Monday, April 27, 2009
A Kindred Spirit on Jane Harmon
This post on Sic Semper Tryannis is more outspoken than I. As it says about Rep. Jane Harmon, "From the Israeli perspective, she would have been their spy.... She agreed to help an agent of a foreign government and was to be rewarded with advancement...." She would have been paid to some extent by Haim Saban, the dual national Israeli-American billionaire who already controls the Brookings Institution's Center for Middle East Policy, which bears his name. Saban's funding has basically turned the Center into an Israeli lobby headed by Martin Indyk, an Australian who worked for AIPAC, the premier Israeli lobby, before he became US Ambassador to Israel.
Wednesday, April 22, 2009
Can the Fed Manage the Economy?
I have been a big fan of Ben Bernanke, who along with Hank Paulson jumped into the fray to rescue the economy from it's meltdown last fall. I think it is great that he is a student of the Great Depression and is using his knowledge to try to avoid another one. Things seem to be looking up, but there seems to be some question about whether the green shoots that are springing up will be viable.
In a way, however, despite the fact that Bernanke has done things the Fed has never done before, what he is doing now is the easy part. In general, people are not going to complain too much when you are handing out free money. There will be complaints from the people who are not getting it, which we are seeing now, but it's not like sucking money out and making life harder for people, not just making some people comparatively poorer by handing out money to others. Although their Wall Street neighbors are rich and getting government handouts, regular people are better off than they would be if the Fed had done nothing. It's just that maybe they get to keep most of their jobs, while Wall Street not only gets to keep its jobs, it gets huge bonuses to boot.
Although this course of action seems correct, you have to wonder why the solution to the current meltdown is the same medicine that caused the meltdown -- low interest rates, more consumer spending, freely available mortgages, etc. Doesn't this encourage the same bad risk borrowers to borrow more? They say that refinancing is way up because mortgage rates are at their lowest rates ever. Are these just people turning their homes into ATM machines who missed the last go-round? Instead of more profligate spending, don't we want to encourage more responsible conduct? Ridiculously low interest rates do not do so. People are saving more, but if the interest paid on their savings is virtually nothing, that's not encouraging them to save. If people genuinely expected deflation, that would encourage them to save, because even zero interest is valuable if each dollar buys more at a later date. Yet, the Fed has said it doesn't want deflation either.
The future is more of a problem. If the Fed doesn't turn off the money spigot at the right time, perhaps at exactly the right time (which is hard to determine in real time), then inflation may take off. When it turns off the money spigot, people will experience real financial pain, not just envy. The one person who's done this is Paul Volker. Under him a 14% mortgage was a good interest rate. Will Bernanke be willing to do this? How much political pressure will he come under not to do it? Will he know when to do it?
In a way, however, despite the fact that Bernanke has done things the Fed has never done before, what he is doing now is the easy part. In general, people are not going to complain too much when you are handing out free money. There will be complaints from the people who are not getting it, which we are seeing now, but it's not like sucking money out and making life harder for people, not just making some people comparatively poorer by handing out money to others. Although their Wall Street neighbors are rich and getting government handouts, regular people are better off than they would be if the Fed had done nothing. It's just that maybe they get to keep most of their jobs, while Wall Street not only gets to keep its jobs, it gets huge bonuses to boot.
Although this course of action seems correct, you have to wonder why the solution to the current meltdown is the same medicine that caused the meltdown -- low interest rates, more consumer spending, freely available mortgages, etc. Doesn't this encourage the same bad risk borrowers to borrow more? They say that refinancing is way up because mortgage rates are at their lowest rates ever. Are these just people turning their homes into ATM machines who missed the last go-round? Instead of more profligate spending, don't we want to encourage more responsible conduct? Ridiculously low interest rates do not do so. People are saving more, but if the interest paid on their savings is virtually nothing, that's not encouraging them to save. If people genuinely expected deflation, that would encourage them to save, because even zero interest is valuable if each dollar buys more at a later date. Yet, the Fed has said it doesn't want deflation either.
The future is more of a problem. If the Fed doesn't turn off the money spigot at the right time, perhaps at exactly the right time (which is hard to determine in real time), then inflation may take off. When it turns off the money spigot, people will experience real financial pain, not just envy. The one person who's done this is Paul Volker. Under him a 14% mortgage was a good interest rate. Will Bernanke be willing to do this? How much political pressure will he come under not to do it? Will he know when to do it?
Who Is To Blame for the Financial Crisis?
Who is to blame for the world financial crisis -- Jews, WASPs, others? Brazilian President Lula said that it was caused by white people with blue eyes.
Jews have come in for a pretty good drubbing because of their traditional involvement in the financial markets and the major role they play on Wall Street. But there also seem to be a lot of WASPs, or at least people of Anglo ancestry; I'm not so sure about the Protestant part. You don't hear much about WASPs anymore, perhaps in part because of the decline of the old line Protestant churches -- Episcopalians, Methodists, etc. In the old days you could count on the Rockefellers, Fords, Morgans, Vanderbilts, etc., to be WASPs.
I would guess that in general the WASPs on Wall Street are more politically conservative than the Jews, e.g., George Soros. But it's not so clear. I don't know who has been more reckless in taking on too much financial risk.
Jewish Goldman Sachs alumnus Robert Rubin was Treasury Secretary in the Democratic Clinton administration, but he and his Jewish colleague Larry Summers oversaw the elimination of banking regulations that eventually led to the financial meltdown, a move favored by the political right wing.
Later, WASP Goldman Sachs alumnus Hank Paulson was Treasury Secretary in the Republican Bush administration, but he oversaw the massive government intrusion into the financial industry to rescue it from the results of the liberalization initiated by Rubin, a move that horrified the political right wing.
But in most cases the characters are white, and maybe blue-eyed. Former Citigroup CEO Richard Parsons, who is black, is an exception, and I'm sure there are many others.
Jews have come in for a pretty good drubbing because of their traditional involvement in the financial markets and the major role they play on Wall Street. But there also seem to be a lot of WASPs, or at least people of Anglo ancestry; I'm not so sure about the Protestant part. You don't hear much about WASPs anymore, perhaps in part because of the decline of the old line Protestant churches -- Episcopalians, Methodists, etc. In the old days you could count on the Rockefellers, Fords, Morgans, Vanderbilts, etc., to be WASPs.
I would guess that in general the WASPs on Wall Street are more politically conservative than the Jews, e.g., George Soros. But it's not so clear. I don't know who has been more reckless in taking on too much financial risk.
Jewish Goldman Sachs alumnus Robert Rubin was Treasury Secretary in the Democratic Clinton administration, but he and his Jewish colleague Larry Summers oversaw the elimination of banking regulations that eventually led to the financial meltdown, a move favored by the political right wing.
Later, WASP Goldman Sachs alumnus Hank Paulson was Treasury Secretary in the Republican Bush administration, but he oversaw the massive government intrusion into the financial industry to rescue it from the results of the liberalization initiated by Rubin, a move that horrified the political right wing.
But in most cases the characters are white, and maybe blue-eyed. Former Citigroup CEO Richard Parsons, who is black, is an exception, and I'm sure there are many others.
Jews Need to Fix Israel
Jews claim that Israel is unjustly criticized, that it is much more moral than other countries who are not criticized to the same degree. See for example this op-ed by Brent Stevens in the Wall Street Journal.
But like it or not, Jews are held to a higher standard. First, it is a religious state, the Judeo part of the Judeo-Christian faith. Russia makes no claim to such religiosity. Italy conveniently stuck the Vatican in its own, separate country. Saudi Arabia as the keeper of Mecca does make a somewhat similar claim, and it is increasingly caught between its Islamic leadership status and its desire to be just one of the guys when it comes to dealing with the West. But because of its religious character, Israel will always be held to a higher standard than most other countries, and it should be. The US, as the "city on a hill" that Reagan loved faces a similar problem, which is currently illustrated by our debate about torture. Russians don't get criticized for killing kids in Chechnya like the Israelis do for killing kids in Palestine, and they don't get criticized for using torture like the US does. If the Jews renounced their God and accepted all the Arabs in Israel (including the West Bank and Gaza) as equals, they would get a lot less criticism. They would be more like an ordinary run of the mill country.
A second issue, however, is the fact that Israel was created by the United Nations. It's not as if the state of Israel had occupied the land of Palestine for the last 4,000 years. They were missing for the last 1,000 years or so. What Israel has done is not unlike what the US did in slaughtering the Indians and occupying the American West, but this is a different time, and attitudes have changed. What was more or less acceptable in the 1800s is no longer acceptable in the 21st century. It might be unfair, but it's a fact. So the Israelis and the beneficiaries of this largess of the world through the UN, should seem more grateful and should try to live at peace with their neighbors. Granted the neighbors are unhappy, that's a challenge for Israel; make them happy.
Finally, the main reason the world gave Palestine to Israel was because of Jewish suffering int he Holocaust during World War II. The idea that the Jews in Israel should then turn around and do the same sorts of things to the Palestinians just is off the charts in terms of human decency. Jews should be models of compassion and understanding. When they turn out to be anything less, the world is horrified, not because what they do is so terrible on the scale of oppression, but because it shouldn't even be on the scale at all.
American Jews should be demanding that Israel behave better, not defending Israel's failures more vocally than the Israelis themselves. There are many wonderful Jews in American, but at the moment, they are all damned by the Jews who defend any reprehensible action that Israel takes.
But like it or not, Jews are held to a higher standard. First, it is a religious state, the Judeo part of the Judeo-Christian faith. Russia makes no claim to such religiosity. Italy conveniently stuck the Vatican in its own, separate country. Saudi Arabia as the keeper of Mecca does make a somewhat similar claim, and it is increasingly caught between its Islamic leadership status and its desire to be just one of the guys when it comes to dealing with the West. But because of its religious character, Israel will always be held to a higher standard than most other countries, and it should be. The US, as the "city on a hill" that Reagan loved faces a similar problem, which is currently illustrated by our debate about torture. Russians don't get criticized for killing kids in Chechnya like the Israelis do for killing kids in Palestine, and they don't get criticized for using torture like the US does. If the Jews renounced their God and accepted all the Arabs in Israel (including the West Bank and Gaza) as equals, they would get a lot less criticism. They would be more like an ordinary run of the mill country.
A second issue, however, is the fact that Israel was created by the United Nations. It's not as if the state of Israel had occupied the land of Palestine for the last 4,000 years. They were missing for the last 1,000 years or so. What Israel has done is not unlike what the US did in slaughtering the Indians and occupying the American West, but this is a different time, and attitudes have changed. What was more or less acceptable in the 1800s is no longer acceptable in the 21st century. It might be unfair, but it's a fact. So the Israelis and the beneficiaries of this largess of the world through the UN, should seem more grateful and should try to live at peace with their neighbors. Granted the neighbors are unhappy, that's a challenge for Israel; make them happy.
Finally, the main reason the world gave Palestine to Israel was because of Jewish suffering int he Holocaust during World War II. The idea that the Jews in Israel should then turn around and do the same sorts of things to the Palestinians just is off the charts in terms of human decency. Jews should be models of compassion and understanding. When they turn out to be anything less, the world is horrified, not because what they do is so terrible on the scale of oppression, but because it shouldn't even be on the scale at all.
American Jews should be demanding that Israel behave better, not defending Israel's failures more vocally than the Israelis themselves. There are many wonderful Jews in American, but at the moment, they are all damned by the Jews who defend any reprehensible action that Israel takes.
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