Daily Archive: 05/19/2014

May 19 2014

Well, talk about bad taste!

Springtime for Bankers

Paul Krugman, The New York Times

MAY 18, 2014

By any normal standard, economic policy since the onset of the financial crisis has been a dismal failure.



Now Timothy Geithner, who was Treasury secretary for four of those six years, has published a book, “Stress Test,” about his experiences. And basically, he thinks he did a heckuva job.



How can people feel good about track records that are objectively so bad? Partly it’s the normal human tendency to make excuses, to argue that you did the best you could under the circumstances.



But there’s also something else going on. In both Europe and America, economic policy has to a large extent been governed by the implicit slogan “Save the bankers, save the world” – that is, restore confidence in the financial system and prosperity will follow. And government actions have indeed restored financial confidence. Unfortunately, we’re still waiting for the promised prosperity.

Much of Mr. Geithner’s book is devoted to a defense of the U.S. financial bailout, which he sees as a huge success story – which it was, if financial confidence is viewed as an end in itself.



One reason for sluggish recovery is that U.S. policy “pivoted,” far too early, from a focus on jobs to a focus on budget deficits. Mr. Geithner denies that he bears any responsibility for this pivot, declaring “I was not an austerian.” In his version, the administration got all it could in the face of Republican opposition. That doesn’t match independent reporting, which portrays Mr. Geithner ridiculing fiscal stimulus as “sugar” that would yield no long-term benefit.

But fiscal austerity wasn’t the only reason recovery has been so disappointing. Many analysts believe that the burden of high household debt, a legacy of the housing bubble, has been a big drag on the economy. And there was, arguably, a lot the Obama administration could have done to reduce debt burdens without Congressional approval. But it didn’t; it didn’t even spend funds specifically allocated for that purpose. Why? According to many accounts, the biggest roadblock was Mr. Geithner’s consistent opposition to mortgage debt relief – he was, if you like, all for bailing out banks but against bailing out families.

Tim Geithner, unreliable narrator

Felix Salmon, Medium

Published May 18, 2014

one thing has become generally-received wisdom about the book: whatever you might think of Geithner’s actions and opinions, he’s at least presenting himself in an honest and unvarnished manner. Michael Lewis describes this as a “near-superhuman feat”: “there’s hardly a moment in Geithner’s story when the reader feels he is being anything but straightforward,” he writes.

If Geithner isn’t being honest about his actions and the actions of others, then the whole book becomes much more problematic. And already critics on the right have, predictably enough, accused Geithner of lying.

Most of the time, such accusations boil down to a he-said-she-said about private conversations held in secret. But sometimes, Geithner makes simple declarations which are easily fact-checked.



Geithner at his most prescient and heroic. He enters a hidebound wood-paneled institution where coffee is brought to his desk on a silver tray while briefings involved precious little discussion or debate; and in his very first speech he decides to speak truth to entrenched financial power, trying to “push back against complacency” and warn against the rise of the shadow banking system.

But here’s the thing: we can read the speech, it’s archived on the Fed’s website. And so it’s pretty easy to tell whether Geithner did indeed try to push back against complacency, in his speech, and warn of the rise of the shadow banks.

Spoiler: he didn’t.



Geithner was saying that the shadow banking system is getting bigger, that the banks the NY Fed regulated were accounting for a smaller and smaller part of the total financial system - and that this was a positive development. Geithner wasn’t warning his audience about the risks of shadow banking, he was extolling it, on the grounds that it had “improved the capacity of our system to handle stress”!



This is a bright green light to all the bankers in the room, saying “go ahead with all your whiz-bang new innovative products, we think they’re great, even if we don’t really understand them or know how to regulate them, it’s our job to keep up with you, and we have people in Basel who are on it.” Not once did Geithner indicate that the financial system was getting too complex and that the Canadian approach of forcing banks to keep things simple was maybe a good idea. Instead, he embraced all of the complexity, and just said that the regulatory architecture would have to cope, somehow.



There are two big worrying things here. The first is that Geithner didn’t see the crisis coming at all, and indeed was something of a cheerleader for all of the dangerous activities that the banks were getting up to. The second, which is just as bad, is that with hindsight, Geithner sees this speech as being prescient and heroic - that it’s something to be proud of, rather than sheepishly ashamed of.

As I read the rest of Geithner’s book, then, I’m basically forced to treat the author as an unreliable narrator. Geithner might seem to be straight-up and guileless, but his report of this speech shows that he can remember things - even things which are easily found on the internet - in an extremely self-serving manner. Maybe that’s only to be expected, from a political memoir. But it’s disappointing, all the same.

May 19 2014

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”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: Springtime for Bankers

By any normal standard, economic policy since the onset of the financial crisis has been a dismal failure. It’s true that we avoided a full replay of the Great Depression. But employment has taken more than six years to claw its way back to pre-crisis levels – years when we should have been adding millions of jobs just to keep up with a rising population. Long-term unemployment is still almost three times as high as it was in 2007; young people, often burdened by college debt, face a highly uncertain future.

Now Timothy Geithner, who was Treasury secretary for four of those six years, has published a book, “Stress Test,” about his experiences. And basically, he thinks he did a heckuva job.

He’s not unique in his self-approbation. Policy makers in Europe, where employment has barely recovered at all and a number of countries are in fact experiencing Depression-level distress, have even less to boast about. Yet they too are patting themselves on the back.

Charles M. Blow: Poverty Is Not a State of Mind

Paul Ryan and Jeb Bush, the didactic-meets-dynastic duo, spoke last week at a Manhattan Institute gathering, providing a Mayberry-like prescription for combating poverty in this country: all it takes is more friendship and traditional marriage. [..]

My qualm with the statement is the insistence on a “traditional marriage.” Loving families, of any formation, can suffice. While it is true that two adults in a home can provide twice the time, attention and income for a family, those adults needn’t necessarily be in a traditional marriage. Yes, marriage can have a sustaining and fortifying effect on a union and a family, but following that argument, we should be rushing headlong to extend it to all who desire it. In some cases, even parents living apart can offer a nurturing environment for children if they prioritize parenting when it comes to their time and money. Not all parents have to reside together to provide together.

There are many ways to be a loving family and to provide what children need. All forms of marriage are valid and valuable, as well as other ways of constructing a family.

Corey Robin: The Republican War on Workers’ Rights

Midterm elections are like fancy software: Experts love them, end-users couldn’t care less. But if the 2010 elections are any indication, we might not want to doze off as we head into the summer months before November. Midterm elections at the state level can have tremendous consequences, especially for low-wage workers. What you don’t know can hurt you – or them.

In 2010, the Republicans won control of the executive and legislative branches in 11 states (there are now more than 20 such states). Inspired by business groups like the American Legislative Exchange Council (ALEC), the U.S. Chamber of Commerce and the National Association of Manufacturers, they proceeded to rewrite the rules of work, passing legislation designed to enhance the position of employers at the expense of employees.

The University of Oregon political scientist Gordon Lafer, who wrote an eye-opening report on this topic last October for the Economic Policy Institute, a liberal think tank in Washington, looked at dozens of bills affecting workers. The legislation involved unemployment insurance, the minimum wage, child labor, collective bargaining, sick days, even meal breaks. Despite frequent Republican claims to be defending local customs and individual liberty, Mr. Lafer found a “cookie-cutter” pattern to their legislation. Not only did it consistently favor employers over workers, it also tilted toward big government over local government. And it often abridged the economic rights of individuals.

Ton Engel hardt: Drones, Trains, and China: How America’s Budget Is Fighting the Wrong Battle

Consider this: our advanced robotic creatures, those drone aircraft grimly named Predators and Reapers, are still blowing away human beings from Yemen to Pakistan. Meanwhile, the Pentagon is now testing out a 14,000-pound drone advanced enough to take off and land on its own on the deck of an aircraft carrier — no human pilot involved. (As it happens, it’s only a “demonstrator” and, at a cost of $1.4 billion, can’t do much else.) While we’re talking about the skies, who could forget that the U.S. military is committed to buying 2,400 F-35 Joint Strike Fighters, already dubbed, amid cost overruns of every sort, “the most expensive weapons system in history.” The bill for them: nearly $400 billion or twice what it cost to put a man on the moon. [..]

On the other hand, if we’re talking about purely civilian infrastructure, just consider that, at this very moment, Congress is dilly-dallying while the crucial Highway Trust Fund that keeps American roads and interstates in shape is “heading for a cliff” and projected to go bankrupt in August. This from the country that once turned the car into a poetic symbol of freedom. Meanwhile, the nation’s overall infrastructure, from levees and dams to wastewater and aviation, now regularly gets a grade of D+ from the American Society of Civil Engineers.

As a rising power in the nineteenth century, the U.S. moved toward global status on the basis of an ambitious program of canal building and then of government-sponsored transcontinental railroads. Jump a century and a half and the country that, until recently, was being called the planet’s “sole superpower” has yet to build a single mile of high-speed rail. Not one. Even a prospective line between Los Angeles and San Francisco, which looked like it might be constructed, is now blocked coming and going.

Robert Kuttner: The Road to Euro-Fascism

As Europe’s depression continues six years after the financial collapse of 2007-2008, watch for far-right parties to make big gains in this week’s elections to the EU’s European Parliament. And why not? The establishment parties of Europe’s center-right and center-left have put austerity policies and the interests of banks ahead of a real economic recovery for regular people.

More than 20 years ago, when the European Union created its constitution in the form of the Treaty of Maastricht, the hope was that Europe stood for a social compact that put citizens first. Europe, especially northern Europe, was a model of decent earnings, universal social benefits and regulation that prevented wealth from swamping citizenship.

Today, however, centrist or center-right governments, which either sponsor austerity or approve of it, govern in every major European capital but France, and France is too weak to go its own way. The economic crisis with its high unemployment only stimulates more migration, which puts pressure on local labor markets and pushes the local working class further into the arms of the nationalist far-right.

May 19 2014

The Breakfast Club: 5-19-2014

Welcome to The Breakfast Club! We’re a disorganized group of rebel lefties who hang out and chat if and when we’re not too hungover  we’ve been bailed out we’re not too exhausted from last night’s (CENSORED) the caffeine kicks in. Join us every weekday morning at 9am (ET) and weekend morning at 10:30am (ET) to talk about current news and our boring lives and to make fun of LaEscapee! If we are ever running late, it’s PhilJD’s fault.

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This Day in History

May 19 2014

On This Day In History May 19

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.

May 19 is the 139th day of the year (140th in leap years) in the Gregorian calendar. There are 226 days remaining until the end of the year.

On this day in 1935, T.E. Lawrence, better known as Lawrence of Arabia, dies from injuries sustained in a motorcycle accident near his home in Dorset, England.

Lieutenant Colonel Thomas Edward Lawrence, CB, DSO (16 August 1888 – 19 May 1935) was a British Army officer renowned especially for his liaison role during the Arab Revolt against Ottoman Turkish rule of 1916-18. The extraordinary breadth and variety of his activities and associations, and his ability to describe them vividly in writing, earned him international fame as Lawrence of Arabia, a title popularised by the 1962 film based on his First World War activities.

Lawrence was born illegitimately in Tremadog, Wales in August 1888 to Sir Thomas Chapman and Sarah Junner, a governess, who was herself illegitimate. Chapman left his wife to live with Sarah Junner, and they called themselves Mr and Mrs Lawrence. In the summer of 1896 the Lawrences moved to Oxford, where from 1907 to 1910 young Lawrence studied history at Jesus College, graduating with First Class Honours. He became a practising archaeologist in the Middle East, working with David George Hogarth and Leonard Woolley on various excavations. In January 1914, following the outbreak of the First World War, Lawrence was co-opted by the British military to undertake a military survey of the Negev Desert while doing archaeological research.

Lawrence’s public image was due in part to American journalist Lowell Thomas‘ sensationalised reportage of the revolt as well as to Lawrence’s autobiographical account Seven Pillars of Wisdom (1922).

Arab revolt

At the outbreak of the First World War Lawrence was a university post-graduate researcher who had for years travelled extensively within the Ottoman Empire provinces of the Levant (Transjordan  and Palestine) and Mesopotamia (Syria and Iraq) under his own name. As such he became known to the Turkish Interior Ministry authorities and their German technical advisors. Lawrence came into contact with the Ottoman-German technical advisers, travelling over the German-designed, built, and financed railways during the course of his researches.

Even if Lawrence had not volunteered, the British would probably have recruited him for his first-hand knowledge of Syria, the Levant, and Mesopotamia. He was eventually posted to Cairo on the Intelligence Staff of the GOC Middle East.

Contrary to later myth, it was neither Lawrence nor the Army that conceived a campaign of internal insurgency against the Ottoman Empire in the Middle East, but rather the Arab Bureau of Britain’s Foreign Office. The Arab Bureau had long felt it likely that a campaign instigated and financed by outside powers, supporting the breakaway-minded tribes and regional challengers to the Turkish government’s centralised rule of their empire, would pay great dividends in the diversion of effort that would be needed to meet such a challenge. The Arab Bureau had recognised the strategic value of what is today called the “asymmetry” of such conflict. The Ottoman authorities would have to devote from a hundred to a thousand times the resources to contain the threat of such an internal rebellion compared to the Allies’ cost of sponsoring it.

At that point in the Foreign Office’s thinking they were not considering the region as candidate territories for incorporation in the British Empire, but only as an extension of the range of British Imperial influence, and the weakening and destruction of a German ally, the Ottoman Empire.

During the war, Lawrence fought with Arab irregular troops under the command of Emir Faisal, a son of Sherif Hussein of Mecca, in extended guerrilla operations against the armed forces of the Ottoman Empire. He persuaded the Arabs not to make a frontal assault on the Ottoman stronghold in Medina but allowed the Turkish army to tie up troops in the city garrison. The Arabs were then free to direct most of their attention to the Turks’ weak point, the Hejaz railway that supplied the garrison. This vastly expanded the battlefield and tied up even more Ottoman troops, who were then forced to protect the railway and repair the constant damage.

The capture of Aqaba

In 1917, Lawrence arranged a joint action with the Arab irregulars and forces under Auda Abu Tayi (until then in the employ of the Ottomans) against the strategically located but lightly defended town of Aqaba. On 6 July, after a surprise overland attack, Aqaba fell to Lawrence and the Arab forces. After Aqaba, Lawrence was promoted to major. Fortunately for Lawrence, the new commander-in-chief of the Egyptian Expeditionary Force, General Sir Edmund Allenby, agreed to his strategy for the revolt, stating after the war:

   “I gave him a free hand. His cooperation was marked by the utmost loyalty, and I never had anything but praise for his work, which, indeed, was invaluable throughout the campaign.”

Lawrence now held a powerful position, as an adviser to Faisal and a person who had Allenby’s confidence.

The Fall of Damascus

The following year, Lawrence was involved in the capture of Damascus in the final weeks of the war and was promoted to lieutenant-colonel in 1918. In newly liberated Damascus-which he had envisioned as the capital of an Arab state-Lawrence was instrumental in establishing a provisional Arab government under Faisal. Faisal’s rule as king, however, came to an abrupt end in 1920, after the battle of Maysaloun, when the French Forces of General Gouraud under the command of General Mariano Goybet http://en.wikipedia.org/wiki/M… entered Damascus, breaking Lawrence’s dream of an independent Arabia.

As was his habit when traveling before the war, Lawrence adopted many local customs and traditions (many photographs show him in the desert wearing white Arab dishdasha and riding camels).

During the closing years of the war he sought, with mixed success, to convince his superiors in the British government that Arab independence was in their interests. The secret Sykes-Picot Agreement between France and Britain contradicted the promises of independence he had made to the Arabs and frustrated his work.

In 1918 he co-operated with war correspondent Lowell Thomas for a short period. During this time Thomas and his cameraman Harry Chase shot a great deal of film and many photographs, which Thomas used in a highly lucrative film that toured the world after the war.

Seven Pillars of Wisdom

Lawrence’s major work is Seven Pillars of Wisdom, an account of his war experiences. In 1919 he had been elected to a seven-year research fellowship at All Souls College, Oxford, providing him with support while he worked on the book. In addition to being a memoir of his experiences during the war, certain parts also serve as essays on military strategy, Arabian culture and geography, and other topics. Lawrence re-wrote Seven Pillars of Wisdom three times; once “blind” after he lost the manuscript while changing trains at Reading railway station.

The list of his alleged “embellishments” in Seven Pillars is long, though many such allegations have been disproved with time, most definitively in Jeremy Wilson‘s authorised biography. However Lawrence’s own notebooks refute his claim to have crossed the Sinai Peninsula from Aqaba to the Suez Canal in just 49 hours without any sleep. In reality this famous camel ride lasted for more than 70 hours and was interrupted by two long breaks for sleeping which Lawrence omitted when he wrote his book.

Lawrence acknowledged having been helped in the editing of the book by George Bernard Shaw. In the preface to Seven Pillars, Lawrence offered his “thanks to Mr. and Mrs. Bernard Shaw for countless suggestions of great value and diversity: and for all the present semicolons.”

The first public edition was published in 1926 as a high-priced private subscription edition, printed in London by Roy Manning Pike and Herbert John Hodgson, with illustrations by Eric Kennington, Augustus John, Paul Nash, Blair Hughes-Stanton and his wife Gertrude Hermes. Lawrence was afraid that the public would think that he would make a substantial income from the book, and he stated that it was written as a result of his war service. He vowed not to take any money from it, and indeed he did not, as the sale price was one third of the production costs. This left Lawrence in substantial debt.

Death

At the age of 46, two months after leaving the service, Lawrence was fatally injured in an accident on his Brough Superior SS100 motorcycle in Dorset, close to his cottage, Clouds Hill, near Wareham. A dip in the road obstructed his view of two boys on their bicycles; he swerved to avoid them, lost control and was thrown over the handlebars. He died six days later on 19 May 1935. The spot is marked by a small memorial at the side of the road.

The circumstances of Lawrence’s death had far-reaching consequences. One of the doctors attending him was the neurosurgeon Hugh Cairns. He was profoundly affected by the incident, and consequently began a long study of what he saw as the unnecessary loss of life by motorcycle dispatch riders through head injuries. His research led to the use of crash helmets by both military and civilian motorcyclists.

Moreton Estate, which borders Bovington Camp, was owned by family cousins, the Frampton family. Lawrence had rented and later bought Clouds Hill from the Framptons. He had been a frequent visitor to their home, Okers Wood House, and had for years corresponded with Louisa Frampton. On Lawrence’s death, his mother arranged with the Framptons for him to be buried in their family plot at Moreton Church. His coffin was transported on the Frampton estate’s bier. Mourners included Winston and Clementine Churchill and Lawrence’s youngest brother, Arnold.

A bust of Lawrence was placed in the crypt at St Paul’s Cathedral and a stone effigy by Eric Kennington remains in the Anglo-Saxon church of St Martin, Wareham