Nothing Plan from a Nothing Man

I just listened to NPR’s report about Paulson’s proposal to overhaul the way financial institutions are regulated.  The report opened with a question to financial experts:  “Does the plan do anything to fix the current financial crisis?”  The experts responded with a unanimous “No.”

That shouldn’t surprise anyone, and it didn’t surprise Krugman:

…if financial players like Bear are going to receive the kind of rescue previously limited to deposit-taking banks, the implication seems obvious: they should be regulated like banks, too.

The Bush administration, however, has spent the last seven years trying to do away with government oversight of the financial industry. In fact, the new plan was originally conceived of as “promoting a competitive financial services sector leading the world and supporting continued economic innovation.” That’s banker-speak for getting rid of regulations that annoy big financial operators.

To reverse course now, and seek expanded regulation, the administration would have to back down on its free-market ideology — and it would also have to face up to the fact that it was wrong. And this administration never, ever, admits that it made a mistake.

Thus, in a draft of a speech to be delivered on Monday, Henry Paulson, the Treasury secretary, declares, “I do not believe it is fair or accurate to blame our regulatory structure for the current turmoil.”

And sure enough, according to the executive summary of the new administration plan, regulation will be limited to institutions that receive explicit federal guarantees — that is, institutions that are already regulated, and have not been the source of today’s problems. As for the rest, it blithely declares that “market discipline is the most effective tool to limit systemic risk.”

Market discipline is no contest for greed. 

Greed crushed discipline.  Paulson responded to the rout by calling a timeout.  He’ll meet with the referees and tell them to call a tighter game, but the rules remain essentially the same, so greed will win again.  It always does.

Happy Birthday to the Man who should be President

Al Gore turned 60 today and kicked off a new campaign to cool the planet.

The Alliance for Climate Protection’s “we” campaign will employ online organizing and television advertisements on shows ranging from “American Idol” to “The Daily Show with Jon Stewart.” It highlights the extent to which Americans’ growing awareness of global warming has yet to translate into national policy changes, Gore said in an hour-long phone interview last week. He said the campaign, which Gore is helping to fund, was undertaken in large part because of his fear that U.S. lawmakers are unwilling to curb the human-generated emissions linked to climate change.

“This climate crisis is so interwoven with habits and patterns that are so entrenched, the elected officials in both parties are going to be timid about enacting the bold changes that are needed until there is a change in the public’s sense of urgency in addressing this crisis,” Gore said. “I’ve tried everything else I know to try. The way to solve this crisis is to change the way the public thinks about it.”

Full story here.

“Jailbird” – Jim White

I’m leaving the heavy lifting to Mr. Barnes and the Old Viking this weekend because my mind is not functioning very well.  Drank some whisky before the Springsteen show last night, and going to see Jim White tonight.

The previous two posts are pretty heavy, so give yourself a little break and watch this Jim White video.

When it Comes to Iraq, Honesty is the Best Policy

The ongoing fighting in Basra and Baghdad between forces of the Iraqi government under Prime Minister Nuri Kamal al-Maliki and the militia of the Shiite cleric Moktada al-Sadr should explode the comfortable notion held by proponents of the occupation in Iraq that the so-called “surge” of American troops was primarily responsible for the quelling of violence over the last six months or more.

This is not to disparage the drastic improvement in the manner in which United States forces now conduct security operations in Iraq. The employment of classic counterinsurgency tactics such as frequent foot patrols in towns and city neighbourhoods, the establishment of a permanent presence in key areas, funding infrastructure improvements and the utilization of special operations units to target high value terrorist targets, have all contributed significantly to a better security environment.  The fact is, however, that violence is down mainly because the Sunni Awakening and the truce called by al-Sadr means that as much as 80% or more of the people who were shooting at or blowing up Americans and causing general mayhem in Iraq stopped doing so.   The key contributor undoubtedly has been that Sunni tribes in Anbar Province and elsewhere who had formed the most formidable part of the insurgency, joined the Americans in combating al-Qaida in Iraq, a threat they saw as far more deadly in the long term than a temporary foreign occupation.  That assistance which has taken the form of providing local forces for security and precious actionable intelligence has enabled the American forces to inflict substantial damage on al-Qaida in Iraq.  And since the latter had instigated a disproportionate amount of the most murderous violence against civilians, the positive effect has been dramatic.

Yet we shouldn’t kid ourselves that the US controls the agenda.  Hopefully the Mahdi Army will be defeated by the American-backed Iraqi Army in the current struggle for control of Basra.  If the rogue Shiite militia emerge the victors or at least fight the government to a draw, al-Maliki will be considerably weakened – and so will the American position in Iraq.  And if the Sunnis become disillusioned with the government and no longer see the alliance with the Americans as in their interests, the violence could yet again spin completely out of control.  And even 160,000 American troops will not contain it.

Both of the potential Democratic nominees to take on Senator John McCain are right to advocate a change to national policy that envisions a military withdrawal from Iraq.  Every time McCain and the Bush administration engage in fear mongering on the dire consequences of what they term a “retreat” from Iraq, it is an admission that the decision to invade and occupy Iraq was a calamitous miscalculation that has created in its wake a failed state, one that cannot be trusted to stand on its own feet without the perpetual presence of American soldiers and Marines.  The only way we will ever find out for sure is to treat the Iraqis like adults and allow them to manage their own affairs rather than create a dependency on Americans that is bad for them and not in our own strategic interests, given the debilitating effect on our Army and Marine Corps, the disproportionate resources expended on the endeavour and the more critical effort in Afghanistan which is being short-changed.  By setting a time-table for withdrawal, the Iraqis will have a powerful incentive and imperative to negotiate a real reconciliation.
 
It could, of course, also go the other way and the country descends into civil war. In which case we will have, hopefully, a Democratic administration that will prepare for the worst by working with all neighbouring states, including Iran and Syria, to contain and minimize the fallout from a return to chaos in Iraq. We must be realistic, also, in allowing for the possibility that we will not be able to leave any military presence in Iraq even to conduct training and special operations again terrorists.  Once we declare a firm time-table for withdrawal, a worst-case scenario may be that the Iraqi government, whoever leads it, may insist that it be complete and not permit a residual American military presence to target al-Qaida in Iraq.  On the other hand, whilst resurgence by al-Qaida in Iraq is a possibility, the absence of American occupation forces will likely serve to marginalize the terrorists among all Iraqis regardless of whether they are Sunni, Shiite or Kurd.

Above all Democrats must not flinch from answering the assertion that a stable and democratic Iraq is in America’s national interest and, therefore, justifies our indefinite occupation.  An honest and straightforward response from either Senator Obama or Clinton should be that, whilst a stable Iraq is indeed a benefit and may, in any case, be promoted by such a withdrawal, it is far outweighed by the greater national interest in extricating our military ground forces from Iraq and reforming and redirecting them, as well as our financial and diplomatic resources, to meet more critical domestic and foreign challenges of the 21st century.  Foremost among these is to defeat the Taliban in Afghanistan and, ultimately, al-Qaida in its safe havens in Pakistan.

The Old Viking tries to instruct his brother on the US efforts to recreate Iraq

Brother,

The upsurge in violence in Iraq this week has been troubling and sent me back to my notes and a couple of authors that I relied on because of their documentation of data and quotes.  It’s too cumbersome to give you chapter and verse citations; suffice it to say that if your pore over two books–Naomi Klein’s The Shock Doctrine: The Rise of Disaster Capitalism and Rajiv Chandrasekaran’s Imperial Life in the Emerald City: Inside Iraq’s Green Zone–you will have all the references that you need and want.

Knowing that you share a curiosity for the workings of foreign societies, for what it is worth, I decided to summarize my notes on the economic issues of Iraq and to share them with you.  (My notes on religious affiliations and political entanglements exist but in a more esoteric and unmanageable form.)

You need to know that as a Keynesian, my perceptions go against privatization for the sake of privatization and that, as a Marxist, I am well convinced that the economic manifestations of a society reflect the central core of belief of that society–not always flattering to us.

While Iraqis were consumed with the daily emergencies in Iraq we sold it off through privatization.  What we called “nation building” was really “nation creating.”  We destroyed everything that was in existence and established Paul Bremer and the CPA as the ruling government with the mission of redoing everything.

(As an aside, one contractor was convicted in the US of fraud and fined $10 million. He appealed on the basis that he gave his [fraudulent] reports to the CPA, which, he contended, was not an official government and he won when the court in Virginia sided with him.)

Bremer fired 500,000 government workers and 400,000 military (who went home with their weapons) and he was left to govern 25 million people with a staff of 1,500. (Halliburton had a staff of 50,000) Iraq had a number of government-owned businesses ranging from the oil industry to cement factories, medical facilities, and food producers.  It also had 67% unemployment.  In the face of that, in the name of privatization, we stopped food handouts and ended subsidized gas prices.  Then we opened the border to unrestricted imports, permitted foreign companies to own 100% of Iraqi firms (which meant that a Kuwaiti business would buy a factory at fire sale prices, lay off most of the workers and bring Kuwaitis in to staff it).  It destroyed the Iraqi businessmen.  Bremer, taking his orders from the Pentagon, privatized the 200 essential government-owned businesses and cut the corporate tax rate from 45% to 15% — but foreign investors could take out all of their profits and pay no tax.  This is The Chicago School of Economics (Milton Freidman) run amok–as they did in Chile and Uruguay.

Bremer, on his own authority, took $80 billion from the Iraqi oil fund for “discretionary spending.”  $8.5 billion is still missing. 

Eight days after declaring “Mission Accomplished,” Bush announced the establishment of a U.S.-Middle East free-trade effort and appointed Dick Cheney’s daughter, Liz, in charge.  This was to give us access to Iraqi oil.  Iraq has one-third of the known oil reserves in the world.  Those who say this fight wasn’t about oil are mistaken.

Although we created a “Marshall Plan for Iraq,” we ran an anti-Marshall Plan.  The original Marshall Plan did not permit foreign ownership of rebuilt factories in Germany and profits and workers stayed in the German economy.  We made no move to rebuild factories in Iraq until 2006, when the blow-back brought us to our senses and the Iraqi government began to exercise more influence in the economy.  (In February 2004, 21% of the Iraqis said that they preferred an Islamic government.  Six months later, 70% had that preference.) 

Our ignorance and incompetence was outstanding but not surprising.  One observer noted, “Conservatives cannot govern well, just as vegetarians cannot make a world-class beef bourguignon:  If you believe that what you are doing is wrong, you are unlikely to do it well.”

Examples,
We gave Creative Associates $100 million to produce new textbooks.  The Iraqis tossed them as not acceptable. 

Research Triangle had a $466 million contract to “bring democracy to Iraq”!  RT is run by Mormons who believed that they could persuade the Moslems that the Book of Mormon was compatible with the teachings of Mohammed.  The point man, Mayfield, was even so audacious as to email that “that the Iraqis will erect a statue of me as their founder of democracy.”

The contractors–Halliburton, Parsons, Bechtel, etc–brought in thousands of foreign workers rather than employ the skilled, out-of-work Iraqis.  In one narrative, a worker tells about a confrontation with the manager of a cement factory that was going under foreign ownership and a huge projected layoff.  He said that before that would happen they would burn the factory down or go inside and blow it up.

Instead of rebuilding cement factories (under Iraqi ownership) the contractors imported cement at 10 times the cost.  When they were brought to their knees in 2006 they got some Iraqi cement factories up and running and expressed surprise that they weren’t is such bad shape and that they had good workers.  The American who put the effort together was called a “Stalinist” by his colleagues because he had abandoned the privatization model.

The American who was put in charge of health care was an opponent of publicly run clinics and tried to even privatize the prescription delivery system to children.  70% of the children’s deaths in Iraq are preventable with proper medication and sanitary conditions.

Often the US contractors would sub-contract with Kuwaiti firms who would sub-contract with Saudi firms who used foreign (often Pakistani) workers.  If they had to use Iraqis, they would go to the Iraqi Kurds.

Parsons was contracted to build 142 clinics.  They built 6 (poorly).

You’ve read recently of several American troops being electrocuted in facilities that are maintained by a Halliburton subsidiary.  The firm said that they had noted the faulty groundings, but “it wasn’t their responsibility to repair them.”

Of 8 water projects that were completed, only one was in operation a year later.

Bremer tried to lock in all of his laws and that was why Bush was so adamant about a new Constitution for Iraq.  The existing Constitution was quite satisfactory–the problem was that Saddam didn’t abide by it.

Much of the chaos that created the blow-back and the civil war could be attributed to Bremer’s (Pentagon-directed) decisions.  The firings removed skilled people from the government and weakened the voice of the secular Iraqis.  It also fueled the resistance with angry people.  And the businessmen who resented the foreign takeovers gave what little money they had to the resisters.

When Bremer left and the Iraqis took over there was poor water quality, no sewage treatment, limited gas supplies, and, at best, two hours of electricity a day.  That’s still true today.

Meanwhile on the home front, as part of the Disaster Capitalism (while the people are still in shock, sock it to them economically) effort, Rumsfeld cut 55,000 jobs from the Department of Defense and the Veterans’ Administration and privatized them.  You wonder how Heath Net had such strong profits and growth–they got the contract to provide medical care for returning, injured military and we know what a lousy job they did to keep the bottom line attractive to shareholders.

In Iraq, Moqtada al-Sadr, Shiite cleric, filled the vacuum by creating his large militia but, more important, created a cadre of workers who went into the community repairing electrical problems, providing food and medical care, etc.

This week the Iraqi Army went after al-Sadr’s militia in Basra.  Friday was the deadline for them to surrender their weapons but Malaki has now extended it by ten days.  I think he sees that he is in a losing cause. 

Brother, we created an economic mess–outside of the invasion–beyond all comprehension and we did it in the name of placing the neoconservative ideal of unrestrained capitalism ahead of the wishes of an informed democracy.  Iraqis are well-educated, secular people but we messed it up and now they, more than us, will be paying a heavy price for years to come.  When emotion trumps reason there is no limit to the extremes to which people will go in desperate times.  Don’t you agree that we should get Nixonian and declare a victory and leave?  Let’s support the IMF and the World Bank in reconstructing the Iraqi economy and stop our partisan meddling.

My guess is that you are as outraged by all this as I am.

The Old Viking (and brother)

The “L” Word

Yes, using the “L” Word as an epithet is back in style, and not only by those you would expect to use it.  The Washington Post reports:

But as Obama heads into the final presidential primaries, Sen. John McCain and other Republicans have already started to brand him a standard-order left-winger, “a down-the-line liberal,” as McCain strategist Charles R. Black Jr. put it, in a long line of Democratic White House hopefuls.
 
Sen. Hillary Rodham Clinton’s campaign has also started slapping the L-word on Obama, warning that his appeal among moderate voters will diminish as they become more aware of liberal positions he took in the past, such as calling for single-payer health care and an end to the U.S. embargo against Cuba. “The evidence is that the more [voters] have been learning about him, the more his coalition has been shrinking,” Clinton strategist Mark Penn said.

I would expect that tired old attack from McCain’s camp, but from Hillary?  From a fellow liberal Democrat?

Yes, her campaign used it in the same way that Republicans have been using it since back during the Bush Sr. campaign when Dukakis was branded by The Right as a “Liberal.”  They used the label as an insult, and now the Clinton campaign is doing the same thing against another Democrat. 

The attack is both unconscionable and ridiculous.  Clinton attacks Obama from the Left for not being as liberal as she is on health care and then, when things get tough, she does the GOP’s dirty work for them and attacks him from the Right for running on a liberal platform.

Dukakis didn’t respond to the “L” Word attack very well, and his weak response, among other things, cost him the election.

Obama has responded not by embracing the term, like Dukakis should have done.  He could have said what Krugman says in his latest book:

I believe in a relatively equal society, supported by institutions that limit extremes of wealth and poverty.  I believe in democracy, civil liberties, and the rule of law.  That makes me a liberal, and I’m proud of it.

Instead Obama says the labels “Liberal” and “Conservative” have lost their meaning and are outdated, and he has a point.  The traditional meanings of the words have been turned upside down.  Again, quoting Krugman:

One of the seeming paradoxes of America in the early twenty-first century is that those of us who call ourselves liberal are, in an important sense, conservative, while those who call themselves conservative are for the most part deeply radical.  Liberals want to restore the middle-class society I grew up in; those who call themselves conservative want to take us back to the Gilded Age, undoing a century of history.  Liberals defend long-standing institutions like Social Security and Medicare; those who call themselves conservative want to privatize or undermine those institutions.  Liberals want to honor our democratic principles and the rule of law; those who call themselves conservative want the president to have dictatorial powers and have applauded the Bush administration as it imprisons people without charges and subjects them to torture.

Clinton’s labeling of Obama as “liberal” today makes her look like a bratty kid in a playground spat.  It’s almost as if she was hoping to catch him off guard and make him look ridiculous by getting him to respond with the equivalent of, “I know you are but what am I?”  But it is she who looks ridiculous.

This episode of the way-too-long campaign has lowered my opinion of her to a level where I would find it difficult to actively support her should she somehow win the nomination. Like I said before, it’s unconscionable and, in the end, it should remove any chance of her winning the nomination.

Frontline – Bush’s War

This edition of Frontline is incredible. It’s causing me to reconsider my opinion of Bush and his administration’s handling of the Iraq War. It’s not an unstoppable freight train of bad decision making, with Bush at the helm, it’s several unstoppable freight trains helmed by the megalomaniacal power brokers Bush unwittingly empowered. And they’re all racing for the Iraq War Central junction, at which Bush is the signalman.

It’s his weak leadership that has led to this train wreck. It seems there may have been good intentions on several fronts that I had never guessed were there. But the infighting, the egos, and the political positioning, among other forces, are directly at odds with the occasional demonstration of competence and thoughtful concern for the consequences of their pursuits.

Revenge R.E.M. Style

Peter Buck, Mike Mills, and Michael Stipe of R.E.M. were interviewed this morning on NPR.  During the segment Michael Stipe discussed the lyrics to “Living Well is the Best Revenge” from their forthcoming album, Accelerate.

[The track] takes its title and inspiration from the English clergyman and metaphysical poet, George Herbert. “Living Well Is the Best Revenge” is a common phrase, and the band admits to only recently discussing what the term really means. Buck jokingly adds, “When I was 15, I had no idea what that meant. That made no sense to me. I thought revenge was the best revenge.”

Stipe had been reading much about the media around that time, and “Living Well” was his response. He imagines himself in the song turning a table onto a television personality, singing:

“Don’t turn your talking points on me,
history will set me free
The future’s ours and you don’t
even read the footnote now!
So who’s chasing you? Where did you go?
You disappeared mid-sentence
In a judgment crisis I see my anecdote for it
You weakened shell.

All your sad and lost apostles hum my
name and flare their nostrils
Choking on the bones you toss to them
Well I’m not one to sit and spin
‘Cause living well’s the best revenge
Baby, I am calling you on that

Stipe admits that the act is a little immature, but ultimately cathartic.

Because the lyrics include “talking points” and “sit and spin” it’s easy to imagine Bill O’Reilly as the target of his rage.  I wonder how long it will be before Mr. Bill says their interview on NPR was just “Drive-By Stuff” and then bribes them, like he did Springsteen, to appear on his show.

Anyway, if you are in the mood to listen to an R.E.M. concert, you can stream their complete one hour and thirty-six minute concert from SXSW on the NPR website.

We are all Prisoners of a Black & White Mind

Roger Cohen wrote a column published in Thursday’s New York Times where he looks back to his time as a child spent in South Africa during the apartheid years and reasses his feelings in light of Obama’s speech.  I really do like this bit from the column:

Honesty feels heady right now. For seven years, we have lived with the arid, us-against-them formulas of Bush’s menial mind, with the result that the nuanced exploration of America’s hardest subject is almost giddying. Can it be that a human being, like Wright, or like Obama’s grandmother, is actually inhabited by ambiguities? Can an inquiring mind actually explore the half-shades of truth?

Yes. It. Can.

The unimaginable South African transition that Nelson Mandela made possible is a reminder that leadership matters. Words matter. The clamoring now in the United States for a presidency that uplifts rather than demeans is a reflection of the intellectual desert of the Bush years.

One need only turn on one of the many 24-hour news channesl, Fox in particular, to see how Bush’s black-and-white world view has permeated the mainstream media.  It’s gotten to the point where if you want to watch anything close to an intellectual discussion on T.V., you’ve got to watch “comedy” shows like The Daily Show and Real Time with Bill Maher.

So has discussion of Obama’s speech lifted the intellectual level of cable news to a higher plane?  Apparently not.