Greenspan slams Bush, embraces Clinton
… in Greenspan’s new book:
Greenspan, who had an eight-year alliance with Clinton and Democratic Treasury secretaries in the 1990s, praises Clinton’s mind and his tough anti-deficit policies, calling the former president’s 1993 economic plan “an act of political courage.”
But he expresses deep disappointment with Bush. “My biggest frustration remained the president’s unwillingness to wield his veto against out-of-control spending,” Greenspan writes. “Not exercising the veto power became a hallmark of the Bush presidency. . . . To my mind, Bush’s collaborate-don’t-confront approach was a major mistake.”
Bush deserves it, certainly. Can’t be certain on Clinton, but the seething animosity reserved for Robert Rubin & Co. by Robert Reich in his book, Locked in the Cabinet, suggests that Clinton & Co. were much more cooperative on fiscal restraint than anyone expected.
One might see this as grading on a curve. Republicans were busy squandering their strength down the pork sausage chute, even as Democrats were showing unexpected restraint under Clinton. I do have a hard time arguing with Greenspan’s take there.
They’re not guidelines, Bob
First, it’s not funny. It’s tragic. But one can’t help but be a little perversely amused Robert Mugabe & Co. in Zimbabwe can be so clueless about the laws of supply and demand. They’re not guidelines, Bob.
Mugabe has now finally allowed a token devaluation of the currency, but
The black market exchange rate surged ahead to eight times the new official rate of Z$30,000 to the dollar. “It’s too little, too late,” Mr Davies said. “It is irrelevant.”
Their answer till now had been to stiffly enforced requirements that retailers slash prices below production cost. Supply plummeted. [Doh!]
Then, there’s the predictable West-bashing that makes him sound like part of the U.S. media-academic complex:
He blamed the West for Zimbabwe’s economic woes. Zimbabwe’s rampant inflation was the result of an attempt “to affect regime change by former colonial powers through the use of price increases,” he said.
Always worth a try. Then there is this:
The police and the army are regarded as among the worst black market dealers, confiscating goods from street traders and then selling them at a higher price.
But my favorite line comes from a reader comment:
Shouldn’t the United Nations be able to step in and do something in a situation of such gravity?
Ya think?
World bank: toxic cocktail of power & arrogance
Apparently the woefully outgunned forces of light at the World Bank are again under assault by the forces of graft. The last hide on their wall was that of super-reformer Paul Wolfowitz, canned in a trumped-up phony ethics scandal, which must have amused his corrupt targets to no end.
Now another report is poised to come out that seems likely to lead to some of the real bad guys losing their job:
Here’s the key quote from the executive summary: “Evidence summarized below indicates that RCH I was subject to systemic fraud and corruption through i) bribery of Procurement Support Agencies (PSAs) and government officials; ii) falsification of performance certificates; iii) collusion among bidders; and iv) coercion of companies by cartel members and PSA officials.”
The real problem is that obscene amounts of other people’s money, the power to use it to reshape whole economies, and utterly no accountability to any electoral base are a toxic mix. If absolute power corrupts absolutely, the World Bank appears to be very close to a safe bet.
Insuring catastrophe
Here’s a fascinating profile of a man and an industry. The man is John Seo. The industry is catastrophic insurance. The difficulty is that huge ratios of American wealth are now concentrated in areas uniquely vulnerable to catastrophe, like Florida and California. The dilemma is how to distribute the financial risk, even though the property risk is highly concentrated.
It may sound esoteric on the surface, but this article is very well written, holds your attention, and brings a complex and very important problem into focus. Part of the story is that John Seo lost millions on Katrina, because his “cat” fund bet against a storm of that magnitude. But he’s actually pleased with the result, partly because it helped validate his industry, and partly because …
“The important thing is that the money wasn’t lost in an unearned manner,” he said, by which he meant that it was not lost dishonestly or even unwisely. Investors will endure losses as long as they come in the context of a game they perceive as basically fair, which is why they do not abandon the stock market after a crash. “That’s all I need to know,” Seo said. “I would be embarrassed if we had a big event and our loss wasn’t commensurate with it. It would mean that we didn’t serve society. We failed society.”
What’s a little genocide among friends?
With up to four million Africans starving in Zimbabwe in a fully man made crisis [that’s man in the singular, as in Robert Mugabe] one would think that all those who cared for humanity would rise up to overthrow the bastard.
An opposition leader described the situation:
To use a legal term, I would say this amounts to genocide with constructive intent. In terms of a complete disregard for the plight of people, not caring whether there is wholesale loss of life, it amounts to genocide.”
So how does Mugabe hang on?
There are several reasons Mr Mugabe has survived for so long. Few African leaders are prepared to openly condemn him despite the fact that, as Mr Coltart pointed out, “the overwhelming majority of the people who are dying as a result of the regime’s policies are black Africans”.
Edwards: a glib statistical illiterate on poverty
John Edwards gets caught with his pants down investing big chunks with the very funds he is attacking for foreclosing on Katrina victims, and he says, “I intend to help these people“:
The Wall Street Journal has identified 34 New Orleans homes whose owners have faced foreclosure suits from subprime-lending units of Fortress Investment Group LLC. Mr. Edwards has about $16 million invested in Fortress funds, according to a campaign aide who confirmed a more general Federal Election Commission report. Mr. Edwards worked for Fortress, a publicly held private-equity fund, from late 2005 through 2006.
Asked about the matter, Mr. Edwards yesterday pledged that he would personally provide financial assistance to New Orleanians who are facing foreclosure by Fortress-affiliated businesses or have lost their homes already. “I intend to help these people,” the former North Carolina senator said.
What does he even mean? Does he really think that his petty fortune is going to make a dent in the poverty problem in New Orleans?
Does he function on such a shallowly symbolic level that he thinks if he sends some cash to the WSJ 34, he’ll have solved a problem? Does he think the underlying problems and the business practices WSJ highlighted in New Orleans are not occurring elsewhere but out of the limelight?
Is Edwards now conducting a personal war on poverty? What scares me is that this impulsive glibness reflects a deeper illiteracy about economics and taxes. It’s closely related to the fallacy that if we just impose confiscatory taxes on the top 2% of wage earners, we can pay for all the goodies we want to give the poor and middle class.
David Brent on poise under pressure
James Harding of the Times of London draws on the wisdom of Ricky Gervais masterpiece character, David Brent, to describe yesterday’s stock market panic:
“If you can keep your head when all around you have lost theirs, then you probably haven’t understood the seriousness of the situation.”
Now that the Fed has cut the discount rate on money it loans to banks we’ll see if order is restored or if we’ll have to default to more leadership insight from Mr. Brent.
It’s extortion pure and simple
John Stossel just nails farm subsidies today. If you’ve been following here, you know that I will never run for office in Iowa and that I am not impressed with ethanol pork.
As I wrote in “Myths, Lies, and Downright Stupidity“, most crops are not subsidized. Yet we have no shortages of fruits, vegetables, livestock and poultry. America has plenty of peaches, plums, peas, green beans, etc., and farmers who grow those crops do fine. What makes wheat, cotton, corn, soybeans and rice different?
Last week, the New York Times reported that dairy farmers in New Zealand get along perfectly well without subsidies: “[E]ver since a liberal but free-market government swept to power in 1984 and essentially canceled handouts to farmers — something that just about every other government in an advanced industrial nation has considered both politically and economically impossible. … [O]utput has soared.”
There are a lot of complicated issues surrounding health care and elder care. But this is not complicated. No real defense can be made. None is possible. Our democracy simply lacks the institutional structure to say no to a focused interest group in a politically pivotal region.
Orangudiesel
I thought it was perverse when they drove up U.S. food prices by diverting corn to ethanol. Now in Borneo orangutans are facing genocide as their habitat is systematically raped to make way for palm oil plantations to produce biodiesel.
The first thing you learn in an economics class is that a functioning market sends price signals in all directions, and you can’t really be sure what they are saying to whom. The same also is clearly true of an artificial market–in this case the Gore-driven rush to produce and burn biodiesel, no matter what the real environmental costs are:
A common tactic, campaigners say, is for plantation firms to first burn the forest then buy up the degraded land for a pittance.
Wonder if all the Hollywood types patting themselves on the back for their offsets will stop to think now about unintended consequences. And whether the movement as a whole will stop to think about all the human unintended consequences of stifling development in poor countries.
The pain of the human children is as real as that of the orangutans.
[Via Blue Crab Boulevard. Read more.]
The real meaning of globalization
Great article in the Telegraph on the surging middle class in Bhopal, India. I was struck by how opportunities develop indirectly from outsourced jobs. The cash in the local economy allowed one woman, for example, to build a thriving beauty parlor.
The only downbeat is that corrupt local government stands as a barrier to even more rapid progress:
The dead hand of corruption, bureaucracy and self-serving political vested interests all curb enterprise.
Mr Ahluwalia recalls being asked by his parent company to look at expanding operations into a new technology park but after meeting senior local government officials advised head office against the investment. …
“That is why when government is removed from the equation, as in the IT sector, Indians are so successful. If the state machine could be made to function properly, just imagine what India could achieve.”
In theory, this should work itself out. A rising middle class, as it become more cosmopolitan and educated, should demand and receive more competent administration.
The potential parallels–and the same potential pitfalls–should be readily apparent in Mexico. There is no obvious reason that it, too, could not develop to the point that its economy does not rise or fall based on the export of illegal menial labor.
Playing chicken
If DHS is serious about cracking down on illegal immigrant employment, then a game of chicken is underway, as employers in many industries will face a crisis very soon:
“We are deeply disappointed in the administration’s decision to punish the American economy because Congress has failed to act,” said Hammond, whose group is considered a Republican ally. …
“Employers want to obey the law,” said Mike Stuart, president of the Florida Fruit and Vegetable Association, which represents more than 200 farmers. “The question is whether they have the tools to continue operation and obey the law at the same time. That’s the catch-22.”
One of my continuing frustrations is that employers and workers alike are forced outside the law because legal guest worker programs are stifled, but illegality is encouraged. It creates a nation of lawbreakers, who become accustomed to skirting law.
It would be far better to reform our immigration and guest worker policy to ensure a legal supply of labor at appropriate wages, rather than an unlimited illegal supply at dirt-cheap unregulated wages.
This is the kind of problem that a real immigration policy would control, and it’s hard for me to get too broken up about the farmer’s plight in the meantime:
One of the people charged in the execution style murders of three teenagers in Newark, New Jersey is an illegal immigrant from Peru. He happened to be free on bond from child molestation charges when the killings occurred. The Feds had done nothing to get this man out of the country despite having several chances to do something about him.
Mexico’s bizarre economy
You know you’ve got a problem when … your top source of foreign currency is those left to work menial jobs elsewhere, and this accounts for more cash than all foreign investment:
Spanish language newspapers report that money being sent back to Mexico has decreased in the last few months. This news concerns many, considering that remittances to Latin America account for more aid than the combined amount of foreign direct investment, and Mexico is the number one recipient.
That translates into a disastrous picture: your economy sucks, rule of law is lacking, workforce is underskilled, infrastructure stinks, and no one will invest. That’s why you have no jobs at home. And that’s why cash shipped home in envelopes is a huge portion of your economy.
Why cannot Mexico, a country ridiculously endowed with natural resources, not build a 21st century economy? Why is so little energy spent addressing the root problem, and so much spent trying to ensure that economic refugees can get menial jobs to send menial amounts home? From the same article:
According to the Bendixen and Associates study, when asked whether it was easier, or more difficult now, compared to a year ago, for a Latin-American immigrant to get a good paying job in the United States, 82 percent of Mexican immigrants responded that it was more difficult. When asked why they thought it was more difficult, 45 percent of respondents said immigration laws (documents required) was the problem, while 21 percent said there were not enough jobs.
Yeah, documents can be a problem when you are illegally in a country.
[Let me point out, however, that I advocate expanded and deliberate immigration policy. I just think it should be policy, and that we should diversify source countries so that cultural and language assimilation is more possible.]
What a gas
I’m probably not supposed to be amused by this, but Canada is now getting into the arctic oil and gas gambit, facing off against the Russians. Denmark is making a few squeaks as well. What really cracks me up is that all of this is made possible by the melting of the polar ice cap and higher hydrocarbon prices.
According to some estimates, the Arctic contains billions of tonnes of gas and oil deposits, which could become more accessible as the ice cap that cover them begins to melt. This is happening just as their exploitation becomes more economically viable because of high hydrocarbon prices.
So, connecting the dots, we see that global warming, presumably caused by burning carbon fuels, is going to make it possible to recover huge supplies of carbon fuels from the region, and already the dogs are growling over the slab of meat.
The irony brings home the pointlessness of the odd little self-indulgent rituals like turning off the lights of London or Sidney for a couple of hours, or burning biodiesel on film sets.
Immigration officials getting tough
After years of throwing up their hands at enforcing immigration laws while insisting that there was simply nothing they could do, the Feds have discovered the Social Security Card:
In a new effort to crack down on illegal immigrants, federal authorities in the United States are expected to announce tough rules this week that would require employers to fire workers who use false Social Security numbers.
Officials said the rules would be backed up by increased raids on workplaces across the country that employ illegal immigrants.
After first proposing the rules last year, Homeland Security officials said they held off finishing them to await the outcome of the debate in Congress over a sweeping immigration bill.
I’ve long been puzzled at this. If you supply a fraudulent Social Security card, you still pay social security taxes, right? And the employer is pumping their share into a fraudulent account as well? And whose “account” does that money go into? Can’t we set up computers to recognize when someone is deceased, 85 years old, 6 years old, or working in 30 different chicken processing plants? This doesn’t sound that difficult.
But they mean business now:
“We are tough, and we are going to be even tougher,” Russ Knocke, the Homeland Security spokesman, said Tuesday.
“There are not going to be any more excuses for employers, and there will be serious consequences for those that choose to blatantly disregard the law.”
Grrrrrrr.
An offer you can’t refuse
Oh, my, said the Godfather, what a sweet little girl you have there. Would be a shame if something happened to her, now, wouldn’t it? And, you know, the last thing we would want would be for something to happen to her.
Shifts in Chinese policy are often announced through key think tanks and academies.Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.
Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing’s foreign reserves should be used as a “bargaining chip” in talks with the US.
“Of course, China doesn’t want any undesirable phenomenon in the global financial order,” he added.
No, I’m sure you wouldn’t. Now, what were your demands, exactly? And why do we find ourselves at your mercy?
