Israel's Insult

I just want to note that last week Israel spit in America's face when it announced new Jewish settlements in east Jerusalem during Vice President Biden's visit. I am inclined to take it as contempt that all Jews (represented by their country, Israel) have for gentiles. But, it's not all Jews, witness the op-ed by Tom Friedman, and his comments to Tom Brokaw on "Meet the Press" yesterday. It probably does represent the view of Likud and Zionists, represented in the US by AIPAC and other big Jewish political organizations. But even if it's not a sign that all Jews hate America, it's not good for race relations. America should certainly suspend all cooperation with, and foreign assistance to, Israel.

I Still Support Obama

In the WSJ, Peggy Noonan says Democratic congress-persons should abandon Obama because he is serious about being a one term President. I think that Obama is putting the United States ahead of his political ambitions, which is very rare in Washington. Peggy Noonan does not understand that, nor do the Republicans in Congress, who see "success" as totally blocking the legislative process.

I should like Peggy Noonan. She seems like a very nice lady. She may be a polite WASP, a rarity in the political world today. But I don't agree with her.

On health care, I think the situation is like the following: Problems with private health care, Medicare, and Social Security are like long-term, chronic diseases. They are not going to kill you now, but they might in a few years. So, the Republicans during the Bush Administration took the United States and ran it into a wall, like a catastrophic auto accident. With two wars and tax cuts bleeding the national treasury, the Republicans now cry, "You can't do anything about those chronic diseases, we have people lying the street bleeding to death." The Republicans did wreck the US economy by tax cuts and failed regulation of Wall Street. But the question is: Can we continue to ignore the long term problems. To do so would be irresponsible. Obama knows this and says so. The Republicans would destroy the United States in a few years in order to win an election next year. They scream that Obama is breaking the budget, but that's because they cut taxes during prosperous times under Bush, and then created a financial disaster requiring deficit spending to survive.

One of the most hypocritical Republicans is John McCain, who used to be a responsible maverick, but is now a right-wing hack. He has become a bitter old man. Unfortunately, he showed he does not intellectually understand economics, when during the campaign he cancelled the Letterman show to focus on the economy and then had no clue when he went to the White House meeting on the economy. Does he get a pass for being stupid? No, the situation is too perilous to allow him to muck it up just because we feel sorry for him.

Unlike McCain, Obama has America's best interests at heart, whether he gets a second term or not. He may not be doing everything right, but he's trying, and he's not getting much help. I can't help him, but I can support him for having his heart in the right place, which is unusual in Washington these days.

Republican Cowards

Newt Gingrich's recent appearance on Jon Stewart's "Daily Show" illustrated the cowardice of Republicans in dealing with national security issues. The Republicans are afraid to grant civil trials and constitutional protections to anyone they suspect of having terrorist leanings, most recently demonstrated by their fear of having terrorist trials in New York. Jon's reply to Gingrich that he was not afraid to hold such trials was a lone voice in the media, but one that reverberated with me. How can we trust cowards like Gingrich, or George W. Bush and Cheney (who dodged the Vietnam draft), to defend the US? Somehow Republicans have the reputation of being strong on defense, which maybe they are, because they are so scared. They fear everybody, strange lights, noises in the dark, anything that might potentially threaten their ill-gotten wealth. These are the people who defend their "private property" by shooting trespassers on sight, even children, and asking questions later. I am ashamed for America. But the good news is that they don't represent all of America. Even if they make big gains in the next election, there are a lot of people who won't vote for them.

I suspect that a lot of the military is Republican, but I don't know for sure. It makes some sense, because Republicans support the troops in general, because they are so fearful that they want somebody to go out and fight for them. But Republicans are also in favor of low taxes that may leave the troops without the support they need. Bush and Rumsfeld sent troops to Afghanistan and Iraq without the best body armor or Humvees, the army you have, not the army you would like to have. Then rather than raising taxes to support the wars, they said just to go out and shop. They certainly made no effort to increase the size of the military to fight two wars; that might inconvenience some of their wealthy friends, whose children might have had to go.

Iran's Nuclear Program Continued

Iran threatens to expand its nuclear program, with yet another reasonable justification, if we could believe them. We've found some significant discrepancies, but we haven't really found a smoking gun that would warrant military action. Economic sanctions are pretty ineffectual; so, it doesn't really matter whether we get some imposed despite China's resistance, or not.

Nobody is talking about the real problem, which is that Israel has many atomic bombs, and we have basically turned a blind eye to bombs developed by India and Pakistan. Arguably, the Pakistani bomb offsets the Israeli bomb, but Pakistan is fast becoming a failed state; so who know what will happen to the Pakistani bombs. They could fall to al-Qaeda, or the US military could take them over to prevent al-Qaeda from getting them. So, Iran is working working on a Muslim bomb that it can count on to counter to the Jewish bombs.

Unless the US does something about Israel, it's unlikely that it can do anything about the Iranian bomb. It's not clear that the Iranians really want to build a bomb; they may just want to be able to build a bomb if they feel the need for one. But they are a lot more likely to feel the need for one as long as Israel has many.

Great Article on Holocaust Remembrance

The Israeli newspaper Haaretz has a great article on Holocaust remembrance day. It says that all the talk Israelis do about the Holocaust will not help Israel, unless it conducts itself in a more moral manner. It says the big Holocaust publicity push is to offset the UN Goldstone report condemning Israel for its conduct of the last war. It says that Netanyahu and his "racist" interior minister ranted against "migrants" in Israel. The article says:

No remembrance speech will obliterate the xenophobia that has reared its head in Israel, not only on the extreme right, as in Europe, but throughout government.

It concludes:

A thousand speeches against anti-Semitism will not extinguish the flames ignited by Operation Cast Lead, flames that threaten not only Israel but the entire Jewish world. As long as Gaza is under blockade and Israel sinks into its institutionalized xenophobia, Holocaust speeches will remain hollow. As long as evil is rampant here at home, neither the world nor we will be able to accept our preaching to others, even if they deserve it.

If only more American Jews were as perceptive as some Jews in Israel are.

Bernanke's Problems Due to Bankers

The main people responsible for Bernanke's problems with approval for another term at the Fed are the Wall Street bankers. They were so arrogant and disdainful of the the US Government, the Congress, President Obama, and the American people that there is a strong reaction against Bernanke's decision to bail them out. People ask, why should be have bailed out such ungrateful people, who brought themselves to the brink of disaster, and who probably did as much economic damage to the US as Osama bin Laden did when he destroyed the twin towers?

Bernanke deserves some credit for saving us from another depression, but he's sullied by the company he keeps. Wall Street bankers come across as some of the most morally despicable people in the US or even the world.

On Bernanke's behalf, he could go to work for these sleazeballs in New York and probably increase his income by 10 to 100 times. He could easily be making over $10 million on Wall Street. We should be grateful that he's willing to stay on as Fed Chairman.

We Need Some Financial Pain

This op-ed in the Financial Times by the Polish finance minister, "Intolerance of small crises led to this big one," makes a point that I have been thinking about and strongly agree with. We need some pain to shake out the aftereffects of the financial crises that we have been through. Fed chairmen, particularly Greenspan and Bernanke, have tried to keep their political masters happy by avoiding any economic pain, except that which blindsided them, like that accompanying the popping of the tech bubble and the housing bubble. This op-ed makes the correct point that they were blindsided by these crises precisely because they trying so hard to smooth out the smaller bubbles preceding them. There is no free lunch. If you pummel the economy, as the bankers did in the housing crisis, you hurt it, and it can't pop back up like nothing happened. If it appears to (as it has recently), it probably means that you've done something bad to it that will come back to haunt you sometime, in a few months or maybe if you're lucky, in a few years. The obvious possibility is that you will sow the seeds of inflation, and that when those seeds sprout, you're going to have a big mess on your hands, made worse by postponing it for years. On the other hand, you might get deflation, like that which produced the "lost decade" in Japan, about to become two lost decades.

What we need is an economy on a sound footing, which means among other things that there is moral hazard for messing up your business. Momma (the Fed and Congress) shouldn't always bail you out. So, should we have let a few more banks follow Lehman down the drain. I don't know, but I don't think so. I think it was probably right to save the banks, but we should have made them pay a higher price for being saved. And we should impose significantly stronger regulations, in particular limiting both their business size (Glass-Steagel) and geographic size.

Brits & US Share Problem

This op-ed in the Financial Times on how to reform the British Foreign Office could have been written about the US State Department. The US Foreign Service almost always suffers from budgetary problems, like their British colleagues. There are exceptions. Colin Powell was personally concerned about the Foreign Service, and Hillary Clinton may try to demonstration her political clout by helping increase State's budget, but most Secretaries of State are more interested in policy issues than personnel issues.

One big problem of both organizations is that they have no domestic constituency. Citizens often see the job of diplomats as representing the foreign countries they work with, rather than pushing the agenda of their home country. Yet, that is seldom the case. They may often argue for going slow in going to war on slapping on sanctions in trade disputes, but that is because they understand that such actions are likely to be futile or counterproductive, although they may make Americans (or Brits) feel better for a while, until the chickens come home to roost.

In any case, those unfortunate perceptions often mean that budgets for diplomacy are among the first to get cut in bad times and among the last to be increased in good times. American lawmakers should take these British arguments to heart in considering their appropriations for the State Department.

Howard Dean Is Right On Healthcare

I have been been a fan of Howard Dean since he ran for President in the 2004 race. He would have been a better candidate than John Kerry. He had good ideas. Unlike Kerry, he spoke his mind, which may have been what killed his campaign. Since he's a doctor, he's seen he's seen this country's healthcare system close up.

When he says the lobbyists and special interests, working through the last must-have votes in the Senate like Joe Lieberman, have made this bill worthless, or even making the healthcare system worse rather than better, I believe him.

It's time to put a public option or Medicare expansion option back in. If the bill won't get 60 votes, get 60 votes to bring cloture and cut off a Republican filibuster. Then go for a vote that only requires a majority of 51 Senators.

If such a plan fails, and the Senate passes something that it total garbage like the present bill, hopefully, they will be forced to revisit the issue and clean up healthcare in the coming years. But the Medicare Part D legislation, creating the doughnut hole that funnels money to the pharmaceutical industry while benefiting few people who can figure out the arcane rules, is not a good precedent. It is speeding the bankruptcy of the US, providing nothing like the benefits that it should for such huge costs.

Give Obama a Chance on Afghanistan

The fact that Obama is taking flack from both the Left and the Right indicates that his policy on Afghanistan is probably about right. The Democrats are complaining that he is the tool of the generals. If he were a Republican, I would worry more about this argument, but I believe that Obama's natural tendency would be to not to go with the generals' recommendations. That means that they must have some good arguments and that they will have to produce results or he will turn against them. Furthermore, I have more confidence in Bob Gates and Hillary Clinton than in most politicians or bureaucrats and am encouraged that they are on board.

I am not personally convinced that we currently need to be fighting in Afghanistan. I think that Bush, Cheney, and Rumsfeld gave the Afghan war short shrift. They didn't really care about it; they cared about Iraq. The troops who died there were not appreciated, starting with Pat Tillman. Bush, Cheney and company were cowards; they were draft dodgers during the Vietnam War, and they hid during the 9/11 attacks. They felt they had to do something in response to 9/11; so, they sent troops to Afghanistan, but their heart was not really in the war, which is why all the troops, equipment and money went to Iraq.

Now that Obama is in office, Afghanistan if getting the attention it deserves for the first time. It deserves attention because Americans are dying there and we are spending billions there. Basically, I think Obama is saying to the military, "Okay, you've been in Afghanistan for eight years, but you've never had the manpower and resources to do the job. And you've never really been told was your mission was. Now, we are going to give you the men and resources to carry out a limited mission. You have 18 months. At the end of that time, if you've succeeded, or if it looks like success is impossible, we'll pull out. If something unexpected happens, we'll reevaluate then." So, the military has a chance to prove itself, after being given just the back of Bush's hand for eight years. We owe it to those who have died over the last eight years, and perhaps to the 3,000 who died on 9/11.

Time To Change Recession Strategy

It's time for the US to spend its money where it's needed, for the common people. The NYT article on debt repayment points out the problems facing the US if it borrows a ton more money for another stimulus or further bailouts. The main beneficiary so far of the taxpayer largess has been Wall Street, which got us into this fix in the first place. It was initially necessary to save the banks and the financial system, but now the idea seems to be that if we make the Wall Street financiers insanely, obscenely rich, some of that wealth will trickle down to ordinary people. It's not happening, as the 10% unemployment rate demonstrates.

Everybody says we need more jobs. So, why doesn't the government create jobs, rather than throw money at the banks and the Wall Street fat cats? It could do this more or less the way FDR did, just create make-work jobs. Construction projects only go so far, since we now have a lot of women and older men in the work force. One office version of make-work would be data entry. The government must have tons of data that it would like to have, or it could get started on computerizing medical records.

Another helpful step would be to impose a year or two of compulsory public service on all young people when they finish their studies, or when they are 18. We wouldn't need to impose a military draft, but military service would be one way to fill the compulsory service requirement. We need more soldiers, and we need fewer people entering the labor market. The compulsory service could be in the US, working in slums, or doing menial work in hospitals, or doing environmental conservation work, or many other things. They could also serve in the Peace Corps, or in the military. The military claims they prefer the all-volunteer Army, but these people could be cooks, or clean latrines, or do other menial work that the military now contracts out for much higher fees that the young people would get. They could get something like $10 per hour, and if they are married and have children, one spouse could be paid the same amount to stay home and take care of the children, thus doubling their income. They would generally live in barracks or group housing and eat in group cafeterias or mess halls, but in some cases could get food stamps or other subsidies as needed for a family living alone. Some young people would opt to serve in the military, thus easing the recruiting strain created by fighting two wars.

We needed Geithner and the bailout when we were on the verge of going over the financial cliff at the end of 2008. But that's over according to the economists. We're growing again. So, let's break up the banks that are too big to fail, raise taxes on the rich, give jobs to people who need them, and prevent young people from entering the labor market immediately by requiring a yar of two of public service.

One other thing -- raise interest rates. Everybody says that raising taxes and interest rates will kill the recovery. Okay, but save the ordinary people by giving them government jobs. Then let the rich fend for themselves if the recovery stumbles. They might have to sell one of their four houses. Good!

The perverse effect of keeping the recovery going is that it is creating the same asset bubbles that got us into this mess in the first place. Low interest rates are a primary culprit. We at least need some minimal interest. It's ridiculous that banks can borrow from the Fed at zero percent and then charge 25% or 30% to their credit card holders. There should be some cost of money to discourage the creation of new bubbles by the greedy barons of Wall Street. Ask Paul Volker!

Wall Street Salaries Are Too High

Everybody is talking about Wall Street salaries being too high, but this article in the Washington Post by the organization that runs the Rhodes scholarship program is what put me over the top. He says that the huge differential between business salaries and public service or academic pursuits is pushing more and more Rhodes scholars into the business and financial world, which means that a big percentage of the America's best talent is going to one place, and areas that need the best people -- to keep us out of war for example -- don't get any.

Something needs to be done. I don't see how you can regulate salaries in general to get at the huge salaries in business and finance, although a very few are being regulated under the bailout program. The problem is really the huge gap between them and everybody else, even including doctors and lawyers, according to the article. So, I propose a huge tax on huge incomes. It could start at say $1 million annual income. Increase the marginal tax on income over $1 million at something like 50%. Then maybe tax income over $10 million at 70%. Annual income over $100 million at 90%. These rich people will have so many loopholes, deductions, credits, etc., that the actual net tax on them will be much lower.

In addition, to level the income gap, there should be less preference for income generated from financial transactions and activities. Capital gains and dividends should be taxed at a higher rate. One old justification for lower capital gains taxes was inflation, but there is no inflation anymore. Another argument is that low capital gains taxes encourage innovation and entrepeneurship. Okay, but limit that advantage to income that actually comes from innovation. Give the break only to those who fund startups. There shouldn't be a lower tax for people who buy IBM or Walmart today and sell it for a profit in a week or even many years later; they didn't create IBM or Walmart.

Similarly, an argument for dividends is that corporations already pay income tax, and thus dividend income is taxed twice. But like rich individuals, few corporations pay anything like the full corporate tax (35%?) on their full gross income. They have many credits, deductions, writeoffs, etc. You could also tax the first relatively small amount of dividends at a lower rate, to encourage investment by individuals, but tax dividends at a higher rate for individuals who receive more than $10,000 or $20,000 annually in dividends.

It's easy to tax people who earn a salary, but difficult to tax people's income from business and financial activities. Thus, you can be pretty sure what an average worker's gross income is, but it's much more difficult to know for someone involved in business and finance. That argues for even higher taxes on the rich, because they will evade taxes anyway.

The recent dust-up about people who were hiding money in secret bank accounts overseas and not paying taxes on the income is just one example of the problem.

More Steve Simon on Terror

Steve Simon now has an op-ed in the New York Times, following up on his op-ed in the Financial Times. He cranks out stuff for major papers faster than I can blog. Once again I basically agree with him that having the terror trials for Khalid Sheik Mohammad and others in New York is a good thing.

I am outraged that the Republicans are so opposed to these trials. Their opposition is based on fear, a poor starting point for a serious country. They have no confidence in the US military, the FBI, the CIA, and the New York police to protect the city during the trial. It's true that Bush and the Republicans failed to protect New York on 9/11. I don't think the Democrats will be as lazy as Bush and Cheney were pre-9/11.

Of course, the civil trials in New York are also a political rebuke to the Republicans, who wanted to hold some kind of kangaroo court in Cuba. The Republicans are now the leaders of what is basically a lynch mob, saying no trial, just shoot 'em. Of course, they'd say that the want military trials before they shoot 'em, but to the world those military trials would look a lot like kangaroo courts or Communist show trials.

So why are we still having military trials for some of the Guantanamo prisoners? I don't really know, but I'm happy that some of them will get real, legal trials.

The old Bush approach to combating terrorism reminds me of Argentina's way of handling its discontents, by "disappearing" them. The government picked them up and they were never seen again. KSM was snatched in Pakistan, and we've just had a number of CIA agents convicted of kidnapping a suspected terrorist in Milan. We grab 'em and stick 'em in Guantanamo or send them by extraordinary rendition some friendly country that will torture them for us. Not a very high class act! Thank goodness the Obama administration has more morals and character. The US should adhere to a higher standard than Argentina did.

Meanwhile the Republican Party displays absolute fear and panic. How can former Presidential candidate John McCain lead such a band of cowards?

Almost Time for Geithner to Go

It was a good decision to name Timothy Geithner as Treasury Secretary when Obama came in at the height of the banking crisis. He needed someone who knew what had happened, where the bodies were buried on Wall Street. Now the crisis has moved on. We need someone who is more an outsider, someone who is not an executive or director of Goldman Sachs. The Geithner move can wait until the health care debate is over, but should come as soon as the system can bear it. He's not the best man for the job.

I don't have a recommendation. The two financial people I trust at the moment are Elizabeth Warren and Paul Volker. People say Obama is ignoring Volker; he does so at his peril. It's understandable, because people say that Larry Summers is so in-your-face that it's hard to oppose him, but the time is coming to do that. Summers needs to be moved away from the center of power. He should continue to be an advisor, but not the advisor. Between Rahm Emanuel and Larry Summers, Obama has his hands full of loud, brash, aggressive, pushy Jews. Volker, of course, is Jewish, but seems to be much nicer personally than his competitors; the same goes for Bernanke. Obama should recognize that and draw on Volker (and Bernanke) despite the tantrums of his other Jewish advisors.

Ideally, a new Treasury Secretary should come from outside of Wall Street, perhaps someone from Obama's old home of Chicago. An academic might be a possibility. Bernanke has done a good job at the Fed, despite coming from an academic background. A businessman or banker is not out of the question, as long as he is not a Wall Street insider.

Gambling on Wall Street

CNBC, which is on in the other room, is doing a story on some poker player in a Las Vegas tournament, who came from a very simply background and is winning tons of cash. First, why is this a financial network story? Because Wall Street is basically a big poker game; it's not about the economy or jobs or any of that stuff that they talk about.

As an example, John Paulson made billions betting against sub-prime mortgage paper, speculating that the housing market would self-destruct. He was right and made billions, but did that have a positive effect on the market? No. His insight, which arguably was important to help the US manage the biggest financial crisis is 80 years, had no effect, except to make him rich. If Wall Street really worked as the commentators want us to believe, his insight into the housing market should have helped avoid the crisis, but it didn't. It's just gambling, unrelated to the real world, except to the extent that if the Wall Street gamblers lose too many billions, the taxpayers will bail them out. Ironically, the WSJ article about Paulson says that he he has hired Alan Greenspan, who aided Paulson's strategy by keeping interest rates abnormally low for too long. That's more a criticism of Greenspan than Paulson. But they are clearly too cozy.

Buying Patriotism

Tom Friedman's Wednesday NYT column on government contractors was once again right on the money. The US government no longer performs the functions that it is charged with and used to do itself, such as fighting wars and negotiating with other countries. It now contracts those and other essential functions out to private business. Of course the main impetus is to avoid re instituting the draft to maintain armed force levels in Iraq and Afghanistan, but secondarily is the Republican (and Democratic) impetus to give money to their campaign contributors.

To me, this represents a failure to support the American government. The government should perform essential functions such as war fighting and diplomacy. The Republicans claim that they love America but hate the government. They go back to Reagan's old claim that government is not the solution, it's the problem. I think that's wrong. In many cases government is not only the solution, it's the only solution. Private sector contractors are not subject to the same constraints that government employees are. Republicans like this because it means that they can resort to nepotism and other forms of favoritism. Democrats, too; look at John Murtha. But I think that if you dislike or hate the US government, you dislike or hate the United States. The government is the country, particularly when you're talking about the military or diplomacy.

As a former soldier and diplomat, I take strong exception to the Republican rejection of government. Granted, government may need a lot of reform, but it should be improved, not destroyed.

Kudos to Tom Friedman for pointing out the failures of government outsourcing and contracting. One of the ironic things is that the government is actually outsourcing a lot of functions to foreigners. It's doing what it criticizes American business for doing: taking American domestic jobs and outsourcing them to foreigners, such as the foreign mercenaries who do a lot of guard duty in Iraq and Afghanistan, in many cases working for American paymasters like Blackwater (or whatever their new name is), who just take the Congressional appropriation and pass it on to the foreigners who work for them, scraping a good chunk off the top for the Blackwater executives. Even when they employ Americans, they tend to take the cream of the crop of Army and Marine veterans by paying them much more than the government can afford to pay them as servicemen. It's a mess, created by people who are destroying America for their personal profit.

Steve Simon Against Afghan Buildup

Steve Simon, with whom I worked in State's old Politico-Military Bureau, has an op-ed in yesterday's Financial Times, "Pull the Plug on the Afghan Surge." I agree with most of his reasons to oppose a surge, except the last one: that if we withdraw troops from Afghanistan's border with Pakistan, the bad guys in Pakistan will probably return to Afghanistan and ease the situation in Pakistan, which is more serious. I don't think that making Afghanistan more attractive to the bad guys, whether Taliban or al-Qaeda, is a good argument for a military strategy. We should not offer them an unfettered base of operations in either country. But I don't think we need huge forces in Afghanistan to interdict the bad guys, but we should attack them whenever we are able to, and we should maintain enough forces to make their life unpleasant, if not impossible.

Corruption on Wall Street

This article from the Wall Street Journal is an apology or explanation of the claims of insider trading at Galleon and other hedge funds, but I don't buy it. On top of the sub-prime, over-leveraging bank debacle, the Madoff ponzi scheme, and other misdeeds by Wall Street, the claims of insider trading ring true. The commentators all say that there is a "fine line" between legitimate information and illegal, insider information. Wall Streeters cross this line every day. They all get information that is not available to people who are not professional, insider stock traders. The editorial says that insider tips are no sure thing for long-term profits. That may be true, but if you can get rich in the short term, who cares about the long term? Nobody on Wall Street. The whole crisis was created by bankers and traders who just wanted to make a buck on their trade, get the asset off of their books, and move on to the next, short-term, insider deal. They're all crooked. They're smart like Al Capone was smart, like Adolph Hitler was smart. They may be masters of the universe, but it's not a universe that anybody else would choose to live in.

Letter on Too-Big-To-Fail Banks

While federal government retiree and Social Security payments will be frozen this year, Wall Street is granting huge bonuses to its workers, who drove the US to the brink of a second great depression. Secondly, there has been little progress on improving financial regulation to prevent what happened a year ago from happening again. In particular the federal government still puts the full faith and credit of the United States behind half a dozen banks that are “too big to fail,” as Fannie Mae, Freddie Mac, and AIG were, while the rest of the US is left to its fend for itself. That policy encourages the big banks to take too many risks, and it gives them an unfair competitive advantage over smaller, local banks.

Government retirement benefits are frozen this year primarily because Wall Street almost bankrupted the country, which meant that there was no economic growth. Wall Street was responsible for throwing millions of people out of work. I believe they are pleased with that. The financial elites -- the one percent who make 95% of America’s income, the CEOs who make 400 times the salary of average workers, or whatever huge statistic you accept -- want a new paradigm where most labor is done overseas by workers in China or Bangladesh who are paid a pittance compared to American workers. In the future 10% or 15% percent unemployment may be the new normal, if Congress does not act.

“Too big to fail” is the primary problem that financial regulation must address. I am a big fan of Elizabeth Warren, the chair of the Congressional bailout oversight program. In one of her recent interviews, she warned that local banks likely face a crisis as commercial mortgages come due and need to be rolled over. There may be huge defaults, and she said that unlike the half dozen banks that are too big to fail, the FDIC would probably shut down the local banks. This creates unfair competition, because the FDIC only insures deposits up to $250,000, chicken feed for the financial elite. Meanwhile the too-big-to-fail banks (Chase, CitiBank, Bank of America, Wells Fargo, etc.) will never need to depend on the FDIC, because the federal government will never let them fail. They will be bailed out by billions of taxpayer dollars, as they were last year, rather than by the insurance fees paid by member banks of the FDIC. It means that the elite billionaires will bank primarily with the big banks, where they don’t have to worry about FDIC limits for the millions they have on deposit. They would be more reluctant to put those millions in a smaller bank that depends on the FDIC, rather than on the full resources of the US Treasury and the Federal Reserve currently pledged to the big six.

It’s important to regulate derivatives, as Congress has proposed, but I believe that it is more important to deal with “too big to fail.” If some banks had not been too big to fail, they would have failed because of their flawed derivatives dealing. It looks like some banks, Goldman Sachs for example, were smart in their derivatives trading. Even there, however, when the US bailed out AIG, about $12 billion of the AIG bailout went to Goldman to pay off their derivative bets. Goldman should have had to absorb that $12 billion bad bet with AIG. There should be a “moral hazard” to bad management, but the government has eliminated the moral hazard penalty for the big banks by making them failure proof.

A particularly terrible thing was the elimination of the Glass-Steagall Act provision preventing bank holding companies from owning other types of financial institutions, a revision done under the Clinton administration. This is part of the too-big-to-fail problem.

The bottom line for me is that the American government is abandoning the middle class, of which I am (or used to be) a member. It’s not unusual. The problem for many failing, developing countries is that they have no middle class. I saw this first-hand in Latin America and Asia. One reason China is making such huge strides in overtaking the US financially is that it is creating a vibrant middle class. Throughout history, societies have deteriorated as corrupt elites have gained more and more power; the Roman Empire is just one big example.

Israel Needs To Man-Up

Israel is pressing back against the UN Goldstone report finding Israel probably guilty of war crimes in its attack on Gaza. According to the AP, the report is having a number of perhaps unanticipated effects, including undermining Fatah leader Abbas, delaying Israel's participation in US peace plans, and putting Israel on the hotseat in the UN. Israel is outraged, but Goldstone, a Jew, has said that he calls them like he sees them and only wants the best for Israel.

The bottom line is that Israel needs to face the fact that morally it is falling short. It needs to man-up and behave in a manner acceptable to the world community of nations.

One of the main criticisms is Israel's use of white phosphorous artillery against people, including civilians. White phosphorous should not be fired on the ground; it should be used in air bursts as a marking round to see where artillery going. If it hits you, it burns until the phosphorous is consumed, because you can't put it out. But it makes a visible puff of white smoke during the day and a fireworks-light bright flash at night. It used to be fun to watch other artillery batteries shoot in delta tangos (defensive targets) for our fire base at night, so that they would know where high explosive rounds would land if they had to be called for during the night. They weren't intended to be used against enemy personnel in a fire fight.

I Still Like Elizabeth Warren

Elizabeth Warren was on Bloomberg TV this morning, and I was again struck by her ability to discuss the banking crisis in plain, straightforward terms that don't appear to be spin. It's very unusual in today's media world. Unfortunately, I thought her interlocutors asked very softball questions (not the link above); I suspect that's because they don't want to offend their patrons on Wall Street, who are often villains in Warren's explanations.

The most interesting thing she had to say in this interview was that the small, local banks are in trouble because they hold so many commercial mortgage loans. The terms of these loans are changing on a longer time frame than the sub-prime mortgages that have already begun to turn bad. The smaller banks may get into trouble as these commercial mortgages come due. She said that they would probably not be bailed out like the big banks, but would just be allowed to fail.

Calvin Trillin Is Right

Calvin Trillin's op-ed in the NY Times is probably right, although it pretends to be humorous. To some extent, the problem is all those smart people on Wall Street. It reminds me of the old Jonathan Winters routine in which he plays a senator; when they ask him about reports that he is inept, he replies that it's all those "ept" people that we have to worry about. When both the bankers and the regulators were somewhat inept, we didn't have to worry too much, but when the bankers became so much smarter than the regulators, we ran into huge problems. Or as Trillin says, when the traders became so much smarter than their bosses, so that the bosses at the big banks did not understand what their subordinates were doing, except that they were all getting insanely rich.

It's the same joke they told about law school: the A students because professors, the B students became judges, and the C students became rich. It's as if the A students have left the classroom for the courtroom, where they are winning huge judgments for undeserving plaintiffs.

Scale Back Afghanistan

After thinking about Afghanistan some more, I believe it's time to start leaving, or at least to scale back. My first consideration, as a Vietnam draftee, is what would happen if we started drafting people to fight in Afghanistan. We would have a rebellion just like we had during Vietnam. Very few people would go. Right after 9/11/2001 there was a patriotic impulse, personified by Pat Tillman, to go fight al-Qaeda there, but that impulse has gone cold. Our main mission there was to find and punish al-Qaeda, especially Osama bin Laden, and we have so far failed at that for over eight years. Now there's concern that the Taliban will return to power and give sanctuary to al-Qaeda again. First, the Taliban is not exactly our enemy, although they are awful people, oppressing women, destroying Buddhas, etc. Al-Qaeda is our enemy, but what do they get from the Taliban? Probably unfettered access to a few square miles of land to use as training bases to plan attacks on the West. Can't we interdict these bases without bringing Jeffersonian democracy to Afghanistan, reportedly an impossible job? I think we can. We can reach some kind of agreement with the Afghans to shoot missiles at any such bases or send in airborne commandos or some such arrangement. Karzai will be happy to have us our of his day to day affairs and let him get back to the corruption that's making him rich. The goal of protecting America does not require us to turn Afghanistan into a Western democracy.

There is the matter of Bush/Cheney sacrificing hundreds of lives of American troops for nothing. That's awful, but there is no sense in sacrificing more lives in a wasted effort. The thing to do is for America to do all it can for the families of the fallen and the wounded.

I am skeptical that America will care for the Iraq and Afghanistan veterans. They are too isolated from the rest of American society. They come from a relatively small cohort in terms of income and political views. They are basically mercenaries, although they come from within American society, except for the significant number who are immigrants who are not citizens. If my return from Vietnam is any indication (and I think in some ways the return of these veterans will be worse) they can't expect much from American society. Few people are going to help them find jobs, for example, except a few who think they can get some good publicity from hiring a few veterans. Vietnam veterans returned to active hatred or at least opposition from those who refused to go; today's veterans return just to indifference, and many have an even more difficult job adjusting because they have served so many tours in such difficult conditions. With the draft, in general, people just went once. "Lifers" kept going back, but they planned to make the military their career. There are more lifers today, but there are a lot who are disillusioned, but find it very difficult to leave, but they don't fit into the society they left behind.

Afghanistan Quandry

As Obama is seized with the issue of what to do in Afghanistan, there is more and more discussion of Pakistan, which is good.

I don't think you can blame Obama for the position he has taken to date on Afghanistan. He correctly determined that the Bush administration had failed terribly in Afghanistan by starting a war and then walking away from it to fight a new war in Iraq. It was unconscionable to walk away from a war while leaving thousands of US troops fighting there. Bush and Cheney flushed the lives of soldiers who died in Afghanistan down the toilet, starting with Pat Tillman. Obama said that we were going to stop killing these troops for nothing. But in doing so, he stepped into quicksand, because there was no coherent strategy for Afghanistan, just as there was none in Iraq until Gen. Petraeus came up with one for Bush and Cheney. But so far, Petraeus, who oversees Afghanistan from the US, has failed to come up with an Afghan strategy, apparently leaving that task to the general on site, Gen. McChrystal, whose proposal has become a political football. It's ironic that McChrystal replaced a general there who was fired because of insubordination, although publicly he appeared to be as quiet as a mouse, much quieter than McChrystal. Either this was a botched change of command, or there's something going on that's not getting reported, some kind of kabuki drama to get us to a place that's not currently apparent.

In McChrystal's defense, I think he is opposed to continuing to see the lives of the troops he commands being flushed down the toilet. Therefore, he might be amenable to a strategy that draws down the troops in harm's way, if that can be done. On the other hand, if Richard Engel of NBC was right on "Morning Joe" recently, saying that unlike Iraqis the Afghans in general hate the US and just want us out, then there may be no small-footprint strategy that protects US troops. There's some poll that people cite that only six percent of Afghans like the Taliban, but what if an even smaller percentage like the US?

The other big unknown in this equation is Pakistan, with its nuclear weapons. Both the Taliban and al-Qaeda appear to have migrated from Afghanistan to Pakistan. For a while, it looked like the Taliban were successfully challenging the government of Pakistan. Now Washington Post columnist David Ignatius is omnipresent saying the Pakistan is doing much better against the Taliban and that things are not as bad as they were. But to what extent are the Taliban and al-Qaeda in league with elements of the Pakistani government and leadership elite? Can we be sure they didn't just agree to cool it to get the US off Pakistan's back and resume its aid. Once the US is out of Afghanistan, it will much more difficult for it to interfere in Pakistan's affairs. If you have doubts about the ability of the current Pakistani government to control its nuclear weapons for the foreseeable future, then that's an argument not to leave Afghanistan.

It's a little less provable, but it's arguable that Bush/Cheney led to this impasse in Pakistan by unquestionably supporting former President Musharraf in the absence of any popular democratic support for him. Thus when he left, there were no institutions in place to replace him, especially after the assassination of Mrs. Bhutto.

In any case, Obama is faced with a very difficult decision about a war that he inherited. For him the easiest thing for him to do politically would be to wind it down and walk away from it, declaring it a Bush/Cheney quagmire that he has decided to crawl out of. But is that the best thing for the US? Does that continue the Bush/Cheney decision to flush the lives of fallen American soldiers in Afghanistan down the toilet, i.e., does it devalue eight years of valiant service by American soldiers? Does it undermine American security by allowing Afghanistan to again become a sanctuary for anti-American terrorists? Will it make it easier for terrorists to gain access to Pakistan's nuclear weapons?

I don't envy Obama.

Jews Still Hate Roosevelt

The New York Times reports that Jews called on President Roosevelt to bomb Auschwitz-Birkenau during World War II. I guess the idea was that bombing would put the gas chambers out of commission, but on the other hand, it would have killed hundreds or thousands of Jews who were prisoners. It seems like a crazy idea, but it reflects the turmoil of American and Israeli Jews who escaped the camps and who must feel horribly guilty.

It's unlikely the US could have done anything, even if the Jews had been united in requesting the bombing. Because Poland was so far east, it was difficult for the allies to reach it with bombers or any other kind of support, including when the whole of Warsaw fought against the Germans during the Warsaw uprising.

In any case, I'm not crazy about the Holocaust Memorial on the mall criticizing the US performance in World War II. First of all, why does the Memorial only remember the Jews, when Gypsies (or Romas) and blacks in Germany were subject to almost the same treatment. While Polish Christians may not have been singled out to be gassed as the Jews were, many ordinary Poles died in the death camps from disease, starvation, overwork, etc. Are their deaths less important than Jewish deaths? And what about all the others who died in World War II, tens of millions of Soviets, millions of Eastern Europeans, not to mention allied countries. Are they chopped liver? Jews ignore the deaths of gentiles while they mourn the deaths of other Jews. And we have a monument on the National Mall that criticizes America for the way it fought World War II, which of course included liberating the surviving Jews at Auschwitz and the other death camps. Maybe the war profiteering Jews who stayed in America and became rich off the war would have been happier if they didn't have to face the death camp survivors.

Hooray for Elizabeth Warren

Elizabeth Warren seems to cut to the core of the financial issues facing the country in understandable language, almost unlike everyone else involved in them, alth9ugh Bernanke is not bad either. Watching her on CNBC, she asks straightforward questions but Treasury Sec. Geithner does not answer in the same manner. Nevertheless, Geithner was probably not a bad choice for secretary because he knew what was g9ing on in the banking crisis during the peak of the crisis. He could pick up from Paulson better than anybody else. Once we get through the crisis, there might be a better choice for Secretary. Warren and even the WSJ are pointing out that the government is not passing laws and regulations to fix the loopholes that allowed Wall Street to threaten to destroy the US. It even sounds as if Blankfein at Goldman Sachs is somewhat repentant for Wall Street's excesses.

Last Days in Rome

Writing about the end of my Foreign Service career in my previous post reminded me of my last days at the embassy in Rome before I went home for good.

I think I went to Rome from Warsaw because Rome had requested a replacement who was not a Foreign Service officer. The State Department personnel system wanted to send a Foreign Service officer, because in general, Civil Service employees don’t serve overseas. Rome needed someone quickly because Italy was taking over the Presidency of the EU, and the embassy science officer had just been let go by the State Department. He was a professional scientist brought to State in an exchange program. Like most people who come under such an arrangement, he didn’t want to leave. He had worked for Amb. Bartholomew for years while Bartholomew was Under Secretary of State, and then accompanied Bartholomew to Rome, when he was named ambassador. But finally State said that he had come to the end of his rope; it wouldn’t extend his program at State any further, and it wouldn’t let him convert to permanent employee status. I’m guessing he recommended the Civil Service employee who had been the deputy director across the hall from me in State/OES. When Embassy Rome tried to finagle the personnel procedures to get a Civil Service employee assigned there, the State personnel office asked me if I would go in order to keep a Foreign Service officer in a Foreign Service position. I agreed, not knowing that I was stepping into the middle of a war between Embassy Rome and the State Department personnel system, probably made even bitterer by the fact that State had refused to let the Ambassador keep the man he wanted in the job.

People may say I was foolish to step into the job without looking into the office politics, but I had taken other less than stellar assignments for the good of the country, the service, or whatever. I knew that I was not God’s gift the Foreign Service, and I was willing to do jobs that more elite officers frowned on. Plus, I knew I was probably being asked because Amb. Rey in Warsaw had already proposed eliminating by job there due to the decline in Polish-American scientific cooperation. It gave me an opportunity to move on to a more active assignment. Plus, the Washington decision not to comply with the five-year cooperation agreement had soured my relationship with my Polish contacts, who thought, correctly, that the US was failing to live up to its legal obligations. They were reluctant to make an issue of it, because at that time Poland wanted more than anything to be admitted to NATO, and would not do anything to jeopardize that objective. So, it was a convenient time for me to leave. But I was bitter that the US had not lived up to its obligations, especially when it had sent me there to carry them out.

It turned out that the day I was scheduled to leave Warsaw for Rome was the day that Newt Gingrich shut down the US Government. All of our clothes, furniture, etc., had been packed and sent to Rome, except for what we could fit in our car, plus our two dogs. The house we were leaving was empty. I had spent my last day in the embassy, and I was up in the Defense Attaché’s office saying good-bye, when I got a call from my Polish assistant saying that I had to come back to my office and speak to Rome on the telephone. Some administration flunky in Rome told me that because the government had been shut down, I should stay in Warsaw and not come to Rome. Of course, by then I had no place to stay in Warsaw. I was furious. I felt that the US was putting my wife and me (and our dogs) out on the street in Warsaw for the duration of the government shutdown. For the first time, I looked to see if I knew anybody in Rome, and it turned out that I knew the Deputy Chief of Mission, the second to the Ambassador, from serving with him in Brazil. I told him my situation, that I had no place to live in Warsaw, and he said to go ahead and leave for Rome; he would work something out. The solution turned out to be furloughing my American assistant, and keeping me on the State payroll as essential, rather than the other way around, which did not endear me to my assistant.

Being almost furloughed in Warsaw was the straw that broke the camel’s back as far as my State Department career went. I was reminded of the old joke about the boy who pushed the family outhouse into the river. That night when his father confronted him about it, the boy said, “Like George Washington, I cannot tell a lie. I pushed the outhouse into the river.” With that, his father took off his belt and tanned his hide. The boy sobbed, “But George Washington’s father didn’t spank him when he chopped down the cherry tree.” The boy’s father replied, “George Washington’s father wasn’t in the cherry tree when he chopped it down.” I was in the cherry tree when Newt Gingrich chopped it down. He had already been messing with me by cutting off funding for Polish cooperation. I had had it. But while I didn’t really care that much about my career at that point, I still felt an obligation to the United States. I had promised to serve as Science Counselor in Rome while Italy held the Presidency of the EU, and unlike the US Government, I intended to honor my promise. Although I was unhappy, I was in a good position to leave. I had put in my twenty plus years and was old enough to retire anytime that I wanted. I didn’t have to give up my retirement pension over a matter of principle.

When I arrived in Rome, I found that two of the big issues that were my responsibility were North Korean nuclear proliferation and Italian swordfish driftnet regulation. The North Korean nuclear program was an issue because the Republican Congress refused to appropriate enough money for the US to fulfill its commitments under the agreement limiting North Korea’s activities. Therefore, one of my jobs was to go hat in hand to the Italian Foreign Ministry and ask them to get the EU to contribute enough money to allow the US to meet its commitments to North Korea, since Congress would not do it. It was like funding for Polish scientific cooperation all over again. The Republican Congress didn’t have the moral gumption to meet America’s legal commitments. I was unhappy to be once again the fall guy for the Republican Congress’ lack of integrity.

I had little interest in the swordfish driftnet issue. I had never worked on fisheries issues and there was a whole fisheries bureaucracy that I was not familiar with. My assistant had handled fisheries issues in Venezuela and had been handling them in Rome. I was happy to leave the issue with her. When I arrived in Rome, I discovered that my office was being sued by four environmental groups for failing to force the Italian government to obey UN resolutions restricting the length of driftnets used to catch swordfish. My assistant was in constant touch with the State Department legal advisor’s office, which kept her up to date on the trial. The actual courtroom argument was handled by the Justice Department. Washington assured us that we would win the case. We lost. As a result, a US District Court judge in New York City had to approve our office’s actions regarding the swordfish fisheries issue. I thought that this was unconstitutional because the Constitution assigns foreign policy matters to the Executive Branch. This seemed to be a usurpation of authority by the Judicial Branch. What happened was that when there was any proposal to take action regarding swordfish, the State Department informed the judge, and the judge contacted the winning environmental plaintiffs for their approval. They always contacted the Greenpeace expert in Rome who handled fisheries matters for Greenpeace. If he approved, then the environmental groups would approve, the judge would approve, and State could accept the agreement.

The US sent a big delegation to Rome to negotiate tougher enforcement by Italy. My assistant played a large role, since she and one of the key staffers in the Italian Agriculture Ministry, which handled fisheries matters, had a good working relationship. The US (i.e., State, the judge, the environmental groups, and Greenpeace Italy) and the Italian Government were all happy with the agreement. On my second to last day in the Embassy before I was to return to Washington and retire, the Agriculture Minister asked to see the Ambassador about the swordfish issue. It turned out that because of the tougher enforcement by the ministry, the fishermen had enlisted the Mafia to threaten the ministry’s enforcement officers. The minister was afraid that some of his officers would be injured or killed, and wanted the US to agree to some loosening of the enforcement regime. It sounds like a joke, but most of the fishermen lived in Sicily, the home of the Mafia. Some swordfish boats worked out of the port of Fuimicino near the Rome airport. A few days earlier, the fishermen had blocked the streets in front of the ministry, creating enough of a disturbance to get on the news.

On the day of the appointment, my assistant was too sick to come into the office; so, I had to accompany the Ambassador to meet with the Minister about an issue that I had tried to avoid for the whole six or so months I had been in Rome. (Payback for getting her furloughed? Probably not.) My main function in the meeting was to tell the Ambassador that he had no authority to revise the agreement with the Minister, because any revision had to be approved by a judge in New York. He was of course furious, because under the Constitution he should have been empowered to negotiate with the Minister. The agreement could be revised, but the Ambassador had to defer to the judge. I spent my last 24 hours as a working Foreign Service officer successfully getting approval from Washington for a revised agreement. For my efforts, I got a letter of reprimand from the Ambassador, who had not liked my keeping him on a leash. I wanted him to know that the State Department’s and his personal authority had been unconstitutionally usurped by a federal judge. Whether his letter went into my official file was a moot question, because at that point promotion was not an option. I was on my way to the Washington retirement seminar.

Before I formally committed to retire, I had asked the State Department to tell me how much my retirement pension would be. It was a big pay cut from my salary, but my wife and I thought that we could live on it. As icing on the cake, however, about the time I finished the retirement seminar, just one or two days before I was formally taken off the payroll, the retirement office told me that they has miscalculated my retirement pay and that it would be about 10 percent less than they had told me in Rome. I think that what happened was that while I was overseas, Congress had voted itself and other government employees in the US a locality pay bonus, which did not apply to me serving overseas. Therefore, my retirement was calculated on a base pay that was about 10% less than it would have been if I had been serving in Washington. I was punished for serving my country abroad, and all Foreign Service officers abroad have been until this year, when the rules were finally revised.

Well, this is not as funny to me as “Burn After Reading,” but I suppose that the characters in the movie didn’t see their lives as funny either, except maybe the senior CIA guy who was the Director of Operations or something. But if the Justice Department goes after him like it is going after the CIA interrogators now, even he may not be laughing long. At least I have a kindred spirit in Osborn Cox.

My Hero Osburn Cox

I've just watched "Burn After Reading" for the third or fourth time, and I still enjoy watching it. I identify with John Malkovich's Osburn Cox, the fired CIA analyst. I was even an analyst for a while in State's intelligence bureau, INR. I'm sure some of my old colleagues would say that my career did not even approach the success of Osburn Cox's, but I can dream. I didn't go to Princeton. I never lived in Georgetown, never had a yacht, but I did work on foreign policy. Probably at least one old boss, Richard Clark of 9/11 fame, saw me as an Osburn Cox, but because of the Foreign Service bureaucracy, he couldn't get rid of me. Amb. Nicholas Rey eliminated my job in Poland while I was still in it, although he was always very polite to me personally. Sadly he passed on recently. When I went to Rome from there, they immediately disliked me so much that from the moment I arrived, they finagled the personnel system to get rid of me and replace me with the man who had the same position I had across the hall from me in Main State years earlier. He was deputy director of the OES office of science cooperation, while I was deputy director of the OES office working on environmental conservation and health issues. We worked side by side for two years, and I really didn't think he was so much better than I. In fact, it was his office that persuaded me to take the assignment in Poland. Well, maybe they did have my number. On the other hand, his office was the one primarily responsible for the failure to fund our cooperation with Poland that led to the elimination of my position there.

I would like to think that Amb. Rey eliminated by job because the main part of it was promoting scientific cooperation between the US and Poland under a five-year agreement signed just before I got there. After two or three years, the Republicans under Newt Gingrich took over the House during the Clinton administration, and quit funding the cooperation, thus eliminating about half of my job. Then Newt shut down the entire government while I was moving from Warsaw to Rome, leaving me with no job and no place to live in either city, until Rome finally took me in. An Army Vietnam veteran with over twenty years in the Foreign Service, and the US Government put my wife and me out on the streets of Warsaw in November with no place to live! So Newt and company made me a liberal Democrat. They represented the fools that I, like Osburn Cox, have been fighting. However, I don't plan to shoot anybody or chop them into pieces. I do plan to blog about it.

Perhaps someone will someday stumble over this blog and think that it contains sensitive information that they can sell to the Russians. They must decide, however, whether it is "drivel" or "dribble." You want dribble? Listen to George W. Bush, Dick Cheney, and John Bolton -- absolute idiots, numskulls, and cowards (because they didn't go to Vietnam, they didn't go to New York City on 9/11, and they tortured people). They are of a piece with Newt. And Tom DeLay is dancing with the stars. Idiots on parade! But I'm the one who retired and went away. Ironically, I had relatively good efficiency reports and was in no danger of losing my position as a Foreign Service officer, although I was having trouble keeping an assignment. Well at least I have a hero: Osburn Cox.

Military-Civilian Disconnect

The New York Times has an excellent blog on Unexamined Civil-Military Relations by a serving Army captain. The blog is definitely worth reading. My comment is posted below. One of the first comments was by somebody apparently from an Ivy League school, who wrote about how few veterans there were, but interestingly he said there were several veterans of the Israeli military, perhaps more than from the American military. There's something wrong with that, although we have the example in the White House of Rahm Emanuel, who served in the Israeli military rather than the American military. My comment:

I’m afraid that there is an increasing disconnect between the military and civil society. All this talk of “Support our troops,” means support them so that I don’t have to go. The disconnect means there will be less support for the troops when they come home, whether it’s military medical care (Walter Reed), the VA’s huge backlog, or just Americans not saying thanks by not giving vets jobs. It’s partly fallout from the Vietnam War (spoken as a Vietnam veteran), because so few of the social elites served despite the existence of the draft. Having avoided military service themselves, they can’t now say it’s a good thing. The latest travesty is the Congressional hold put on the nomination of the Secretary of the Army by the senators from Kansas, Roberts and Brownback. They are forcing the Army to fight two wars without its own political leadership. When the people of Kansas turn against the military, you know it’s in trouble

No Compassion in America?

Everybody from Obama on down has criticized Scotland for releasing the man convicted of bringing down the Pan Am plane in Lockerbie, Scotland. I don’t get it. We, the US, are supposed to be the Christians, following a gospel of love and forgiveness, while the Europeans are supposed to be godless secular humanists. They are releasing this man because of their compassion, and the Americans are screaming to keep him in prison because they are so filled with hatred. I don’t get it. One explanation might be that American Christians embrace the Old Testament, but reject the New Testament, which actually would make them Jews, rather than Christians. How can you accept Jesus and reject the Sermon on the Mount?

Too Bad Obama Dumped Howard Dean

Obama needs Howard Dean's help on health care. Dean understands the issue; he is a doctor, was governor of Vermont, the best Democratic candidate for President in 2004, and former head of the DNC. This NYT article on Rahm Emanuel talks about how Sidney Blumenthal lost a job at State because he got crossed up with Emanuel, but a more serious rift is between Emanuel and Dean. Dean and Emanuel had very different visions for the Democratic Party's strategy in 2008. While Emanuel gets the credit for the sweeping Democratic victory in the House, Dean played an important role that may have surpassed Emanuel's by making the Democratic Party competitive everywhere, not just in strongly "blue" states. But because Emanuel and Dean fought during the 2008 election, Dean is persona non-grata in the While House.

Dean would probably have been a better choice for HHS Secretary than Tom Daschle, Obama's original choice. Daschle is just an old pol; he can slap backs and cajole, but he doesn't have the vision that Dean does, something that everybody says is badly lacking in the While House at the moment. Obama has just thrown his very fuzzy vision of health care into the lions' den of Congress. As a result, Obama may get something, but it may not be worth very much. Dean would have had a much more focused plan, and as former DNC chairman, would at least have had a shot at getting it approved. Emanuel has a lot of clout in the House, where many members may feel they owe him their jobs, but he doesn't have as much in the Senate, where the real problems lie at the moment.

It may be impossible for Obama to get Emanuel and Dean to work together. It's unfortunate for the country that he can't.

Fareed Zakaria Was Top Sunday News Show Again

The good and bad news from Fareed's interview with Israeli Amb. Michael Oren was that the Ambassador defended Israel's positions about as well as they can be defended.

On Iran, Fareed pressed Oren hard on the issue of whether Iran was not allowed to have a peaceful nuclear power capacity by the Non-Proliferation Treaty. They are. Oren's reply was that a normal state would be allowed to have nuclear power, but Iran's leaders have misbehaved so badly that they have forfeited their right to do so. The question is whether other countries, particularly Russia and China, would agree with Israel. Probably not, but it's a good argument. That brings up the mirror question of whether Israel should bring its nuclear program under the international monitoring of the NPT. On that issue or a related on about whether Israel has nuclear weapons, as I recall Oren begged off and did not really answer. He has some finely worded statement about Israel not being the first to introduce nuclear weapons, more or less a "no first use" statement, although I think he refused to characterize it as such.

Fareed also had a segment on the real meat of Hilary Clinton's trip to Africa, rather than just the 10 second sound-bite about not channeling Bill, or about the 2000 Florida presidential election mess. It just showed how poorly everyone else covered her trip. Poor Hilary gets no points for trying to help Africa. The news anchors could care less about people dying in Africa.

Anyway, kudos to Fareed.

Great Article on Flash Trading

Whatever it is, flash trading of stocks is pretty certainly bad, as I pointed out earlier. This article in Asia Times has the best explanation I've read. I don't understand the problem enough to know if his proposed tax solution is the best one, but I would certainly support it while we look at other options.

Sen. Coburn Approves Killing Poor Babies

Yesterday on "Meet the Press" Sen. Tom Coburn said the following:

We talk about neonatal mortality. Where’s the neonatal mortality? It’s not in the private insurance plans, it’s in Medicaid. Well, here’s the government-run program that is failing us in terms of neonatal mortality, and yet we use as an indicator neonatal mortality to say we need more government rather than less.

Rachel Maddow replied, "That is so disingenuous, that's unbelievable."

Rachel is right, although she didn't get to explain why. Medicaid is not a federal government insurance program. It's a joint state/federal program to provide last ditch assistance to people without health insurance to allow them to get treatment rather than die in the streets. Many of the 45 million people without health insurance probably benefit from Medicaid if they have a serious illness, or have a baby. So the people on Medicaid are the people targeted by the new program exactly to do things like allow them to have regular visits to a doctor while they are pregnant, rather than seeing a doctor for the first time when they go to the emergency room to give birth. If it weren't for Medicaid, many more poor babies would die, because mothers would get no medical care at all.

Coburn is basically saying that since people on Medicaid are poor, he doesn't care if their babies die. He would join Sarah Palin in calling for babies of trailer park trash to die so that Palin's Trig and other rich babies can live.

It's the same selfishness expressed in the town hall meeting protests that say, "Don't mess with my Medicare." They worry that their "socialist" government provided health care would suffer if the government tried to provide similar coverage to more people. They are saying I want those other people to die rather than give up my free health care.

Decent, loving people (which should certainly include people who call themselves Christian) would frame the issue as follows: We would like to have decent health care for everybody, not just me. How can we best do that, and how much can we afford? The latter question might also be phrased, how much am I willing to give my neighbor so that he can continue to live.

People screaming, "Don't touch my Medicare," are clearly not Christians.

Will Jobs Ever Recover?

Everybody is celebrating that the number of people who lost their jobs last month was smaller than the number for previous months, and the unemployment figure fell from 9.5 to 9.4 per cent unemployed. Meanwhile the stock market is going through the roof. What this means to me is that in the competition between labor and capital, capital is winning.

The consensus is that businesses are earning more money despite lower sales because they are cutting costs, which mainly means laying off workers.

The laid-off engineers and skilled mechanics may eventually get jobs, but many of them will end up working at McDonald's, Wal-Mart, or in similar unskilled jobs that pay considerably less. This is good news for Wall Street, where executives will hire replacements for them in India or China for much less, thus cutting the bottom line as they begin rehiring at the end of the recession. The recession has been a great opportunity for American business to get rid of higher paid American workers forever, not just during the recession.

Uneven Playing Field: Flash Orders and Oil

The obscene profits and compensation at Goldman Sachs and other banks indicate that the stock and commodity markets are not level playing fields. The big firms have an unfair advantage and they use it. The only argument in favor of allowing them to use this advantage is that they continue to take such huge trading risks that if they were to fail, as many small investors do, they would once again threaten to destroy the world as we know it, as they did at the end of the Bush administration.

Two examples of their unfair advantage have come to light in th4e last few days: flash or high frequency trading orders, which is under investigation by the SEC, and manipulation of the oil futures market, which is under investigation by the CFTC. The fact that both of the matters are under investigation is a welcome change from the Bush administration Of course Goldman Sachs is in the forefront of both of these questionable practices. Matt Taibbi did an excellent job of reporting Goldman’s role in the spike of gas prices last year; now they are at it again.

Malpractice and Healthcare

I am very disappointed that there has been so little discussion of the importance of malpractice liability in the discussion of the cost of healthcare. It may be anecdotal, but my impression is that malpractice liability adds significant costs to medical care. It may be a relatively small percentage, but it’s a small percentage of a huge number. The CBO says malpractice costs are only 2% of overall healthcare costs. It’s hard to know where to go to get unbiased information because tort lawyers are such important donors to the Democratic Party.

My main anecdote is former senator and presidential candidate John Edwards, who became obscenely wealthy as a lawyer suing doctors for malpractice. There is no doubt that the doctors were at fault and that the victims should be compensated, but did the system have to pay for multiple mansions for John Edwards in addition to helping the victims? I think John Edwards is just one of many lawyers becoming rich off malpractice suits. Just watch the TV ads for lawyers trolling for clients who have been injured in various ways as a result of medical conditions.

The only people I’ve heard mention this issue, however, have been Susan Eisenhower on Bill Maher’s show and Mort Zuckerman on “Morning Joe.” I found a transcript of John McCain on Hannity’s Fox News site; so, maybe I just don’t watch enough conservative talk shows. McCain said a neurosurgeon’s liability insurance could cost $200,000 per year. I think ob-gyn insurance is about the same; they are people that John Edwards used to sue.

A 2004 Congressional Budget Office report on the malpractice tort suit issue was non-committal. Its conclusion was:

In short, the evidence available to date does not make a strong case that restricting malpractice liability would have a significant effect, either positive or negative, on economic efficiency. Thus, choices about specific proposals may hinge more on their implications for equity--in particular, on their effects on health care providers, patients injured through malpractice, and users of the health care system in general.

It also says that around the time of the 2004 report there were about annually about 5 successful malpractice claims for every 100 doctors, and the average judgment was $320,000, up from $95,000 in 1986. It further says that the evidence is not clear on defensive medicine, the practice of requiring many extra tests to confirm diagnoses. CBO believes that a greater driving factor for extra tests is the extra profit made by the doctors.

It seems to me that it would be better in a reformed healthcare system to go to a system like workmen’s compensation for malpractice claims, and to do more to drive out poor doctors. Even the CBO says it is a relatively small subset of poor doctors who really drive the costs of malpractice insurance through the roof. First, the government should do more to monitor doctors’ performance and eliminate under performing physicians. Secondly, the government could set price for the most common types of malpractice: X dollars for cutting off the wrong let; Y dollars for leaving a clamp in a patient after surgery, etc. Incidents not specifically listed could be arbitrated based on guidelines, rather than litigated by high priced lawyers for contingency fees.

Another Op-Ed on Israeli Settlements and Iran

Alan Dershowitz had an op-ed in the July 2 WSJ saying there has to be some flexibility on Israeli settlements so that people already living in them can have babies. It's a specious argument. Why don't the settlers start out in larger houses? Or why can't they move to a new town if they have lots of children? People in American do it all the time, although the housing crisis has somewhat affected Americans' propensity to move. But what really sets Dershowitz off is linking the settlement issue to Iran. If Israel were to spit in America's eye over the settlements issue, there are hints that America might be less aggressive in stopping Iran's nuclear program. He says, "If the Obama administration were to shift toward learning to live with a nuclear Iran and attempt to deny Israel the painful option of attacking its nuclear targets as a last resort, that would be troubling indeed. Thankfully, the Obama administration's point man on this issue, Dennis Ross, shows no signs of weakening American opposition to a nuclear-armed Iran." He thanks God for Dennis Ross because Dennis Ross is Jewish, and therefore not exactly unbiased on this issue. It's pretty clear reading between the lines that what Dershowitz really wants is to kill some Iranians. Dennis Ross has a long history of working on Middle East issues at the State Department under Democrats and Republicans; hopefully he will be more responsible than Dershowitz gives him credit for being.

I Don't Blame McNamara

I don't blame Robert McNamara for the US failure in Vietnam, although he certainly played an important role in it. As Secretary of Defense, he was not powerful enough to lose a war single-handedly from the Pentagon. The real culprits were the presidents -- Kennedy, Johnson and Nixon -- the Congress, and the American public. McNamara was an official under orders, and he carried them out to the best of his ability. He was more like the generals who worked for Hitler; he could have been guilty of war crimes, but not for the overall conduct of the war. That his obituaries are not claiming that he was guilty of war crimes probably speaks well of his character. Today, we have wars in Iraq and Afghanistan that the country more or less ignores, but in which they have been quicker to perceive war crimes, particularly in places like Abu Ghraib and Guantanamo.

I blame the country, the United States, rather than McNamara. Despite protests, the leadership of the country let the war go on. I think from some of the obituaries I read, more GIs died in Vietnam after McNamara left as Secretary than during his tenure. The NYT obit says "Half a million American soldiers went to war on his watch. More than 16,000 died; 42,000 more would fall in the seven years to come."

As long as the rich and connected -- Bush, Cheney, Clinton, Wall Street types -- could avoid fighting, they were content to let the war go on, but in order to cover their cowardice they reviled those who fought the war, whether McNamara in the Pentagon, or some poor private just out of high school. The criticism heaped on McNamara in his obituaries taints every soldier who fought in the war. I'd like to know more about how the Germans treated their low ranking veterans of World War II. Did the German soldiers experience more shame and hatred from their fellow citizens than Vietnam veterans did?

UK Foreign Secretary Miliband is Jewish

I was surprised while watching Fareed Zakaria's GPS on CNN to learn that British Foreign Secretary David Miliband is Jewish. About 19 minutes into the interview, he made a point of saying that he is an atheist, but that his grandparents and his parents went through the Holocaust. So, he's an ethnic Jew, if not a religious Jew. It's no big deal, except that it's another indication that Jews run a lot of the world.

It's not unusual. In the Bible, Jews were advisers to lots of gentile leaders, starting with Joseph advising the Egyptian Pharaohs on how to avoid their seven years of famine. Later, you have Daniel advising Persian King Darius, ironic in light of today's Israel/Iran tensions. My only question is whether Jews are more loyal to the countries where they live or to Israel. The only example I can think of in the Bible is Nehemiah, the king's cup bearer, who persuades the king to let him rebuild the wall around Jerusalem.

We have not had a Jewish President. It would be interesting to know whether Al Gore's picking Joe Lieberman to be his vice president helped or hurt his campaign. Certainly it looked odd for Lieberman to support John McCain in the last election. Some new book says that Henry Kissinger is responsible for America surviving the Watergate scandal. Kissinger certainly spent a lot of time working on Israeli issues, but, perhaps mistakenly, I think he was pretty even handed. I think he was committed to Israel's existence, but was willing to press Israel to make concessions to the rest of the world. Although Barak Obama is certainly not Jewish, he is surrounded by a lot of Jewish advisers, starting with Rahm Emanuel and Larry Summers, whom I find suspect. For some reason I have no qualms about Paul Volker or Ben Bernanke, who for some reason I consider totally American, even more trustworthy than Kissinger.

China Raises Fuel Prices

The FT reports that China has raised fuel prices across the board. Gas is now more expensive in China (about $3 per gallon) than it is in the US. What does it say about the US, when a developing country under recessionary pressures, like China, increases gas prices, while a rich country like the US keeps them low? Europe has kept gas prices high for years by adding taxes of various kinds.

Tom Friedman among many others has been calling for higher gas prices in order to promote other, greener forms of energy, but without success. When gas prices went much higher last summer, although they were still low compared to Europe, it was because of manipulation of the financial market, according to Matt Taibbi in Rolling Stone, not because of any intelligent policy decision.

It looks like the US could at least pursue a policy as sensible as the Chinese, although our policies appear to be controlled by oil and gas and financial interests who are only interested in boosting their profits, not by our national interest.