Six years ago, in mid-2007, cracks started to appear in the financial system. Little more than a year later, Lehman Brothers failed, bringing advanced economies to the verge of collapse. Throughout the ensuing half-decade of recession and slow recovery, central banks in these economies have been forced to look for ways to increase their degree of accommodation. First they lowered the policy rate to essentially zero, where it has been ever since in the United States, United Kingdom and euro area. (And where it has stood in Japan since the mid-1990s!)
Next, these central banks began expanding their balance sheets, which are now collectively at roughly three times their pre-crisis level – and rising. Originally forged as a description of central bank actions to prevent financial collapse, the phrase "whatever it takes" has become a rallying cry for central banks to continue their extraordinary actions. But we are past the height of the crisis, and the goal of policy has changed – to return still sluggish economies to strong and sustainable growth. Can central banks now really do "whatever it takes" to achieve that goal? As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths authorities and their publics both want and expect.
What central bank accommodation has done during the recovery is to borrow time – time for balance sheet repair, time for fiscal consolidation, and time for reforms to restore productivity growth. But the time has not been well used, as continued low interest rates and unconventional policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system. After all, cheap money makes it easier to borrow than to save, easier to spend than to tax, easier to remain the same than to change.
Yes, in some countries the household sector has made headway with the gruelling task of deleveraging. Some financial institutions are better capitalised. Some fiscal authorities have begun painful but essential consolidation. And yes, much of the difficult work of financial reform has been completed. But overall, progress has been slow, halting and uneven across countries. Households and firms continue to hope that if they wait, asset values and revenues will rise and their balance sheets improve. Governments hope that if they wait, the economy will grow, driving down the ratio of debt to GDP. And politicians hope that if they wait, incomes and profits will start to grow again, making the reform of labour and product markets less urgent. But waiting will not make things any easier, particularly as public support and patience erode.
Alas, central banks cannot do more without compounding the risks they have already created. Instead, they must re-emphasise their traditional focus – albeit expanded to include financial stability – and thereby encourage needed adjustments rather than retard them with near-zero interest rates and purchases of ever larger quantities of government securities. And they must urge authorities to speed up reforms in labour and product markets, reforms that will enhance productivity and encourage employment growth rather than provide the false comfort that it will be easier later.
Thursday, June 27, 2013
In their must read annual report, The Bank of International Settlements (aka "the central bank of central banks" points out that there is only so much that monetary policy can do and basically the central banks are "spent":
Monday, June 24, 2013
This is satire but it certainly feels true some days:
After fluctuating wildly this morning between $1 and $35, the price of money spiked to an unprecedented $90 a dollar in afternoon trading, plunging international financial markets into chaos. "Wall Street erupted into absolute pandemonium once the price of a dollar jumped past $50—if this keeps up, I wouldn't be surprised if the dollar reached $275 or higher by the closing bell," said CNBC analyst Marvin Kanisch, noting that the price of 20 dollars had soared well over $1,000 amid frenzied trading before plummeting back down to a more reasonable $430, while the price of five dollars remained steady at $5. "Everywhere you look, panicked investors are clamoring to exchange their dollars—which can only purchase about two cents apiece right now—for more stable dimes and quarters, which are trading at $18 and $32.25, respectively. And with the price of pennies falling below $140 an ounce, it's easy to understand the sense of urgency. Bottom line: It's a seller's market." With the skyrocketing dollar-to-dollar exchange rate prompting Americans to hoard as much money as possible, President Obama is expected to address the nation later today about easing America's dependence on domestic currency.
Thursday, June 20, 2013
Here is Glenn Beck's fiery and awesome speech at the Tea Party rally yesterday against the IRS targeting right wing groups. Seriously, it was a pretty passionate and motivating speech and is well worth the listen and not just for the line comparing DC to Las Vegas:
Tuesday, June 18, 2013
It seems pretty clear Hassan Rouhani is a shill for the regime and really never reformed anything. The clerics are doing a great job in fooling the international community:
Hassan Rouhani, the only cleric among the candidates, is a relic from the early days of the Revolution. His birth name is Hassan Feridoon -- a more Persian name then his Muslim name, Rouhani, meaning spiritual. Since the government takeover of the Islamic Revolution, Rouhani has held multiple positions, including Secretary and Representative of the National Security Council, member of the Assembly of Experts, member of the Expediency Council, President of the Center for Strategic Research, and various positions in the Iranian Parliament. In the early days of the revolution he was put in the position of Military Coordinator where he purged the existing military and replaced them with Khomeini loyalists. During the Iran-Iraq war, he served as Rafsanjani's right hand man.
Khatami and Rafsanjani played a significant role in Rouhani's victory by holding off declarations of support and persuading their actual candidate, Mohammad-Reza Aref, to drop out to avoid a split vote. So as of four days before the actual election day, Rouhani had emerged as the fake-reformist, "moderate" candidate in the race. As the peerless Iranian expatriate journalist, Amir Taheri, has written, "He never reformed anything."
Many reputable Iranian analysts such as Dr. Alireza Nourizadeh, have said, "Rouhani has never been a reformist, however he is supported by some members of the so-called pragmatists, like former Mullah Hashemi-Rafsanjaniand Khatami. In fact he is a representative of the Supreme Leaderhip and has always been very close to Khamenei. From that aspect, this election was more like a poll for the regime as it wants to show itself as a populist entity."
As a negotiator, Rohani is triumphantly duplicitous, known to lull his non-Iranian counterparts into a false sense of calm. Despite all the talk that, during his term as a nuclear negotiator, Iran appeared more cooperative with the international community, Rohani bragged about how he had tricked the West. In April of 2006 during a speech at the Assembly of Clerics,
Rouhani was caught on tape, boasting that while talks were taking place in Teheran, Iran was able to complete the installation of equipment for conversion of yellowcake -- a key stage in the nuclear fuel process -- at its Isfahan plant, but at the same time convince European diplomats that nothing was afoot. "From the outset," he said, "the Americans kept telling the Europeans, 'The Iranians are lying and deceiving you and they have not told you everything.' The Europeans used to respond, 'We trust them!'"
Later, when the massive Tehran University uprisings occurred in 1999, Rouhani, who at the time headed up the Islamic National Security Council, reacted by saying: "These students are too pathetic and worthless for us to have to begin changing our directives. The continuance of this mess is not acceptable for our regime and the people. I issued strict orders against these elements [the students] to confront and severely deal with these opportunists. Wherever they are, we will handle them and suppress them. People will witness what today's security and disciplinary forces, the heroic members of the Basij (auxiliary militia) will do to these rabble-rousers and thugs, if they dare to imagine that they can continue their so-called peaceful campaign. The agent that has united our people today, is simply indestructible; that agent is Islam and Islamic rule which is the absolute symbol of the Supreme Leadership."
Saturday, June 15, 2013
Friday, June 14, 2013
Great people Obama and McCain want to arm:
A teenager selling coffee in the northern Syrian city of Aleppo was arrested by Islamist rebel fighters for insulting the Prophet Mohammed, beaten and then executed in front of his family, a watchdog group claims.
The boy, Mohammed Qatta, 14, reportedly refused to give a customer coffee, the Syrian Observatory for Human Rights reported Sunday.
"Even if [Prophet] Mohammed comes back to life, I won't," the boy said, who was known by his nickname "Salmo."
Extremist rebels driving past in a black car overheard the comment, the opposition Aleppo Media Center said. Qatta was taken away by the fighters and later brought back, his head wrapped with his shirt and his body covered with marks from whipping.
The rebels then read out the boy's sentence – not in a Syrian accent, but in classical Arabic. They accused the boy of blasphemy and told the crowd – which included the boy's parents – that anyone who insulted the Prophet would suffer a similar fate.
Qatta was then shot in the mouth and neck. A graphic photo was released late Sunday of the dead boy clearly showing wounds that matched the reports.
The boy's parents confirmed the accounts in an interview posted online on Monday by the Aleppo Media Center. In it, his father stoically recounted the execution while his mother wailed.
"Why did they kill my son," she cried. "We are not for or against anybody in this conflict, may God take revenge on them."
The Economist very effectively debunks the idea that it would be possibly to siphon western arms only to the "right" people. Given that the vast majority of rebel groups are jihadi/islamist, any weapons we do send over there has a very high likelihood of ending in the wrong hands (the only definitely not Islamist is the Kurdish group the Democratic Union Party). Heck if we can lose track of guns in a federally run gun tracking program like Fast and Furious, leading to the death of hundreds of innocent people, how can we be at all confident that we can keep track of them half a world away? It boggles the mind. Anyway here is a very handy chart from the Economist identifying the key rebel groups:
Thursday, June 13, 2013
As I post this, John McCain announced on the Senate floor that this administration has decided to assist the Syrian rebels through various means. Because of this I thought I should post excerpts from an interview between the Times of Israel and Michael Walzer of the Institute for Advanced Study on the subject:
"Now you have jihadi fighters on the one hand and Hezbollah on the other, and it really doesn't look like there's much to choose between," Walzer said. "It's almost impossible to describe a desirable outcome in this civil war, and if you don't have a desirable outcome — you can't intervene."...
I'm really stunned by the David Brooks op-ed from a couple of days ago. I just can't imagine people, especially someone who has called himself a conservative in the past, would think this way. I'm also stunned by the complete lack of any logic in parts. Anyway, here are the excerpts I found particularly egregious along with some commentary from your humble narrator:
But Big Brother is not the only danger facing the country. Another is the rising tide of distrust, the corrosive spread of cynicism, the fraying of the social fabric and the rise of people who are so individualistic in their outlook that they have no real understanding of how to knit others together and look after the common good.
People going their own way is a bigger danger than pretty much the entire population of the United States being monitored by the government without a warrant or probably cause or anything even close? And who is to blame for our cynicism? Brooks seems to think its individualism or libertarianism or something. I think the big culprit is the fact that the government pretty much just lies to us. Senior government officials just outright lie to Congress. And I'm not talking about withholding the truth, I'm talking about lying blatantly when asked a direct question. The IRS Director lied when asked about giving special attention to conservative groups. James Clapper lied to Ron Wyden when asked about the NSA snooping into innocent private citizens. And remember when White House Press Secretary Carney said that only one word was changed in the Benghazi talking points? Remember when Obama said his would be the most transparent administration in history? What happened with that? Or his promise to close Gitmo (not that I am for it but he was elected by people who believed him when he said he would close it). And Republican Presidents have been little better. W outright betrayed Republicans through his non-stop spending, enacting the Medicare Part D entitlement and programs like No Child Left Behind. He even appeased North Korea near the end. The only way someone could not be cynical if they are paying attention is to have a lobotomy and/or be on happy pills.
For society to function well, there have to be basic levels of trust and cooperation, a respect for institutions and deference to common procedures. By deciding to unilaterally leak secret N.S.A. documents, Snowden has betrayed all of these things.
"Common procedures"? What a load of conformist crap is that? What is the procedure if you find out about a massive government program that invades the privacy of hundreds of millions? Send a memo to some undersecretary? Have the Inspector General start an investigation? That doesn't sound particularly effective given the current scandal about higher ups at the State Department squashing investigations to protect their friends. Anyway, in the end all the higher-ups would have told Snowden was that "this program has been fully reviewed and is in accordance with the law". We all know that. What's the point of following procedure if you know nothing will come of it?
He betrayed the cause of open government. Every time there is a leak like this, the powers that be close the circle of trust a little tighter. They limit debate a little more.
I'm sorry, how open was this government before the NSA leaks? This is a government that uses secret email accounts to get around Freedom of Information Act requests. If nobody exposes all the crap about what is going on in government people will assume everything is fine and not ask for a more open government. It's only be exposing it do you get public support for major changes in government disclosure.
He betrayed the privacy of us all. If federal security agencies can't do vast data sweeps, they will inevitably revert to the older, more intrusive eavesdropping methods.
Those more "intrusive" eavesdropping methods are more likely to require a warrant so at least there is judicial oversight and likely some probably cause in picking required to actually eavesdrop. That is preferable to sending a subpoena to Verizon and then forbidding anyone to ever even acknowledge the existence of the subpoena.
He betrayed the Constitution. The founders did not create the United States so that some solitary 29-year-old could make unilateral decisions about what should be exposed. Snowden self-indulgently short-circuited the democratic structures of accountability, putting his own preferences above everything else.
He betrayed the Constitution? The Constitution and Bill of Rights exist to enumerate the powers of the Federal government and to protect individuals and states from it. It does not protect the government from individuals. And what's up with his issue with the word "unilaterally". Someone has to stand up and fight tyranny. If everyone agrees that we should have a totalitarian dictatorship, does that make any unilateral action from a dissenter wrong? There is right and there is wrong, it doesn't matter if your action is unilateral or not.
Social arrangements? It seems that David Brooks' piece comes down to "this is just not done in polite society." Polite society being those people who never rock the boat, allow evil to take hold and do nothing. It is about conformity and going along to get along. Where has that left us? With an insolvent government that has brought George Orwell's 1984 much closer to reality than any of us thought possible.Judging by his comments reported in the news media so far, Snowden was obsessed with the danger of data mining but completely oblivious to his betrayals and toward the damage he has done to social arrangements and the invisible bonds that hold them together.
Tuesday, June 11, 2013
It's interesting how uninterested our administration is in what is going on in Turkey right now. Namely the protests against Obama's "best friend in the Middle East", Turkish PM Erdogan. Even behind closed doors there doesn't seem to be any recrimination. Here are comments from yesterday's State Department briefing:
Now imagine if this were happening in Jerusalem? My guess is the State Department wouldn't be so neutral about it, nor would Kerry & Obama be so quiet.
QUESTION: Do you have an update on Turkey, on the protests in Turkey?
MS. PSAKI: Did you have a specific question about it, or --
QUESTION: About your dialogue with Turkish Government maybe, because the Prime Minister --
MS. PSAKI: Well, the Secretary did speak again with the Foreign Minister this weekend, but it was mainly focused on Syria. Of course, we remain focused on calling for calm and calling on all sides to make sure that they don’t escalate the rhetoric and that – refrain – that all sides refrain from violence. So that’s where our focus remains.
Jeez, how weak. Calm on both sides? Don't escalate the rhetoric? So far 5 have died and 4,200 have been injured. The Turkish police have even resorted to water-cannoning the disabled (click-through to see a video):
Now imagine if this were happening in Jerusalem? My guess is the State Department wouldn't be so neutral about it, nor would Kerry & Obama be so quiet.
Monday, June 10, 2013
Friday, June 7, 2013
I'm Sure the NSA Folks Are Very Nice But What About the Other Government Guys Who Will Sift Through Our Data
With the latest Obama scandal it seems pretty clear that the NSA is tracking what each of us do online, who we call and from where. The two defenses of such an incredible breach of privacy without any probable cause are:
1. It's perfectly legal
2. The NSA is just sifting through metadata, looking for patterns, they don't really care about you. Innocent Americans have nothing to fear.
And yes, it is all technically legal because of Section 215 of the Patriot Act. The key text of this section reads:
The Director of the Federal Bureau of Investigation or a designee of the Director (whose rank shall be no lower than Assistant Special Agent in Charge) may make an application for an order requiring the production of any tangible things (including books, records, papers, documents, and other items) for an investigation to protect against international terrorism or clandestine intelligence activities, provided that such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution.
So I guess somehow all of America is now "under investigation"? I really don't think it was obvious when this section was written that the government would get carte blanche to sift through EVERY phone and electronic record looking for Al-Qaeda. Clearly the interpretation of Obama's legal team is a bit of a stretch. Even the guy who wrote the Patriot Act thinks so, calling the actions of the NSA "un-American". At best from a legal standpoint, we are in a grey zone.
I also think it's a bit of a cop out to say something is okay because it's legal. Slavery was legal here. So were Jim Crow laws. Hitler took power through legal parliamentary procedures and passed his Nuremburg laws the same way (my apologies to Godwin). When 2000 page bills are passed without people reading them, of course the government can find some subsection of some law to say they are allowed to do what they are doing.
Also laws don't mean much when there isn't oversight to make sure they aren't abused. Oh there is oversight of the Patriot Act? By whom? It's always other members of government. The problem with that is, as long as they are part of the same broader organization, they are never truly independent. There is always some way to pressure them to rule the way you want. So the legal justification really only goes so far. I think what is more important would be whether a reasonable person would think it is right or wrong and I'm pretty sure that the government acting like Big Brother would not be viewed as right by reasonable Americans.
On my other point, I actually do have faith that the NSA doesn't care about the pictures I put up on Facebook or the video I put up of my 13 month old dancing to rock music. They are data mining and looking for patterns, patterns that can help them identify and breakup terrorist cells. The problem is how can you say this will always be the case? What if one day, one legalese line to the effect of "for the sake of efficiency, any data harbored by one government agency shall be shared with the other government agencies so that they can better achieve their mandates" is inserted into some 2000 page bill that nobody reads and subsequently passes? Just as the original Section 215 didn't say explicitly that the NSA will be snooping into your life whether you are under investigation or not, the next legal change won't say that the IRS or whomever will have access to the same data. And I'm sure when THAT story breaks we will hear the excuse that it's all legal as well.
Government abuses power, that is what it does. We need to make sure we it them as little power as possible.
Thursday, June 6, 2013
I can't believe I am quoting from and agreeing with the New York Times but it seems they have finally become fed up from the lies and the evasions from "the most transparent administration in history" (I guess when the White House says they are being transparent they mean they are being transparently dishonest). Anyway, here is their editorial:
Within hours of the disclosure that the federal authorities routinely collect data on phone calls Americans make, regardless of whether they have any bearing on a counterterrorism investigation, the Obama administration issued the same platitude it has offered every time President Obama has been caught overreaching in the use of his powers: Terrorists are a real menace and you should just trust us to deal with them because we have internal mechanisms (that we are not going to tell you about) to make sure we do not violate your rights.
Those reassurances have never been persuasive — whether on secret warrants to scoop up a news agency's phone records or secret orders to kill an American suspected of terrorism — especially coming from a president who once promised transparency and accountability. The administration has now lost all credibility. Mr. Obama is proving the truism that the executive will use any power it is given and very likely abuse it.
A senior administration official quoted in The Times offered the lame observation that the information does not include the name of any caller, as though there would be the slightest difficulty in matching numbers to names. He said the information "has been a critical tool in protecting the nation from terrorist threats," because it allows the government "to discover whether known or suspected terrorists have been in contact with other persons who may be engaged in terrorist activities, particularly people located inside the United States."
That is a vital goal, but how is it served by collecting everyone's call data? The government can easily collect phone records (including the actual content of those calls) on "known or suspected terrorists" without logging every call made. In fact, the Foreign Intelligence Surveillance Act was expanded in 2008 for that very purpose. Essentially, the administration is saying that without any individual suspicion of wrongdoing, the government is allowed to know who Americans are calling every time they make a phone call, for how long they talk and from where.
This sort of tracking can reveal a lot of personal and intimate information about an individual. To casually permit this surveillance — with the American public having no idea that the executive branch is now exercising this power — fundamentally shifts power between the individual and the state, and repudiates constitutional principles governing search, seizure and privacy.
The senior administration official quoted in The Times said the executive branch internally reviews surveillance programs to ensure that they "comply with the Constitution and laws of the United States and appropriately protect privacy and civil liberties."
That's no longer good enough. Mr. Obama clearly had no intention of revealing this eavesdropping, just as he would not have acknowledged the killing of Anwar al-Awlaki, an American citizen, had it not been reported in the press. Even then, it took him more than a year and a half to acknowledge the killing, and he is still keeping secret the protocol by which he makes such decisions.
Time for Another Filibuster: The Government is Snooping Through All Verizon Customer Cellphone Records
This level of government surveillance is very worrisome. Worst part is that Verizon isn't even allowed to disclose the fact that they received this government order so completely innocent customers are completely in the dark of being snooped on:
The folks at the Guardian who broke this story should watch out. They might get droned as part of the leak investigation.
The National Security Agency is currently collecting the telephone records of millions of US customers of Verizon, one of America's largesttelecoms providers, under a top secret court order issued in April.
The order, a copy of which has been obtained by the Guardian, requires Verizon on an "ongoing, daily basis" to give the NSA information on all telephone calls in its systems, both within the US and between the US and other countries.
The document shows for the first time that under the Obama administration the communication records of millions of US citizens are being collected indiscriminately and in bulk – regardless of whether they are suspected of any wrongdoing.
The secret Foreign Intelligence Surveillance Court (Fisa) granted the order to the FBI on April 25, giving the government unlimited authority to obtain the data for a specified three-month period ending on July 19.
Under the terms of the blanket order, the numbers of both parties on a call are handed over, as is location data, call duration, unique identifiers, and the time and duration of all calls. The contents of the conversation itself are not covered.
The court order expressly bars Verizon from disclosing to the public either the existence of the FBI's request for its customers' records, or the court order itself.
The folks at the Guardian who broke this story should watch out. They might get droned as part of the leak investigation.