Tuesday, February 09, 2010

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.

Thursday, January 28, 2010

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.

Monday, January 25, 2010

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.

Thursday, January 21, 2010

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.