Some Fine Tuning

If you have been following the recent media saliva-thon regarding The Obama’s recent trip to China, you may be under the impression that the trip was an utter failure, an abject round of grovelling and slavering, and an unmistakable sign of both Obama’s incompetence and America’s irrevocable decline.  That is the predominant message the US mainstream apparently wishes to get across, with its endless narrative of Obama as a “profligate spender coming to pay respects to his banker”.

Once we in the US agree upon a story, we tend to believe it in the face of contravening evidence (WMDs anyone?).  How else to explain our ignoring of this article in China’s (state-run) China Daily? If one takes its message at face value, this article indicates a major victory for the Obama Administration.

From the article:

The vice-foreign minister said the RMB rate’s flexibility may widen, echoing the nation’s central bank a month ago.

The announcement by Vice-Foreign Minister Zhang Zhijun comes after the People’s Bank of China, which has the power to oversee the yuan and financial institutions, said it was in the process of reforming the exchange rate system.

China is also starting to receive more international pressure to let its currency appreciate. The nation adopted the policy of loosely pegging the RMB to the US dollar since the financial recession began.

“China will increase the flexibility of the RMB exchange rate at a controllable level in the future,” Zhang said, “based on the market demand and with reference to a basket of currencies.”

China Daily is essentially the equivalent of Pravda in the Soviet Union – a state-run publication whose role it is to inform the public on official government policy (aside from the ’state-run’ part, not at all dissimilar to our US media). Of course, their articles are written in byzantine journal-ese and one won’t find the slightest breath of dissent within its pages, but over the years it has grown useful in deciphering Chinese official policy.

Thus the surprise. For more than two years now, China has steadfastly refused to allow its currency to appreciate, an act which nearly every other country considers cheating (or “aggressive monetary policy”). By keeping its currency pegged to the dollar at favorable rates, China has put its export market on steroids. The US has made its position on this practice abundantly clear; Our Treasury Secretary castigated China for it literally on his first day, and our leading Nobel Laureates write accusatory op-eds in our state-run newspapers demanding that “something be done”.

Now, a few lines in a China Daily hardly pass for a substantive policy announcement, but one is led to think that Obama and his Chinese doppelganger had a nice little chat while he was over there, and they made some kind of agreement regarding China’s “currency manipulation”.

If China allows its currency to appreciate, they will have acceded to Obama’s central (though unstated) goal in visiting Asia. They will also have begun to do their part in reducing our monstrous and unsustainable trade deficit. However it is also clear that any currency re-valuation on the part of China will spell hardship for America’s “middle class” (that is, the bottom 95%). We depend on cheap products from China to a wholly unhealthy extent, in much the same manner as a heroin user. When cheap Chinese currency is no longer an option, import prices are bound to inflate. Of course, this matters little to our policymakers at the top. Their interest is in preventing the further hemorrhaging of value from the dollar, thus securing their overseas investments.

So! Good news, I guess?

Dirty Work

It looks as though we’re trolling the Europeans for help on our Afghan problem. You know, the one that presents an “existential threat” to the United States and all? But I don’t think they’re biting this time.

From the Times:

NATO members and other foreign allies have expressed reluctance to send more soldiers because of the Afghan war’s growing unpopularity in their countries and increasing concerns over corruption in President Hamid Karzai’s government.

Silly NATO! When will they realize that such trivial matters as “public opinion” and “corruption” have no place when discussing vital defense strategy? Why can’t they take the United States’ example on this? The US, after all, doesn’t let a little thing like a widespread electoral fraud or massive heroin production by the winners of said fraud affect their decision. We must stay the course, after all!

Later they say that:

It remains unclear whether several thousand NATO and other foreign troops are really the equal of a similarly sized American force in terms of military capacity. Some countries may continue to restrict how their forces may be employed. In addition, a force that is cobbled together from too many nations — a few hundred here and a thousand there — might not have the unit cohesion of an American force, military analysts said.

Yeah, who needs ‘em! The “military analysts” are right – nobody has the “unit cohesion” of a good ol’ red-blooded American soldier! It looks like no one at the Times has ever heard of a thing called “sour grapes”.

Public and Secret Buildups

As expected, President Obama will soon announce his decision to escalate the Afghan War to the tune of around 30,000 soldiers. Meanwhile, Blackwater is busy at work in Pakistan, heading up our governments secret assassination program and performing “various tasks” for the CIA and Joint Chiefs of Staff. Jeremy Scahill’s article is worth quoting in detail:

“Part of this, of course, is an attempt to get around the constraints the Congress has placed on DoD. If you don’t have sufficient soldiers to do it, you hire civilians to do it. I mean, it’s that simple. It would not surprise me,” [said Col. Lawrence Wilkerson, who served as Secretary of State Colin Powell's chief of staff from 2002 to 2005.]

Blackwater, he said, is already so deeply entrenched that it has become a staple of the US military operations in Pakistan. According to the former Blackwater executive, “The politics that go with the brand of BW is somewhat set aside because what you’re doing is really one military guy to another.” Blackwater’s first known contract with the CIA for operations in Afghanistan was awarded in 2002 and was for work along the Afghanistan-Pakistan border.

We are not told the extent of mercenary presense in Pakistan/Afghanistan, but some sources allege there to be one mercenary soldier for every US Army man there. So the true extent of the escalation has been hidden from the public, and it might be prudent to double any reported troop presence in Afghanistan. Obama’s stated “buildup” of 30,000 troops will bring the official total in the Afghan theatre to around 110,000 soldiers, which means there could be up to 200,000 actually there.

Good thing we elected such a progressive leader!

India: A Local Perspective

A young man on the street was gracious enough to share his opinions regarding India:

“Corruption is endemic here. Let’s say, for example, I get stopped by the police. I jumped a red light. Now I can either take the ticket, around Rs. 1000 or so, or I can simply bribe the policeman, say Rs. 200. Who, I ask you, would prefer to pay the ticket? 99.9% of us will just give the bribe and  be done with it. That sort of thing simply cannot happen in America.”

“Oh yes, income inequality is still huge, still a major problem, but I think there is reason to believe it is getting better. If you came here, say, 10 years ago, you would have seen it a lot worse. Come in another 10 years or so, and you’ll likely see it less. Can poverty ever be truly eradicated here? Probably not. The rich are getting a lot richer in this country; they have been for the past two decades. The poor have not seen anything like that; life for the bottom has continued in much the same way.”

“Pollution… well, what can you say about a people who throw their trash on the ground and then blithely forget it? These are cultural problems, but they are also political problems. You think there isn’t enough money to make it so that people don’t have to beg? You think we lack the knowledge and manpower – I mean, you think it’s beyond us to construct a decent municipal trash system, to make sure the sewer reaches all areas of the city, to make regularized trash pickup a basic right? Of course it isn’t, but the political will to enact such programs just isn’t there. The vested interests who run our political system would rather see our resources to go different ends. Their ends. Look at New York City – every vehicle has a catalytic converter, trash is superbly managed – hell, there’s a trash can on every street corner. We’re a long way from that.”

“In fact, I would say we in India are about 100 years behind the West.”

(At this, I demurred.)

“No, certainly we are! The things you take for granted there – social security, regularized pensions, food banks, homeless shelters, scrupulous policeman; we have none of those here. P. Sainath said that all the judges and magistrates in India don’t have the power of a single police constable, and he said it right. We hardly even have a sense of ourselves as a nation, as such. We would much rather identify with smaller communal structures: Religion, race, caste, social status, and so forth. What do the Indian billionaires really have in common with the destitute on the street? Not a damn thing.”

“But – and here is the rub – we are all implicated! Take the example of the policeman. Who will say they have never given a bribe?  I know I have. Our politicians – we say they are corrupt, we complain and moan, but in the end who elected them? We did. It is a vicious circle, without a beginning or end.”

“Perhaps I misspoke, however. If I could point to a beginning of the circle, it would surely be the population. All of our problems stem from that. But again, it is a cultural problem. Everyone gets married here; it is basically a law. And if you get married and don’t have kids, people will immediately assume something is wrong. The gossip one hears! ‘Cheh, did you hear so-and-so still hasn’t had a child? They’ve been married for more than a year! I think his wife may be infertile. Such a shame, such a shame!” One cannot escape talk like that, and one cannot, I think, live with it for more than a short time. So we are compelled to have children by a thousand different pressures. And one is not enough, you must have at least two! And woe unto you if they turn out to be girls, especially if you’re poor! In that case the dominant strategy is to just keep having children until a boy turns up. What can you do in the face of that? We distribute condoms, but nobody uses them – we hold sessions on family planning, but no one shows up.”

“About the future, I am not too optimistic. Our pollution corresponds directly with our need for an “affluent lifestyle”, and there is no getting away from it. We rely on coal to an alarming extent. Our population keeps growing and there seems no power strong enough to check it. 40% of our population is under the age of 30, but that is both a blessing and a curse. What will we do in ten years when they all start to want families?”

Nixon at His Finest

To supplement my previous post on Henry Kissinger, here is a telling little clip from the famous “Nixon Tapes” which were declassified earlier this decade.

Courtesy of Lapham’s Quarterly:

Nixon: See, the attack in the North that we have in mind… power plants, whatever’s left—POL (petroleum), the docks…. And I still think we ought to take the dikes out now. Will that drown people?

Kissinger: About two hundred thousand people.

Nixon: No, no, no… I’d rather use the nuclear bomb. Have you got that, Henry?

Kissinger: That, I think, would just be too much.

Nixon: The nuclear bomb, does that bother you? I just want you to think big, Henry, for chrissakes. The only place where you and I disagree is with regard to the bombing. You’re so goddamned concerned about civilians, and I don’t give a damn. I don’t care.

Kissinger: I’m concerned about the civilians because I don’t want the world to be mobilized against you as a butcher.

http://www.laphamsquarterly.org/voices-in-time/richard-nixon-thinks-big.php

Failed Bank Fridays!

I missed the last three failed bank Fridays, so here are all seventeen that failed in the past three weeks in a row. As always, from the FDIC:

Pacific Coast National Bank	San Clemente	CA	57914	November 13, 2009	November 18, 2009
Orion Bank	Naples	FL	22427	November 13, 2009	November 17, 2009
Century Bank, F.S.B.	Sarasota	FL	32267	November 13, 2009	November 18, 2009
United Commercial Bank	San Francisco	CA	32469	November 6, 2009	November 9, 2009
Gateway Bank of St. Louis	St. Louis	MO	19450	November 6, 2009	November 9, 2009
Prosperan Bank	Oakdale	MN	35074	November 6, 2009	November 9, 2009
Home Federal Savings Bank	Detroit	MI	30329	November 6, 2009	November 9, 2009
United Security Bank	Sparta	GA	22286	November 6, 2009	November 9, 2009
North Houston Bank	Houston	TX	18776	October 30, 2009	November 3, 2009
Madisonville State Bank	Madisonville	TX	33782	October 30, 2009	November 3, 2009
Citizens National Bank	Teague	TX	25222	October 30, 2009	November 3, 2009
Park National Bank	Chicago	IL	11677	October 30, 2009	November 3, 2009
Pacific National Bank	San Francisco	CA	30006	October 30, 2009	November 3, 2009
California National Bank	Los Angeles	CA	34659	October 30, 2009	November 3, 2009
San Diego National Bank	San Diego	CA	23594	October 30, 2009	November 3, 2009
Community Bank of Lemont	Lemont	IL	35291	October 30, 2009	November 3, 2009
Bank USA, N.A.	Phoenix	AZ	32218	October 30, 2009

Auditing the Fed

The policy blogs are abuzz with the recent news that the Federal Reserve System might finally undergo an audit. The bill, sponsored by Ron Paul and endorsed by nearly everyone else, passed with a lopsided 43-26 victory in the House and would be the first comprehensive inquiry into what the Fed does with the trillions of dollars it commands. Glenn Greenwald has the best dissection of what went down.

Some highlights:

Our leading media outlets are capable of understanding political debates only by stuffing them into melodramatic, trite and often distracting ”right v. left” storylines.  While some debates fit comfortably into that framework, many do not.  Anger over the Wall Street bailouts, the control by the banking industry of Congress, and the impenetrable secrecy with which the Fed conducts itself resonates across the political spectrum, as the truly bipartisan and trans-ideological vote yesterday reflects.  Populist anger over elite-favoring economic policies has long been brewing on both the Right and Left (and in between), but neither political party can capitalize on it because they’re both dependent upon and subservient to the same elite interests which benefit from those policies.

Beyond the specifics, a genuine audit of the Fed would be a major blow to the way Washington typically works.  The Fed is one of those permanent power centers in this country that exert great power with very little accountability and almost no transparency (like much of the intelligence and defense community).  The power they exert has exploded within the last year as a result of the financial crisis, yet they continue to operate in a completely opaque manner and with virtually no limits.  Its officials have been trained to view their unfettered power as an innate entitlement, and they express contempt for any efforts to limit or even monitor what they do.

A Lesson in Tolerance

“Oh, you can’t trust the Muslims,” a coworker of mine informed me, “They follow their own rules. They act as one. I mean, look at their religion! No morality whatsoever! If you want to have five wives, well, go right ahead. If you want to blow yourself up, just be sure to shout ‘Allahu Akbar’ beforehand.”

He continued: “We Hindus, on the other hand, when can you point to a single instance of violence originating from us? Where can you point to a single Hindu trying to convert someone by force?”

Meekly, (for I knew how hot emotions run during times such as these) I mentioned the Partition Riots that took place in 1947, or the periodic bouts of ‘communal violence’ which seem to crop up every two years or so.

“The communal riots, that’s something totally different!” he barked, “Those are usually started by the other side anyway. Are you saying we shouldn’t defend ourselves? Anyway, can you point to a single Hindu suicide bomber?”

I could not. Yet it seemed pointless to mention at that time the danger of the views he espoused, that by perpetuating the “Us vs. Them” mentality he did damage of a far more insidious sort than quite a lot of suicide bombers together.

I mention this episode because it was so similar in nature to many other conversations I have had with Hindus regarding Hindu-Muslim relations. Perhaps it is a symptom of the unspoken segregation that exists in India that I have not yet had the chance to get a Muslim view on the subject, though I suspect such a conversation would go quite the same, only in favor of their “side”.

Unspoken though it may be, Hindu-Musilm segregation is quite real, and it stands apparent even to a foreigner such as myself. The city in which I stay, Hyderabad, is famous for the peace with which its population lives, despite being an almost fully hybrid city. Hindu temples dot the sidewalks in one district, and merely a few kilometers away one can hear the local Mosque’s ringing call to prayer. Yet one sees very little commingling between Hindus and Muslims. The city is pocked with Hindu or Muslim enclaves, and their residents rarely venture to the other side. And it is an undeniable fact that the Muslim neighborhoods are worse off in almost every respect to the Hindu boroughs. The few Muslim neighborhoods I visited were crowded labyrinths of squeezed-together houses and suffered from a lack of fresh water, lack of access to sewage systems, poor and irregular food delivery and almost no sanitation to speak of, while the neighborhoods I saw with all the ‘modern amenities’ were populated almost exclusively by Hindus.

“India will never solve its problems,” a pessimistic friend of mine once said, “because India will never get along with itself. If you had a stone in the middle of the road and were trying to organize people to help move it to the side, it just wouldn’t happen. One person will say we should move it to the right. The other person will insist on moving it to the left. They’ll form parties over the issue, hold elections, even. Whatever the outcome, no matter how well monitored, the losing side  will insist that it had been cheated, that the elections were fraudulent. Then there will be recounts, runoff elections. One faction of the ‘right side of the road’ party will splinter off, saying it is no longer represented by party leadership, and form its own party – say, the ‘further down the road’ coalition which states that the rock should neither be moved to the right nor left. Hindus will insist on taking leadership positions in the moving of the rock, Muslims will howl at the injustice of it all. Perhaps they’ll agitate for their own rock, to move in a fashion they see fit.”

At that point he ran out of examples, but I could continue for him if he wished: “Then, a language controversy would erupt. Marati speakers would insist on writing their language on the rock; Hindi speakers will make the same demands, and so will the Tamils. The lesser represented languages will join together in a coalition which, of course, will subsequently break apart.” And so forth.

This is a parody, but not a very gross one. “In such a country,” my friend concluded, “It’s impossible to believe that anything gets done.”

It is clear, however, that things are getting done, and one need look no further than India’s new crop of billionaires to see it.  But one wonders if India will ever move beyond its communal mentality, if it will ever see itself, and its problems, holistically. There is much evidence that this is already happening, however slowly.

On the other hand, I have even heard the overpopulation problem blamed on the Muslims.

Israel, The Times, and Al-Jazeera

The New York Times and Al-Jazeera give us dramatically different news reports on what ostensibly should be a straightforward affair. The issue in question – Israel’s recent decision to go ahead with its illegal settlement project despite the opposition of the entire rest of the world (including, surprisingly, the US) – would appear to present an open-and-shut case for news providers. By demolishing Palestinian  homes and constructing on illegally-occupied territory, Israel is, after all, expressly violating international law. It is therefore interesting to examine how the two news organizations decide to present this.

The NYT opens with:

The Israeli move to push forward the building plans in Jerusalem comes as the Palestinians have begun seeking support for a plan to win the United Nations Security Council’s recognition of a Palestinian state, without Israel’s agreement, in the lands Israel won in 1967. Palestinian officials said they were pursuing the idea in an attempt to break the impasse in peace talks.

It is important to note the use of the word “won”, which, very subtly, legitimizes Israel’s claim to the swaths of Palestine annexed in 1967. Nowhere in the NYT article will you find mention of the fact that this annexation was expressly against international law, and has been the subject of repeated efforts for repatriation by the UN.

Again, the NYT attempts to legitimize Israel’s position with the utmost delicacy:

Disagreements over settlement building are in large part the reason that the negotiations, which have been stalled for months, have not resumed. The Palestinians demand a complete freeze on settlement construction in the West Bank and the parts of Jerusalem taken over by Israel in 1967; the Israelis have rejected that.

You see, it’s merely a disagreement! Never mind the fact that the entire rest of the world (including the US, even though they’re unwilling to do anything about it) considers the settlements a violation of international law and Palestinian human rights, or that Israel stands alone and defiant in insisting on their continuance. By saying that the negotiations have not resumed due to “disagreements”, the New York Times makes the tacit case that both sides are equally to blame for this impasse, when instead it is rather clear that Israel is the sole impediment to a peaceful and just solution to this dilemma.

Now, then, let’s contrast with Al-Jazeera. They, of course, are kind enough to offer a FAQ on the subject, in addition to their general article. In it, one finds the vital question:

Are the settlements legal?

The United Nations, World Court and European Union have all deemed both the official settlements and the outposts to be illegal under international laws, including the Geneva Conventions, which set out the basis for international humanitarian law.

After Israel’s seizure of West Bank and Gaza Strip in 1967, the UN Security Council said the “Geneva Convention relative to the Protection of Civilian Persons in Time of War, of 12 August 1949, is applicable to the Arab territories occupied by Israel since 1967, including Jerusalem”.

And again:

What impact do the settlements have on Palestinians?

Amnesty International has argued the settlement policy violates Palestinian human rights.

“As well as violating international humanitarian law per se, the implementation of Israel’s settlement policy in the Occupied Territories violates fundamental human rights provisions, including the prohibition of discrimination,” it said in a report in 2005.

Not to mention the fact that:

Human Rights Watch and other rights groups have documented violence against Palestinians by settlers, including “frequent stoning and shooting at Palestinian cars”.

“In many cases, settlers abuse Palestinians in front of Israeli soldiers or police with little interference from the authorities,” it said.

All of these statements, of course, are beneath The New York Times’ purview. The most we get from them on the subject of legality is at the very end of the article, tucked away in a secondary clause:

[The settlements] are in Gilo, an area in southern Jerusalem considered by Israel to be a neighborhood of the city and by the Palestinians and much of the world to be a settlement that violates international law. Israel claims sovereignty over all of Jerusalem.

They are “considered” to be a violation of international law because they are a violation of international law. That the NYT fails to qualify this, nor to give the name of the UN resolution that de-legitimizes the settlements (Resolution 446) betrays quite vividly their true feelings on the subject.

Geithner and AIG, Sitting in a Tree

The Times reports on a recently released audit which concludes, beyond the shadow of a doubt, that Timothy Geithner (now Treasury Secretary, then President of the New York Fed) voluntarily gave up vast negotiating powers when choosing to shower AIG with billions upon billions of dollars.

The article is written in standard Times-ese, which is to say that it seeks to relate truly scandalous information in such a way as to cause as little uproar as possible, but although it must be translated into standard English, some truly damning testimony emerges:

Just two days before the New York Fed paid A.I.G.’s partners 100 cents on the dollar to tear up their contracts with the insurance giant, one bank volunteered to take a modest haircut — but it never got the chance.

UBS, of Switzerland, alone offered to give a break to the New York Fed in the negotiations last November over how to keep A.I.G. from toppling and taking other banks down with it. It would have accepted 98 cents on the dollar.

The Fed “refused to use its considerable leverage,” Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program, wrote in a report to be officially released on Tuesday, examining the much-criticized decision to make A.I.G.’s trading partners whole when people and businesses were taking painful losses in the financial markets.

So this means: The New York Fed decided to print 100% of the value of AIG’s investors’ bad loans in order to get them to divest from AIG, and (hopefully) save the money-laundering giant. Realize, now, that the Fed was under no obligation whatsoever to guarantee these loans with taxpayer dollars, and certainly not guarantee them at full value. Given that these CDS loans were later revealed to be totally fraudulent, this decision makes even less sense.

If I convinced you to give me real dollars for Monopoly Money, and then you complained to the government that the Monopoly Money you received was actually worthless, would you expect them to just print 100% of the value and give it to you, no questions asked? Or would you expect them to give you nothing and tell you, in effect, to be smarter next time?

What’s truly astounding about this episode is that some of the banks offered to take less than 100% of the value of their worthless investments, but Geithner refused! He said to them, essentially, that “oh well, it doesn’t matter – it’s taxpayer dollars anyway! Go ahead, take the full value!”

This is the man who is now our Treasury Secretary.