Saturday, May 31, 2008
Headline of the Day
Fukudome in Chicago Dims Lights on Fans Ruth Inspired in Japan
Friday, May 30, 2008
Religious Fatuity of the Day: Sharon Stone on the Chinese earthquake
I’ve been concerned about how we should deal with the Olympics, because they are not being nice to the Dalai Lama, who is a good friend of mine. And then all this earthquake and all this stuff happened, and I thought, is that karma – when you’re not nice that the bad things happen to you? —actress Sharon Stone speaking at the Cannes Film Festival
The suggestion that the root cause of a natural disaster was some delinquency on the part of somebody (or everybody) goes back to our earliest written records: The story of the Great Flood, causing the near destruction of all humanity by an offended deity, is found worldwide.
Of course in the West we prefer the Old Testament account. The god Yahweh (Jehovah) was so put out with humankind that he had something very like a hissy-fit. From Genesis, Chapter 6—
5 And Yahweh saw that man's wickedness was great over the face of the earth, and that all day the thoughts in his heart formed nothing but wickedness.
6 And Yahweh regretted having made man on the face of the earth, and his heart grieved.
7 And Yahweh said, "I will wipe man from the face of the earth, man, my own creation and also the animals of the field, and the creatures that crawl on the ground, and the birds of the air; for I regret having made them."
Since our rational faculties seem to have ceased to evolve about the time of the election of Ronald Reagan, we should not be surprised that natural cataclysms—be they earthquake, hurricane or tsunami—or even human-engineered disasters—as in the case of the destruction of the Twin Towers—bring out a rash of prophets to denounce the sins of the locals.
The most salient feature of these fulminations is that they always involve sins committed by someone other than the critic. In the case of Christian evangelicals such as Jerry Falwell, Pat Robertson and the like, the root cause of disasters is usually said to be the failure of society to have made its homosexuals sufficiently miserable—a failure for which they cannot personally be held to account.
Another notable reaction of these divine mindreaders is that the disaster is typically celebrated. As Britain's Channel 4 reported after Hurricane Katrina,
Without reference to the children crushed beneath the rubble of collapsed buildings, Steve Lefemine, Director of Columbia Christians for Life said, categorically: 'God judged new Orleans for the sin of shedding innocent blood through abortion', while Pastor Bill Shanks of the New Covenant Fellowship of New Orleans rejoiced that 'the hurricane has wiped out rampant sin' in a city about to host its annual Gay Pride event.
But this tendency to blame geophysical events on people we disapprove of is not restricted to Christian evangelicals. After the tsunami of 2005 Buddhist leaders of Sri Lanka were condemning sin willy-nilly—not to mention the island's remaining Muslims and Christians.
But what to do about an earthquake in godless China, where religious leaders aren't permitted to tout and taunt? Clearly an outside voice was called for, and the lot fell to Sharon Stone.
Stone bravely stepped into the role and carried it to new heights. The earthquake occurred, according to Stone, not because of "sin" but because the Chinese were "not nice" to the Dalai Lama. It remains unclear whether the Chinese government's fundamental offense was to bully a holy man or to mistreat one of her personal friends. In either case, justice was served.
Now karma is not being nice to Sharon. Christian Dior, which was using her to to pitch skin-care products to the Chinese, has dropped her like a plucked eyelash, and her movies have been banned from China and Hong Kong. Stone has been moved to contrition and even offered to help with the relief work.
That's what I like about karma—it all works out in the end.
Thursday, May 29, 2008
Warmonger of the Day: Senator Joe Biden
Twenty percent of our party really is anti-war almost under any circumstance, just like 20 percent of the Republican Party is probably ready to go to war on any circumstance.
Nothing but political rhetoric of course. But let's see how the numbers fell out in a real-life situation.
The "Joint resolution to authorize the use of United States Armed Forces against Iraq" was in effect a resolution to go to war "under any circumstance."
Only one Republican Senator (Chafee) out of the 49 Republicans who voted opposed the resolution (2%), while 21 out of 49 Democratic Senators opposed it (42%). Senator Biden was not among them.
In the House 126 Democrats opposed the resolution (61%) while only 81 supported it. But on the Republican side a mere 6 out of 221 (3%) opposed.
So the figures tell us that 98% of Republican Senators and 97% of Republican Representatives authorized a war "under any circumstance." It appears that Sen. Biden has seriously understated the level of Republican bellicosity.
As for his other assertion—that 20% of the Democrats would oppose war "almost under any circumstance"—so far as I know a resolution not to go to war "almost under any circumstance" has not been debated since the signing of the Constitution. More's the pity.
It's the obscenity, stupid!
But if the reporter's characterization of the remainder of Biden's remarks is accurate, the Senator is not only obtuse but obscene—
Biden argued that Democrats should show the voters that they are ready to lead on national security issues. He compared the current situation, in which Democratic candidates are perceived to be weak on the issue, to a time when the party was viewed as soft on crime.
The senator noted that, following the passage of a massive crime bill, Democrats were able to shed the label of not being tough on crime.
The basic argument here is that the Democrats should demonstrate that they're as bellicose as the Republicans. He fails to note that the massive crime bill of which he's so proud has played a significant role in making the U.S. the world leader in imprisoning its citizens while failing to address the problem of crime. And the "success" of the Republican approach to national security is ever before our eyes.
Biden will be up for re-election in November. Biden's Wikipedia entry states that in addition to being Delaware's longest serving Senator, "he is an advocate for Amtrak, the Dover Air Force Base, and the downstate chicken processing industry." What a leader!
Memo to Delaware Democrats: Is this the best you could do?
Wednesday, May 28, 2008
Advice of the Day: On the regulation of financial markets
I feel the western consensus on the relation between the market and the government should be reviewed. In practice, they tend to overestimate the power of the market and overlook the regulatory role of the government and this warped conception is at the root of the subprime crisis. —Liao Min, director-general and acting head of the general office of the China Banking Regulatory Commission (CBRC) as quoted in "China rebukes west’s lack of regulation"
Lest this quote be dismissed as some sort of anti-capitalist rhetoric, I should point out that hedge-fund billionaire George Soros has been delivering the same message.
When asked what other countries could learn from China’s regulatory system, he pointed out that Chinese financial institutions needed CBRC approval to launch individual product types, making it nearly impossible for exotic financial instruments, such as the ones blamed for the subprime crisis, to exist in China.
These "exotic financial instruments" were recently decried by super-capitalist Warren Buffett. In an interview with Der Spiegel he opined—
SPIEGEL: .... You yourself have referred to some of the tools of the financial industry as "weapons of mass destruction." It sounds almost like what German President Horst Köhler said about the financial markets, which he described as "a monster."
Buffett: I don't condemn the entire industry. When I mentioned weapons of mass destruction, I was merely referring to the out-of-control trading in derivatives. It doesn't make sense that hundreds of jobs are being eliminated, that entire branches of industry in the real economy are going under because of such financial gambles, even though they are in fact completely healthy. Besides, these types of constructs are so complicated that hardly anyone understands them anymore.
SPIEGEL: Even bankers don't know what's going on anymore.
Buffett: They concocted a poisonous brew, and in the end they had to drink it themselves. This is something bankers are normally extremely loath to do. They'd rather sell it to someone else.
Unfortunately Buffett has fallen prey to financial fatalism, quite contrary to the
SPIEGEL: How can these financial instruments be monitored?
Buffett: That's the problem. You can no longer control or regulate this sort of thing. It's taken on a life of its own. You can't put the genie back into the bottle. The American central bank, the Fed, tried to exert its influence by lowering interest rates, for example. The Fed and the US government have absolutely no interest in promoting the extreme fluctuations we are now experiencing. Nevertheless, they were also unable to prevent them.
SPIEGEL: Based on your logic, any future US administration will also be powerless....
Perhaps Buffett has concluded that the power of the capitalists has exceeded the power of governments—and I fear that he's right. But to suggest that the raising or lowering of interest rates is the only means left to control the financial markets only shows how deeply economic theory has corrupted the thought of even the richest.
Will China be able to whip our capitalists into shape?
Thanks to China’s lack of integration with global financial markets as well as the cautious regulatory approach of the CBRC, Chinese banks have emerged relatively unscathed from the global credit crisis, which so far has caused nearly $380bn of losses at western financial institutions. [A gross understatement of the losses. —HF]
Apart from Bank of China, which reported a subprime-related writedown of nearly $1.3bn by the end of last year, no other Chinese bank has been seriously affected.
The CBRC is advocating new international laws requiring governments to provide timely, accurate information in times of crisis.
That would be a start. So much of western financial chicanery transpires "over the counter," which is a wonderful euphemism for "under the table."
And you have to love the irony when the Chinese government acts as the voice in the wilderness calling for greater transparency!
Movie of the Day: Three Days of the Condor
"Three Days of the Condor," a 1975 thriller, was among them. Turner Classic Movies showed it this morning in the wee hours, which may account for why I am beginning my day so late.
Robert Redford as "Turner" plays a low-level CIA analyst who works out of a Manhattan townhouse disguising itself as the "American Literary Historical Society" (ALHS). He and his six coworkers analyze publications in search of intelligence—a small-scale version of our current "National Open Source Enterprise." Redford thinks he's hit upon a conspiracy, but his boss tells him that CIA headquarters assures him there's nothing to it.
While Turner is out picking up lunch for his coworkers, they're all murdered execution style and the fun begins.
It turns out that the conspiracy is by a group within the CIA itself. Redford, code-named "Condor," eventually tracks down the man behind the killings, a Mr. Atwood of Chevy Chase, Maryland, and confronts him—
Turner (Redford): What do you do for a living? .... What do you do exactly?
Atwood: Deputy Director of Operations.
Turner: What section?
Atwood: Middle East.
Turner: What are you working on? What are you doing? What's the secret worth murdering everybody at the ALHS house?
Atwood: There's no secret.
Turner: Wicks showed you my report.
It was your network I turned up. Doing what? What does Operations care about a bunch of goddamn books? A book in Dutch. A book out of Venezuela. Mystery stories in Arabic.
Wait. [light beginning to dawn] What the hell is so important about...?
Oil fields! Oil! That's it, isn't it? This whole damn thing was about oil!
In the final moments of the movie we learn what Robert Redford's travails are about. This exchange occurs between our hero and an upper-level member of the Company (CIA)—
Turner (Robert Redford): Do we have plans to invade the Middle East?
Higgins (Cliff Robertson): Are you crazy?
Turner: Am I?
Higgins: Look, Turner…
Turner: Do we have plans?
Higgins: No. Absolutely not. We have games. That's all. We play games: What if? How many men? What would it take? Is there a cheaper way to destabilize a régime? That's what we're paid to do."
Turner: Go on. So Atwood just took the game too seriously. He was really going to do it, wasn't he?
Higgins: It was a renegade operation. Atwood knew 54-12 would never authorize it. There was no way, not with the heat on the Company.
Turner: What if there hadn't been any heat? Supposing I hadn't stumbled on a plan? Say nobody had?
Higgins: Different ball game. The fact is there was nothing wrong with the plan. Oh, the plan was alright. The plan would have worked.
Turner: Boy, what is it with you people? You think not getting caught in a lie is the same thing as telling the truth.
Higgins: No. It's simple economics. Today it's oil, right? In 10 or 15 years - food, Plutonium. And maybe even sooner. Now what do you think the people are gonna want us to do then?
Turner : Ask them.
Higgins: Not now - then.
Ask them when they're running out? Ask them when there's no heat in their homes and they're cold? Ask them when their engines stop? Ask them when people who've never known hunger start going hungry?
Do you want to know something? They won't want us to ask them. They'll just want us to get it for
After Higgins suggests that the CIA will eventually "get him." Turner tells Higgins that he's already given the story to the New York Times and confidently begins to walk away—
Higgins: Hey, Turner. How do you know they'll print it? You can take a walk, but how far if they don't print it?
Turner: They'll print it.
Higgins: How do you know?
The film was based on a book by James Grady published in 1974. One can only wonder at the prescience of the novel and the movie, which remained relatively faithful to the plot.
Of course like Orwell's 1984 the dates were wrong, both being premature by some 20 to 30 years. And the conspiracy to attack a Middle Eastern country was fomented within the White House rather than by the CIA—though the "Company" was certainly involved in certain aspects of the conspiracy. But the economic basis for the war plan, the initial support of the American public and the suggestion of collusion by the media are all there.
The novel and film teach us something else—that you don't have to be an "expert" to see where we're heading. Hats off to author James Grady and director Sydney Pollack.
Americans do not like wars in which we appear to be losing. They do, on the other hand, thoroughly approve of wars where we appear to be winning. So if you convert this war from a "losing" proposition to a "winning" proposition, you'll see the poll numbers climb in support of the war....
It will be interesting to see—in a ghoulish sort of way—if the rise in oil prices will be used by the government to highlight our "vital interests" in Iraq in an attempt to convince the public of the necessity of remaining in the country despite current perception that we're losing. My guess is that, yes, members of the government will begin to speak more overtly of America's interest in Iraqi oil.
Whether the public takes the bait will depend in part on the depth of the recession and the government's success in convincing the public that "victory" in Iraq will somehow be curative of our misery. [back]
Monday, May 26, 2008
Understatement of the Day: A failing economy and an ignorant public
We have an economy that’s eroding in lots of ways Americans don’t really fully understand yet. —Kevin Phillips, former Republican strategist turned author and culture critic, in an interview on Democracy Now!
One of my Simply Appalling goals over the past few years has been to look at the news in the Business section and make it intelligible to readers who have no greater involvement in finance than a bank account. The level of theft, fraud and greed is staggering, and not only staggering but "reported"—if you read the Wall Street Journal or the Financial Times or the Business section of the New York Times.
Unfortunately almost all this news is passing over the heads of the public, leaving them to sputter about oil and food prices, which are less the cause of our sorry state than the effects. If Americans understood terms such as "tranches," "leveraged buyouts," "CDOs," "hedge funds," "futures markets" or even "liquidity," they'd stop worrying about street crime and join in the fun.
Author Kevin Phillips is making the talkshow rounds touting his new book Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. In this May 6 interview with Amy Goodman he lays out some of the issues betokening the "global crisis of American capitalism." He likens the American economy to a shark tank—
... I used to say that normally when a country is—United States is—heading into a recession, there are one or two, sometimes three, factors that you worry about. But at this point in time, the American economy, you can think of it as being kind of in a shark tank, and there are like six or seven sharks, and you don’t usually see anything like that number.
An economy based on finance rather than on manufacturing
... we have a financialized economy in which we don’t make much anymore, and finance is up to 20 to 21 percent of the US GDP,1 and manufacturing down to 12. Finance dominates the US economy.
Massive public and private debt
The second problem is that we have massive debt, both public and private. It’s gone up about 700 percent since the early 1980s, staggering numbers where there—we basically have $50 trillion worth of credit market debt, which is tradable debt. And people just have no idea of this. It’s not government debts that’s the problem, it’s private sector debt, both financial and corporate and then in the consumer sector with credit cards and then mortgage debt. We just have this extraordinary level of it. 340 percent of the gross domestic product, that’s how big debt is. And the last time something was close to this—and it was less—was in the late 1920s and early 1930s....
The collapse of home prices
Third shark in the tank is the collapse of home prices. They continue to follow the scary trajectory that has people predicting that there’s going to be a 15 to 20 percent decline in home prices, which would be the sharpest since the Great Depression.
Then you can go to shark number four, that’s global commodity inflation—oil and food. People are as worried now about the price of milk as they are about the price of a gallon of gasoline. That’s a global problem, but it makes a mockery of the administration’s pretense that there’s no inflation.
Deceptive economic statistics
The fifth shark is, frankly, lousy economic statistics. I don’t think the average American should believe either the inflation numbers, the GDP numbers or the unemployment numbers. And there’s a lot of complexity and technical terminology involved here, but the long and the short is that over thirty to forty years, we’ve seen a kind of Pollyanna Creep, and administrations of both parties have done this. They want the figures to be friendlier, not to get them in trouble. And we’re at a point now where the figures lie enough that foreign investors are starting not to believe them and, I think, with considerable justice.
Now, the next shark in the tank is obviously the price of oil. And it’s not just global commodity inflation, it’s the problem that we see of oil production peaking in the world sometime in the next ten to twenty years. And the advance signs of this are scarcity in peaking in certain countries.
And the prediction just came out of Goldman Sachs a couple of days ago that within a fairly short period of time, probably this year, you’re going to see $150 or $200 oil.
The falling U.S. dollar
And that’s because, partly at least, of the scarcity, but the US dollar has been tied historically since the 1970s to oil, because of a deal worked out when OPEC wanted a price increase. Henry Kissinger and others were involved in getting OPEC to commit that they would sell and buy oil only in dollars and that they would invest their petrodollars in the US, in Treasury debt. So we have a currency that’s profited from the connection to oil, which sustained it in many ways.
But now oil has boomeranged on the United States. We have to spend $400 billion a year to import the oil we need. We don’t have the basis for controlling oil anymore, after the idiocy in Iraq, which was partly put in motion to solve the oil problem, and instead you’ve got oil prices going up 500 percent in five years. So the dollar is on the ropes, and that’s the other shark in the tank.
Phillips omits a couple of other "sharks" heading our way—(1) insolvency of local governments and devastating cuts to state budgets, and (2) undercapitalization of pension funds—both public and private.
And now the bad news
Phillips sees three consequences to America's economic plight—
Loss of assets and national autonomy
One of the dimensions, obviously, is that if the economy goes sour and if we have a run on the dollar and the value of American dollars declines in a severe way, you’re going to have foreigners buying up a lot more of our industry, and people would want to sell it to them. America’s role as a global debtor would just mushroom. We’d be at the beck and call of other countries. The dollar would be subject to being abandoned by the oil producers. You can have a major league recession in the United States, which of course then would be compounded by all this huge amount of debt beginning to fall in.
Loss of democratic input into economic goals
But I think there’s another dimension that people tend to forget here. If you have the rise of finance, as we’ve seen it in this country, to be the largest part of the private economy, you have on one hand the growth of the Federal Reserve Board in regulating more and more of the American economy, and they’re partly controlled by the banking sector. They’re not elected by anybody. So you’re missing a democratic ingredient in that respect.
Loss of control over one's life
It’s also very true that the growth of finance has involved the growth of a debt and credit industry. And part of what finance has brought as it grows is that more and more people are in more and more debt, and the amount of debt that individuals have and that they have to service is increasingly a burden. And people get into debt to maintain either a living standard they can’t afford or one that’s been nurtured by consumerism and advertising to get people to spend money they don’t have. So you’ve got an element that the public is losing control of its own economic future when you have an economy that’s full of debt and credit industries, which are a mainstay of finance.
The implications of all of this for who controls what within the United States are huge, and that will be especially true if a lot of the debt we’ve built up starts imploding because of higher inflation and higher interest rates.
Quite frankly, Phillips understates the consequences. The problem with his formulation is that he speaks as if these events may occur. He needs to take time off from his book tour to follow developments.
- Sovereign wealth funds—the investment arms of foreign governments—along with other foreign investors are gobbling up American assets as if they were oysters on the beach.
- "Free-market" capitalism is simply code for the notion that the rich should be left free to pillage and plunder unencumbered by government. The American people have not had control over either their economic future or their government for a very long time now—if they ever had it.
- Most Americans already live from one credit card payment to the next and worry about maintaining their credit rating. The only shoe left to drop is if a lot of people come to the decision—either because of "upside-down" mortgages and auto loans or because of lost income—that their survival is more important than their credit rating. Many stocks in the financial sector have already fallen by 50% or more, but any company that has made its fortune by generating consumer debt is a bad buy at any price.
The Depression Chronicles – 5: Consumer spending (5/13/08)
Welfare queens, homeowner queens and bailout queens (5/20/08)
1"Gross domestic product" or "GDP" is one of the few statistics—along with the Consumer Price Index—that the average American is likely to hear bandied about in the nightly news. Its most important use is as technical-sounding proof that Americans are really better off than they think they are.
The Wikipedia entry is humorously instructive—
GDP per capita is often used as an indicator of standard of living in an economy, the rationale being that all citizens would benefit from their country's increased economic production.
The major disadvantage of using GDP as an indicator of standard of living is that it is not, strictly speaking, a measure of standard of living....
That seems clear enough. If the American economy were a beehive, the GDP would give a rough measure of how busy the bees are—but not of how well off they are. [back]