $100,000,000 and can't pay, the bank is in trouble." So, it's possible the hedge fund types have the Fed over a barrel. But certainly the Fed should resist the temptation to bail out the market losers, like Jim Cramer of CNBC, according to Barrons. Bush has already given them a ton of help by cutting their taxes to almost nothing. Bush works for them; maybe Bernanke doesn't. Maybe he works for America. We'll see.

Little Genuine Support for the Troops in Iraq

The Army doesn't see much genuine support from the American public for the troops in Iraq. A NYT story on American troops in Germany being reassigned to Iraq says their commanding general told the families not to go back home to the States, because they wouldn't find much support there. They would find more support at their Army base in Germany. The article said:

One thing General Hertling pointedly did not suggest was for the families of the soldiers to return to the United States. The Army’s goal is to create a support network strong enough that the spouses will decide to wait out the deployment on the base in Germany, a country that many of them scarcely know and that pointedly declined to take part in the Iraq war. “We tell them, ‘You will not get the support you think you will, if you go back home,’ ” he said in an interview.

But it also demonstrates, General Hertling said, how the gap between American society and its volunteer military has widened as the Iraq war has dragged on. “Many people there have just moved on,” he said.

The extension of the last deployment — which came at the last minute after some troops had already reunited with their families in Germany — strained relations between the families and the Army. “There have been so many changes in what we’ve asked soldiers to do, that we may have put spouses in a position where they question what comes next,” said General Hertling, who has had two sons and a daughter-in-law serving in Iraq.

For most Americans, supporting the troops means putting a bumper sticker on their car, or watching a program about the Army on TV. The real way to support the troops is to enlist in the Army or the Marines to go fight. Because nobody does that, those in the service go back to Iraq again and again. Bush and Cheney don't care. They were both draft dodgers during Vietnam who have contempt for the military; to them, serving in the military is something that poor, stupid people do who can't get a real job working for Halliburton or the Texas Rangers.

To me an example of contempt for the military is that the last two Democratic candidates for President, Al Gore and John Kerry, were both Vietnam veterans. The public said, "Naw, we don't like veterans. We didn't serve, and we don't trust those do-gooders who did serve. Give us a draft dodger." And the public got what it deserved: cowards who were afraid to fight in Iraq, who got us into a horrible war that will destabilize the Middle East because they were afraid to fight hard enough to win. Why? Because they would have to raise taxes and re-institute the draft to get enough soldiers to fight and win the war they started. Cowards! Republicans, draft dodger Rudy Giuliani included, are cowards, except for John McCain, Chuck Hagel, and a few other veterans.

I'm not happy with Sen. John Warner, who was Republican chairman of the Senate Armed Services Committee during the invasion of Iraq and during the first years of the war, although he is a veteran. He did not support the military, and has let Bush and Cheney virtually destroy the military by not providing the necessary manpower and equipment to fight the war in Iraq. Warner just got an award from the George Marshall Foundation, but instead of an award he should have gotten a censure for doing the exact opposite of what Marshall did to build up the Army to win World War II. It's time for Warner to go. He has failed his country.

Monday, August 20, 2007

Congress' Disdain for National Security

The word is that the Democratic Congress (Senate and House) passed the revision to the overseas wiretapping law requiring FISA review because it was afraid it would be labelled weak on national security by Bush if it didn't. Maybe it would have been, but the questionable law it passed opens it up to the same criticism, albeit not from Bush, but from freedom loving Americans. The NYT reports that the new law may give Bush more latitude for spying than he had, and not only for wiretapping. It didn't just correct an oversight, it opened new loopholes for the Administration to drive through.

The bad thing is that the Congress cared so little about what the law said that it passed it without debating it, without even reading it closely, if at all. The lesson: August vacation is more important to Congress than America's national security. Congress is a national disgrace!

China's Economic Nuclear Option

There has been talk of China using it's economic "nuclear option" against the US, that is dumping its US dollar holdings, thus killing the value of the dollar against other currencies, as for example in this report. But this would be sort of mutually assured destruction, a MAD economic doctrine. The US would be hurt, but so would China. It would lose its best customer, the US, which would no longer be able to afford all the stuff it now imports. Plus, it would be hard for China to dispose of all of its US dollar denominated assets before the dollar started to crash; so, China would take a big loss on whatever it got caught holding as the dollar tanked. In addition, as the article points out, the US has been trying to get China to increase the value of the yuan relative to the dollar, albeit not by so much; so, China would be to some extent doing what the US wants it to do, delink the yuan from the dollar and let the yuan float up versus the dollar.

In short, this seems like something that it would be very unlikely for China to do. It would hurt the US, but at a great price for China. The only scenario might be if there was a huge financial crash in China, so that adding to it would be relatively unnoticeable; then China might say, "If I'm going down, I'll take America with me."

Saturday, August 11, 2007

Iraq War Czar Considers a Draft

CNN reports that Iraq war czar General Lute said that restoring a military draft should be considered as an option to provide enough troops to maintain the US military's ability to fight the Iraq war.

I think we need a draft. Too much is being asked of our all volunteer Army. Bush and Cheney, two draft dodgers, would never propose to restore the draft, although their war is the reason we need to do so. They are perfectly happy to destroy the Army, for which they have no respect, and let their successor figure out how to defend the US. We need to start planning for the future now, and the all volunteer Army won't meet the needs of the future unless we get out of Iraq now and let it start recuperating.

Thursday, August 09, 2007

Insider Trading Common on Wall Street

The Financial Times did a study that showed that insider trading is common on Wall Street. This should be no surprise, given that Wall Street is populated by greedy, dishonest people. I was already mad with Wall Street because of its disregard for the war in Iraq. The Dow Jones index went through the roof as more and more Americans and Iraqis died in the war. Wall Street didn't care although to hear George Bush tell it, we went to war for Wall Street, because of the 9/11 attacks, despite the fact that smarter people have found no connection between Saddam Hussein's Iraq and the 9/11 attacks. The attacks on the World Trade center were directed at the US financial district. Since we can't find Osama bin Laden, we don't know exactly why, but part of the the reason was probably to make a high visibility attack that would get the world's attention, and part of it was probably because of the large role played by Jews in America's financial district.

In any case, the Financial Times study tends to reinforce the negative impression of Wall Street. The violent fluctuations currently going on in the market no doubt allow savvy traders, maybe not doing anything illegal, but just using their intimate knowledge of how trades are made these days by computer programs, to make money when the market goes up or down. Add to this the fact that many staffers, high and low, in banks and brokerages are aware of merger and acquisition (M&A) activity, and can probably do some small trades using their inside knowledge that will not show up on the SEC's radar screen, but may show up on the overall statistical study done by the Financial Times.

Wednesday, August 08, 2007

Cowardly Democrats

Caving in to President Bush on the warrantless wiretapping law was total cowardice on the part of Democrats. Bush threatened to hold them in session unless they passed his law. They had the same choice the Iraqi Congress had -- work for national security or go on vacation during the month of August. The US and Iraqi Congresses chose to go on vacation, rather than try to better their countries.

Bush is worthless, but the Democrats are also worthless. I guess politicians are worthless. I'm particularly surprised that Diane Feinstein, Jim Webb, and my Democratic Senator Ken Salazar voted for the bill.

The bill may be okay, but it may not be. The quick vote was unseemly and showed that the Congress wanted to go on vacation more than it wanted to protect the US. Yesterday, two people debated the law on PBS and they had diametrically different ideas of what the bill actually said, much less what it meant.

Tuesday, August 07, 2007

Unoptimistic about Middle East

Condi Rice is doing her thing, supposedly bringing peace the Middle East, but I don't believe it. She's not a terrible Secretary of State, but she is not a good one either. She parades around and says the right things, but she doesn't back them up. She doesn't fight for anything. Christopher Hill got the North Korean nuclear agreement. She did support him, which is more than Colin Powell did on the issue. She was probably able to support him only because she got rid of John Bolton at State, and Don Rumsfeld and his allies were gone from Defense. Nick Burns negotiated the Indian nuclear deal, but that was much less successful than the North Korean one. The Indian deal is more likely to undermine US security than to improve it, because it undermines the whole nuclear non-proliferation regime by rewarding one of the holdouts of the regime.

While her subordinates have been out doing things, Condi has been giving interviews and making appearances around the world. But she is not going to make any tough decisions. Any progress in the Middle East will require getting Israel to make some sacrifices, and she won't do that because she and Bush won't, or don't want to, stand up to the Israel lobby, AIPAC and company. Thus, her initiative is doomed from the start.

The idea of shoring up Abbas and Fatah is unlikely to lead anywhere. Fatah meant something when Arafat headed it. The Israelis assassinated Arafat, and I think they will live to regret it. The Israelis may not have assassinated Arafat by actually killing him, although they may have. The reasons for his death given by the French hospital where he was treated were never very clear; he could have died from some virus or poison wafted into his ramshackle headquarters by Israel. Or he may have died simply because of the squalid conditions that Israel forced him to live in. In any case, he was a leader of the Palestinians who could actually follow through on promises he made. Abbas does not have they power. He is a puppet of Israel and the US and is perceived as such by the Palestinians and other Arab and Muslim states. The US money and weapons given to Fatah may help him stay in power, but it won't help him bring peace to the region. It would take a leader with more power than Abbas to do that.

Saturday, July 28, 2007

Plights of Iraqi Refugees and US Iraq Veterans

This is the essence of letters to my senators and congressman prompted by an international conference on Iraqi refugees held on July 26 in Amman, Jordan.

I am distressed that by starting a war that it has now virtually lost, the United States has created a hell on earth in Iraq. According to the New York Times, 750,000 Iraqi refugees now live in Jordan, and 1.5 million live in Syria. Another 50,000 leave Iraq every month. Craig Johnstone, the UN deputy high commissioner for refugees, told the BBC, "The international community, I think, has neglected the plight of the refugees from Iraq so far, but they are beginning to act."

On a related issue, we need to help Iraqis who have worked for the US leave Iraq if their life is threatened. As a retired Foreign Service officer who worked frequently with “foreign service nationals” (FSNs) at embassies abroad, I feel particularly strongly that we should help them. I am distressed that we seem to be allowing only a handful of Iraqis to seek refuge in the US, when we should be helping thousands. It’s nothing compared to the number of Vietnamese who came to the US as a result of the Vietnam war.

I do not think immediate withdrawal from Iraq is the best course of action to bring closure to the Iraq war. I think we need to reinstate the draft and increase the number of troops in Iraq to 500,000 to 1 million until we can stop the terror there and bring enough peace for Iraqis to live in their own country. However, if we are unwilling to make the sacrifices necessary to bring peace to Iraq, then we should leave and let the Iraqis end the civil war as soon as possible with their own internecine bloodletting. As an American I am dismayed that we have brought upon ourselves this choice between two horrible alternatives.

I was a draftee who went to Vietnam, unlike Presidents Bush and Clinton, and Vice President Cheney. I was the Science Counselor at the American Embassy in Warsaw, Poland, in the mid-1990s when then Vice President Gore visited for an anniversary marking the end of World War II. Former National Security Adviser Zbigniew Brzezinski introduced Gore to the audience of Polish war veterans at the Ambassador’s residence in Warsaw by noting Gore’s service in Vietnam. The Poles applauded loudly, but many Americans murmured, “Doesn’t he know Clinton didn’t serve?” As a Vietnam veteran, I will probably never forget the American hostility towards Gore for being a veteran and the difference in attitudes between the Poles and the Americans. I’ve seen it all my life; when I returned from Vietnam to the relatively conservative University of Alabama, all anybody wanted to hear about Vietnam was how many atrocities you committed or saw. I was grateful to have served along the DMZ where, unlike farther south, anybody you saw outside your perimeter was almost certainly a bad guy. For many in Vietnam telling the good guys from the bad guys was difficult, but it seems much more difficult in Iraq.
I realize that Americans are now trying to make up for their former open prejudice against veterans by praising those who fight in Iraq. But news reports make it clear that those fighting are a relatively small group of mostly white Christians from small towns in the mid-American heartland. Upper class and upper middle class citizens from comfortable cities and suburbs applaud them so that the wealthy don’t have to go. Until the last few days, Wall Street celebrated the carnage in Iraq by hitting new highs of the Dow Jones average.

Unless the US beefs up its military presence in Iraq, which unfortunately I doubt because of the unwillingness of most Americans to make any sacrifice for the “war on terror,” I pity the poor Iraqi war veterans. Because of the shoddy treatment of these vets by Walter Reed Hospital and the Veterans Administration, President Bush set up a commission led by former Senator Dole and former Secretary Shalala to help improve their treatment. This is a good start, but the problem for the future is that there will be so few Iraqi vets. Because they are being sent back again and again, the total number of vets is small, especially when compared to World War II or even Vietnam, where most soldiers served one tour. Thus, in the years to come they will have a very small political constituency to fight for the benefits they need. Once the war is off the front pages, they are unlikely to get much from the government.

I don’t know what happened, but the recent resignation announced by Coloradan Jim Nicholson as Secretary of Veterans Affairs is discouraging. I am guessing that, perhaps in private, the Dole-Shalala panel had some tough words for the VA because of its failure to meet Iraq war veterans’ needs.

Friday, July 20, 2007

Why Do We Encourage Troops To Leave the Military?

We don't have enough troops to maintain order in Iraq, but by paying contractors two, three, maybe five times as much as soldiers make, we encourage the best troops to leave the military and return to Iraq as civilian contractors carrying guns. There are almost as many US government contractors in Iraq as there are soldiers, although many of them are Iraqis working for us. But many are also former soldiers who left the military to make more money as mercenaries. Recent press reports have pointed out the downside for contractors if they get hurt, but if they don't get hurt, they get rich. It's a gamble that many make.

We should have enough troops to do what we need done in Iraq. I think this even includes Halliburton's jobs of running mess halls and driving trucks. Of course, we could never do this with the small Army and Marine Corps that we have, but that means that we need a bigger military until this war is won, not that we go hire a bunch of South African thugs to act as body guards for senior Americans.

While military salaries and bonuses are growing to keep some semblance of parity with the contractors, the country will be bankrupted if we take it too far. Of course, Bush is oblivious to the financial cost of the war. He's aiming for a trillion dollar war.

Why Don't Republicans Support the Troops

If the Republicans really cared about our troops in Iraq they would get them some help, not just send the same troops back to Iraq again and again. No doubt a lot of the troops believe in what they are doing in Iraq, but I doubt that many of them want to do it 52 weeks a year, year in and year out. They want and deserve a break. But with the current Army and Marine Corps, there are not enough of them to hold down Iraq and have sufficient stateside downtime. Actually there are not enough of them to hold down Iraq as it is; that's why Iraq is descending into chaos and anarchy. We ought to have 500,000 to 1,000,000 troops there for a while, maybe a year, to re-establish order.

It's clear now that we lost the war when we allowed looting to break out after the US troops first took Baghdad. Ministries were destroyed; key records were lost; key personnel disappeared; archaeological treasures were stolen. The country was disintegrating before our eyes, and we did nothing. Now we reap what we sowed then.

So, if we're serious about Iraq, we must re-establish the draft. But I don't think we are serious; so, if not, then it's time to leave. We can try to leave gracefully and leave as many Iraqi police and army troops in place as possible, but it's likely to be a bloodbath.

As an American, I feel awful every time I see or read about a suicide bombing, or a beheading, or an assassination. As Colin Powell told Bush, the Pottery Barn principle applies, "If you break, it you bought it." We bought it big time. Terrible things happened before we invaded, but then it was Saddam Hussein's fault; now it's our fault. We are not murdering too many people (although a few according to press reports), but we are failing to maintain order and a civil society. George Bush blames Maliki, but Bush is responsible. It's his war. He failed. America failed. Why would he start a war, and then lose it? It's total incompetence and cowardice.

Iranian Invasion When We Pull Out of Iraq

One possibility, of many, is that when the US leaves Iraq, Iran will step in and annex Iraq either formally or de facto. Iran and Iraq have already fought a bitter war in which Iraq used chemical weapons and we, under Reagan's guidance, sided with Saddam Hussein. If Iraq descends into chaos after we leave, can we expect Iran to keep hands off? If the Shiites are unquestionably in power when we leave, Iran might stay out. On the other hand, if there is the least chance of the Sunnis taking over again, why should Iran risk it. It would be foolish for Iran to take that risk. The US intervened strongly in Central America during Reagan's presidency when we thought the Communists were coming to power there. There is likely to be an Iranian Ollie North who will push for invasion, maybe using some weapons supplied by the real Ollie North.

Should that possibility keep us from leaving? Maybe, but only if staying could change that outcome. If staying just keeps the lid on anarchy until we finally leave, what's the point? Iran could take over in 2008 or 2010 or 2020; it still takes over. We could hope for some kind of revolution in Iran, but it's unlikely to happen.


I think that we need to beef up the troops and re-establish order in Iraq, but Bush and the Republicans are too cowardly to do it. They won't re-establish the draft, which would be the only way to raise a sufficient number of troops to do the job. They'll just keep sending the same troops over there again and again for longer and longer tours with shorter and shorter stateside tours.

Sunday, July 15, 2007

New Gilded Age and the Military

The New York Times says this is the new gilded age, and it looks like it is. The are a lot of similarities to the beginning of the 20th century. Why didn't the US move into a new gilded age after World War II. Financially we were in even better shape than we are today, because almost every other industrialized country around the world was in shambles. The article asks why now instead of the 1960s or 1970s. One answer that keeps coming up is changes in regulatory and tax structure. Taxes today are lower; Glass-Steagall was removed from the books, allowing nationwide banking, etc.

Something the article doesn't mention is World War II. WW II is so far unique in our history in pulling the country together. Unlike Vietnam and Iraq, almost everybody served in the military and fought. Men from the upper classes and the Ivy League spent years with men from the farms and factories. There was a brotherhood and a sense of shared responsibility. Today there is none of that. The privileged classes don't fight in Iraq. There is less social mobility within American society.

After WW II men who served as officers and returned to run the business world felt a kinship for and obligation toward the less fortunate enlisted men they had fought with. Some of the elite, rather than going into business, went into politics and ended up passing some of the laws leveling American society, making taxes more progressing, limiting monopolistic practices, etc., the kinds of things that have been undone in the last 20 years.

While these men ran America, we had a somewhat golden (as opposed gilded) age where management and labor worked more or less together to make life better for everyone. Today there is very little of that. The head of FedEx is a Vietnam veteran, and while Vietnam was a very different war, FedEx probably espouses more social responsibility than most other corporations whose managers only know the brotherhood of business school at Harvard or some other elite university.

Checking Wikipedia for military service by some big business names, I found:

  • Bill Gates (Microsoft) - No service
  • Warren Buffet (Berkshire Hathaway) - No service
  • Sandy Weill (Citicorp) - Did Air Force ROTC; wanted to be a pilot, but apparently could not qualify and did not serve in the active military.
  • Leo Hindery (AT&T) - No mention of service, but less than complete biographies.
  • Sumner Redstone (Viacom) - Worked in the predecessor to NSA during WW II.
  • Kenneth Griffin (Citadel hedge fund) - No mention of military service; sounds like he went straight from Harvard into managing hedge funds.
  • Lew Frankfort (Coach) - No mention of military service in Business Week bio.
  • Sheldon Adelson (Gambling/Las Vegas) - No mention of service in Forbes bio.
  • Larry Ellison (Oracle) - No mention of service in Forbes bio.
  • Paul Allen (Microsoft) - No mention of service in Forbes.
  • Jim Walton (Wal-Mart) - No mention of service in Forbes.
  • Robson Walton (Wal-Mart) - No mention of service.
  • Sergay Brin (Google) - No mention of service.
  • Larry Page (Google) - No mention of service
  • Michael Dell (Dell) - No mention of service.
  • Steve Ballmer (Microsoft) - No mention of service.

Enough!

Tuesday, July 10, 2007

Condi Rice Is Paris Hilton of State Department

Condi Rice is supposed to be a foreign policy professional, but things have gone to hell in hand basket on her watch as Secretary of State. Arguably things have not gone as badly 0n her watch as they did on Colin Powell's. We haven't gotten into any new wars. We've reached an agreement with North Korea on nuclear issues, rather than breaching one. But Condi was in the White House fighting against Colin Powell on these issues during Bush's first term.

Condi has turned out to be a light weight when it comes to foreign policy. She basically lets herself be pushed around by whomever she's with. At the White House, it was the war mongering neo-cons, and she backed them. Now, at State, she to her credit is taking a more statesman-like position, but due to the people around her, not to any good sense of her own.

She dresses nicely and is telegenic, but like Paris Hilton, there's not much "there" there, unlike Robert Gates who appears to be personally moving the Defense Department in a more reasonable direction.