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Posts by Ian Welsh
The Attacks on Gaza: Orwell in Israel
Posted by Ian Welsh, Firedoglake on December 27, 2008 at 2:17 PM.
This beauty from Tzipi Livni is completely Orwellian:
The government ordered the strikes on Hamas only after it saw no other way to stop rocket attacks on its southern towns, she said.
I can imagine no scenario under which bombing Hamas will stop rocket attacks. In particular, these attacks were aimed at the security forces, killing the police chief and the security chief and 140 Hamas security forces.
Now, who do you think enforced the truce? Who is it that Hamas uses to make sure rockets only get launched when Hamas wants them to? That would be ... the police and the security forces.
Bombing Hamas is not going to stop the attacks, if anything it will increase them. But Israel has degraded Hamas' ability to control the various folks who launch the missiles (many of whom are not Hamas).
Read the rest of the post on the flip side »
Riots Spread in Europe: How Long Till They Break Out in the U.S.?
Posted by Ian Welsh, Firedoglake on December 12, 2008 at 11:00 AM.
Looks like the Greek riots have been contagious:
Protesters in Spain, Denmark and Italy smashed shop windows, pelted police with bottles and attacked banks this week, while in France, cars were set ablaze Thursday outside the Greek consulate in Bordeaux, where protesters scrawled graffiti warning about a looming "insurrection."...
...More demonstrations were set for Friday in Italy, France and Germany.
Still, the clashes have been isolated so far, and nothing like the scope of the chaos in Greece, which was triggered by the police killing of a teenager on Saturday and has ballooned into nightly scenes of burning street barricades, looted stores and overturned cars.
Here's the question. When will Americans decide they've had enough and start rioting?
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How Fumbling the Bailout Led to the Chicago Sit In
Posted by Ian Welsh, Firedoglake on December 8, 2008 at 9:59 AM.
Over the last couple months I've warned that one main reason banks aren't lending, and are cutting off credit lines to businesses and individuals, is because they are hoarding money in order to buy competitors. In the Chicago factory sit in, the key moment which caused Republic Windows to shut down was when Bank of America cut off their line of credit, which they did just before they approved a $50 billion takeover of Merrill Lynch.
Bank of America has bought out LaSalle Bank and Countrywide, and bank shareholders just approved a $50 billion buyout of Merrill Lynch. B of A has recently settled the largest suit against Countrywide.
Meanwhile, according to a source familiar with the nature of the bank's finances, Bank of America has issued $9 billion of secured debt insured by the FDIC. Yet, as with almost all banks, it has been tightening its credit to businesses and consumers.
A lot of banks still have plenty of money. Bank of America has plenty of money. The amount of money required to keep Republic Windows open is trivial to them -- $10 million, perhaps.
But right now, they as with other banks, are keeping their powder dry. Money loaned out can't be used to buy up competitors at cents on the dollar.
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India's Wondering, 'If the U.S. Can Bomb Pakistan, Why Can't We?'
Posted by Ian Welsh, Firedoglake on December 2, 2008 at 9:49 AM.
Sovereign nations have the right to protect themselves, US president-elect Barack Obama said on Monday, when asked if India could follow the same policy he advocated during his election campaign — of bombing terrorist camps in Pakistan if there was actionable evidence and Islamabad refused to act on it.
The Times goes on to note that Obama carefully caveated his remarks, noting that India should only act unilaterally if the association is proved beyond a doubt and if Pakistan doesn't deal with it themselves.
Nonetheless, this is a particularly ominous development. US bombing and incursions into Pakistan are already destabilizing the country, and the Pakistani military and intelligence services have become unreliable instruments, using them to crack down on Pakistanis at the behest of outsiders has caused a great deal of dissent.
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Bush's Gates Will Stay as Obama's Defense Secretary: Looks Like More War in Afghanistan
Posted by Ian Welsh, Firedoglake on November 25, 2008 at 4:56 PM.
Gates is staying on as Defense Secretary. What this means is simple enough, a continued draw down in Iraq and a surge (tm) in Afghanistan. Gates was, in effect, Bush Senior's man at Defense, cleaning up another one of Junior's messes. This also raises the question of whether generals who have gotten too big for their jobs, are going to be reigned in as they should be. Petraeus has been acting as proconsul, doing high level diplomacy and effectively running US foreign policy in a big chunk of the world. This was a function of Bush's weakness, his need of someone popular to carry his corpse around, as well Condi's complete sidelining from serious decision making. Irrespective of one's views on Petraeus's competence and integrity, however, it's not a healthy situation, and the Obama administration should take back the roles which don't belong to any general.Gates seems unlikely to be the man to do that, but it's hard to imagine Clinton, for example, allowing anyone to usurp her prerogatives, so we shall see how it plays out.
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Econ-ocalypse: Dow Drops Below 7,600, No Deal Reached on Auto Bailout
Posted by Ian Welsh, Firedoglake on November 20, 2008 at 2:52 PM.
Well, the Dow has broken 8,000. As Jane noted there is no technical support below 8K, so where it ends now is not known. A historical low for a bear market, as I've written in the past is 6K, which is about 7 times earnings.
The issue isn't just technical trading, it's the spiral of margin calls, where the lower the market goes, the more investors who have borrowed funds to invest have to sell in order to keep enough value in their accounts to cover the loans they've taken out. The term for this is an Ohmstead break, and if one occurs, the drop will become uncontrollable.
In the meantime, I am amused that the same White House and Senate who supposedly passed the bailout bill to save the market wasn't willing to push cough 25 billion to stop this meltdown from occuring. When the White House and Congress failed to pass a restructuring bill, investors got scared, because even if politicians are stupid enough to be stampeded by Paulson, then too stupid to understand what 3 million job losses will do the US economy, investors know that it would devastate the economy.
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Now Is No Time to Sing Kumbaya: We Must Hold the Bush Regime Accountable
Posted by Ian Welsh, Firedoglake on November 14, 2008 at 7:34 AM.
So, I'm hearing a ton of arguments that we should all just let bygones be bygones, because gosh darn, there are so much more important things to do than bringing Bush apparatchiks who smashed the constitution to bits, invaded another country based on lies (a war crime that Nazis were hung for) and who were criminally incompetent in their management of the economy, Katrina and everything else, to account.
Yes, we should all be BIGGER than justice, and just let bygones be bygones. What could be the harm in just saying "hey it's over now, let's fix the problems these criminal saps made and not bother to go after them." (I'm sure rapists and murderers who have killed and harmed far fewer people are wondering why this standard doesn't apply to them.)
The SAME people who were responsible for Nixon's crimes, were responsible for Iran/Contra. They and their proteges came back and were responsible for Bush, Iraq, torture, screwing up Katrina and so on.
But we're supposed to let bygones be bygones so they can do it again in the next Republican administration.
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Why Won't the Federal Reserve Say Who They Gave $2 Trillion To?
Posted by Ian Welsh, Firedoglake on November 11, 2008 at 5:06 AM.
Apparently Bernanke, that wonderful bipartisan soul who is so competent and wonderful that everyone in the village thinks Obama should leave him in charge is refusing to identify who got almost 2 trillion dollars of Fed cash. Bloomberg News is suing to find out. Personally I really, really, really want to know. What exactly is Bernanke hiding? Who got the money he doesn't want us to know got the money?
This is money that was loaned in exchange for "collateral", by which we mean "trash no one else but the Fed would buy for anything but cents on the dollar." Barney Frank, embarrassing himself yet again, claims the Fed should keep its clap shut because if people know how bad it is, well, there might be a run. I think Barney's missing the point, as long as people don't know how bad it is, they won't trust anyone who might be borrowing large amounts of money from the Fed with crap collateral, because they don't know how bad it is and they suspect it's really really really bad. As in 10 cents on the dollar bad.
More to the point, that 2 trillion is taxpayer money, and taxpayers have a right to know what sweetheart deals Bernanke's been giving out, and who's been getting what. This whole "this information is too scary for citizens to know" schtick is so Bush regime. I thought we were moving into a new era of openness? Perhaps Barney should get with the program?
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Neo-Nazis' Plan to Assassinate Obama Disrupted
Posted by Ian Welsh, Firedoglake on October 27, 2008 at 2:58 PM.
As Dave Neiwart notes, hopefully this US attorney has the integrity to prosecute it properly. These skinheads were plenty ambitious:
Federal agents have broken up a plot to assassinate Democratic presidential candidate Barack Obama and shoot or decapitate 102 black people in a Tennessee murder spree, the ATF said Monday ...
... the two men planned to shoot 88 black people and decapitate another 14. The numbers 88 and 14 are symbolic in the white supremacist community.
The men also sought to go on a national killing spree, with Obama as its final target, Cavanaugh told The Associated Press.
"They said that would be their last, final act - that they would attempt to kill Sen. Obama," Cavanaugh said. "They didn't believe they would be able to do it, but that they would get killed trying."
I think maybe McCain, and Palin in particular, might want to start calming the waters. And Palin in particular needs to call out the racists in her crowds and stop whipping it up. Because yes, lady, you will be held responsible if anything happens.
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Obama Brings the Funny: '(Housing) Crisis Has Been 8 Times Harder on John McCain'
Posted by Ian Welsh, Firedoglake on October 17, 2008 at 7:00 AM.
Obama tears up the joint at the Al Smith dinner.
"Fox News accused me of fathering two African-American children in wedlock"
(Part II after the jump)
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Obama Coolly Dispatches Punch-Drunk McCain
Posted by Ian Welsh, Firedoglake on October 7, 2008 at 8:17 PM.
So, ok, clearly Obama won again. We don't even need to see the polls to know that. He comes across as president already, while John McCain comes across as an angry doddering old man.
Here's what I don't understand. Essentially McCain made the same sort of mistakes he made last time. Not friendly enough, not calm, awful body language and so on. Not a statesman. Not a reassuring elder who's seen it all and who can be trusted to deal with it now.
I don't believe that his handlers don't know this. I don't believe they didn't know this after the first debate. It was dead clear. So, does John McCain not know this? Are they not able to tell it to him? Does he not listen? Why do they not have someone coaching him? Ditch some campaign appearances and spend hours working on his body language, his voice tone and give him answers that are statesmanlike.
Or is John "Maverick" McCain too angry to listen? Too frazzled, too tired, too unable to make a change from a game plan that clearly isn't working. Is it the campaign? Or is it him?
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Repubs Vote for High Gas Prices, More Illegal Immigration and Against "the Troops"
Posted by Ian Welsh, Firedoglake on July 28, 2008 at 4:51 AM.
On Friday Republicans blocked a bill in the Senate meant to give regulators more ability to reign in oil speculation (h/t The Zoo). While there's some dispute how much if any of the price of oil is based on speculation, there's reason to think it could be a lot. And current law means that a lot of oil futures trading is done in such a way that we don't even know how much is being done, let alone if it's having any effect. At this point the current law is effectively "we don't even look to see if a crime could be occuring."
3. The Enron exception. Through its political pull with politicians like then Senator Phil Gramm (R-TX), Enron was able to insert language into the Commodity Futures Modernization Act of 2000 exempting energy trading companies from oversight by the Commodities Futures Trading Commission (CFTC), the government watchdog agency, in the over-the-counter (OTC) market for "futures-like" instruments.
4. London-Dubai loophole. In January 2006, the Intercontinental Exchange (ICE) with the blessing of the CFTC (via no-action letters) began allowing American traders to trade futures contracts on oil produced and consumed in this country on foreign terminals in the UK thus circumventing reporting requirements to the CFTC regarding large trader activity and speculation caps. (ICE also has an OTC component.) NYMEX joined with the Dubai Mercantile Exchange to launch a similar venture in May 2007.
5. Swaps dealer loophole. Under a 1993 CFTC rule, swaps dealers, investment banks like Goldman Sachs and Morgan Stanley, were given the same status as traditional futures traders like oil companies and airlines as long as they were considered to be hedging a "legitimate" risk. This allowed large financial funds to enter into swaps contracts with investment banks. A swap contract is essentially an agreement between two parties in which the first party agrees to pay the second a fixed rate of interest on an agreed upon amount, and the second party agrees to pay the first a variable rate on the same amount. The actual principals offset each other so it's really a mechanism to convert a fixed rate into a variable rate. The trick is that the investment banks use the money they receive to buy something that has a variable value, in this case crude oil futures which they have access to and the funds do not. This has been yet another way for large amounts of outside capital to enter into and distort the operation of the futures market in crude.
6. An ineffectual CFTC. This agency is supposed to regulate futures markets, but in this most anti-regulatory of Administrations, it has given away so much of its authority that it has no idea what is going on in the "dark markets" created by ICE and the Enron exception and no real interest in doing anything about it.
So, the Senate bill, while it doesn't go far enough (I'd slap a percentage tax on all futures and options commodity trading, probably of 1% and I'd increase margin requirements significantly), it's certainly a good basic idea. Even if you don't think futures are doing a thing to oil prices, no liberal can be for all that trading going on in the dark--nor should any markets believer, since transparency in markets is generally considered necessary for them to operate properly, and this is clearly not a transparent market without information asymmetries.
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Crucified By Your House
Posted by Ian Welsh, Firedoglake on December 25, 2007 at 4:20 AM.
In 1896 William Jennings Bryan brough down the house with his Cross of Gold speech, in which he railed against the gold standard. Americans responded because many felt they had indeed been crucified upon a cross of gold by the bankers and the rich men of the east. Today, it's their houses they've been nailed to, and it's their houses they'll go down with.
As in Bryan's day, today one of the main problems in the US is the monetary system, but unlike in 1896, when tight money was used to keep creditors, most especially farmers, in their place, today it has been loose credit and repeated inflationary asset bubbles driven by uncontrolled money creation which threatens the middle class. While the uncontrolled creation of money isn't limited to the housing bubble, or what is laughably called "sub-prime", since the problems extend far past sub-prime, understanding how real-estate and housing work is integral to understanding the impact, because for most Americans their home is the most important asset they own.
To talk about Housing one has to first talk about what money is. In the modern world money is generally created as debt. The simplest form is where someone goes to the bank, say "I have asset X that's worth Y and I want to borrow money." The bank takes a look at the asset, checks you out and if they think you can pay them back, they give you the loan. Because a bank can loan multiples of the money it has been given to keep for other people (deposits) most of that money is, in effect, created out thin air.
That's the fractional reserve system, and it creates money.
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Greenspan Slams Bush's Fiscal Policy, Several Years Too Late
Posted by Ian Welsh on September 17, 2007 at 5:43 AM.
This post, written by Ian Welsh, originally appeared on FireDogLake
So Alan Greenspan has a new book coming out on Monday. And it says nasty things about the Bush administration. Welcome to the club Alan - the club of Bush enablers who write books once they aren't in power, in a pathetic attempt to pretend they weren't culpable in Bush's mess. But back when it mattered, back when you were in charge of the Fed, when you were lionized as the Maestro... oh, back then, when you could have actually, I don't know, oh, done something concrete to oppose Bush's policies, did you? No, no you didn't.
Let's see what Uncle Alan is saying in his book, say about tax cuts...
Though Mr. Greenspan does not admit he made a mistake, he shows remorse about how Republicans jumped on his endorsement of the 2001 tax cuts to push through unconditional cuts without any safeguards against surprises. He recounts how Mr. Rubin and Senator Kent Conrad, Democrat of North Dakota, begged him to hold off on an endorsement because of how it would be perceived.
"It turned out that Conrad and Rubin were right," he acknowledges glumly. He says Republican leaders in Congress made a grievous error in spending whatever it took to ensure a permanent Republican majority...
...Today, Mr. Greenspan is indignant and chagrined about his role in the Bush tax cuts. "I'd have given the same testimony if Al Gore had been president," he writes, complaining that his words had been distorted by supporters and opponents of the cuts.
How precious is that. Take a look at the top chart - has the government ever reduced spending in recent history? Greenspan can't claim economic illiteracy. He knew that. Yet he shilled for tax cuts anyway.
In fact, according to a 2001 story he made the endorsement after he knew what the details of the cut were and the amounts of it. We are supposed to believe the Maestro couldn't do the math?
In testimony to the Senate Budget Committee, Greenspan declined to comment on President Bush's $1.6 trillion, 10-year tax cut plan, saying a decision on the size of a cut was best left up to Congress and the political process. But the Fed chairman's backing of tax cuts as economically sound likely will provide a boost to the new administration's proposals.
And the tax cuts made a difference. As Krugman noted:
Why, then, do we face the prospect of huge deficits as far as the eye can see? Part of the answer is the surge in defense and homeland security spending. The main reason for deficits, however, is that revenues have plunged. Federal tax receipts as a share of national income are now at their lowest level since 1950.
Of course, most people don't feel that their taxes have fallen sharply. And they're right: taxes that fall mainly on middle-income Americans, like the payroll tax, are still near historic highs. The decline in revenue has come almost entirely from taxes that are mostly paid by the richest 5 percent of families: the personal income tax and the corporate profits tax. These taxes combined now take a smaller share of national income than in any year since World War II.
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Ron Paul Wants to Repeal the 20th Century
Posted by Ian Welsh on September 14, 2007 at 6:00 AM.
This post, written by Ian Welsh, originally appeared on Agonist
I've mostly stayed out of the Ron Paul discussions at the Agonist. But I think it needs to be pointed out that what Ron Paul wants to do is essentially repeal the progress made in the 20th century. Radical de-federalization would mean endgangering civil liberties in large parts of the country - the US did not de-segregate because the states wanted to, it desegregated because the Federal government made the States do so at the point of a gun.
The entire network of laws and institutions created by the New Deal and the Progressive era would be swept away if Ron Paul's plans were to go through. The US would move back to uncontrolled capitalism even more ugly than what it has now. While the government is currently not controlling the excesses of business, it has most of the tools to do so. Ron Paul would take away those tools, along with most of the tools used to enforce civil liberties (when a Democrat is in government, anyway.)
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