11/29/2010 archive

Evening Edition is an Open Thread

1 World scrambles to deal with WikiLeaks fallout

by Charles Onians, AFP

2 hrs 44 mins ago

Pay Freeze Decision Smacks of Too-Cute Political Team Running the Show

By: David Dayen Monday November 29, 2010 12:06 pm

There are two options. One is that Obama necessarily gravitates toward people with really bad economic ideas, and as a result of this advice makes really bad economic decisions. The other, and I would probably say the right, option is that the economic team isn’t really driving the debate, certainly not anymore. The political team thinks in terms of 11-dimensional chess and putting Republicans in a bad spot and all of the things you’d expect out of this federal pay freeze decision. Never mind that this hasn’t worked in the entire history of the Obama Administration. So a politically-minded official saying that unemployment is structural reinforces that we should really get around to those budget cuts which will please centrists in 2012.

There’s a lot of turmoil on the economic team right now, with new people moving in and out. The political team, outside of Rahm Emanuel, has remained basically stable, certainly in terms of worldview. And that worldview (mis)reads polls, and thinks that being the “good guys” who cut worker pay and freeze discretionary spending to “look tough” on the deficit is eminently responsible. It’s also responsible to extend unemployment benefits to people who have no other visible means of support, but that’s out of their hands, and if they fail, ah well. What’s important is to convey responsibility to the elites, who will pat them on the head as they carry out their austerity plans.

Oh, and while raising taxes on or otherwise “punishing” the banksters will instantly result in these “talented” Masters of the Universe going Galt, the same logic doesn’t apply at all to government employees-

"Responsible" Obama Administration Doesn’t Think Federal Employees Facing Pay Cut Will Leave to the Private Sector

By: David Dayen Monday November 29, 2010 11:30 am

On a conference call just now, White House Communications Director Dan Pfeiffer and U.S. Chief Performance Officer and the Office of Management and Budget’s Deputy Director for Management Jeffrey Zients defended the White House’s [proposed pay freeze ] for federal employees from the charge that this will drive talented workers out of government as they see no prospects for individual advancement. Seeking a better return on their talent, the theory goes, they would move to the private sector, probably a government contractor, where their services can be “rented” from the government at a higher rate. If the government has the same amount of services to deliver and less skilled know-how at their disposal, they would need to draw upon that from somewhere. So under this scenario, government would end up paying more for the same pool of talent, despite freezing salaries.

Zients disputed the notion that this pay freeze will lead to a dissolution of talent. “On recruitment and retention, we believe that people come to government service for range of reasons…. We feel comfortable that we have a strong value proposition and can retain the best and brightest.” Given this, Zients didn’t feel that there would be an expanded reliance on government contracting as a result of this decision. They believe they can wring enough out of federal contracting to save $40 billion dollars, in fact.

And finally, the problem with the economy is NOT THE DEFICIT!  It’s a lack of Aggregate Demand!

Obama Flunks Economics with Pointless Federal Wage Freeze

By: Scarecrow Monday November 29, 2010 8:35 am

(F)or the umpteenth time, this President has repeated discredited Republican gibberish that when households are having to cut back spending during a recession, government should do the same thing.

That’s just wrong. Foolishly wrong. Depressingly (literally), tragically wrong.

…

With 15 million unemployed and millions more living in job and health insecurity, typical non-wealthy households have no choice but to cut back. So private spending cannot pull the economy out of the ditch as it has in the past. But that is not true of the federal government.

Government spending can pull the economy up from the bottom. And only government has the resources and the power to fill in the gap in aggregate demand to bring the economy and jobs back.

A government with its own currency is not a household. It has different abilities, different ways of affecting the economy and paying for things. It controls the money supply. And it has different responsibilities, including the obligation to pull the economy out of a deep recession, to help create jobs and foster job creation in the private sector. To do this under today’s conditions requires enhanced spending/investments by government, not less. And there has never been a better time for government to act, nor has the cost of acting ever been lower.

It’s counterproductive and stupid for the President of the United States to keep telling Americans the false argument that government needs to tighten its belt when households are tightening theirs. And it’s even worse to falsely claim that by focusing on deficit reduction, the government is “doing everything we can to help boost economic growth and spur job creation.”

As Krugman said–

(Y)ou have to wonder what it will take for serious people to realize that punishing the populace for the bankers’ sins is worse than a crime; it’s a mistake.

“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”.

Lawrence Lewis (Turkana): The war in Afghanistan enters Joseph Heller territory

Earlier this month, it was reported that one of the largest U.S. government contractors in Afghanistan was being fined nearly $70 million for having “knowingly and systematically overcharged the U.S. government.” But just two months after a whistleblower revealed the Louis Berger Group’s deliberate and systematic overcharging, the U.S. Agency for International Development awarded the company a new joint contract worth $1.4 billion. That seemingly large fine turned out to be but a minor business expense.

The one part of the U.S. effort in Afghanistan that is going very well is the contracting. Not the results of the contracting, the money being made off it. Less than two weeks ago came this news:

U.S. Army Gen. David Petraeus, the commander of international forces in Afghanistan, has ordered a dramatic expansion in contracting. Other than asking a brigadier general to investigate problems with military contracts, so far he’s failed to address their flaws.

   A McClatchy investigation has found that since January 2008, nearly $200 million in U.S. Army Corps of Engineers construction projects in Afghanistan have failed, face serious delays or resulted in subpar work. Poor recordkeeping made it impossible for McClatchy to determine the value of faulty projects before then. The military tries to recover part of a project’s cost, but in many cases, the funds were already spent.

McClatchy’s investigation also found that the Corps accepts bids that don’t cover such obvious costs as security or the contractor’s profit margin. One might think security costs in Afghanistan would be significant. One might think a contractor’s profit margin should be a factor when considering whether to send said contractor piles of taxpayers’ cash. Remember that whole deficit thing? Apparently, the Corps doesn’t. And, of course, it gets even worse. . . .

It’s hard to verify who is whom. It’s hard to verify where the billions of U.S. tax dollars are going. It’s hard to verify what exactly is supposed to be accomplished by continuing the war. It’s hard to verify the existence of an exit strategy and it’s hard to verify the existence of an exit date.

To be continued.

Joe Conason: Iran’s Best Friends on Capitol Hill

Nuclear weapons treaties are like currency exchange rates-always vitally important to the national interest but often stunningly dull, not to say impenetrable. Yet Washington has suddenly been jolted awake by Republican threats to stall if not kill the Obama administration’s New START treaty.

The irony is that by doing so, they would do little to protect American security while providing moral support to Iran, North Korea and any other rogue regime seeking to arm itself with nukes.

By reducing the bilateral limits on deployed warheads and delivery systems, and by modernizing the verification and monitoring system contained in the original START treaty, the new agreement achieved a breakthrough in arms control and improved U.S. relations with Moscow. The equally important strategic objective, however, was to establish a renewed bilateral commitment to arms control that would strengthen the international effort to prevent Iran from building nuclear weapons.

Monday Business Edition

The World is running out of money to insure the fictional assets of ‘senior creditors’ and banksters.

The problem is fundamentally leverage, the intellectual market laziness that makes financial institutions think they are entitled to make unlimited bets on 36:1 payouts every time.

When things get even a little difficult they whine and whine about how badly they are mistreated, but the fact of the matter is that there’s going to be a haircut taken and the obvious target is the biggest one.  Spain is the next to go and Italy after that.  Euros were such a good bet.

And if you were smart and doubled down every chance you could get, you’d build up quite a pile of chips.

Not the kind you can eat.

So what are they worth?  Whatever Rick will pay for them in some medium of exchange that’s good outside the casino.  Unless you want to barter, I have two passes out of Casablanca.

We’ve talked about Ireland and Iceland, but I wonder how many people are familiar with Dubai?

Today, Dubai has emerged as a global city and a business hub. Although Dubai’s economy was built on the oil industry, currently the emirate’s model of business, similar to that of Western countries, drives its economy, with the effect that its main revenues are now from tourism, real estate, and financial services.

I like this one because it has lots of numbers-

Dubai mulls sale of corporate champions

By Simeon Kerr in Dubai, Financial Times

Published: November 28 2010 18:42

Dubai is mulling the privatisation of home-grown corporate champions as a means to start paying down its estimated $110bn in debts, senior officials said.

Let’s just stop right there and recognize that we’re talking about an Ireland.  The proposal is to sell minority stakes in State Owned and Sovereign Wealth Fund Owned industries like their National Airline.

Mr Shaibani was speaking at an open forum held on Sunday, a rare moment of media engagement in an emirate that has faced a deluge of negative press since shocking markets with its standstill request a year ago, which ended with the restructuring of $25bn in debts at troubled conglomerate Dubai World.

Yup, that Dubai World, the one we were going to sell our ports to.  Now Dubai has already had a bailout from the UAE to the tune of $10 Billion in February of 2009 and assures us with the utmost gravity and reliability, just like Spain and Portugal, that they don’t need any bailouts thank you very much.

We are rapidly reaching the point where negative outcomes for the bankster class are inevitable due to the sheer volume of their theft.

Business News below.

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.

November 29 is the 333rd day of the year (334th in leap years) in the Gregorian calendar. There are 32 days remaining until the end of the year.

On this day in 1963, one week after President John F. Kennedy was fatally shot while riding in a motorcade in Dallas, Texas, President Lyndon Johnson establishes a special commission, headed by Supreme Court Chief Justice Earl Warren, to investigate the assassination.

After 10 months of gathering evidence and questioning witnesses in public hearings, the Warren Commission report was released, concluding that there was no conspiracy, either domestic or international, in the assassination and that Lee Harvey Oswald, the alleged assassin, acted alone. The presidential commission also found that Jack Ruby, the nightclub owner who murdered Oswald on live national television, had no prior contact with Oswald.

According to the report, the bullets that killed President Kennedy and injured Texas Governor John Connally were fired by Oswald in three shots from a rifle pointed out of a sixth-floor window in the Texas School Book Depository. Oswald’s life, including his visit to the Soviet Union, was described in detail, but the report made no attempt to analyze his motives.

Cables shine light into secret diplomatic channels

The confidential material was obtained by WikiLeaks and released despite requests by the U.S. government not to do so

By Scott Shane and Andrew W. Lehren

WASHINGTON  – A cache of a quarter-million confidential American diplomatic cables, most of them from the past three years, provides an unprecedented look at backroom bargaining by embassies around the world, brutally candid views of foreign leaders and frank assessments of nuclear and terrorist threats.

Some of the cables, made available to The New York Times and several other news organizations, were written as recently as late February, revealing the Obama administration’s exchanges over crises and conflicts. The material was originally obtained by WikiLeaks, an organization devoted to revealing secret documents. WikiLeaks intends to make the archive public on its Web site in batches, beginning Sunday.

The anticipated disclosure of the cables is already sending shudders through the diplomatic establishment, and could conceivably strain relations with some countries, influencing international affairs in ways that are impossible to predict.

In the kitchen, oftentimes we desire to thicken a sauce or a broth without significantly changing its flavor.  There are several ways to do this, and the physicochemical principles behind them are quite different in many cases.  One way of thickening things is just to reduce them (i.e., boil them down), but that often involves chemical changes that alter flavor.

Other ways of thickening things including adding small amounts of rather bland ingredients that cause the sauce or other material to become thicker without extreme heating, or to create a complex emulsion that thickens materials due to physical rather than chemical changes.  We shall examine some of both this evening.

Evening Edition is an Open Thread

1 WikiLeaks unleashes flood of confidential US cables

by Joseph Krauss, AFP

1 hr 20 mins ago