Skip to content
About these ads

Question time on the FM website. Post your questions and answers!

3 November 2012

Summary: It’s time again for question time — “ask the mineshaft”. In the comments post your questions about geopolitics. And post your answers to other people’s questions.  This is a community exercise, from the German “Gemeinschaft” (see Wikipedia).

Contents

  1. What in your opinion is the right “frame” to use when discussing China with others?
  2. What is behind this at-any-cost alignment between the US and Israel? (Strategy? Money? Ideology? Religion?)
  3. (misc comment)
  4. Is Obama responsible for the deaths at the US consulate in Benghazi?
  5. Should you vote?
  6. Is there a vital conservative critique of America, other than shills of the 1%?
  7. Comment about the “I side with” interactive poll website.
  8. What is the future of the petrodollar? What will replace the US-dollar based global currency regime?
  9. Will interest rates rise? If yes then what will they rise to?
  10. Why haven’t small-government conservatives and libertarians carried out their agenda through the bond market instead of the political process?
  11. Don’t we deserve another party other than Theocracy (Republicans) and Socialism (Democrats)?
  12. Could China prevent the RMB from becoming a reserve currency?
  13. What are the dumbest headlines of the week?
  14. _____________

.

.

About these ads
50 Comments leave one →
  1. cynicalatheist permalink
    3 November 2012 1:34 pm

    Hi Fabius! I have been wondering about something ever since watching the final debate between Obama & Romney. It has to do with the right attitude of an American who cares both about the state of their own nation, as well as that of the rest of the world, toward China.

    During the debate, both candidates seemed to describe a similar policy toward China, a kind of “two track” policy where the US both works with China but also competes with and criticizes China. I believe it was Romney who stated he would call them “currency manipulators”, an accurate if somewhat hypocritical charge. There was also a sense of military competition alluded to.

    It occurs to me that the policy — supported by both the US and China, each for our own reasons — of keeping the USD high and the RMB low, thus helping Chinese industry while suppressing most US industries, as well as the tendency of US corporations to “outsource” jobs to Asian nations, really does hurt US workers. In addition, the substantial Chinese (& Japanese) holdings of US debt are considerable. The growing sense of strategic competition cannot be overlooked. Finally, it seems to me that there is a real attitude of jingoism & xenophobia that some Americans have toward China, and in fact toward Asia in general.

    Given all these complex connections and potential dangers, what in your opinion is the right “frame” to use when discussing China with others? Especially with others who may not be geopolitical junkies like us, and whose attention may be limited. How does one talk about the very real problems in the US relationship with China, while avoiding hypocrisy and jingoism?

    Like

    • WTF permalink
      3 November 2012 3:46 pm

      I saw a blatantly anti-China political TV advertisement yesterday. It is, of course, on YouTube:

      .

      .

      Source organization is apparently the usual bogus “anti-waste” right wing scam: Citizens Against Government Waste (CAGW). Links to fraud: Wikipedia on CAGW.

      Like

    • WTF permalink
      3 November 2012 4:42 pm

      They “conveniently” forget to show pictures of Kissinger, Bush Sr. and Nixon in China in the 70s putting together the scam! Conservatism = Lies and Fraud!!!

      Like

    • cynicalatheist permalink
      3 November 2012 5:48 pm

      WTF, that’s right, what I am wondering is the best way to talk honestly about the situation between US & China that does not feed into the sort of hysteria employed by CAGW and similar folks.

      Like

    • 3 November 2012 6:11 pm

      “What in your opinion is the right ‘frame’ to use when discussing China with others?

      What a great question!

      I’ll start, as I so often (an irritatingly) do with a note about epistemology (I’ll give more specific replies in another comment). One finds the true perspective only in Heaven. As with the fable about the blind men and the elephant (look here for several versions), we can only look at China (everything) from different perspectives. Each gives different insights.

      One day, a rajah’s son asked, “Father, what is reality?”

      “An excellent question, my son. Come, we will go to the marketplace.”

      So the rajah and his son went outside and mounted their royal elephant. When they got to the marketplace, the rajah commanded, “Bring me 3 blind men.” When the blind men arrived, the rajah commanded, “Place one blind man at the elephant’s tusk, one at the elephant’s leg and one at the elephant’s tail.” When that was done, the rajah said, “Describe the elephant to me, blind men.”

      The man at the tusk said, “It’s like a spear.” The man at the leg said, “It’s like a tree.” The man at the tail said, “It’s like a rope.”

      As the men started to argue, the rajah said to his son, “Reality, my son, is the elephant. And we are all blind men.”

      Having said that, what’s my preferred perspective about China — as seen from America? It’s success, on an incredible historic wonderful scale.

      The post-WWII dream was a global order founded on peaceful competition between free-market democratic regimes. China and the Soviet Union were the challenges to that vision. Both have joined it. There are few greater successes to be found in history.

      As always, success brings new challenges. China has joined our world, and become a powerful competitor. That’s wonderful, too. Our society, like our species — and nature itself — advances through competition. Bring it on!

      Like

    • 3 November 2012 6:50 pm

      “During the debate, both candidates seemed to describe a similar policy toward China, a kind of “two track” policy where the US both works with China but also competes with and criticizes China. I believe it was Romney who stated he would call them “currency manipulators”, an accurate if somewhat hypocritical charge. There was also a sense of military competition alluded to.”

      Let’s take that in two parts.

      (1) “It occurs to me that the policy — supported by both the US and China, each for our own reasons — of keeping the USD high and the RMB low, thus helping Chinese industry”

      The US didn’t respond to China’s policy because we loved the strong USD. As did the UK during its period of imperial decline. It’s stupid, but feels good — and benefits powerful interest groups. See this post for details.

      Meaning, as economists said, the forces of Econ 101 worked. China’s underpriced currency increased in real terms. Partially by incremental re-valuations by China. Partially by inflation (the inevitable consequence of an undervalued currency). Now the yuan is near “fair” value, and their trade surplus melts away. Meanwhile the US, showing its broken vision of the world, debates about a situation already gone. Eventually we’ll respond to conditions past and gone, proving yet again the perils of a broken OODA loop.

      (2) “There was also a sense of military competition alluded to”

      This is our imperial madness. China is, like all great powers, building up its military to project over its surrounding zone. And to defend itself against America, with its massive military and demonstrated willingness to use it in defiance of the international laws it created.

      Like

    • 6 November 2012 4:38 am

      More about China’s overvalued currency

      Is China Still a ‘Currency Manipulator’?“, Ed Dolan (bio), Roubini’s Economonitor, 24 October 2012

      Like

    • 7 November 2012 3:39 am

      More about China’s currency:

      The Renminbi Bloc Is Here: Asia Down, Rest of the World to Go?” by Arvind Subramanian and Martin Kessler, Peterson Institute for International Economics, October 2012

      Abstract

      A country’s rise to economic dominance tends to be accompanied by its currency becoming a reference point, with other currencies tracking it implicitly or explicitly. For a sample comprising emerging market economies, we show that in the last two years, the renminbi has increasingly become a reference currency which we define as one which exhibits a high degree of co-movement (CMC) with other currencies. In East Asia, there is already a renminbi bloc, because the renminbi has become the dominant reference currency, eclipsing the dollar, which is a historic development.

      In this region, 7 currencies out of 10 co-move more closely with the renminbi than with the dollar, with the average value of the CMC relative to the renminbi being 40 percent greater than that for the dollar. We find that co-movements with a reference currency, especially for the renminbi, are associated with trade integration. We draw some lessons for the prospects for the renminbi bloc to move beyond Asia based on a comparison of the renminbi’s situation today and that of the Japanese yen in the early 1990s. If trade were the sole driver, a more global renminbi bloc could emerge by the mid-2030s but complementary reforms of the financial and external sector could considerably expedite the process.

      Like

    • 7 November 2012 3:42 am

      More about China’s currency. It’s an important and highly debated subject.

      Revisiting the Internationalization of the Yuan“, Yongding Yu, Asian Development Bank Institute, July 2012

      Abstract:

      As the world’s second largest economy, largest trading nation, and the largest foreign holder of United States (US) government bonds, the People’s Republic of China (PRC) needs a currency with international status that can match its economic status in the global economy. However, sequencing is important. Before the internationalization of the yuan can make meaningful progress, necessary conditions, such as the existence of deep and liquid financial markets, a flexible exchange rate and interest rates responsive to market conditions must be created.

      The process of yuan internationalization essentially is a process of capital account liberalization. Due to the unprecedented and complex global financial crisis and the PRC’s huge imbalances, capital account liberalization has to be pursued in a cautious way. As a result, the internationalization of the yuan is bound to be a long-drawn process.

      The PRC’s road map for the internationalization of the yuan is flawed with many missing links and wishful thinking. Yuan internationalization guided by the current road map may be proven counterproductive.

      Like

  2. 3 November 2012 7:28 pm

    In a recent post it was suggested that the post-war dream first turned seriously astray when Israel undertook a war of displacement and resettlement, and the US supported them. My understanding (mostly based on Chomsky) is that it has been common for the US and Israel to stand together against the rest of the world in the UN.

    What is behind this at-any-cost alignment between the US and Israel? (Strategy? Money? Ideology? Religion?)

    Like

    • 3 November 2012 7:30 pm

      Great question. I have no idea.

      Open this to our readers! Does anyone have thoughts on this?

      Like

    • Pluto permalink
      4 November 2012 12:25 am

      My understanding is that the US-Israeli relationship is heavily based on the Jewish voting bloc in the US and the lobbying efforts of a number of Jewish individuals in the US government. But I cannot find an authoritative source on this.

      Like

  3. david fisher permalink
    3 November 2012 9:14 pm

    An open and transparent one.

    Like

  4. 3 November 2012 9:47 pm

    Is President Obama responsible for the deaths at the US consulate in Benghazi?

    The Right-wing of the GOP’s obsessive search for ways to hate Obama has focused this week on an responsibility for the deaths in our Benghazi consulate. It’s an interesting episode, and when the evidence is all in deserves close study.

    What we see so far is a willful refusal of the Right to see much of the evidence. Such as on this story, the inability of the Stennis to provide firesupport to Libya while in the mid-Pacific. Or here, refusal to give any credence to the specific charges made about General Ham. Instead those on the right imagine ways, without evidence, to connect these to the Benghazi incident.

    More broadly, see the hundreds (perhaps thousands) of internet postings blaming Obama for this — which rely mostly on rumors to draw large conclusions. Often (as above) quite absurd ones. Perhaps they believe the world works like the TV show NCIS, where senior officials spend most of their time watching real-time pictures of events around of the world — instead on meetings and paperwork.

    While some of this is probably a deliberate desparate last-minute GOP effort to fire up the base for the election, it is symptomatic of a larger problem in America today. Everybody has their own facts. The climate doomsters. The Peak Oil doomsters. The Bush haters (“just like Hitler”). The Obama haters (that foreign Islamic nilhist socialist). We can all add to the list. The resulting pointless political firefights consume our attention, starving serious challenges of the attention they require.

    If we cannot see the world more clearly, how can America survive in the 21st century?

    For all their many faults, China’s rulers look like a clear-sighted and rational crew. Perhaps the hard logic of history will give leadership of the world to them.

    Like

  5. 3 November 2012 9:52 pm

    Should you vote?

    Yes! It’s an important election. Even if you like neither candidate, the choice between bad and worse is important.

    On the other hand, there are other perspectives on this…
    .

    Like

    • 3 November 2012 11:39 pm

      A sub-question/consideration: Most projections I see expect that President Obama will be re-elected, but that a slim majority of the popular vote will go to Mitt Romney. Even though voters not in “swing states” are very unlikely to affect the results in the electoral college, they contribute to the popular vote. Instead of voting for a third-party candidate who is sure not to win, or staying home (if no other elections matter to them), should anyone care about (the symbolic or psychological or ??? effect of) the popular vote?

      Like

  6. 3 November 2012 10:20 pm

    Is there a vital conservative critique of America, other than shills of the 1%?

    Yes. Revolutions in the West — in the broad sense of over-turning the existing social order — have foundations from a combination of real-world innovations and new philosphical (ie, in the traditional sense, including science) insights. So it is today.

    As usual, a revolution gains strength slowly on the fringes. Too radical for the mainsteam media to even see. And when they do mention it, they do so only with mockery.

    Revolutions are always shocking, and seldom pretty (until historians clean them up for children’s textbooks, which accounts eventually replace the true story in people’s minds).

    For an introduction see “Latest Baumeister Paper Supports CH Concept Of The Sexual Market“, posted at Chateau Heartiste (“where pretty lies perish), 2 November 2012.

    Like

    • 4 November 2012 2:33 am

      Be sure not to read much of the comments on that blog! The post was interesting though.

      Like

    • 4 November 2012 4:04 am

      Agreed, the comments are amazing! Like Tom Leykis (Radio talk show host; see Wikipedia). The most astonishing aspects (to me, being naive) are the girls who comment — agreeing with the “game” guys perspective. Often mocking the betas they play with and exploit.

      Like

    • 4 November 2012 2:43 am

      “Is there a vital conservative critique of America, other than shills of the 1%?”

      I think that question embodies a contradiction in terms. The “true meaning of ‘conservative’” can be a little hard to pin down, but it always seems to work out to preserving and strengthening the authority and prerogatives of those who already hold power.

      “Is there a vital conservative critique of America…?”

      That would be the Democratic party. The Republicans serve as their advance guard, testing to see how far it’s possible to push the envelope. I suspect even they are surprised at their achievements.

      Like

    • 4 November 2012 4:01 am

      “That would be the Democratic party”

      Wow. I think we have a clear “best of thread” winner! That’s so true, on several levels.

      Like

    • 5 November 2012 3:55 am

      The Chateau Heartiste article is disturbing. It’s as good a reason as any that I follow prostitutes’ blogs, especially the Honest Courtesan, the blog maintained by retired prostitute and librarian Maggie McNeill. McNeill addresses human sexuality frankly, albeit in a much more demure tone than many of her colleagues, who tend to be explicit and raunchy. What these women do not do, however, is approach sexuality with the cynicism, authoritarianism and Machiavellian ethics that are celebrated at Chateau Heartiste.

      Similarly, the Exiled, whose work I’ve linked to before, often publishes articles that discuss the sexual frustration of American men very bluntly, but without the cruelty that pervades the Chateau Heartiste article and many of its reader comments.

      A subtle but crucial virtue in the approach taken by the Exiled and sex workers’ blogs is that they are clearly written by reasonably clearheaded, morally grounded adults who seem capable (and in the whores’ cases, clearly are capable) of giving a hand up to people who are mired in potentially dangerous sexual frustration. The Chateau Heartiste crowd, by contrast, comes across as a bunch of high school bullies, abetted on occasion by nosy scolds, and probably by some weaselly voyeurs. There are compelling reasons to keep some teachers around to give their ilk some oversight and guidance.

      A number of the Heartistes, including the author, view themselves and their overbearing morality as the last bulwark against national decline, but I submit that seeking guidance from people of their character is an effective way to weaken the civic fabric and invite mayhem. George Sodini, the bachelor who shot up the women’s gym class in Pittsburgh, was set off by exactly the kind of sexual frustration at issue here. His rage absolutely did not come out of nowhere. With an endgame like that, I’d certainly hope that the discussion of sexual sociology not be dominated by sadists.

      Like

    • 5 November 2012 4:00 am

      Yep. I get much the same feeling when reading articles by American geopolitical experts, with heir love of aggression and bullying cloaked in self-righteousness.

      Right-wing war blogs are far worse, often with a sheer love of evil.

      No surprise that this attitude has spread throughout our culture. Just a guess, of course.

      Like

  7. 3 November 2012 10:38 pm

    I love this blog. I read it daily and spread the word to as many as I can.

    In terms of the petrodollar, when do you foresee its inevitable end and do you think a basket currency model will replace it or a fragmented economic system by region based on precious metals, commodities, etc.?

    What is the future of the petrodollar in your best estimation?

    Like

    • 3 November 2012 10:56 pm

      What shape will the future global currency regime take? That’s an important and fascinating question! First, some definitions — courtesy of Wikipedia:

      A petrodollar is a United States dollar earned by a country through the sale of its petroleum to another country. The term was coined in 1973 by Georgetown University economics professor, Ibrahim Oweiss, who recognized the need for a term that could describe the dollar receiving by petroleum exporting countries (OPEC) in exchange for oil.

      The term, petrodollar, should not be confused with petrocurrency which refers to the actual national currency of each petroleum exporting country.

      The currency regime is but a reflection of the global political order. My guess is that the mad empire of the US rests on a foundation of sand, which will wash away with the next storm. Whenever that comes. What will replace it? I see no future hegemons on the horizon, for several reasons.

      First, nobody has the power. China will be a major power, as might Europe (if they unify). The US will remain powerful. There are possible candidates for great power status: Russia, India, a united Middle East (paging Mr. Saladin), Brazil (oil, minerals, agriculture!). But none sufficiently powerful to dominate the others.

      Second, does it pay to be world hegemon? It’s expensive to maintain sufficient military power. Nobody can dominate a nuclear-armed state, and any major nation can easily build nukes (if Pakistan and North Korea can, then…). And aggressive war itself — waged against modern states — has not paid well for centuries. Has any large aggressive war (ie, not counting large states vs. tiny ones) been profitable since 1648?

      As for currencies, being the reserve fiat currency is for chumps. There have only been two (UK, US), because the supply of fools is limited. Economists call it a “poisoned chalice” (like a multi-level marketing scheme) because its long-term harm lies inside a glittering exterior.

      All this suggests some sort of complex currency scheme lies ahead. Perhaps an advanced version of the IMF’s special drawing rights. Perhaps based on a basket of currencies or commodities. Properly managed, almost anything can work. That means adapting the pricing to changes in world conditions (ie, not fixed — like a ship tied too tightly to a dock, so that it sinks at high tide).

      Like

  8. Wad permalink
    4 November 2012 12:23 am

    An interactive mineshaft: What are Fabius Maximus readers’ matches on http://www.isidewith.com?

    ISideWith is a website that asks users’ opinions on key political issues, and for this election, it also gauges how much these issues matter to them. There are economic, social and foreign policy questions. It then shows you how much you are aligned with the positions of Obama, Romney and the minor-party candidates.

    There are also stats on how respondents side with candidates at the state level — the Obama-leaning states roughly match actual polling support, but the Romney-leaning states are more biased toward Libertarian Gary Johnson — as well as how respondents lean on major news, politics and current-affairs sites.

    Like

  9. slapout9 permalink
    4 November 2012 2:28 am

    Will intererest rates rise? If yes then what will they rise to?

    Like

    • 4 November 2012 4:34 am

      “Will interest rates rise? If yes then what will they rise to?”

      Will interest rates rise? I can guarantee you the answer is “yes”. Saying “when” they will rise is more difficult. A note from history explains why.

      Einstein dies and goes to heaven only to be informed that his room is not yet ready.
      St. Peter: “I apologize, but you must share the room with three men.”
      Einstein: “That’s fine. I can get along with most people.”
      St. Peter: “Joe is a generous man. He has an IQ of 150!”
      Einstein: “That’s wonderful! We can discuss my theory of relativity.”
      St. Peter: “Bob is faithful man. His IQ is 120.”
      Einstein: “We’ll get along fine! We can discuss the prospects for world peace.”
      St. Peter: “Ralph is a kind, warm man. Sterling in most ways. But is IQ is only 90.”
      Einstein: {long thoughtful pause} “That’s nice. We can discuss which way interest rates will move.”

      The harsh truth of this joke is that the direction of key business variables (eg, GDP, interest rates) has great importance, and so vast amounts of intellectual energy does into forecasting them. Unfortunately success lies beyond the current state of the art. To use a bad analogy, imagine if we gave Ben Franklin satellite pictures and asked him to make weather forecasts. He could do so after a fashion (after all, he had just discovered the Gulf Stream), but not well.

      First, we don’t have accurate real-time data. We know where the world and US economies were 3 months ago, but real time data is sketchy and much of it is unreliable (eg, the establishment survey’s estimate of the October change in US employment was reported Friday; the final estimate in 18 months (18 is from memory) will probably be substantially different.

      Second, we don’t have reliable theory to analyze the data. If we did, the rapid evolution of the economy probably will render it largely useless in a decade.

      Having said all that, my guess (emphasis on guess) is that both real and nominal interest rates will stay low for the next year. Which is, IMO, the maximum foreseeable time horizon in the very strange circumstances of today.

      Like

  10. Wad permalink
    4 November 2012 4:50 am

    Another question.

    Why haven’t small-government conservatives and libertarians carried out their agenda through the bond market instead of the political process?

    Like

    • 4 November 2012 5:06 am

      We have some great questions today!

      Wad raises a provocative question, since such a large fraction of wealthy and powerful people are conservatives and libertarians. That is, they either have wealth or control wealth (eg, foundations, endowments, trusts, pension plans, mutual funds). Although they’re often constrained by legal requirements, they could still exert powerful forces on the US government bond market — if they dared.

      My guess (emphasis on guess), is that for many of them political theory plays second fiddle to their first love: religion. The worship of the great God Mammon. And they believe (IMO, correctly) their political beliefs would steer their investments on the rocks quite fast.

      This is of course often the case, work and faith conflicted. I’ve read that God himself holds personal opinions that differ from his professional ones — which accounts for the existence of the evil and suffering that dominate the world.

      Like

  11. genericman permalink
    4 November 2012 6:51 am

    Do you think the Democratic party represents an ideological far left position and that we need a new party of centrists (like say, Americans Elect) to take back America?

    Don’t we deserve another party other than Theocracy (Republicans) and Socialism (Democrats)?

    Like

    • cynicalatheist permalink
      4 November 2012 1:27 pm

      You’ve got it backwards: the Democrats represent a centrist position now. The Republicans represent a far right position. What is lacking is a viable left party. If we had one, it would be much easier to progress as a nation.

      Like

    • 4 November 2012 3:05 pm

      I agree with cyninalatheist.

      There is a large literature defining and measuring the political spectrum of the US and the placement on it of the US parties. It’s complex, because the specific meanings of “left” and “right” policies change over time. Civil rights for black Americans was once a far left position, as was votes for women. Prohibition of alcohol and public ownership of major industries are no longer even issues, except for tiny slivers of the public.

      Like

    • 4 November 2012 3:11 pm

      “Don’t we deserve another party other than Theocracy (Republicans) and Socialism (Democrats)?”

      I don’t beleive those descriptions well describe either the GOP or Democrats. Much of the right is anti-Christian in policy, advocating policies with no remote Scriptural basis — and that would (will?) get them sent directly to Hell by Jesus. It’s key leaders often desplay contempt for key aspects of Christian policy, such as the sacrament of marriage and care for the poor. Their lay patron saint, Reagan, de facto abolished marriage in California — perhaps one of the most revolutionary aspects of social policy in US history.

      Saying the Democratic party today advocates Socialism is just daft. It’s a 100% owned subsidiary of Wall Street, as the Obama Administration has proven.

      Like

    • david jones permalink
      6 November 2012 1:06 am

      “Their lay patron saint, Reagan, de facto abolished marriage in California”

      How did he do that?

      Like

    • 6 November 2012 1:59 am

      Marriage in the United States

      The nature of marriage had evolved slowing in America during the 20th century, but the revolution began with the California Family Law Act of 1969, which Governor Reagan signed on 4 September 1969. California now allowed divorce initiated by only one spouse without legal fault for de facto any reason — the assertion by only one spouse that there were “irreconcilable differences”.

      The traditional contract of marriage allowed people to plan on the basis of a joint partnership, one that could be broken only for a limited set of reasons. Now it was every man and woman for itself. The new institution retained the same name as its predecessor, but was fundamentally different.

      Like

    • 7 November 2012 3:36 am

      Two articles about the current state of marriage, 33 years after Reagan signed the CA Family Law. Marriage is evolving into something unrecognizable to the Americans of 1969. The slippery slope in action.

      1. The End of ‘Marriage’“, Laurie Shrage, New York Times, 4 November 2012
      2. Marriage is Broken. Here’s How to Fix It.“, Amanda Hess, Slate, 6 November 2012

      Like

    • david jones permalink
      7 November 2012 11:48 pm

      i’d say changed instead of “abolished” but I see what you mean. interesting bit of history!

      Like

    • 8 November 2012 2:54 am

      Jones,

      As you note, there are no lines to mark when incremental change makes a social institutional fundamentally different. I believe that we’ve passed that point with marriage. The two articles cited show that the evolutionary process has accellerated, sliding to what end we cannot guess.

      Only time will tell who is correct.

      Like

  12. guest permalink
    4 November 2012 1:08 pm

    “As for currencies, being the reserve fiat currency is for chumps.”

    The question is whether a country, as powerful as it may be, is entirely free to choose whether its national currency becomes the world reserve currency or not.

    Could China, for instance, stop the RMB becoming a reserve currency if other central banks start hoarding it in their reserves, or if merchants start trading in RMB? Was the status of the GBP or the USD as reserve currencies a conscious decision entirely in the hands of the UK and the USA, or was the entire economic environment pushing in that direction anyway?

    Like

    • 4 November 2012 4:57 pm

      “Could China, for instance, stop the RMB becoming a reserve currency if other central banks start hoarding it in their reserves, or if merchants start trading in RMB? Was the status of the GBP or the USD as reserve currencies a conscious decision entirely in the hands of the UK and the USA, or was the entire economic environment pushing in that direction anyway?”

      A few things to clarify this discussion. A fiat reserve currency differs from trusted coinage (eg, the thaler). So there have been only two reserve currencies: the UK pound and the US dollar. This brief history proves nothing, certainly not the necessity of a reserve currency for the global economy. These might be historical anomalies.

      Nations could maintain foreign exchange reserves in the traditional sense, a currency holdings to match their trade patters (esp imports). Some excess might be maintained, using those currencies with active bond markets and relattively stable values (the US dollar’s gyrations showing that the former is far more important than the latter).

      The reserve currency has a tendency to become overvalued — as its accumulation as a store of value by public and private entities creates additional demand — and hence produces chronic (ie, structural) trade deficits. That sustains the system, because a growing world economy produces increased world demand for the reserve currency — which is in turn “produced” by the trade deficits. This is an extreme oversimplification, but gets to the policy question. If a nation does not run the “twin deficits” — fiscal and trade deficits — it can become “a” reserve currency but not “the” reserve currency.

      A major exporter — such as Japan, China, and German — avoids reserve currency status, as it is destructive to the source of their prosperity.

      Like

  13. 4 November 2012 5:38 pm

    What are the dumbest headlines of the week?

    Everyone will have their own list of favorites. Here are mine. Please post yours!

    (1) ‘A pre-9/11 moment’“, Chicago Tribune (news, not an op-ed), 3 November 2012 — “Time to step up on cybersecurity”

    Panetta’s last widecat exploration for new sources of funding hit a gusher with his remarks about cyberwar, generating a thousand flowers of news articles, op-eds, and reports. Quite natural. It’s projection. Liars assume everybody lies. Sociopaths assume everybody considers others as objects. Aggressors live in fear of attack. We staged the first cyber Pearl Harbor on Iran — a sneak attack with no declaration of war. So of course we fear others will do the same to us.

    (2) Libya Attack Shows Pentagon’s Limits In Region“, New York Times, 4 November 2012

    For America, intervention creates blowback — which creates domestic pressure for more overseas military expansion. This cycle — leading to more involvement in Arican affairs, was widely predicted to be the result of creating the Africa Command. It was probably the intent of DoD in creating Africa Command. DoD, like all living entities (including parasites) seeks to continually grow.

    (3) Obama Fires Top Admiral For Advocating Libyan Rescue?

    One of a thousand website headlines by desparate right-wingers seeking ways to blame President Obama for the deaths of the Benghazi consulate staff. Most are, like this, a combination of ignorant and degranged. The former because the USS Stennis was in the mid-Pacific at the time, far too distant to intervene in Libya. The latter for the belief that the President personally intervenes in real-time to such fast-moving local events. Perhaps this comes from watching too much TV.

    Like

    • 5 November 2012 1:28 am

      Redskins lose to Panthers, Redskins Rule says Mitt Romney will be President
      By Ryan Wilson | Blogger

      Months after Republican presidential candidate Mitt Romney joked about rising oceans and suggested FEMA should be privatized, he got some much-needed good news Sunday, two days before the nation goes to the polls to decide the next Commander-in-Chief: The Carolina Panthers won.

      Romney, who was born in Michigan and was once the governor of Massachusetts, doesn’t have any ties to the Charlotte area. But he’s certainly well aware of the Redskins Rule. Specifically: Going back to 1940, a Redskins victory in their last home game before the election has meant the party currently in power remained in power 17 of 18 times. With a Redskins loss on Sunday to the Panthers, that portends good things for Romney’s political future.

      http://www.cbssports.com/nfl/blog/eye-on-football/20823348/redskins-lose-to-panthers-redskins-rule-says-mitt-romney-will-be-president

      Like

  14. 5 November 2012 5:29 am

    FM: What are your thoughts on Thomas Barnett’s endorsement of Romney? The sad truth about a second Obama presidency, 31 October 2012

    Like

    • 5 November 2012 2:18 pm

      Barnett is a smart guy, and his analysis — which is an endoresement of David Brook’s — is logical, in a small sort of way. If they don’t get a GOP President, the GOP will continue to sabotage Congress — so we should surrender to them.

      A more reasonable conclusion of that logic, IMO, would be to say that the GOP’s leadership has put pursuit of power nakedly above the national interest — and that such American voters should remove such people from office. The Founders cretaed a system of diffused power. So reform in American communities (broadly defined) must come from within. So this task falls to GOP partisians, to reform their party and rebuild it as a loyal American political force operating in our two-party dominated system.

      That’s not going to happen because of larger forces at work. The move the Democratic Party to the right, and the GOP to the far right, reflect the centralization of wealth and power in America. And their deployment of the power in a constellation of organizations manipulating US public opinion.

      This will be an interesting election, since it will measure their success so far.

      Like

  15. genericman permalink
    6 November 2012 1:28 pm

    What do you think of this article? “In Praise of Flip-Floppers“, Zachary Keck, Foreign Policy, 2 November 2012 — “When it comes to presidents and foreign policy, changing your mind is as American as apple pie.”

    Like

    • 6 November 2012 1:59 pm

      Genericaman,

      In hindsight, Slate’s success at pointless contraianism was certain to create imitators. This article displays the usual chacteristics.

      Start with a plausible but false statement such as “no cardinal sin is quite as grave in contemporary American politics as “flip-flopping.” A Cardinal Sin is unforgivable, which flip-flopping is not in US politics.

      Add a modifier to disarm critics who note that its false: “Perhaps no cardinal ….”

      Give examples, but ignore frequency and magnitude — so all examples blur into a haze, and any context and meaning are lost.

      Draw a bizarre conclusion, boosted by excessive adjectives: “Should Romney become president, his mastery of the art of flip-flopping may be his greatest asset in handling America’s foreign affairs.” Romney changes his position frequently, but with “mastery”? His “greatest asset”?

      Like

  16. genericman permalink
    6 November 2012 1:50 pm

    Thomas Friedman nails it again. “The Morning After the Morning After” Pretty much jives with what you’ve been saying Fabius.

    Like

    • 6 November 2012 2:30 pm

      But it’s Thomas Friedman! Can it be other than oblivious restatement of the obvious intermixed with a few category errors and other mistakes? A core tenet of my faith is challenged as I turn to read it — and the opening reaffirms my Faith:

      “THERE are two things I’ll predict about Tuesday’s election: one is that America’s biggest voting bloc — the center-right/center-left — will win; the other is that there’s going to be a big civil war within the Republican Party and a small civil war within the Democratic Party starting the day after the election, as they’re each forced to accommodate this center-left/center-right victory.”

      What is the “center-right/center-left” bloc? Given the bell-curve-like distribution of US national political ideology, it sounds like the center 50%. By definition this is the battleground. But equally so, in our two-party system it seldom votes as a bloc. The two big landslides in the past century were only 61% of the popular vote (1964 and 1972) — showing that the “center bloc” was split.

      TF might be correct about GOP “civil war” following a GOP defeat. That was predicted by many after 2008 – and instead they doubled-down on the Right. Also, instead of a “civil war” the GOP might slowly evolve.

      Note Friedman abandons his opening prediction about a “small civil war starting the day after the election” inside the Democratic Party. Instead he says that if the GOP changes, then the Democrats must have a civil war:

      A truly center-right G.O.P. would force the Democrats to have their own civil war — the center-left versus the rest — largely over tax/entitlement reform and defense spending. Obama has never fully tested where the Democratic base is on these issues, but that’s coming. The Democratic civil war will encompass fewer issues than the G.O.P.’s, but it will be intense and unavoidable”

      He then intones the mantra of High Centrism, which so many analysts have debunked as neither supported by polls (despite his “clearly wants”) nor necessary (but does allow pundits like TF to pose as being above the fray, like God):

      “if we are to forge the Grand Bargains that America’s center-right/center-left majority clearly wants and the country clearly needs.”

      Like

    • 6 November 2012 3:14 pm

      Another note about Friedman’s column: he does point to what might be the major effect of this election:

      The broadly similar positions of the two candidates on large areas of public policy (eg, foreign affairs) suggest that this will not act as an inflection point in US politics. But a GOP defeat might spark a major re-evaluation by GOP leaders and conservatives in general of their political views. But some disagree, such as this by Joseph Britt, a former Republican senate staffer who now lives in Wisconsin (from a post by James Fallows at The Atlantic):

      Thanks for again bringing us these analytical pieces from Dr. Popkin. However, I think his use of the post-1984 Democrats as an example of the likely path forward for the Republicans in the event of an Obama victory (and failure to gain control of the Senate) is flawed.

      In 1984, the components making up the modern conservative media ecosystem (Fox News, conservative talk radio, the various Internet outlets, reinforced by social media) didn’t exist. While I suspect he’s correct about what the various local and state-level officials and candidates will want to do – break to the center – I think he discounts their ability to get an electorate to follow them. The inhabitants of the conservative bubble of today shake off any and every thing that conflicts with their worldview, and this contrary feeling is supported by the media feedback loop….

      Unless something significant happens which proves the undoing of the conservative media machine, I fear rationality on the right will be a long, long time coming.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 2,495 other followers

%d bloggers like this: