Wolfowitz Problems at World Bank

According to the Financial Times, Paul Wolfowitz is being criticized by World Bank officials for his handling of his "partner's" job at the World Bank. It's not explained, but apparently Shaha Riza is living with him, but not married to him. When he took over the World Bank, she could not work under his supervision and thus was seconded to the State Department, where she works for Dick Cheney's daughter. Reports are that Wolfowitz influenced her getting a promotion and raise at the World Bank.

Maybe he'll get canned, but it's unlikely until Bush gets the boot in the next US election. Scandal couldn't happen to a more deserving person -- the failed architect of the Iraq war, the butcher of Baghdad!

Jews Profit from Holocaust

The NYT reports that Israel Singer, the head of the World Jewish Congress, which got billions for Holocaust victims, improperly used money from the fund for his personal benefit. The Jews tell everybody else that they have to fall down and worship the Holocaust and speak of it only in hushed whispers, but for the Jews themselves its just a big moneymaker, a way to shake down the gentiles. While what Singer did was apparently illegal, or improper if not illegal, many Jews have benefited in less questionable ways. As I've said before, Jewish lawyers for Holocaust reparations have taken huge fees, Jewish big shots who headed up these groups (Former Secretary of State Eagleburger) have taken huge fees, etc.

I can't find anything on the Internet that says Eagleburger is Jewish, either ethnically or religiously, but he certainly seems to be with his close connections to Kissinger, his appointment as one of the chief Holocaust restitution bosses, etc.

Is There a Correction in Our Future?

The New York Times and the Financial Times have both warned recently of a possible stock market (and economic?) correction in our future.

The NYT said on March 24, "Investors who fail to take a hard look at the vulnerability of the American economy are courting tremendous risk. The fact that after years of profligacy the federal government is fiscally ill prepared to respond to a destabilizing downturn only increases those risks."

William Rhodes, CEO of Citibank, wrote in the Financial Times on March 29:

The low spreads, the tremendous build-up of liquidity, the reach for yield and the lack of differentiation among borrowers have stimulated both dynamic growth and some real concerns....

As lenders and investors inevitably become more discriminating, liquidity will recede and a number of problems will surface....

I believe that over the next 12 months a market correction will occur and this time it will be a real correction....

Today, hedge funds, private equity and those involved in credit derivatives play important, and as yet largely untested, roles. The primary worry of many who make or regulate the market is not inflation or growth or interest rates, but instead the coming adjustment and the possible destabilising effect these new players could have on the functioning of international markets as liquidity recedes. It is also possible that they could provide relief for markets that face shortages of liquidity.

Either way, this clearly is the time to exercise greater prudence in lending and in investing and to resist any temptation to relax standards.

My own view of what's going on is that interest rates price both inflation and risk. When inflation was higher and interest rates were higher, they more or less incorporated the risk factor, i.e., it was relatively small in comparison to the inflation factor. As inflation fell and interest rates fell with it, the risk portion shrank in tandem. However, if anything the risk has been going up, not down, as hedge funds, private equity, and derivatives have played a more and more important role. In addition, the entry into the world economy of new major players such as China and India, who have kept inflation artificially low by depressing wage costs, has also kept the risk factor artificially low while actually increasing risk.

As Rhodes said, someday investors will begin to notice this underpricing of risk, maybe not until something happens to highlight the risk factor. The sub-prime mortgage sector is probably not big enough in itself to do this, but if some other bump comes along while sub-primes are still a problem, that might do it.

Politically, it should be noted that while interest rates have fallen for big investors, they have risen for small consumers. In addition to the sub-prime mortgage scandal, which came to light because the interest rates on these mortgages increased dramatically, credit card issuers are raising rates far above the prime rates they charge wealthy individuals, as well as adding all kinds of fees and penalties. This doesn't represent risk pricing so much as it does hucksterism and usury. Lenders are taking advantage of people who have gotten themselves in trouble by borrowing too much. This is illustrated by the fact that people in credit trouble often get more offers from lenders ("loan sharks," even if they are big, fancy banks) than people with good credit histories.

George Soros on AIPAC

George Soros has written an excellent article in the New York Review of Books, "On Israel, America and AIPAC." He calls on Israel and the US to deal with Hamas. He says:

AIPAC's mission is to ensure American support for Israel but in recent years it has overreached itself. It became closely allied with the neocons and was an enthusiastic supporter of the invasion of Iraq. It actively lobbied for the confirmation of John Bolton as US ambassador to the United Nations. It continues to oppose any dialogue with a Palestinian government that includes Hamas. More recently, it was among the pressure groups that prevailed upon the Democratic House leadership to drop the requirement that the President obtain congressional approval before taking military action against Iran. AIPAC under its current leadership has clearly exceeded its mission, and far from guaranteeing Israel's existence, has endangered it.

He takes on the American Jewish Committee's attacks on critics of Israel, which were praised by Bill Clinton, as I noted earlier. On behalf of the AJC, Alvin Rosenfeld attacks as anti-Semites Jews such as Tony Judt and Richard Cohen, and gentiles as well. Soros says:

Whether the Democratic Party can liberate itself from AIPAC's influence is highly doubtful. Any politician who dares to expose AIPAC's influence would incur its wrath; so very few can be expected to do so. It is up to the American Jewish community itself to rein in the organization that claims to represent it. But this is not possible without first disposing of the most insidious argument put forward by the defenders of the current policies: that the critics of Israel's policies of occupation, control, and repression on the West Bank and in East Jerusalem and Gaza engender anti-Semitism.

The opposite is the case. One of the myths propagated by the enemies of Israel is that there is an all-powerful Zionist conspiracy. That is a false accusation. Nevertheless, that AIPAC has been so successful in suppressing criticism has lent some credence to such false beliefs. Demolishing the wall of silence that has protected AIPAC would help lay them to rest. A debate within the Jewish community, instead of fomenting anti-Semitism, would only help diminish it.

Hooray for Soros! I don't know that it will have much effect. It's interesting that Bill Clinton is already undermining Soros, who has been one of the main benefactors of the Democratic Party through Move-On.org and other contributions. So, Soros' concern about whether the Democratic Party can liberate itself from AIPAC is well founded.

AIPAC supporters are already returning fire, see for example this article in Forward.