Leading Economists Question US Growth

Despite the seemingly robust growth of 5.7% seen in the last quarter of 2009, a number of noted economists, who originally anticipated the great recession, have stated their concerns and pessimism for the future of the American economy.

In Bloomberg's news-wire, New York University professor Nouriel Roubini calls the released Q4 numbers “very dismal and poor.”  He explains that more than half of the 5.7% expansion "was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus."  In his opinion, future growth for the US economy remains tenuous and he believes that although the economy will not trend back into a recession, for many Americans -especially those who remain or become unemployed- it certainly will feel as if the recession persists.  His title as Dr. Doom remains intact.

Princeton university professor Paul Krugman has been warning Americans since the first signs of the recession that a strong stimulus program, paralleled with a comprehensive regulatory reformulation between government and America's financial institutions, was necessary in order to have the country successfully rebound from the recession.  His January 28th NY Times column outlines this theme:

We’re in the aftermath of a severe financial crisis, which has led to mass job destruction. The only thing that’s keeping us from sliding into a second Great Depression is deficit spending. And right now we need more of that deficit spending because millions of American lives are being blighted by high unemployment, and the government should be doing everything it can to bring unemployment down.

He rebukes Mr. Obama and his economic team for their unwillingness to do more and warns "against the perils of complacency and false optimism."

As you read the economic news, it will be important to remember, first of all, that blips -- occasional good numbers, signifying nothing -- are common even when the economy is, in fact, mired in a prolonged slump ... the odds are that any good economic news you hear in the near future will be a blip, not an indication that we're on our way to sustained recovery.

In addition, he sternly chastises the Obama administration for engaging in budgetary gimmickry and sleight of hand policies, such as reining in non-military discretionary fiscal expenditures, while calling for increases to defense, nuclear, and homeland security budgets.  A subject Glenn Greenwald described as the Sanctity of Military Spending.

Joseph Stiglitz, another Nobel Prize winner in economics and professor at Columbia university, is equally unimpressed by the current state of affairs and has been condemning both governments and business alike in their meekness to effectively manage and resolve the underlying problems.  He too calls for a second government backed stimulus in the USA, to reduce chronic unemployment, which when including the under-employed and discouraged workers represents a rate of approximately 19%.  He states that, "I don't think anyone would describe the current situation as a strong recovery."  Furthermore, Stiglitz questions the underlying premise of using GDP as an adequate economic metric:

The big question concerns whether GDP provides a good measure of living standards. In many cases, GDP statistics seem to suggest that the economy is doing far better than most citizens' own perceptions. Moreover, the focus on GDP creates conflicts: political leaders are told to maximise it, but citizens also demand that attention be paid to enhancing security, reducing air, water, and noise pollution, and so forth - all of which might lower GDP growth.

Robert Shiller, professor at Yale University, has written an article in the NY Times that discusses the underlying psychological elements affecting both consumers and investors.  He reminds people that,

business recessions are caused by a curious mix of rational and irrational behavior. Negative feedback cycles, in which pessimism inhibits economic activity, are hard to stop and can stretch the financial system past its breaking point.

The article notes that a majority of Americans do not believe that any recovery will occur for at least another two years.  Unless the population becomes convinced that serious attempts have been made to re-align risks, stabilize the economy, and pursue a long-term plan for future growth and prosperity, there will be  little realized improvements. 

The past ten years have been a disaster for the American middle class and average person.  The time for tepid half-measures and voodoo-economics has long expired.  Mr. Obama was elected to take on the institutional forces that have corrupted government and driven the entire economy to near collapse.  As all four of these economic professors indicate, serious and sustained actions are required to convince everyone that America has a plan for success that will work in everyone's interest.

German Evangelical Christians find Asylum in USA

American conservatism, as espoused by so-called "social-conservatives" has long been described as being ideologically affiliated with right-wing authoritarianism.  Modalities of thought include the following attitudinal and behavioral motifs:  a high degree of submissiveness to establishmentarian authorities; a hyper-aggressiveness "against deviants, outgroups, and other people that are perceived to be targets according to established authorities"; and a high-level of adherence to" traditions and social norms that are perceived to be endorsed by society and its established authorities."  Coupled with these authoritarian themes is a theological framework that claims that its adherents are oppressed and victimized by elite powers that emanate from Western secularism and liberalism.

In 2008, a German family with Evangelical Christian roots, abandoned the Fatherland to seek political asylum in America.  According to Der Spiegal online, the Romeikes sought refuge in the United States, because the German state prevented them from withdrawing their five elementary aged children from school altogether and "home-schooling" them.

The Romeikes also wanted to spare their children from the "un-Christian goings-on" at German schools. They said that their children were being "educated according to an anti-Christian worldview" in public schools, and that textbooks are filled with obscene language, swear words and blasphemy. "They're more about vampires and witches than about God," says Uwe Romeike.

Despite their desires, courts in Germany have confirmed that it is the "government's responsibility to provide education in a pluralistic society" and therefore the "public has a rightful interest in preventing the formation of  'parallel societies' based on religion or worldview" through home-schooling.  Furthermore, "the European Court of Human Rights ruled that Germany's mandatory school attendance policy, along with the corresponding ban on homeschooling, is compatible with both European law and the European Convention on Human Rights."

For the flat-earth believers and self-appointed moral-police of America, it wasn't enough to pollute America with indolent and regressive half-wits intent on converting all of America to their bigoted quackery.  The Romeike family was resettled in Tennessee with the assistance of an evangelical Christian lobbying group called the Home School Legal Defense Association (HSLDA).  On the claim that they believed that there was "a well-founded fear of persecution" based on their religious convictions, they were awarded political asylum.

HSLDA attorney Mike Donnelly claimed, "This is simply about the German state trying to coerce ideological uniformity in a way that is frighteningly reminiscent of past history."  Judge Lawrence Burman, who adjudicated the case, stated that, "We can't expect every country to follow our constitution," and opined that it was his belief that the family's basic human rights were being violated.  

It is always nice to hear from conservatives, who claim to strongly believe in the rule of law and constitutional prerogatives, that the US constitution has applicability to non-citizens.  Oddly enough these laws don't apply to citizens of their own country who see their homes being searched by government officials, their phone calls llegally listened to, or holding them indefinitely without charge, when issues of the global war on terrorism arise.  Nor does it seem that the US constitution is applicable to non-citizens held in concentration camps where they are subject to torture.  The level of hypocrisy of America's social-conservatives is always admirable.

Will China Crash?

Investment analyst Gordon Chang has written an opinion piece in the Christian Science Monitor, which expands on an article written earlier in the New York Times that describes the underlying themes which have driven acclaimed investor James Chanos into betting against the Chinese economy.

Until now, China's extensive annualized growth and its emerging role as a global economic and political power have muted much of the criticisms and naysayers.  However, with more investors questioning the soundness of the "Chinese miracle", Mr. Chang, who has been making dire economic predictions for the People's Republic of China for more than a decade, is finding his assessments more closely followed.  In his CSM commentary, he uses the analogy of Dubai, where their bubble was fully evident to all and yet when it imploded, there were many investors who were dismayed that it could have occurred.

Key points outlined are:

• Beijing’s stimulus spending last year represented approximately a quarter of the total economy, resulting in as much as 95% of China’s growth being attributable to state investment
• China's exports declined 16% in 2009 and there is little evidence that global demand will increase in 2010.
• Power consumption statistics contradict government economic growth statistics and infer that the 'real' economy was expanding at only two-thirds of the announced rate.
• The nation's stimulus plan favored "large state enterprises over small and medium-sized private firms, and state financial institutions are diverting credit to state-sponsored infrastructure."
• Whereas annual growth was driven by private growth in previous years, in the current situation China is "re-nationalizing the economy with state cash."
• 20% of state bank loans have been diverted into the country’s rising stock markets, and "another large portion is fueling property market bubbles."

If the criticisms made by Mr. Chang prove correct, then China's state-sponsored stimulus package will, like America's dalliance with low and non-existent interest rates after the dot-com implosion, prove to have made the country more susceptible to economic decline.

***

I too have written about the Chinese economy crashing (here) and the inconsistencies of economic data emerging from China in the past decade (here and here).

Dumbest Quote of the Week

There has been a great deal spoken domestically and internationally by all sides of the political spectrum  about Mr. Obama's first year as the 44th President of the USA. 

Many on the left have been critical of Mr. Obama's corporatist leanings and his abandonment of progressive liberal causes, that although have majoritarian support across the nation, are fiercely opposed by corporate America; i.e. universal health care, reigning in corporate malfeasance and corruption, strong environmental protections, prosecution of the Bush juntas most flagrant abuses, and an end to the militarism encapsulated in the current trans-Middle Eastern wars (discussed by me here, here, and here). 

America's right wing on the other hand; a blend of regressive antediluvian racists, southern and middle American Christianists, and Wall Street corporatists, have gone full throttle in excoriating Mr. Obama as everything from the anti-Christ to a Marxist to der Furher.  The following quote, included in the Economist  magazine's (Jan. 16th edition) headline article "Reality Bites," illustrates the point:

“I’m neither a Democrat nor a Republican, neither a jackass nor an elephant. But I wouldn’t vote for a socialist. Hell, I’d vote for Adolf Hitler before I’d vote for Barack Obama. At least you know what he’d do to you,” says Ron King, a retired policeman in Stuart, Virginia. He adds that Mr Obama “lies all the time” and is “dangerous; he’s trying to change the entire country.”

For someone who was formally in law enforcement to declare that they would vote for "Hitler" before they would ever vote for Obama, should shock any sensible person.  How these persons continue to believe, in spite of overwhelming evidence to the contrary, that the Democrats have deviated into some sort of Socialist dystopia, is either an indictment of the American educational system or the inherent stupidity that manifests itself amongst the adherents of  American fascism.  Where were these incensed masses and so-called patriots when Mr. Bush was pushing through his police-state legislation, lying to the public about Iraq's WMDs, instituting torture against American citizens, and dismantling the constitution?  No doubt blaming gays, Hollywood, American secularism, and science for their endless cries of institutional victimization.

Suicides staged to cover up torture at Guantanamo

It will have blood; they say, blood will have blood
- Macbeth, Act 3, Sc4. 121.


Part I - Background

Research conducted by Human Rights Watch investigator John Sifton and the ACLU have determined that at least 100 persons have, "died during interrogations, some who were clearly tortured to death."  Retired US Army General Barry McCaffrey has said, "We probably murdered dozens of [detainees] during the course of that, both the armed forces and the C.I.A." 

The American public cannot claim ignorance about the festering myasis that has become normative behavior amongst intelligence gathering agencies and the US military this past decade.  Reports published as early as 2002 in both the NY Times and Washington Post, describe the beating deaths of Afghan detainees by US troops and CIA field contractors.  Seymour Hersh of the New Yorker magazine exposed the truculent grandstanding by Rumsfeld's all too willing "rotten apples," when orders for the gloves to come off at Abu Ghraib were made.  Extraordinary rendition, CIA black-site torture camps, civilian massacres by mercenary forces, Bush's torture memos authorizing -if necessary- genital mutilation, regular doses of water-boarding against Al Qaeda high-value operatives, and Guantanamo's Muslim concentration camp are all piece-and-parcel of the Bush junta's Global War on Terrorism that were on public display. 

A review of homicide cases, however, shows that few detainee deaths have been properly investigated. Many were not investigated at all. And no official investigation has looked into the connection between detainee deaths and the interrogation policies promulgated by the Bush administration.

Gen. Antonio Taguba, after investigating the Abu Ghraib abuses, said that "there is no longer any doubt as to whether the current administration has committed war crimes. The only question that remains to be answered is whether those who ordered the use of torture will be held to account."

In spite of the obvious facts, the false narrative offered by both the government and their accomplices, is that torture (otherwise stated as 'enhanced interrogation' in the MSM) is limited to those "ticking time-bomb" cases and even when used, is innocuous and not permanent and therefore justifiable.  The following case proves the complete opposite is true.

Part II - Cover Up of Guantanamo Homicides

Scott Horton at Harper's magazine has unfolded another horror story at Guantanamo, that includes the staged suicide of three detainees and the subsequent cover up by the military and Department of Justice officials under both Bush and Obama administrations.

According to the NCIS documents, each prisoner had fashioned a noose from torn sheets and T-shirts and tied it to the top of his cell’s eight-foot-high steel-mesh wall. Each prisoner was able somehow to bind his own hands, and, in at least one case, his own feet, then stuff more rags deep down into his own throat. We are then asked to believe that each prisoner, even as he was choking on those rags, climbed up on his washbasin, slipped his head through the noose, tightened it, and leapt from the washbasin to hang until he asphyxiated. The NCIS report also proposes that the three prisoners, who were held in non-adjoining cells, carried out each of these actions almost simultaneously.

The article presents the accounts of military officers who were stationed at Guantanamo at the time, which indicate that each of the three detainees were subject to torture at a classified sub-site at 'Gitmo' referred to as Camp "No" (i.e. "no" it doesn't exist) and returned to their cells in the dead of night.  Horton claims that a concerted effort was subsequently made by military brass to paint the deaths as a publicity stunt coordinated by the inmates in order to tarnish American image.  Government investigators dismissed the purported suicides as nothing more than 'asymmetric warfare' by the enemy. 

Andrew Sullivan interjects that further investigation is warranted and that no one in government can be trusted to handle the truth:

This case deserves a thorough and complete and exhaustive inquiry and investigation. I no longer believe that any entity in the US government can be trusted with such a task. The investigation must be able to go right to the very top of the torture program and do so with no political influence whatsoever.

FBI Repeatedly Broke Law In Phone Record Searches

The FBI, the federal government's central law enforcement agency, has been found to have been engaged in illegal telephone surveillance activities.  According to the Washington Post, the transgressions began shortly after the passage of the Patriot Act and occurred throughout 2002 to 2006.

The USA Patriot Act, an omnibus bill of police state "must haves" enacted literally weeks after the September 11th 2001 attacks, permitted law enforcement agencies to search a home or business without the owner’s or the occupant’s permission or knowledge; expanded access of law enforcement agencies to business records, including library and financial records; and expanded the use of National Security Letters, which allows the FBI to search telephone, e-mail, and financial records without a court order.  It is this latter attribute in which the government, even when receiving carte-blanc authority to monitor its citizens with virtual impunity, determined that existing restrictions on its actions was too much.  The historical record of civil rights abuses and criminality conducted by American law enforcement against innocent civilian groups is well established.   For example, in 1978 the Foreign Intelligence Surveillance Act (FISA) was enacted in response to Watergate era civil rights violations and revelations that president Nixon and other administrations had authorized warrantless surveillance of political opponents and activists.

In the stated period, the FBI monitored over 2,000 US telephone conversations under the pretense of terrorism emergencies that did not exist.  The tactic was not limited to Americans with ethnic-sounding names, but used to survey a wide swath of persons that the government was interested in; such as the press.

The FBI’s spying on journalists without any link to known cases of terrorism suggests that the journalists were the victims of political intimidation and retaliation by the FBI for exposing illegal government programs. Ellen Nakashima has written extensively on domestic wiretapping and government intrusions into privacy, while Raymond Bonner’s articles include exposes on detainee abuse and illegal surveillance.

The Washington Post article outlines that the FBI violated the Electronic Communications Privacy Act when it collected phone records without linking the investigations to “emergency terrorist threats.”  A Justice Department probe of the situation is anticipated to find that the bureau routinely violated the law.

FBI officials told The Post that their own review has found that about half of the 4,400 toll records collected in emergency situations or with after-the-fact approvals were done in technical violation of the law. The searches involved only records of calls and not the content of the calls. In some cases, agents broadened their searches to gather numbers two and three degrees of separation from the original request, documents show.

Over-and-over we are told that "innocent" mistakes on behalf of government police agencies resulted in these illegal searches.  However, it is obvious from the development of events, as described in the WaPo article, that these actions were not undertaken to protect the nation from terrorists, but to advance the statist objectives of the Bush junta, so that they could effectively control and extinguish political opposition to their increasingly criminal pursuits.

More Investors Convinced China will Crash

There has been a number of articles in the past few weeks outlining the distinct possibility that the Chinese economy, due to inherent corruption, an unstable credit bubble driven by housing speculation, and a poorly regulated financial system, is posed, at the very least, to have a hard crash that will spill over into the rest of the global economy.

According to the NY Times, "Mr. James Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc."  Chanos' hedge fund, Kynikos Associates based in New York, foresaw the demise of Enron and a number of other high-flying companies whose profits were too good to believe.  As is frequently stated by the financial industry, "Past performance is not indicative of future earnings."  So how valid is Mr. Chanos' opinion on this subject?

The nation’s huge stimulus program and record bank lending, estimated to have doubled last year from 2008, pumped billions of dollars into the economy, reigniting growth.  But many analysts now say that money, along with huge foreign inflows of speculative capital, has been funneled into the stock and real estate markets.  A result, they say, has been soaring prices and a resumption of the building boom that was under way in early 2008 one that Mr. Chanos and others have called wasteful and overdone.

The implication is that the great illusion of growth and prosperity that continues to be exalted by investors and politicians alike, will not last.   As they also say in business, it's a matter of simple "mean reversion."

Thomas Friedman in yesterday's NY Times OP-ED pages, will not accept any such arguments about declining Chinese supremacy.  He retorts that China is sitting on two trillion dollars worth of foreign currency reserves, the country is finally finding its stride by finding efficiencies in its vast transportation infrastructure, capable managers and entrepreneurs are returning to the country in droves, and vast numbers of students are enrolled in college and university programs.  Collectively, China's best days, in his opinion, are still in front of it and we in the West best get used to it.

That argument is fine and in the long-term, China may well do better than woeful and stagnating Japan or the once heralded Asian-tigers of the Pacific south-east.  However, Friedman fails to address the central premise of his opponents, in that there is obviously a credit bubble brought on by massive state stimuli to mostly state owned and inefficient businesses.  How long is this affair supposed to continue, in which the central government keeps pouring capital into questionable economic endeavors with equally limited return?  Three of the top five banks in the world (by capitalization) are now Chinese.  Does anyone really know what is on their books and how confident we should be about their debts?

The Washington Post, elaborates on lending practices by Chinese banks:

The government has helped pump up the property market by keeping interest rates low, the currency undervalued and the fiscal spigots open. Standards for bank lending have been lax, with lending rising at a 30 percent annual pace in 2009, according to a report by the Los Angeles-based bond investment firm Pimco.

Recent housing bubbles, that were created elsewhere, also have had similar attributes: rampant speculation, apartment and home prices doubling over the period of months, loan applicants lying about income, regular people with average incomes being priced out of the market due to geometric growth patterns, and officials and real estate agents boasting that price corrections were not probable given regional dynamics.

Some economists and bankers fear that they have read this script before. In Japan at the end of the 1980s and in the United States in 2008, residential real estate bubbles ended in big crashes, battered banks and slow recoveries. With China acting as a key engine of global growth, a bursting of the Chinese real estate bubble could be a pop heard round the world.

Enough data has been seen by this blogger, that I can confidently state that those banking on gossamer winged dreams of future growth derived from corrupt plutocrats, are probably the same persons who learned nothing from the past economic catastrophe and are thus bound to repeat the follies of their predecessors.

Will this scanner make my penis look bigger?

If you're in the military-industrial complex, terrorism is an integral part of your profit scheme.  The more than one trillion dollars already spent on the Iraq/ Afghan/ Pakistan/ 'Global War on Terror' boondoggles has been highly profitable for those companies producing military materiel and providing such useful services as preparing meals for servicemen in war-zones (i.e. Halliburton) to lethal mercenary armies (i.e. Blackwater).  Fear of the other motivated the American populace to abandon liberties, scorn opposition to the leader(s) who failed to originally protect them, and give the mad-militarists, who never saw a problem they couldn't bomb into oblivion, a blank check to wage unlimited war against the rest of the planet.

Since the failed Christmas day mission of the "underpants bomber" aboard a trans-Atlantic flight from Amsterdam to Detroit, MI, the brain-trust of several governments have declared their intention to install new high-resolution body scanners across airports in America and internationally with connections to US cities.  BusinessWeek, in an article "Invasion of the Body Scanners," discusses the costs of installing these devices and the benefits, or lack thereof, of utilizing these high-end technologies against a determined, albeit in the latter case a fairly stupid, adversary.

The U.S. Transportation Security Administration, which has 40 scanners in place at 19 airports so far, has spent $25 million on 150 additional scanners and plans to buy 300 more. The devices, which are placed at security checkpoints, use radio waves or low-level X-rays to produce detailed images of passengers' bodies—and weapons or explosives beneath their clothes.

Despite objections from civil libertarians and a few members of congress, who have described the process as a "virtual strip search," Senate Homeland Security Committee Chairman, Joe Lieberman was asking, "Why isn’t whole-body-scanning technology that can detect explosives in wider use?"  Perhaps the answer lies in its life-cycle costs, overall utility, the fact that millions of people would be exposed to potentially cancer-causing ionizing radiation for no beneficial reason, or as in my personal case, wonder if my penis will look big enough for the security clerk glinting at my masculinity!  For example, in the image above of a female TSA employee undergoing a scan, the outline of her breasts, pelvis, and genitalia are clearly observable to any staff and government agency.  The TSA claims to be, "Addressing privacy fears [by] making sure scanners blur facial features and genitalia and deleting images after use."  However, given the government's penchant and demonstrable history of disinformation, dishonesty, and incompetence at managing confidential information, does anyone believe them?

In relation to the military-industrial complex, the BusinessWeek article outlines:

The biggest beneficiaries of a scanner boom will likely be L-3 Communications (LLL) of New York and Torrance (Calif.)-based Rapiscan Systems, part of OSI Systems. They're the only scanner makers approved so far by the TSA, which already has contracts with them that could top $100 million apiece. If the TSA decides to install the machines at all 2,100 security lanes in the U.S., that could produce total revenue of $300 million to $400 million. "The TSA is saying, 'Let's accelerate the process,' " says Richard Hoss, a senior research analyst with Roth Capital Partners. "It's likely to benefit these companies." The stocks of OSI and L-3 are up 29% and 2%, respectively, since Christmas Day.

The most obvious question, that few in government or in the commercial world seem keen on addressing, is whether any of this will improve passenger safety?  The American public has not been made aware of any cost-benefit analysis that asks whether similar funding should be given to bomb-sniffing dogs, improved terrorist database management, or better intelligence gathering procedures.  A four-year test of the efficacy and reliability of body scanners in detecting plastics, chemicals, or liquids upon passengers at London’s Heathrow airport, resulted in the decision to discontinue their use.  Bruce Schneier, chief security technology officer at BT Group, explains that "If we use full body scans, [terrorists] are going to do something else. This is a stupid game, and it's time we stop playing it."  Unfortunately for us poor tax-paying serfs, our dear leaders, like those bloviating charlatans in congress, don't really seem to care if the technology will work as required, but rather if said technology will enhance the profits of their friends in the military-industrial complex.

You Betcha!

Why African leaders cannot be taken seriously (Part II)

The nation of South Africa has an enormous number of societal and economic problems.  Many of these problems emanate from the country's racial divide: poor education, inferior infrastructure and development, rising poverty, inadequate public health management, and extraordinary levels of criminality.   An estimated 5.4 million people have HIV-AIDS; the largest of any nation.  The disease coupled with inadequate educational resources reduces the supply of skilled workers and prevents an indigenous professional class from arising from the blighted masses.  Rape, homicide, and criminality are at epidemic levels.  The United Nations Office on Drugs and Crime ranked South Africa (circa. 2000), "Second for assault and murder (by all means) per capita and first for rapes per capita" on a global level.

In terms of business practices, "corruption is rife in the granting of government contracts. Bribery thrives at the central government level, as exemplified by the high-profile procurement scandals that have been exposed within the last decade. Many companies also cite the procurement of goods for private companies as an activity likely to involve bribery."

Given that there are no shortage of problems to address, it is of great wonder how the current President Jacob Zuma, a Zulu traditionalist who practices polygamy, found time to marry his fifth wife on the 4 January 2010.  As the photograph illustrates, Mr. Zuma has no shame in dressing in traditional native attire and prancing about to the merriment of his betrothed and ethnic community.  His personal history prior to becoming South Africa's President is also very colorful.  According to Wikipedia,

Zuma has faced significant legal challenges. He was charged with rape in 2005, but was acquitted. In addition, he fought a long legal battle over allegations of racketeering and corruption, resulting from his financial advisor Schabir Shaik's conviction for corruption and fraud. On 6 April 2009, the National Prosecuting Authority decided to drop the charges citing political interference.

As usual, these African leaders always have time to indulge in what their immediate tastes desire.  Their ridiculous personal lives and corrupt governmental practices, that benefit both themselves and politically aligned cronies, confirms the reality that few, if any, African leaders can be taken seriously on matters of governance.

Agruments for a US Consumer Protection Agency

Professor Elizabeth Warren, who chairs the Congressional Oversight Panel created to oversee the TARP funds, was on the Rachel Maddow Show last night and described the rational for having a single Consumer Protection Agency that would regulate credit card rates, mortgages, and general financial transactions in America. 

The Republican party, drunk on the deregulatory vino and still thinking it's 1999, have proclaimed that any such agency would be a terrible idea and would cause severe problems for business across America.  Those problems of course would not  be anything like the depression causing legislation, such as the Gramm-Leah-Bliley Act of 1999, which eliminated the Glass-Steagall Act of 1933 and permitted the financial monstrosity of Citibank to come into existence.  These same politicians, who continue to carry water for their Wall Street paymasters, want the public to believe that after the greatest economic collapse  in the history of mankind (in absolute terms), that their deregulatory laissez-faire ideology is the solution and not the problem.  What have these invertebrate shills for corporate-fascism done since the inception of the crisis?  First, they denied that there was a problem, then they start screaming like hysterical little girls at a boy-band concert, proclaiming that if we didn't hand over everything, including Grandma's silver dinner utensils, to the banks, who caused the problem, that we would be all doomed and consigned to the soup-kitchens. 

To date: the banks got their trillions of publicly backed dollars; executives of these financial firms received record bonuses for nuking the global economy; no meaningful legislation to prevent another crisis has been passed; and most economists, who first called the onset of the current depression, state that we are in worst shape than before the crisis.

In the discussion segment, Professor Warren outlines why it is not only important to have meaningful regulations for all consumer products, but why regulations facilitate transparency, accountability, and prevent commercial fraud.  She outlines her case by explaining, why if there had been a single consumer regulatory body in place, that much of the crisis stemming from the sub-prime loan fiasco and the shadow derivatives market, would not have occurred.  Her "money" quote was:

What we have aren't regulators who are there to regulate on behalf of the public.  What we have are regulators who are there to offer good deals to the banks.

Visit msnbc.com for breaking news, world news, and news about the economy

Ethnic vandals burn French autos for the New Year

New Year's eve across France was very much like its predecessor in 2009, with the exception that there was ten less vehicles turned into charcoal briquettes in the orchestrated mayhem that has become an annual ritual.

The French interior ministry, in anticipation of civil hooliganism from mostly ethnic gangs (made up of Arab and North African youth), mobilised 8,000 police in and around Paris and 45,000 nationally for the night.  To date a total of 1,137 cars were set on fire.   Police in the capital region of Paris said that 171 arrests were made, mainly for burning cars and throwing objects at officers; however, no major clashes with police were reported.

Earlier this year French President Sarkozy proposed tough anti-crime legislation aimed at the more than 200 organized gangs, which operate primarily out of Paris.  "If the thugs want to take on the Republic, then the response of the Republic will be force and justice," he said.  The gang violence reached its apex in 2005 when France endured three weeks of violence that left thousands of cars torched and hundreds of people injured.

It has been argued that the objective of individual gang members, beyond criminality, is the opposite of what Muslim extremists want.  While they share the common traits of  being socially marginalized and poorly educated, with little or no prospects for self-improvement or social mobility, they differ with respect to their desire to integrate with larger French society. 

Overall,  these criminal entities, which are similar to inner-city American gangs composed of  blacks and/or Latinos, represent a hostile and recalcitrant underclass that unless dealt with effectively, will become a permanent fixture of French society.

Niall Ferguson: I've seen the future and it stinks!

Niall Ferguson gives an interview with business journalist Consuelo Mack of the PBS program 'WealthTrack'.  In it Ferguson does his standard song and dance about the origins of the strife between the USA and China or what he ofter refers to as Chi-merica.   He sternly admonishes those who feel that the current recession/depression is over and the classic 'V' shape recovery is occurring.   Paul Krugman, who has been having a public feud with Ferguson, addresses both topics in his NY Times column (respectively here and here).  In both cases, Ferguson and Krugman are basically on the same page in offering both concerns and veiled predictions of weak American economic performance in 2010.

The take home message in my opinion, which comes near the end of the interview, is Ferguson's comparison of the current 'depression' with of the depression of 1873.  This particular event, which is almost never referenced in the press, involved depressions emerging in both America and Europe.  In America, construction work lagged, wages were cut, real estate values fell and corporate profits vanished.  A total of 89 railroad companies went bankrupt, 18,000 businesses failed between 1873 and 1875, and unemployment reached 14% by 1876.  Whereas in Europe, the Vienna stock exchange crashed, Viennese banks failed, speculative bubbles collapsed, and industries crashed.  Deflation ensued for the next twenty years and an economic shift from Europe to America occurred.

In Ferguson's analysis, China plays the part which America played in the 1873 crash, in terms of the shift of industrial strength.  He also believes that like the populist backlash that emerged in the first Gilded age, current day populist rage across the Western world arising from severe unemployment, decreasing social amenities, and the realization of the corrupt financial/governmental systems, could pose substantial risk for standing governments.

The second message, despite his early preening in the interview about the rise of the emerging markets and especially China, is in his own words,  "I've been to Chongqing. I've seen the future and it stinks!"  He concludes that China's communist party is incapable of fundamental reform or eliminating the rampant corruption that underlies the fabric of its merchantalist society.  I have written a fair degree on China's corrupt business practices (here, here, and here for example) and believe likewise, that this facet of their culture will be one of the principle agents why the so-called Chinese miracle will not overtake the West.

CIA Screws Up Again?

Two things happened this week that let me return to the central thesis of Tim Weiner's book Legacy of Ashes: A History of the CIA, which states that the agency has a record of gross incompetence and failure, and officials and agents conduct themselves with a "swagger and hubris" that is disproportionate to their actual accomplishments.

The first incidence, was that of the underwear-bomber who set his genitals on fire aboard a trans-Atlantic flight from Amsterdam to Detroit.  According to ABC News, the accused  made a final telephone call to his father, who found the conversation so disturbing that he "approached Nigerian officials who took him directly to the CIA's station chief in the Nigerian capital."  The alert prompted, "Officials to put Abdulmutallab's name into a database of more than half a million others that the U.S. suspects of ties to terrorism, but they did not put him on the country's no-fly list."  On the day of Abdulmutallab’s departure, his $2,800 airline ticket was paid for with cash, with the accused having no luggage except a single backback.  The latter created no red-flags for either the airlines or US security.

The second incidence, involved a suicide bomber disguised as an Afghan soldier, who managed to kill seven CIA agents at the agency's base in Afghanistan.  The incident represents the agency’s worst loss of publicly-identified personnel since a 1983 attack in Lebanon conducted by Hezbollah guerrillas.  The Times of London reports that:

The bomber, claimed by the Taleban to be one of its members, entered Forward Operating Base Chapman and detonated explosives attached to his body in the compound’s gym. US officials said that the CIA had mounted an internal investigation into the security breach... Four other agents have been killed in Afghanistan since 2001, according to the CIA, though the secretive nature of its operations means that there may have been more.

The history of the agency has been noted as a colossal failure-after-failure and an extravagant waste of capital.  Their most recent misadventures involve torturing terrorist suspects across the globe, obtaining useless and counter-factual data from paid Iraqi agents, and their pre-911 intelligence gathering services were determined to be severely compromised by foreign agents.  Little appears to have changed and their gross incompetence, as far as we can discern, is insuring that America's efforts in its 'Global War on Terrorism' remains a fantastic failure.

Canada Suspends Democracy during Olympics!

In general, Canada is a pretty good place to live.  In terms of ease of doing business, global competitiveness, individual liberty, and overall quality of life, it consistently ranks amongst the top ten nations of the world.

Yesterday, the Prime Minister's Office announced that it was seeking proroguing parliament and expanding the traditional Christmas break season for Parliament until March 3rd; until after the 2010 Winter Olympics in Vancouver, BC.  The concept of prorogation, which involves the termination of a legislative period, thus ending all standing committees, closing question period in the House of Commons, and letting all legislation that hasn't received Royal Ascent to be dismissed, is neither novel nor is it illegal.  However, the current context to which it has been utilized by the Conservative Party, is an unprecedented attempt by a minority government to evade public accountability, marginalize the role of the opposition in Parliament, and enhance the party's hold on the instruments of power.

At the begining of 2009, in the face of a potential coalition government forming between the opposition Liberal Party and NDP and shortly after national elections had returned Mr. Harper's Conservatives to power, parliament was prorogued.  This incident was a clear attempt to sow public dissension and confusion over coalition prospects. The officially stated reason for this most recent prorogation, was to allow the Tories to seek a national consensus on Canada's economic policies for the new year.  This becomes the third time in three years that prorogation has been used by the Conservatives.

The Tories, despite having complained endlessly that Liberal Senators were stymieing and slowing down legislation in the upper chamber, have now allowed for dozens of bills, some they claimed critical to their agenda, to fall to the wayside.  The rational provided by the Prime Minister's Office, if taken seriously, essentially would mean that the current government cannot walk and chew gum at the same time; i.e. they are incompetent.

Kady O'Mally, at CBC News' Parliamentary Blog, explains that the December time date for prorogation, which prevents Parliament from reconvening in the face of national necessity, and not late January when MPs return from break, indicates that this action has more to do with stopping Afghan torture investigations and using Machiavellian ploys to gain a majority on Senate committees.

Opposition parties have already warned that prorogation would disrupt the inquiry of a parliamentary committee looking into accusations that the government ignored warnings about the torture of Afghan detainees. Strategically, prorogation also prevents question period criticisms from the opposition parties during the Olympics.

Andrew Coyne, writes on his Maclean's blog, that this is, "An abuse of process, an insult to Parliament, another step on Parliament’s long slide into irrelevance."  Liberal House Leader Ralph Goodale called the government's move "beyond arrogant" and its justifications for it "a joke."

In another time and place this type of action would be the exclusive purview of tyrants and kings.  Given that Mr. Harper and his cohorts ran on a platform of delivering accountability, transparency, and efficient government to the people of Canada, this transgression is a telling indictment of their inherent hypocrisy and the corrupting force of power.  To prevent the elected representatives of the people from investigating the actions of the current Conservative government, is an affront to the central democratic principle, that the governing party works to enhance the lives of all its citizens and not merely its own status. This is a corruption of Canadian democracy and if people actually were concerned about such abstractions, they would demand the immediate resignation of the Prime Minster and elections be called to end this fraud of a government.