03/01/2012 archive

Over that last few weeks with the winding down of the wars in Iraq and Afghanistan, there has been much hype over Iran and its nuclear capability and threats from Israel of military intervention. Despite all the intelligence and statements from the ruling Ayatollahs that Iran is not seeking to develop nuclear weapons, the US government and pundits continue to push the meme in the media that Iran must not be allowed to continue to develop nuclear “capabilities.” Much of this sounds very familiar hearkening back to the lies of 2003’s run up to the war in Iraq. The major media is banging out the message that a war with Iran is inevitable and have failed to disclose to the public the relationship of some of its guests to government agencies or their guests own self interests for monetary gain should there be a war.  As Talking Points Media points out the talk of a war with Iran has reached “fever pitch”:

The tone in reporting on a potential military conflict with Iran has entered a new phase in recent weeks, with the saber rattling seemingly reaching a fever pitch.

From the New York Times recently reporting on how Israel would carry out a strike against Iran, to pundits casually throwing around the words “bomb Iran,” to presidential candidates trying to out-tough each other on a daily basis, the prospect of a potential military conflict with Iran is increasingly discussed less in terms of “if” but of “when.”

Glen Greenwald at Salon focused on the relationship of NBC News with retired Gen. Barry McCaffrey whose reliability has come into question:

In 2009, The New York Times‘ David Barstow won the Pulitzer Prize for his two–part series on the use by television networks of retired Generals posing as objective “analysts” at exactly the same time they were participating – unbeknownst to viewers – in a Pentagon propaganda program. Many were also plagued by undisclosed conflicts of interest whereby they had financial stakes in many of the policies they were pushing on-air. One of the prime offenders was Gen. Barry McCaffrey, who was not only a member of the Pentagon’s propaganda program, but also, according to Barstow’s second stand-alone article, had his own “Military-Industrial-Media Complex,” deeply invested in many of the very war policies he pushed and advocated while posing as an NBC “analyst”:

   Through seven years of war an exclusive club has quietly flourished at the intersection of network news and wartime commerce. Its members, mostly retired generals, have had a foot in both camps as influential network military analysts and defense industry rainmakers. It is a deeply opaque world, a place of privileged access to senior government officials, where war commentary can fit hand in glove with undisclosed commercial interests and network executives are sometimes oblivious to possible conflicts of interest.

   Few illustrate the submerged complexities of this world better than Barry McCaffrey. . . . General McCaffrey has immersed himself in businesses that have grown with the fight against terrorism. . . .

   Many retired officers hold a perch in the world of military contracting, but General McCaffrey is among a select few who also command platforms in the news media and as government advisers on military matters. These overlapping roles offer them an array of opportunities to advance policy goals as well as business objectives. But with their business ties left undisclosed, it can be difficult for policy makers and the public to fully understand their interests.

   On NBC and in other public forums, General McCaffrey has consistently advocated wartime policies and spending priorities that are in line with his corporate interests. But those interests are not described to NBC’s viewers. He is held out as a dispassionate expert, not someone who helps companies win contracts related to the wars he discusses on television.

Not exactly an unbiased reliable source nor especially coherent:

Among the many attributes one might attribute to McCaffrey and his report, incoherence is near the top of the list. He does, as I noted, make statements suggesting imminent military conflict, including his claim that “there is a significant probability of Iranian escalation in the coming 90 days” and “they are likely to further escalate,” along with the title of his first page: “Creeping toward war.” But as several emailers point out, he also tacks onto the end of the discussion on the first page the assessment of “15% probability of major military action in the coming 90 days.” The document is devoted to making military conflict appear quite likely, though he places a relatively low percentage on “major military action in the coming 90 days.”

Knowing all this, NBC News still calls McCaffrey an analyst, gives him an unchallenged platform and beats the drums of another unnecessary war.

“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”.

Nicolas D. Kristof: Born to Not Get Bullied

When she was in high school, Lady Gaga says, she was thrown into a trash can.

The culprits were boys down the block, she told me in an interview on Wednesday in which she spoke – a bit reluctantly – about the repeated cruelty of peers during her teenage years. [..]

Searching for ways to ease the trauma of adolescence for other kids, Lady Gaga came to Harvard University on Wednesday for the formal unveiling of her Born This Way Foundation, meant to empower kids and nurture a more congenial environment in and out of schools.

Lady Gaga is on to something important here. Experts from scholars to Education Secretary Arne Duncan are calling for more focus on bullying not only because it is linked to high rates of teen suicide, but also because it is an impediment to education.

Robert Reich: Stop Starving Public Universities and Shrinking the Middle Class

Last week Rick Santorum called the President “a snob” for wanting everyone to get a college education (in fact, Obama never actually called for universal college education but only for a year or more of training after high school).

Santorum needn’t worry. America is already making it harder for young people of modest means to attend college. Public higher education is being starved, and the middle class will shrink even more as a result.

Remind me again why Republicans are worse.  Court appointments?

Federal judge weighs whether to let regulators rein in oil speculators

By Kevin G. Hall, McClatchy Newspapers

Monday, February 27, 2012

WASHINGTON – A federal judge on Monday refused to halt efforts by a key regulator to limit excessive speculation in the trading of oil contracts – which is driving up oil and gasoline prices – but hinted that he might soon rule in favor of Wall Street and let speculation go unchecked.

…

Judge Wilkins expressed concern that Congress would direct the agency to impose market-wide limits without detailed study beforehand. President Barack Obama nominated Wilkins to the bench and the Senate confirmed him in 2010.

…

“That seems to me an astonishing position to take,” the judge told CFTC deputy general counsel Jonathan Marcus, who had said that Congress ordered the agency to first impose limits on oil trading, then other commodities.

As a sign of how high the stakes are, the trade groups hired Eugene Scalia to make their case. He’s the son of outspoken conservative Supreme Court Justice Antonin Scalia, and last year he won a key challenge to a Dodd-Frank rulemaking being carried out by the Securities and Exchange Commission. In that case, the courts struck down provisions that would have made it easier for shareholders to run candidates for corporate boards.

Congress ordered the CFTC to impose position limits, concerned that financial speculators now far outnumber producers, merchants and end users of oil and other commodities in the trading of contracts for future delivery of product known as futures contracts. Reporting by McClatchy has shown that these speculators now outnumber by more than 2-to-1 the traders who actually produce or consume oil.

Oh, after 3 and a half years it’s too soon to tell.

Gotcha.

All I need to know about economics I learned by the sixth grade.

There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.

So I’ve mentioned letsgetitdone’s recent series on Modern Monetary Theory in reaction to Dylan Matthews’ piece and there are some updates I’d like to draw to your attention.

First, some more reactions have come in-

The WaPo MMT Post Explosion: Kevin Drum’s Take on MMT

letsgetitdone, Corrente

Sat, 02/25/2012 – 1:19am

He … favorably quotes Jared Bernstein’s post, which I recently evaluated, coming out against the idea that deficit reduction is “pure virtue,” and also coming out for the view we need to use Government’s ability “… to run large deficits in times of market failure” to replace lost aggregate demand. But Kevin doesn’t get why Jared says this is MMT’s greatest contribution. Kevin wonders why this is any different from what ” Old Keynesianism. And post-Keynesianism. And New Keynesianism” say, and he asks: “If that’s really MMT’s most important contribution, who needs it?”

…

It is about our fear of inflation and our assessment of the risk of it. But it’s also about how we prioritize the risk of inflation against the reality of unemployment other than a “frictional” rate due to job transitions of 1 – 2%. Even 4% Unemployment measured by the U6 would still leave about 7.2 million Americans unemployed after a vigorous post-Keynesian expansion.

Those people would pay the price for the rest of us who are more concerned with containing inflation than with employing them. How serious is this price? Martin Watts and Bill Mitchell (one of the earliest and still leading developers of MMT) offer us a very good idea of how high this price is for those selected to pay the price of a 4% U6 target, much less a 4% U3 target which is what I suspect Kevin is referring to.

Kevin Drum refers to the NAIRU, as if he and all economists agree that there must be a trade-off between inflation and unemployment at a to be determined NAIRU level. But, I wonder if he knows that MMT economists view the Non-Accelerating Inflation Rate of Unemployment, as both “a crock” and as closely tied to the neoliberal economic paradigm that MMT opposes, and specifically to its acceptance of the idea that there must be an unemployed “buffer stock” of people who want to work, but must stay unemployed, in order to contain inflation?

…

MMT is always about policy, mostly fiscal, not monetary, that will enable certain economic, social, cultural, environmental, and political outcomes, and disable other outcomes in each of these categories. It is never about running deficits or surpluses as targets for their own sakes. Whether deficits, or surpluses occur are byproducts of MMT policy impacts, and are largely endogenous to the economy. In themselves they mean nothing. Only the economic policies and outcomes that drive them are important.

The WaPo MMT Post Explosion: Matthew Yglesias’s Reaction to MMT

letsgetitdone, Corrente

Mon, 02/27/2012 – 2:49am

Reading this, I had the definite feeling that the old aphorism about people who fight new paradigms and ridicule/marginalize their adherents, and often opine later that there is nothing new there, is all too true. Matty ought to give everyone a break and admit that the mainstream has been beating the drums of insolvency terrorism since shortly after the Obama Administration began and still is. So, mainstream people have been saying that there can be an insolvency problem in very large numbers, and if they are doing so less now, it’s only because any fool can plainly see that austerity is failing all over the world, as MMT predicted when the austerity craze started, and also because many more people are reading MMT blogs than was the case two years ago, and they are beginning to pick up some of the core insights.

…

I wonder what the mainstream would have to say about Matty’s implication, that its economists haven’t really been being ignorant and dumb; just elitist, dishonest, and manipulative.

I lived through the inflation of the 70s, and I can attest to its reality, and severity for some people, but relatively mild impact for others. I also think that the causes of that inflation were not simply increases in nominal unit labor costs, but increases in interest costs caused by the Federal Reserve’s policies, the actions of the oil cartel, and particularly the Saudis, the activity of speculators, the constraining regulations on Natural Gas production, and the failure of the Carter Administration to employ price controls and rationing due to its neoliberal biases.

…

Galbraith was clearly talking about the likelihood of demand-pull inflation inflation occurring in the United States, and was also implying that the Weimar and other WWI aftermath inflations had nothing to do with that policy. Also, in referring to “dodgy government financial practices” in the last sentence, Matty seems to be saying that the Weimar Government was guilty of such practices, but given the size of their Versailles-imposed reparations to be repaid only in goldmarks or foreign exchange, what could the German Government have done to recover from the War, except try the money-printing strategy to try to get the foreign exchange needed? If anybody was guilty of “dodgy financial practices” it was the Versailles peacemakers who, in imposing a Roman peace on Germany, insisted on payment conditions that the Germans could not possibly meet, especially since the French and Belgians seized control of the Ruhr and with it much of Germany’s industrial capacity in 1923.

…

I hesitate to say what MMT might recommend in the two cases of increasing world-wide demand, highlighted by Matty, because I’m not sure that all of us would say the same thing, nor am I one of the economists developing the MMT approach. But, speaking as someone who’s been researching MMT for some time, in the ’70s case, I would have placed domestic price and wage controls on commodities except on foreign sales to oil exporting countries, where prices of exports would have been pegged to increases in the prices of their oil exports. I would have also recommended de-regulating natural gas, and oil rationing to cut demand for the cartel-restricted supply. I would not have implemented higher interest rates as the Fed did. Until the very end, when the economic system was driven into recession, that only “fed” the inflation fire, while creating “stagflation.” I think such measures, consistent with MMT as I understand it, would have “choked off” the ’70s inflation in a much shorter time than the policies followed in the 1970s and the early 1980s.

As for the present increasing demand on the world’s food supply, that’s certainly not being caused by deficit spending by an International currency issuer, since there is none. And the only remotely similar entity to that is the ECB which is gradually choking off economic activity in the Eurozone to save its financial elites. I think commodity inflation must be fought by Governments legislating and enforcing existing laws against speculation, preventing cost-push inflation of the kind we saw in the 70s using the measures outlined, and by allowing commodity markets to adjust to the need for more supply, or producers to create substitutes for commodities in short supply. I also think control of speculation and market forces will probably suffice to relieve the pressure we’ve been seeing in commodities.

If that fails, however, then Governments whose economies can produce abundant supplies will have to place export controls on commodities necessary for their own populations in order to contain domestic inflation. That will not be popular. But we do still live in a nation state system, and the first responsibility of national governments still is to the general welfare of their own populations. Of course, such measures will result in other nations placing their own export controls on abundant commodities, and nations will have to negotiate bilateral agreements to serve their respective populations.

…

The truth, again, is that the inflation of the ’70s was caused by a complex of inter-related phenomena and the rise in unit labor costs was only one of these. It may have been the one that neoliberals focused on in the ’80s to avoid pinning the blame for what happened on the Cartel, the failures of the Carter Administration and the Fed’s policies, and to claim that the inflation was due to demand-pull factors, but that doesn’t mean that their analysis was correct.

Today, we know that Paul Volcker and Jimmy Carter handled the 1970s inflation incompetently, and we also recognize that the behavior of the Cartel, and the excessive regulations on natural gas made this a cost-push and not a demand-pull inflation, and that the Fed policy of targeting the unit cost of labor as a trigger for raising interest rates for the next 30 years or so was part of its low inflation at the cost of high unemployment policy that it illegally engaged in, in violation of the Humphrey-Hawkins Act.

…

(M)y thinking about what went wrong in the ’70s, and also MMT thinking about it are both very different from his. As a result, I think corresponding explanations of why it won’t happen again are likely to be very different also. Again, I don’t think what we have to acknowledge is that increases in unit labor costs caused the ’70s inflation.

In fact, I think that is a very partial, and therefore false narrative of what happened then. And I’m afraid I also think that Matty ought to take his own advice and acknowledge the roles of 1) the Cartel, 2) the Federal Reserve, and 3) the Carter Administration as all being much more important in the severity of that cost-push inflation then the rise in unit labor costs was.

…

If the ’70s are not to happen again, it will not be enough to rely on the more globalized economy of 2012, with its cross-border competition among workers, creating a race to the bottom in wages, and untoward returns to capital.

The Federal Government will have to be much more aggressive in implementing a response, recognizing that an inflation like that in the 70s would be cost-push and not demand-pull. And that to manage it, policies that choke off government deficit spending, and tighten credit, will be much more costly than policies involving trade retaliation, price controls, rationing, substitution of commodities subject to cost-push, and above all continuous and very substantial investments in government programs developing alternative energy sources.

There is also a 4 part response to 2 pieces by Dean Baker-

• The WaPo MMT Post Explosion: Dean Baker Weighs In on MMT
• The WaPo MMT Post Explosion: Dean Baker’s Second Try On MMT (1)
• The WaPo MMT Post Explosion: Dean Baker’s Second Try On MMT (2)
• The WaPo MMT Post Explosion: Dean Baker’s Second Try On MMT (3)

but I think I’ll save those for another post.

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.

March 1 is the 60th day of the year (61st in leap years) in the Gregorian calendar. There are 305 days remaining until the end of the year.

On this day in 1961, President John F. Kennedy issues Executive Order #10924, establishing the Peace Corps as a new agency within the Department of State. The same day, he sent a message to Congress asking for permanent funding for the agency, which would send trained American men and women to foreign nations to assist in development efforts. The Peace Corps captured the imagination of the U.S. public, and during the week after its creation thousands of letters poured into Washington from young Americans hoping to volunteer.

The Peace Corps is an American volunteer program run by the United States Government, as well as a government agency of the same name. The mission of the Peace Corps includes three goals: providing technical assistance, helping people outside the United States to understand U.S. culture, and helping Americans understand the cultures of other countries. Generally, the work is related to social and economic development. Each program participant, (aka Peace Corps Volunteer), is an American citizen, typically with a college degree, who works abroad for a period of 24 months after three months of training. Volunteers work with governments, schools, non-profit organizations, non-government organizations, and entrepreneurs in education, hunger, business, information technology, agriculture, and the environment. After 24 months of service, volunteers can request an extension of service.

Kennedy appointed his brother-in-law Sargent Shriver to be the program’s first director. Shriver fleshed out the organization with the help of Warren Wiggins and others. Shriver and his think tank outlined the organization’s goals and set the initial number of volunteers. The program began recruiting in July, 1962.

Until about 1967, applicants had to pass a placement test that tested “general aptitude” (knowledge of various skills needed for Peace Corps assignments) and language aptitude. After an address from Kennedy, who was introduced by Rev. Russell Fuller of Memorial Christian Church, Disciples of Christ, on August 28, 1961, the first group of volunteers left for Ghana and Tanzania. The program was formally authorized by Congress on September 22, 1961, and within two years over 7,300 volunteers were serving in 44 countries. This number increased to 15,000 in June 1966, the largest number in the organization’s history.

Those of you that read this regular series know that I am from Hackett, Arkansas, just a mile or so from the Oklahoma border, and just about 10 miles south of the Arkansas River.  It was a rural sort of place that did not particularly appreciate education, and just zoom onto my previous posts to understand a bit about it.

This piece is mostly about two old rock buildings near Hackett.  One of them was the “old schoolhouse” to which my mum and dad met each other as first graders.  Their story was actually a love at first sight one, and that is actually, literally true.  My dad fell in love with my mum immediately, and their love affair continued to produce two sons, me being one of them, several grandchildren, and a circle of friends that still continue, although most of them are now gone.

The secondary story is about the consequences of posting about people.  I got a very irate email from the granddaughter of one of the men that I described months ago, just day before yesterday.  She was upset about the way I described him, and rightly so.  We communicated further, and became friends.  I shall show everyone what she said, my responses, and the consensus that we finally came to that resolved the issue.  I plan to continue this series, but will be a bit more considerate in future.