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Archive for March 3rd, 2010

Whitewashing Bernanke’s Involvement in the Crisis

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Dean Baker gets an excellent catch in what, upon first glance, I thought to be rather solid Washington Post article. Quality from the Post is such a rare beast that I think you’ll forgive me for the mistake. It’s like a guy who gets excited over a bigfoot sighting, but it just turns out to be some hairy guy.

As you probably know, President Obama has hundreds of positions left unfilled within his administration. This is partly due to his not getting around to them, but in large part also due to “Republican” obstructionism, wherein certain senators have placed holds on several key appointments, tossing them into the bureaucratic abyss.

The Post article purports to be about three major posts that Obama has yet to fill in the Federal Reserve and the candidates who may fill them. Now, I’m all for calling attention to Obama’s unfilled administrative positions. They’re a major bottleneck in the bureaucracy and are causing his administration to move sluggishly on matters that urgently need attention – ironically, Federal Reserve issues. It looks as though he’s finally going to bite the bullet and make these appointments during Congress’ recess, which he should have done all along.

So far, so good – it’s all newsworthy. But was it really necessary for The Post to inject yet another ode to Fed Chief Ben Bernanke in its already too-long article? We know how they feel about Bernanke – they’re all for him. If anyone doubts it, I invite you to visit their editorial page. On any given day I guarantee you’ll find some apology for Mr. Bernanke’s malfeasance from one of their establishment cheerleaders.

The phrase in question describes Mr. Bernanke as having “led efforts to make the Fed’s bank oversight more effective and focused on broad risks to the economy that arise out of banks’ decisions.

Not only is that so vague as to be rendered meaningless, but it is also patently untrue.  “More effective”? “Broad risks”? “Bank’s decisions”? How effective? What risks? Which decisions? These are mistakes one goes over in Reporting 101.

They’re sloppy mistakes, too – and they betray a complete vacuum where the writer’s knowledge of history should be. Aside for Lawrence Summers (current National Economic Adviser, who authored the bill that got us into this mess), Timothy Geithner (current Treasury Secretary, who was #3 at the Fed while the banks turned into casinos), and, of course, Alan Greenspan, Mr. Bernanke is the single biggest reason why 1/4 of the workforce is desperately seeking work.

He actively campaigned against oversight, was completely blind to the risks facing our economy (“The subprime mess is largely contained“), and, in fact, actively encouraged those risks by keeping interest rates at almost zero for three straight years after the dot-com bust. This is a matter of public record. A five minute Google search and articles from The Post itself were enough to reveal this.

What’s worrying is that The Post seems to be unaware of this – or if they are aware, put a willfully misleading clause in their “news” article. I can understand it when journalists lie in the Op-Ed pages; that is, after all, what they’re for. But to put a factually ignorant opinion in a serious news article betrays, I think, some very perverse ethics.

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Britain Grapples With Debt of Greek Proportions

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The Times has a pretty strong piece in today’s issue about Britain’s massive debt problems. Yet more evidence that the “Greek Problem” isn’t limited to Greece alone. The whole European Union and most of its satellite economies are probably in for a rough decade:

As for the British government, it has been able to finance a budget deficit of 12.5 percent of G.D.P. — equal to Greece’s — at an interest rate more than two full percentage points lower only because the Bank of England bought the majority of the bonds it issued last year.

“It’s not just ‘basket cases’ like Greece that can be considered candidates for sovereign crises,” said Simon White of Variant Perception, a research house in London that caters to hedge funds and wealthy individuals. “Gilts and sterling will continue to come under pressure as scrutiny of the U.K. fiscal situation intensifies.”

Now, unlike the United States, other countries’ deficits actually mean something. They aren’t allowed to go around printing as much money as they want, running absurd amounts of debt, and forcing everyone to except their currency at the barrel of a gun. Running budget-busting deficits isn’t just something they can laugh off, like we can here in America – over a long enough time scale, those deficits can make a country’s currency worthless.

It’s tough to see where this will end. The whole EU and attached economies are vulnerable to this “contagion”, which, I cannot stress enough, has a lot to do with Wall Street’s reckless bets during the aughts. If we were living in a fair world, these Wall Street firms would pay reparations to the affected countries for essentially destroying their economies. As it is, it looks as though we’re going to have to watch the EU go down in flames before anyone does anything.

Then, likely, we’ll see some backdoor deals, a few hurried conferences, and the US Government will come out with a new TARP program, this time for Europe. Washington has always had a flair for publicity – maybe they’ll call it a “second Marshall Plan”. It’s inconceivable that the US would allow its most favored “allies” to go down without assistance. And such a move would likely have incidental benefits – namely, bringing the EU firmly under our political control.

Sure, the American taxpayer will eventually have to foot the bill, but who ever cared about that?

Written by pavanvan

March 3, 2010 at 4:00 pm

A Guide To This Season’s Republican Primaries

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Ed Kilgore over at The New Republic has a pretty good primer on the upcoming Republican primaries: The Republican Civil War

In a string of GOP primary elections stretching from now until September, the future ideological composition of the elephant party hangs in the balance. Many of these primaries pit self-consciously hard-core conservatives, often aligned with the Tea Party movement, against “establishment” candidates—some who are incumbents, and some who are simply vulnerable to being labeled “RINOs” or “squishes” for expressing insufficiently ferocious conservative views.

Written by pavanvan

March 3, 2010 at 1:59 pm

Posted in Politics

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Blanche Lincoln (Hopefully) to Be Dethroned

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I generally try not to get into the flying circus that is US domestic politics, mostly because it’s all so much political side-show (whereas un-elected, non-public figures – CEOs, The Fed, White House appointees, etc. – usually end up making the real policy), but I think this definitely deserves a mention.

Blanche Lincoln is a “Democratic” senator from Arkansas, and one of the most odious politicians ever to mar our fragile Senate. She voted YES on the Iraq War, YES on the Military Commissions Act (denying due process to anyone deemed a “terrorist”), YES on the Patriot Act (see below), NO on the Employee Free Choice Act,  was one of the major holdouts on the watered-down “health care reform” proposed by President Obama, etc., etc. She’s a bad, bad lady. Needless to say, President Obama supports her re-election.

But there’s hope! (Not, of course, from Obama, who has decidedly retired from the hope business.) No, instead, the AFL-CIO is funding an insurgent campaign on the part of Lt. Governor Bill Halter. Now, I’m sure Mr. Halter has various objects in his closets which may or may not resemble skeletons, but the fact remains that there are very few worse candidates for this seat than the incumbent Ms. Lincoln. Even one of Bill Halter’s hypothetical skeletons would be an improvement. I generally think that voting does nobody any good, but in this case, a dethroning is well in order.

Written by pavanvan

March 3, 2010 at 8:52 am

Quote of the Day

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Fuck your parliament and your constitution. America is an elephant. Cyprus is a flea. Greece is a flea. If these two fleas continue itching the elephant, they may just get whacked good …We pay a lot of good American dollars to the Greeks, Mr. Ambassador. If your Prime Minister gives me talk about democracy, parliament and constitution, he, his parliament and his constitution may not last long…

– President Lyndon Johnson, to Greek Ambassador Alexander Matsas – June, 1964

Written by pavanvan

March 3, 2010 at 12:01 am

Posted in Uncategorized