Daily Archive: 07/28/2011

Jul 28 2011

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 Phone hacking inquiry opens as scandal spreads again

By Danny Kemp, AFP

3 hrs ago

A judge opened Britain’s phone-hacking inquiry Thursday with a vow that he will order witnesses to testify, as new claims emerged in a scandal that has tarnished the media, police and politicians.

Lord Justice Brian Leveson, the judge appointed by Prime Minister David Cameron to lead the probe, said the inquiry would start by looking at media ethics and press regulation.

The first public hearings would be held in September, he announced.

Jul 28 2011

Progressivism in the New Gilded Age

Burning the Midnight Oil for Progressive Populism

The “Progressive Era” was not so named because it was an era in which Great Progress was automatic, or effortless. It was so named because it was an era where Income Inequality was high, even by US historical standards, and extraordinarily high by the standard of the Great American Middle Class Era of the 1940’s to 1970’s …

… and that meant that winning Progress that went against the vested interests was very hard, and required long, determined fights against a torrent of money deployed to oppose its progress.

Indeed, one of the fruits of the Progressive Era victories was to eliminate Progressivism as a distinct political force. But now the enemies of the Square Deal, New Deal and Great Society have rebuilt a Gilded Age, and we need it once more.

Progressivism, however, while necessary, is not sufficient on its own.

Jul 28 2011

THE Reserve Currency

hitchhikingFirst of all you have to give up the idea that “money” has any utility except as a medium of exchange.

If you have a goat or a camel you can milk it, you can eat it and use the hide, AND you can make cute little baby goats and camels.  On the other hand they eat and are smelly and ill tempered.  Gold is shiny and pretty, non-reactive and a good electrical conductor, as well as being easy to shape and bend.  You can’t eat it or use it for tools (try tightening a bolt with a solid gold wrench).

Now whether it’s Dollars or Gold or Yap Island Rais the essential concept of “money” is that it is something that you can trade for a goat should you happen to need one for milk or meat (not to mention those cute little baby goats) without the inconvenience and stink of actually being a goat herder.

Moreover if you’re weighing the economic advantage of camels v. goats (you can ride them and use them to haul heavy things, on the other hand they spit at you and bite you) instead of figuring out how many goat carts makes a camel load you can go to the magical free marketplace and find out how many carved stone doughnuts it takes to get one.

And it gives you an easy way to deal with fractional goats.  How much is a a haircut worth?  A pair of shoes?  A suit?

Because of it’s adaptable and arbitrary nature “money” is a useful measure of the difference in societal desire between various objects.  This is one reason inflation is economically useful, because it encourages investment in actual goats and camels that produce milk and meat and stinky little goats and camels rather than simply holding hoards of rocks you can’t eat.  There are no cute little baby golds.

“Money” is a lousy store of value.

There is over $700 Trillion of ‘notional’ value floating around in the magical free market place.  This is enough to buy all the little goats and camels for 30 years but that’s not a problem if you don’t need one right now so you can sacrifice to the gods and read the entrails for augury.  Should everyone need ALL THOSE GOATS AT ONCE RIGHT NOW! there is literally not enough “money” in the world, even including camels.  Store of value?  Goats 1, Rocks 0.

It’s really all about convenience.

Nobody wants to smell like a goat herder and hard think make brain hurt.  Especially pampered privileged Masters of the Universe types.  They whine and complain not only over their pwecious wittle fee fees but are constantly surprised when the magical marketplace doesn’t conform to their ignorant expectations.

Ah, if only we had less uncertainty.  And it was a bad lie, I’m taking a mulligan, it’s not that I’m a horrible golfer at all.

Dollar dominance is a historical oddity.  It’s partly a result of the fact that after WW II we were the only economy left standing.  It’s also a result of elite intellectual laziness and the fact that there are penalties for being the world’s reserve currency.

Felix TV: Will the US downgrade be a nonevent?

Felix Salmon, Reuters

Jul 27, 2011 12:50 EDT

The fact is that Treasury bonds are going to remain the global fixed-income benchmark, simply because there’s no alternative. There are $9.3 trillion in marketable Treasury securities outstanding – that’s five times the debt stock of triple-A countries like France, Germany, or the UK. And when it comes to liquidity, the gap is even bigger: daily Treasury volume of $580 billion is 17 times higher than the next most liquid triple-A security, UK gilts. And UK gilts are denominated in pounds, which is hardly a global reserve currency; they’re certainly not much use for, say, financial institutions needing collateral for their dollar-based triparty repo transactions.

Jul 28 2011

Damned If We Do, Damned If We Don’t

Apparently the rating agencies don’t like either the Republican or Democratic plans to raise the debt ceiling and address the deficit. Love them or hate them, the rating agencies still have huge power over credit ratings and have warned raising the debt ceiling and cutting spending is not enough:

Market analysts and investors increasingly say yes. The outcome won’t be quite as scary as a default, but financial markets would still take a blow. Mortgage rates could rise. States and cities, already strapped, could find it more difficult to borrow. Stocks could lose their gains for the year.

“At this point, we’re more concerned about the risk of a downgrade than a default,” said Terry Belton, global head of fixed income strategy at JPMorgan Chase. In a conference call with reporters Tuesday, Belton said the loss of the country’s AAA rating may rattle markets, but it’s “better than missing an interest payment.”

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Standard & Poor’s warned earlier this month that there was a 50-50 chance of a downgrade, if Congress and President Obama failed to find a “credible solution to the rising U.S. government debt burden.” S&P said it may cut the U.S. rating to AA within 90 days. Passing a $4 trillion agreement could prevent a downgrade, S&P said.

The other chief rating agency, Moody’s Investors Service, said the U.S. government would likely keep its top rating if it avoids a default.

CNN’s Erin Burnett also reported from her sources that neither bill may be adequate to keep the US credit rating from being down graded:

“I think it is important to emphasize that most people think both of the plans are really Band-Aids and don’t deal in any significant way with the spending and cost issues in the country,” Burnett said. “The issue was that Speaker Boehner’s plan does not cut enough spending right away. Harry Reid’s plan would cut about $2.7 trillion. Just because it is bigger than Speaker Boehner’s plan is really the reason the Boehner plan may still trigger a downgrade.”

The ratings agencies aren’t alone in their criticism. there is plenty of opposition from both sides in the deficit debacle. Zero Hedge noted:

Paul Craig Roberts – a true conservative, who was a Wall Street Journal editor and Assistant Secretary of the Treasury under Reagan – slams the Republican intransigence on the debt.

The Reid plan came under fire from Anti War for its alleged trillion dollar saving from the draw down of the two wars:

   Senate Democrats have issued a new “savings” plan that would nominally pare the projected deficit by over $1 trillion simply by assuming that the costs of the wars in Iraq and Afghanistan will eventually go away by virtue of those wars ending.    

   This has spawned a myriad of criticism, including a leaked Goldman Sachs memo warning that the nation faces a credit downgrade if it tries to use this sort of on-paper gimmick instead of actual cuts in spending.    

   And indeed, while politicians may be comfortable with the notion that the wars will end at some point in the next decade, it isn’t clear at all that this will be the case. Officials are already talking up continuing in Afghanistan long beyond 2014, while the war in Iraq seems set to be extended for “years to come.”  

   The memo noted that this war savings was only a problem “without a credible follow-on process,” which is to say an actual effort to end those wars. Given strong Democratic opposition to other efforts to end wars (including the ongoing war in Libya), it seems hard to believe officials are looking at doing anything credible about the seemingly endless conflicts.

The damage may already have been done. A small ratings agency based in China, Dagong Global Credit Rating Co., said it would down grade the US next week even if the debt ceiling is raised before August 2, citing the acrimonious fight has already damaged investor confidence.

It would seem that the Republicans and Democrats have already driven off the cliff and the crash will be as early as next week.

Jul 28 2011

Punting the Pundits

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Robert Sheer: Debt Madness Was Always About Killing Social Security

This phony debt crisis has now passed through the looking glass into the realm where madness reigns. What should have been an uneventful moment in which lawmakers make good on the nation’s contractual obligations has instead been seized upon by Republican hypocrites as a moment to settle ideological scores that have nothing to do with the debt.

Hypocrites, because their radical free market ideology, and the resulting total deregulation of the financial markets, is what caused the debt to spiral out of control this last decade. That and the wars George W. Bush launched but didn’t have the integrity to responsibly finance. The consequence was a banking bubble and crash leading to a 50 percent run-up of the debt that has nothing to do with the “entitlements” that those same Republicans have always wanted to destroy.

New York Times Editorial: America’s Credibility Is at Risk

Until this week, Wall Street has shrugged off each new low in the debt-limit debate, confident – in a whistling-past-the-graveyard kind of way – that Washington would raise the debt limit on time.

Many Republican politicians have insisted that the economy and the country could shrug off a default. Up to Wednesday, the most conservative members of the House seemed to be welcoming a default. They refused to support a plan to raise the limit – and impose overly harsh spending cuts – put forward by Speaker John Boehner.

The cost of this fecklessness should now be clear to everyone. The Dow Jones industrial average dropped nearly 200 points on Wednesday and is down 421 points since Friday when Mr. Boehner left President Obama waiting for a phone call that never came about a deal that never closed.

Cliff Schecter: The Republican Party No Longer Has Its Country’s Best Interests at Heart

Once upon a time, in a land that now seems to have been populated by tooth fairies and unicorns, there was a political party that had a set of core beliefs to which they actually adhered.

Among them was that actually balancing the budget, as opposed to just talking about it, was sacrosanct. Slow change, while necessary, had to be balanced against the traditions of the United States, ones that had mostly served us well over two centuries.

Foreign military adventures should be limited to our national security interests. And one of the single most important components of diplomacy was protecting the economic interests not only of an elite few, but of the great many Americans who toiled in our factories and fields.

Robert Reich: The Biggest Driver in the Deficit Battle: Standard & Poor’s

If you think deficit-reduction is being driven by John Boehner or Harry Reid, think again. The biggest driver right now is Standard & Poor’s.  

All of America’s big credit-rating agencies – Moody’s, Fitch, and Standard & Poor’s – have warned they might cut America’s credit rating if a deal isn’t reached soon to raise the debt ceiling. This isn’t surprising. A borrower that won’t pay its bills is bound to face a lower credit rating.

But Standard & Poor’s has gone a step further: It’s warned it might lower the nation’s credit rating even if Democrats and Republicans make a deal to raise the debt ceiling. Standard & Poor’s insists any deal must also contain a credible, bipartisan plan to reduce the nation’s long-term budget deficit by $4 trillion – something neither Harry Reid’s nor John Boehner’s plans do.

E. J. Dionne, Jr.: Yes to moderation, no to centrism

What the country yearns for is moderation. What we hear about is the political center. But centrism has become the enemy of moderation.

Moderation in politics is about balance. It means believing in a vibrant and innovative private sector and a government substantial enough to do what the private sector doesn’t, and it means enforcing sensible rules for economic competition. It means incentives for success, help for those making their way up, and security for the sick, the aging, the poor, the unlucky. It means balancing our love of individualism and our desire for community. This, in turn, means that reducing the budget deficit can’t rely only on cutting programs. Yes, taxes need to go up.

All the polls I have ever seen peg the vast majority of Americans as moderate by this definition.

Jon Walker: Disaster Legislating; A Dangerous New Process

Some people are worried about the potential Constitutional crisis if President Obama uses the 14th Amendment to declare the debt ceiling voting unconstitutional. The reality though is that we are already in the midst of a full blown Constitutional crisis that is will likely only get worse in the coming years.

Whether or not you think it is a good idea, the Constitution was designed such that any major policy change should take the agreement of the House, the Senate, and the President, unless the President’s veto could be overturned by the House and Senate.

Bill McKibben: Tim DeChristopher Is Going to Jail, Now It’s Our Turn

“The idea of wilderness needs no defense. It only needs more defenders.” –Ed Abbey

“The Eyes of the Future are looking back at us and they are praying for us to see beyond our own time.” –Terry Tempest Williams

There’s something about the redrock canyons that seems to inspire great writing — I was lucky enough to know Ed Abbey and to count Terry Tempest Williams as a great friend. Both wrote — and both fought. They fulfilled the duty they owed that great landscape. They fought to protect great chunks of land.

And they’re joined by Tim DeChristopher, sentenced today to 24 months in prison for a creative act of resistance straight out of the Monkey Wrench Gang. He didn’t damage anything except the pride of the Bureau of Land Management, when he posed as a bidder and won 14 parcels of land at an oil-and-gas lease auction. They were gorgeous pieces of land that he protected — but far more, he was acting on behalf of every landscape left on the planet.

David Sirota: The Long-Term Legacy of 9/11

Nearly 10 years later, new studies point to lasting effects on the nation’s mental, physical and political health

Like most Americans, I can still remember it as if it were yesterday: The images of the burning building on the screen, the murmurings of bewildered morning TV anchors, the burst of “holy shit!” subject lines in my email box and then, shattering the slow-mo dreamlike quality of it all, the bark of a police officer telling me to get out of the Capitol complex as quickly as possible because a plane-turned-missile was headed our way.

This was my particular 9/11 experience — a Washington of complete chaos where chest-thumping tough-on-terror congresspeople were instantly transformed into cowering child-trampling George Costanzas as they fled for the door. I’m sure everyone fortunate enough to survive that day has their own unique flashback — it was, after all, a generation’s “where were you when” moment a la the JFK assassination. Only now, approaching the 10-year anniversary of 9/11, a trio of new studies show the post-traumatic stress of the attacks resulted in deep cultural shifts that go way beyond mere haunting mental images and bouts of insomnia.

Jul 28 2011

On This Day In History July 28

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

July 28 is the 209th day of the year (210th in leap years) in the Gregorian calendar. There are 156 days remaining until the end of the year.

On this day in 1868, following its ratification by the necessary three-quarters of U.S. states, the 14th Amendment, guaranteeing to African Americans citizenship and all its privileges, is officially adopted into the U.S. Constitution.

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In the decades after its adoption, the equal protection clause was cited by a number of African American activists who argued that racial segregation denied them the equal protection of law. However, in 1896, the U.S. Supreme Court ruled in Plessy v. Ferguson that states could constitutionally provide segregated facilities for African Americans, so long as they were equal to those afforded white persons. The Plessy v. Ferguson decision, which announced federal toleration of the so-called “separate but equal” doctrine, was eventually used to justify segregating all public facilities, including railroad cars, restaurants, hospitals, and schools. However, “colored” facilities were never equal to their white counterparts, and African Americans suffered through decades of debilitating discrimination in the South and elsewhere. In 1954, Plessy v. Ferguson was finally struck down by the Supreme Court in its ruling in Brown v. Board of Education of Topeka.

The Fourteenth Amendment (Amendment XIV) to the United States Constitution was adopted on July 29, 1868 as one of the Reconstruction Amendments.

Its Citizenship Clause provides a broad definition of citizenship that overruled the decision in Dred Scott v. Sandford (1857), which held that blacks could not be citizens of the United States.

Its Due Process Clause prohibits state and local governments from depriving people (individual and corporate) of life, liberty, or property without certain steps being taken. This clause has been used to make most of the Bill of Rights applicable to the states, as well as to recognize substantive rights and procedural rights.

Its Equal Protection Clause requires each state to provide equal protection under the law to all people within its jurisdiction. This clause later became the basis for Brown v. Board of Education (1954), the Supreme Court decision which precipitated the dismantling of racial segregation in the United States.

The there is that pertinent and pesky Article 4:

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Validity of public debt

Section 4 confirmed the legitimacy of all United States public debt appropriated by the Congress. It also confirmed that neither the United States nor any state would pay for the loss of slaves or debts that had been incurred by the Confederacy. For example, several English and French banks had lent money to the South during the war. In Perry v. United States (1935), the Supreme Court ruled that under Section 4 voiding a United States government bond “went beyond the congressional power.” Section 4 has been cited (during the debate in July of 2011 over whether to raise the U.S. debt ceiling) by some legal experts and Democratic members in the U.S. House Democratic caucus, as giving current President Barack Obama the authority to unilaterally raise the debt ceiling if the Congress does not appear to be able to pass an agreement by Tuesday, August 2, 2011. The White House Press Office and President Obama have said that it will not be resorted to, though Democratic members of the House that support the move are formally petitioning him to do so “for the sake of the country’s fiscal stability.” A final resolution to the crisis has not yet been decided upon.

Jul 28 2011

Countdown with Keith Olbermann

If you do not get Current TV you can watch Keith here:

Watch live video from CURRENT TV LIVE Countdown Olbermann on www.justin.tv

Jul 28 2011

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 Turban bomber kills Kandahar mayor in troubled Afghan south

By Mamoon Durrani, AFP

5 hrs ago

The mayor of Kandahar, a close ally of Afghan President Hamid Karzai, was assassinated in a suicide attack Wednesday — the latest in a string of political murders in the key southern region.

The killing came two weeks after Karzai’s powerful brother was shot dead in the city and is a further setback for US-led efforts to control the Taliban’s spiritual home as foreign troops start to withdraw.

The suicide bomber detonated explosives hidden in his turban and killed mayor Ghulam Haidar Hameedi, who was talking to locals in the courtyard of Kandahar’s city hall, police chief Abdul Razeq told AFP.