“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.
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Dean Baker: The Fed, Ben Bernanke and the rotten Libor
Ben Bernanke had an obligation as Fed chair to expose and stop the rigging of inter-bank lending rates.
The case of the rigged Libor turns out to be the scandal that just keeps on giving. It reveals a great deal about the behaviour of the Federal Reserve Board and central banks more generally.
Last month, Federal Reserve Board Chairman Ben Bernanke gave testimony before Congress in which he said that he had become aware of evidence that banks in the UK were rigging the Libor – the inter-bank lending rate and one of the primary benchmarks for short-term interest rates – in the autumn of 2008. According to Bernanke, he called this to the attention of Mervyn King, the head of the Bank of England. Apparently Mervyn King did nothing, since the rigging continued, but Bernanke told Congress there was nothing more that he could do.
The implications of Bernanke’s claim are incredible. There are trillions of dollars of car loans, mortgages and other debts, in the United States, tied to the Libor. There are also huge derivative contracts whose value depends on the Libor at a moment in time. People were winning or losing on these deals not based on the market, but rather on the rigged Libor rate being set by the big banks.
The Great Drought of 2012 has yet to come to an end, but we already know that its consequences will be severe. With more than one-half of America’s counties designated as drought disaster areas, the 2012 harvest of corn, soybeans, and other food staples is guaranteed to fall far short of predictions. This, in turn, will boost food prices domestically and abroad, causing increased misery for farmers and low-income Americans and far greater hardship for poor people in countries that rely on imported U.S. grains. [..]
At this point, the focus is understandably on the immediate consequences of the still ongoing Great Drought: dying crops, shrunken harvests, and rising food prices. But keep an eye out for the social and political effects that undoubtedly won’t begin to show up here or globally until later this year or 2013. Better than any academic study, these will offer us a hint of what we can expect in the coming decades from a hunger-games world of rising temperatures, persistent droughts, recurring food shortages, and billions of famished, desperate people.
Under the direction of the United States, the UN Security Council recently extended sanctions for another year against the northeast African nation of Eritrea. The country of 6 million people, nestled against the Red Sea, is on America’s hit list. In the imperial double-speak of Washington, Eritrea is described as a “destabilizing” force in the region – which simply means the government in Asmara has refused to buckle under to U.S. military domination of the Horn of Africa. [..]
Eritrea’s real sin is to be one of the very few nations in Africa that do not have military relations with AFRICOM, the U.S. war machine. That puts a bulls-eye on her back, along with Zimbabwe and Sudan, which U.S. Ambassador to the UN Susan Rice demanded be blockaded and bombed back in the George Bush administration. Barack Obama’s Africa policy is an extension and expansion of Bush’s aim to militarize the continent, and the much older U.S. policy to create chaos and horrific human suffering in those regions it cannot directly control. In practice, Obama’s doctrine is the same as Bush: “You are either with us or against us.”
Gail Collins: The Wacky Primary Voters
Missouri Republicans have just nominated a Senate candidate who appears to believe that the government’s college student loan program is the equivalent of Stage 3 cancer. Actually, he said “the Stage 3 cancer of socialism,” which is perhaps not the exact same thing. But I believe you get the idea.
This was a week after Texas Republicans nominated a Senate candidate who is worried about protecting the world’s golf courses from the United Nations. Republicans, I think you need to get a grip. [..]
Next week we have Wisconsin, where former Gov. Tommy Thompson, the guy everyone expected the Republicans to nominate for the Senate, is in trouble thanks to a challenge from – yes! – the Tea Party. And will Connecticut Republicans nominate a former congressman with a reputation for bipartisanship or a businesswoman whose claim to fame is building a professional wrestling empire? Duh.
Paul Krugman: US Conservatives Pile on the Excuses
The commentators Mike Konczal and Jonathan Chait both had good blog posts recently on “You didn’t build that,” the statement President Obama made during a speech in July that, deliberately misinterpreted, has dominated right-wing discourse these past few days. But I think both of them missed a couple of tricks.
The first is that both in effect shrugged their shoulders over the fact that for several days running the central theme of the Romney campaign has rested on a complete lie.
I understand; going on about the dishonesty can get boring. But we should step back often to look at this remarkable spectacle. I really don’t think there’s been anything like this in American political history: a presidential campaign with a pretty good chance of winning that is based entirely on cynical lies about what the sitting president has said. No, Mr. Obama hasn’t apologized for America; no, he hasn’t denigrated achievement. Yet take away those claims, and there’s nothing left in Mitt Romney’s rhetoric.
Campaign fundraising’s reality is that donors large and small end up disappointed. So cui bono? The media and media buyers
What does all this money, in the most well-funded presidential race ever, buy?
There’s the $750m for the president; $800m for Mitt Romney; and then there’s a couple of hundred more in Super Pac funds.
What do the people putting up all this dough in politics actually get? Or maybe a better question: how do people keep falling for this? [..]
Sheldon Adelson has been one of the big spenders during this campaign (by some estimates, his spend may go to $100m), first for Newt Gingrich, and now for Romney, accompanying the Republican candidate and his entourage on their recent trip to Israel. This might be what Adelson wants: some big-man travel, some personal press, a sense of bully-boy insinuation into Israel-US relations, some faith-based pride. But does he get real influence?
Jim Hightower: The People’s Choice! Only, Not Really
If you thought right-wing politicos couldn’t get any goofier, take a peek at Texas on “Cruz Control.”
Ted Cruz is America’s latest tea party darling, having just pulled off a political contortion in Texas that few would’ve thought humanly possible: He got to the right of Gov. Rick Perry! The “Oops” governor is himself a former tea party darling who’s such a far-out know-nothing that he’s renowned for putting the goober in gubernatorial. By the time of last week’s Republican runoff election in Texas, however, Cruz had squinched himself Houdini-like into even farther-out political positions than Perry has taken, thus wowing the tealeaf crowd and defeating the guy whom Perry was backing to be the Party’s nominee for a seat in the U.S. Senate.
How far out is he? One of the white-hot talking points Cruz used to fire-up the narrow extremists who now control the Texas GOP is that he will, by God, defend America’s golf courses! You might not have realized that golf course defense is a burning national issue crying out for the attention of U.S. senators, but such keen vigilance on even the most unimaginable threats to our nation is the kind of stuff that makes Cruz a tea party fave.