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.

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.

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.

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.

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.

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.