Ask any question about geopolitics, broadly defined. We — and others reading the FM website — will attempt to answer it in the comments. All answers welcomed!
Contents
- Questions received so far
- To start the discussion: articles of interest this week
- A disturbing fact to disturb this week’s sleep
- Quote of the week
(1) Questions received so far
Click on the link to go directly to that thread. Please use the REPLY button when replying to a previous comment, to keep threads together.
- Important: What can Iran do in response to the assassinations and sabotage by the Israel-US alliance?
- Is the US economy in recovery — or intensive care?
- Why doesn’t Iran just make their case to the international community and wait. Brinksmanship is not the answer; time is on their side.
- Do you feel the proposed defense budget cuts are dangerous at this period of time?
- Which has more significance, the erosion of our civil liberties or our economic competitiveness? Based on that which is easier to rehabilitate?
- Why doesnt Iraq press the UN to tell the Coalition they have to pay reparations? A zillion dollar damage repair bill.
- Is this the best article of the week, a must-read for all Americans?
Also see this question, in thread #2: Why can the Spain’s conservative party (the PP) get away with blaming the previous socialist government for Spain’s economic problems, when the PP ruled from 1996-2004 — when their problems took root and festered? It’s a question relevent to the US as well.
(2) To start the discussion: articles of interest this week
- “Student loans outstanding will exceed $1 trillion this year“, USA Today, 25 October 2011 — “The amount of student loans taken out last year crossed the $100 billion mark for the first time. Americans now owe more on student loans than on credit cards.”
- “A Dysfunctional Education System That Bankrupts A Generation“, Wolf Richter, The Testosterone Pit, 26 October 2011
- This is the America of our future, unless we act soon and strongly: “Rick Perry: the best little whore in Texas“, Matt Taibbi, Rolling Stone, 28 October 2011 — “The Texas governor has one driving passion: selling off government to the highest bidder.” This is State Capitalism, politicans delivering value in exchange for campaign contributions.
- “Austrian Monetary Mental Mysteries for What I Hope Is the One Last Time“, Brad DeLong (Prof Economics, Berkeley), 15 November 2011
- Nobody does propaganda than Fox! “More Government Failures Costing You“, Fox News, 28 November 2011 — Normal glitches of innovation are unacceptable in modern America!
- The real scoop, unlike the above Fox News story: “The Straight Story On the Chevy Volt Battery Fire“, Popular Mechanics, 28 November 2011 — “Reports of a Chevy Volt’s battery pack catching fire after a crash test have ignited fears over the car’s safety. Here’s what you should know about the test fire, why you probably shouldn’t be worried about it happening on the highway.”
- “Pity the Quarter-Billionaire – Take a Ride on the RINO in 2012“, Thomas Frank, TomDispatch, 8 January 2012 — “Why the Tea Party Needs Mitt”
- “Scripps blockbuster: Ocean acidification happens all the time — naturally“, Jo Nova, 9 January 2012 — You read it here first.
- “Descent into Deepest Ignominy – The Heritage Foundation Then and Now“, Chuck Spinney et al, CounterPunch, 9 January 2012
- Highly recommended: “Libya and the New Warmongering“, David Gibbs (Prof History, U AZ Tucson), Foreign Policy in Focus, 12 January 2012
(3) Quote of the week
The American ruling class feeds on raw meat – dominant and imbued with a sense of its own virtue and infallibility, it is unable to comprehend, much less to accept, the growing limitations on American power. This leaves them arrogant and prone to misjudgements, disinclined to seek workable compromises with countries whose fundamental interests may be divergent from their own. If Destiny is not manifest, then game theory becomes a vital field of study.
At worst, the domestic political process has descended into the grotesque, with the likes of Sarah Palin and Donald Trump becoming serious national players, while a Tea Party utterly divorced from reality renders the budget debate an exercise in the theatre of the absurd. The preponderant influence of special interests prevents urgently needed reform, whilst extreme ideological positioning by political parties threatens paralysis.
— “Idiots“, Eric Kraus, Truth & Beauty, 9 May 2011
(4) A disturbing fact to disturb this week’s sleep
“Patriot Act – The kitchen-sink approach to national security“, Benjamin Wallace-Wells, New York magazine, 27 August 2011
Graph: Delayed-notice search warrants issued under the expanded powers of the Patriot Act, 2006–2009
Excerpt:
“Patriot Act” was appropriately overt. Before 9/11, when politicians spoke of “patriots,” they usually meant soldiers. Now prosecutors and the FBI were reaching for the same vanity—that they were the hard tip of freedom — and the same license to pursue enemies without much oversight or meddling.
When it was signed into law six weeks after the attacks, the act made it easier to wiretap American citizens suspected of cooperating with terrorism, to snoop through business records without notification, and to execute search warrants without immediately informing their targets (a so-called sneak-and-peek. Privileges once reserved for overseas intelligence work were extended to domestic criminal investigations. There was less judicial oversight and very little transparency.
The bill’s symbolism mattered also, signaling that the moral deference previously given to the Special Forces would be broadened until it encompassed much of the apparatus of the American state. Local prosecutors, military policemen, CIA lawyers — these were indispensable patriots too.
The Patriot Act was mostly a Republican project at its origin, but it would have died long ago without the support of Democrats. Liberals
What can Iran do in response to attacks (illegal assassination, sabotage, and sanctions)? Beyond their proper but useless appeal to the UN Security Council?
“Iran Signals Revenge Over Killing of Scientist“, New York Times, 12 January 2012 — Opening:
Game theory shows that Tit-for-Tat is the most effective strategy. Iran can use Palestinians for covert ops in Israel, just as Israel uses terrorist groups like MEK.
This is how wars start. Nations like Israel slowly escalate to greater levels of force, and other nations reply.
What’s truly alarming about this are the recent news reports which state that Russia has announced it will view an attack on Teheran by Israel or the West as an attack on Moscow. This combined with Iran’s threats to block the Straits of Hormuz are deeply disturbing, because this scenario is actually not that far removed from those depicted in two films from the early 80’s — “Threads” and “Countdown To Looking Glass”.
“Threads” is a British film which explores the potential effects of a nuclear attack on England — in the film, a Soviet invasion of Iran escalates into nuclear war between the US and the USSR. (A note of caution: “Threads” is extremely bleak and gritty, so much so that it makes “The Day After” seem positively mild by comparison.)
“Countdown To Looking Glass”, a Canadian film, was reportedly written with the assistance of US military and government experts and depicts one possible “war game” scenario which might escalate to a nuclear confrontation between the US and the USSR. In this film, a global financial crisis leads to the government of Oman being toppled by a guerrilla force backed by the USSR. When the guerrillas block the Strait of Hormuz and demand that ships pay a toll to use it, the US sends an aircraft carrier to the Persian Gulf and the Soviets send in submarines — with the result that it is not long before nuclear weapons are exchanged. The end of the film shows the President being evacuated from Washington on Air Force One (presumably in order to avoid a probable nuclear strike from the USSR) as the television audience begins to hear an audio message from the Emergency Broadcasting System.
Granted, these are both fictional scenarios but life has sometimes been known to imitate art — all we can do is hope that in this case, it does not. Russia is no longer the Soviet Union but they still have nuclear weapons, and they have in recent years occasionally made statements to the effect that they are still potentially open to using them despite the probable consequences. There’s a difference between the kind of fearmongering “They’ll Use Nukes!” rhetoric described in the article “What Happens When A Nation Gets Nukes?” (posted here on FM this past Wednesday), and threatening rhetoric which is coming directly from the proverbial “horse’s mouth.”
Among the many possible scenarios for the US-Iran war, IMO a US-Russia atomic war is among the least likely. It hardly seems worth consideration.
Is the US economy in recovery — or intensive care?
Few things show the broken OODA (observation-orientation-decision-action) loop of America better than our economic policy.
Wall Street and the government trumpet the recovery, ignoring the $1.3 trillion federal deficit (2010-11 fiscal year) that boosted the economy. It’s like heroin — an effective pain-killer (guaranteed to put a smile on your face), but it does nothing to cure the underlying problems.
Pain killers are an important element of treatment, but only a fool confuses them with a cure. We’re even more delusional, believing that the flush of euphoria produced by borrowing and spending $1.3 T means we’re healthy.
The likely result: we’ll continue to borrow (perhaps via nutty tax cuts or non-investment spending) until we’re hopelessly in debt (we’re not there yet, but eventually will be). Stupidity provides its own just rewards.
Quantitative easing and government stimulus has juiced the markets, so the Dow has continued to rise, but the problem is the unemployment rate is still catastrophically high. Official rate is 9% or so, but the real number might be as 15% due to changes in how the calculation has changed. This is the problem, that the largest of the large companies, the ones who have the ear of Washington are recovering, but the workers, small companies, and local governments, are still in very poor shape. I see this still happening here in California, with friends who work for both private companies and city and state government. The vice keeps getting tightened a little more every year.
That comment is not accurate in many ways.
(1) Qualitative easing (QE1 adn QE2)
Stimulative monetary policy, of which QE1 and QE2 are part, has done a great deal in addition to stimulating the markets. Among other things, When people want safe assets, the Fed must provide them — or they’ll liquidate the ecnonomy to get them.
(2) “but the real number might be as”
This is a pernicious idea circulated by conservatives to advance their goals. It is also silly. Measuring economic activity is not like counting apples, where there is one “right” number. There are just different perspectives. The Bureau of Labor statistics, understands this and publishes six measures of unemployment — from a narrow to expansive definition — which range from 5% to 15%. The highest is the U-6 measure, which was never the headline measure (as you state), and does not correspond to what most people mean by unemployed:
“Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.”
(3) “unemployment rate is still catastrophically high.”
Please do not exaggerate; it doesn’t help in any way. The broadest measure of people actually not working is the U-5, at 10%. That’s high, but we’ve been there (and higher) before without suffering a catastrophy. Greece has unemployment of 17%+; Spain’s is 23% (both differently calculated than ours, but VERY high any way you look at it). Spain has been in a depression for several years. That has not proven catastrophic — yet — but will eventually
While I agree with your overall answer, FM, the situation is much more complicated than your comment implies.
Is the US economy in recovery or intensive care?
The answer depends on where you are standing. The Federal government had a $1.3 trillion dollar deficit, but in the short run that is natural and not a danger. Tax revenue naturally contracts during a recession. Despite the fact that the overall economy has recovered to the same level that it was at before the 2008 financial crisis, tax revenue has not recovered because much of the recovery has been sparked by tax cuts. While tax cuts are not a particularly efficient tool to boost a recovery (increased spending is much more cost-effective at injecting life into the economy), it is logical for the Feds to be doing this at this time.
In the long run, failure to address the annual deficit and/or the $15+ trillion dollar overall Federal debt is deadly but likely to occur barring a major change of heart in our leadership.
If you look at the situation from the top 20% of the income earners (especially the top 1%), everything is going great and they don’t see why it shouldn’t continue. The bottom 80% is harder to describe. Those with decent jobs are slowly recovering, those without decent jobs are slowly falling. The view from the perspective of state and local governments is generally bad and getting steadily worse.
The ECRI and some fairly respectable economists (I follow John Hussman) are saying that we are about to fall into or have already fallen into a recession. If they are right things will be particularly hard on the bottom 80% who have not yet rebuilt their reserves since the last recession.
Pluto — I agree on all points (and was giving a narrow answer, not a précis of the overall situation.
“to fall into or have already fallen into a recession”
I don’t know of anyone saying that we’re already in a recession. The real-time data indicates otherwise.
There are three major publishers of leading indicators.
The ECRI has been weak but stable since early October. On 30 September they published “U.S. Economy Tipping into Recession” — Opening: “Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.” It’s been 15 weeks, and there are few signs the US economy is slowing — let alone in recession. US data has come in far above expectations.
Go here to see their recent public forecasts, as reported in the media.
Wont this result in an economic collapse if we just borrow and borrow?
Whirlwind — What would you say if someone came up to you at dinner and said “If you keep eating at that rate, you’ll explode!”
Yes, borrowing at 10% will eventually produce some ill effects. And eventually disaster. But these deficits are results of slow economic growth — reducing government income and treated by fiscal stimulus. That is, deficits are largely a result of the downturn. We should be worried about the causes, for the downturn (or slowdown, or however you choose to describe it) will have painful effects if continued long enough.
Also note that the deficits were a problem before the downturn. Clinton left us with a surplus. Bush Jr deliberately destroyed those by tax cuts and wars, putting the US government in a structural deficit. This is one of the most irresponsible actions in US history, IMO. We can only guess at motives, but their statements at the time suggest that this was a deliberately destructive action, wrecking the US government’s solvency in order to “starve the beast” and reverse New Deal social programs. Future generations might view this like President Buchanan’s allowing the South to seize Federal arms, an almost treasonous act (in the lay sense, not according to the Constitution’s definition).
“This is a pernicious idea circulated by conservatives to advance their goals. It is also silly. Measuring economic activity is not like counting apples, where there is one “right” number. There are just different perspectives. ”
The ‘évil right wing completely’ is completely justified in calling Obama on high unemployment, because it’s just a fact. Even the progressives make the same argument about the discouraged workers, except, of course, they will remain relatively quiet until a Republican is elected. When the job market is lousy, every President gets called out on this.
This has been a recovery for Wall Street and the rich bankers advising Obama. Obama has let the blatant criminality in the financial sector, like the robosigning scandal, go unpunished. MF Global steals customer funds, and no one gets punished. The big banks have sold massive fraudulent investments, which they knew were going to explode, and yet no one goes to prison. The Fed provided low interest loans to the wives of top executives. (I think it was MS?) The outrageous bonuses and other abuses continue, but the local governments are struggling, unemployment remains high. There is not even a trickle down here. Instead from these same bankers we get payday loans and fees for ATM cards. Oh there was a huge crowd at the “Dollar Tree” of people looking for work when they offered a few jobs.
Mataga — Please read more carefully, as you completely mis-read the content of my reply. I objected to three aspects of your comment, the two relevant here are:
(2) “but the real number might be as”
You appear to believe that the U-6 definition of unemployment (now 15%) is more “real” than the U-1 definition (now 5%). All are matters of perspective. In fact the U-6 is not most people’s common-sense definition of unemployment, as it includes people who have a job (albeit part-time, when they say they would prefer full-time).
(3) That current level of unemployment is “still catastrophically high.”
As I showed, that’s false in any usual sense of the word. The US has had higher levels of unemployment in the past without catastrophy. Other nations have far higher levels of unemployment — Spain having 2x ours for several years — without catastrophy. That does not mean that 10% unemployment is fun or beneficial, just that its not by itself catastrophic.
In this comment you also say, as if it’s a rebuttal to my comment, “the right-wing {is} completely justified in calling Obama on high unemployment”. That’s false in two senses. First, I never said or implied any such thing. Second, since the GOP has opposed all measures to reduce unemployment they can not logically blame Obama for high unemployment.
2) “but the real number(unemployment) might be as”
“This is a pernicious idea circulated by conservatives to advance their goals. It is also silly. ”
If the pernicious idea circulated by conservatives is that unemployment is higher than the statistics show, I think it logically follows that they are trying to call out Obama high unemployment. I can’t read your mind, but this seems pretty straightforwards to me.
Mataga — My comment was quite clear, that conservatives’ long-standing effort to discredit the US government’s economic statistics (eg, inflation, unemployment) is pernicious. It is part of an even larger project to discredit the US government as an effective force in US society. Government investment is always ineffective; Romney’s recent false statement that ““very little of the money that’s actually needed by those that really need help, those that can’t care for themselves, actually reaches them” (see here for details).
No, it does not logically follow from that they are trying to call out Obama on high unemployment. They’re trying to descredit government as an institution.
What does potentially catastrophic unemployment look like?
No need to guess. See Spain, from an article today by AFP:
re: “Unemployment rate ‘astronomical’, says Spanish PM“, AFP, 14 January 2012:
Can someone explain why the PP (“Partido Popular” – Spain’s conservative “Popular Party”) gets away with blaming the previous socialist government for Spain’s economic problems when the PP itself, under Aznar’s earlier PP government (1996 to 2004), was the party that moved Spain into Global Economics that seems to be the primary caused of the current “castastrophy”?
Please note that Aznar currently works for Rupert Murdoch.
I’ll venture an answer to that, although knowing little about Spain’s political dynamics. Who should Spainish voters blame for the economic downturn, which in Spain it looks like a depression? Both parties share responsibility for the economic downturn.
One of the two major parties in Spain is the center-left Spanish Socialist Workers’ Party (PSOE). A PSOE-led coalition ran Spain from 1982-1996, during which time the European Monetary Union was negotiated. They signed the Maastricht Treaty in 1992, with its fundamental flaws revealed by the crash. The PSOE has supported European integration, including the European Constitution in 2005. Since this project has played the largest role in causing the downturn, the PSOE right can be given some of the blame.
The People’s Party (PP) was in office from 1996 – March 2004, during which years Spain joined the EMU (1999) and lost much of its competitiveness. Also during these years the housing bubble began and grew. However both these policies continued under the PSOE-coalition after its victory in the March 2004 election. Furthermore, the PSOE was in office 2004-2011 — and so take responsibility for the economic downturn that hit in 2008, and the policy response during the next 3 years.
Lots of blame for both sides. The question for Spain IMO is not assigning blame, but finding a path forward to a better future.
“Spain having 2x ours for several years”
No, unemployment in Spain reached the 20s only in 2010. But this was a very rapid evolution (from eurostat):
Year….Spain…..USA
2006….08.5%…..4.4%
2007….08.3%…..4.4%
2008….11.3%…..5.0%
2009….18.0%…..7.3%
2010….20.1%…..9.9%
2011..{22% est}…8.5%
.
.
FM note: I added a column for the US unemployment rate, from the BLS website.
I added a column to your comment showing the US rate. The rate for the last pre-recession year (2006) was 4.4% for the US vs. 8.5% for Spain. I am as pedantic as the next guy (usually more so), but I think the description of “2x” is close enough for casual use — although not well describing the trajectory of unemployment rates during the recession. This was not a critical point.
Why doesn’t Iran just make their case to the international community and wait. Brinksmanship is not the answer; time is on their side.
Time is NOT on Iran’s side. US sanctions are already exerting severe stress on Iran, and are tightening. We can maintain these sanctions longer than Iran can withstand them.
This puts Iran in a horrific situation. Either they get outside help — perhaps from Turkey, China, or Russia. Diplomatic or economics. Or they crack. Or they fight.
This is of course what we did to Japan in 1941 (with far better reason).
“They should make their case to the international community ”
They have done so, but should hope for nothing in response. The US has a veto on the Security Council. As for the wider international community:
This puts few limits on the US ability to crush small states. We’re taking the world back to the Law of the Jungle.
I’m curious about how heavily China might get involved. They get a lot of their oil from Iran and are likely not happy about the US stepping so heavily on their economic relationships. China also has a lot of potential power through economic might if they play their cards right.
This is one of the great unknowns. China’s non-participation would weaken the sanctions. Also, they could use the sanctions to develop a non-US-centric financial apparatus, which many nations — unhappy with US hegemony — might use.
Do you feel the proposed defense budget cuts are dangerous at this period of time?
Yes, it is true that we’re guillible, perhaps too guillible for self-rule.
Perhaps that’s too indirect an answer to your question. Let’s let Dick Armey explain: “Obama Disguises Military Budget Increase as a Cut“, Dick Armey and Julie Borowski of FreedomWorks, 10 January 2012 — Opening:
About Dick Armey
Richard Keith “Dick” Armey was the Representative from Texas’s 26th congressional district (1985–2003) and House Majority Leader (1995–2003). He was one of the engineers of the “Republican Revolution” of the 1990s, in which Republicans were elected to majorities of both houses of Congress for the first time in four decades. Armey was one of the chief authors of the Contract with America. Armey is also an author and former economics professor (1964-1883, last position was Chairman of the economics department at University North Texas from 1977 – 1983).
Which has more significance, the erosion of American civil liberties or American economic competitiveness? Based on that which is easier to rehabilitate?
What a great question! One over my pay grade. Perhaps only someone one the level of Lord Keynes could do it justice. Here’s my guess.
Our ruling elites are stripping us of our libery easily because we no longer value it. Given the will, we can stop and reverse this easily. It’s our choice.
Changing economic factors is more complex, more difficult, slower, and usually involves work and cost.
Why doesnt Iraq press the UN to tell the Coalition they have to pay reparations . Like , a zillion dollar damage repair bill .
The Coalition cites UN Resolution 1441 and Resolution 1483 as authority for its actions. However specious, the US can veto any Security Council action contradictory to its interests.
“Everything You Need to Know About Wall Street, in One Brief Tale“, Matt Taibii, Rolling Stone, 13 January 2012
Too good to excerpt. Please read in full, esp the concluding paragraphs.
Now is the time to get angry.
Thanks for the most excellent link. One comment by someone appearing to have done research on the lack of prosecutions for bank scandals stated that most (but not) of the people in charge of operations in local judiciaries are corrupt. This would presumably apply to both jundges and prosecutors?
WTF — This would presumably apply to both judges and prosecutors
And congresspeople and presidents too. Nice how there are comments on Taibbi’s article about “why doesn’t Obama do something?”
Open Secrets:
The game is rigged.