What Happens to Ireland If It Ditches the EMU?
Working in a building called the "European Research Institute," you cannot expect me to rehash Eurosceptic rhetoric about EU members surrendering sovereignty to Brussels and all that jazz. Fortunately, there are bazillions of blogs out there if that's your thing. If anything, I am a fierce proponent of giving up the pound and adopting the Euro. However, many others here in Britain and across the continent do not share my sentiments. Witness Ireland's recent referendum where it turned down the adoption of the Lisbon Agenda. Admittedly, the agenda is a warmed-over version of the EU Constitution which France and the Netherlands turned down in 2005. So, once again, dreams of an ever-closer union have been put on hold. While the EU's powers-that-be have demanded another referendum from Ireland, its results are by no means guaranteed to be more favourable than the last one.
Ireland has been an oft-cited example of the benefits of European economic integration. Nicki Smith, a colleague here at the University of Birmingham, even pondered the question of whether Ireland was Showcasing Globalisation. Before embarking on its modernisation programme, Ireland was more famous for its sizeable diaspora leaving its moribund economy. More recently, Wolfgang Munchau has pondered the question of what would happen if the Irish went further down the Eurosceptic road and decided to abandon the EMU altogether. Surely, if Ireland turns down another referendum, that path cannot be far in the distance. As I heartily approve, he gives the idea two thumbs down (plus two big toes down to boot). Below are some excerpts, but do read the whole thing if you're interested in the terrible fate that will surely befall the Emerald Isle should it decide to go it alone. Even the Lone Ranger needs Tonto:
So within a couple of weeks, the chances of Ireland ending up outside the EU have turned from zero to a distinct possibility. The same goes for the Czech Republic, another potential non-ratifier. I do not want to get into the legal details of how a country’s departure from the EU could be accomplished. Suffice it to say that it can be done within European law as long as there is political will.What strikes me the most about this extraordinary turn of events is the perception in Ireland that a break with the EU would be no big deal. I received a large number of letters from Ireland last week from readers who steadfastly maintain that the country’s economic success had nothing to do with the EU and everything to do with domestic policy – in particular with low corporate taxes and skilled labour.
The view expressed by those correspondents is as wrong as it is revealing. If so many people are delusional about their country’s economy, then we should perhaps not be surprised about the outcome of the referendum. It is therefore perhaps worth looking in some detail at the nature of Ireland’s economic success over the last 30 years to gauge what life might be like outside the EU...
Ireland was one of the early and enthusiastic members of the European Monetary System in 1979, which brought much needed macroeconomic stability. Membership of the eurozone in 1999 led to lower interest rates, which have contributed to the economic growth ever since. Low corporate tax rates certainly helped Ireland attract foreign investors. But never forget that Ireland is also the only English-speaking member of the eurozone, the one place where eurozone and Anglosphere meet.
The country naturally benefited from membership of the EU’s internal market. Without it, Ryanair, the Irish low-cost airline, would not be able to offer its popular flights across Europe. The Irish have also proved influential in the management of the internal market, not least through Charlie McCreevy, the Irish commissioner in charge of the EU’s internal market and financial services. As a member of the EU, Ireland has been in a position to veto motions that would have impaired the country’s economic success. Without steadfast opposition from Ireland, the EU would have made more headway in imposing corporate tax harmonisation...
So what would happen if Ireland were to leave the EU? As an associate member of the single European market, Ireland would probably attract less foreign investment than it does today. Dublin’s financial centre would be demonised as an offshore tax haven and treated on par with Liechtenstein. We would see lots of Ryanair flights between Dublin and Cork and the EU would put even more pressure on Ireland to raise corporate taxes.
Oh, and by the way, Ireland would no longer be a member of the eurozone. The Irish could use the euro if they wanted to but this would be like Panama using the dollar – a little sad, really. There would be no Irish voice in the European Central Bank’s governing council warning that this is not a good time to raise interest rates. Leaving the EU involves a huge loss power and influence.
To put it mildly, the No vote is highly risky. Considering that the country is now on the verge of a severe economic slowdown, brought on by a downturn in the real estate market and the credit market crisis, it could not have come at a worse time. Not only does the No vote carry risks, it is a highly asymmetric gamble that brings no material benefit under the best of circumstances. The No vote put Europe’s most impressive economic miracle at stake, and the cards are not looking good.
Insight: Beware the Japanese trap
By Gillian Tett
A decade ago I lived in Tokyo, where I wrote about Japan’s banking woes. For several nail-biting years, I watched as the Bank of Japan unveiled a stream of ever-more creative measures that were designed to combat the risk of a financial meltdown.
By the start of this decade, this crisis was - finally - ebbing away. So when I left Tokyo in 2001, I naively assumed that the BoJ’s “emergency” policies were destined to vanish too.
Not entirely so. As Tadashi Nakamae, a Japanese economist, recently pointed out to me, one “emergency” practice from that era which has not gone back on the shelf is the idea that the BoJ should buy lots of Japanese government bonds.
For, ever since the BoJ deployed this “temporary”, crisis-busting step - supposedly to help the banks - the Ministry of Finance has become rather fond of keeping long term bond yields down. Thus whenever the BoJ threatens to withdraw its JGB support, the Ministry blocks the idea - on the grounds the move could unleash more financial turmoil.
It is a salutory tale that Western policy makers would do well to note. In the last ten months, as financial crisis has swept through Western markets, US and European central banks have also produced all manner of crisis-busting, money-market manouvres. And, perhaps unsurprisingly, some of these seem to have been copied from 1990’s Japan.
Thus far these steps have won widespead plaudits from market participants. And I would not criticise the Western central banks for acting to avert a full-scale financial collapse in this way. But the more I look at these measures, the more I wonder how the US and European banks will avoid the Japanese trap?
After all, if Western central banks halt these emergency steps too fast, they could unleash turmoil again; but if they wait too long, they could breed a new form of financial addiction among private banks and politicians alike. And as any addict knows, addiction rarely disappears by itself. On the contrary, procrastination tends to make the problem worse, as habits become deeply engrained - be that in Japan, or anywhere else.
The US Federal Reserve, for its part, currently appears to be keenly aware of this problem. And Timothy Geithner, New York Fed president (and himself an expert on Japan), has already signalled his desire to avoid any Tokyo-style policy fudge by calling for a broader rethink of the regulatory structure. The Fed has also indicated that it will withdraw the generous liquidity support that it is currently providing to broker dealers, following the Bear Stearns drama, by September.
But whether the Fed will actually meet this deadline remains an open bet. After all, brokers such as Lehman Brothers are hardly flourishing right now - and the prospect of the September deadline is already spooking the markets.
Meanwhile, on the other side of the Atlantic, the ECB has problems of its own. Thus far, the Frankfurt-based group has not set any deadline for scaling back its programme of emergency money market support. However, some officials are becoming concerned about the addiction patterns this is breeding.
More specifically, there is concern that private sector banks currently have little incentive to restart the mortgage securitisation market - precisely because it is so easy (and cheap) to get funding from ECB sources instead. But the ECB knows that if it tries to withdraw its aid before the securitisation market has reopened, it will face strong political criticism. Worse still, it could even hurt some banks.
Perhaps this dilema will quietly resolve itself over time. After all, if banks recapitalise themselves over the summer, and investors regain confidence, it should become easier to withdraw central bank support later this year or next - or so the optimists hope.
But in the meantime I am told that many Western banks are becoming increasingly creative about how they repackage their assets to get central bank support. Addiction, in other words, is not disappearing of its own accord. No wonder some bankers now joke that the “originate to distribute” model has quietly morphed into “originate to repo” pattern instead. It is indeed a difficult policy trap. Do not bet on an easy or smooth exit soon.
How imbalances led to credit crunch and inflation
By Martin Wolf
Inflation is always and everywhere a monetary phenomenon. Milton Friedman.
What explains the combination of a “credit crunch” in the US with soaring commodity prices and rising inflation across the globe? Are these unrelated events or part of a bigger picture? The answer is the latter. So far this is not a return to the 1970s. But action is needed to keep this true.
Inflation is a sustained rise in the price level: the result of too much money (or purchasing power) chasing too few goods and services. A one-off jump in commodity prices is not inflation. Nor need such a jump cause inflation. But a continuous rise in the relative price of commodities is a symptom of an inflationary process.
Whenever excess demand hits, the goods whose prices rise first are ones with flexible prices, of which commodities are the prime example. Commodity prices then are a pressure gauge. If we look at what has been happening in recent years, the gauge is showing red. The Goldman Sachs index of commodity prices has doubled since early 2007. Nominal prices of oil have increased by 150 per cent over the same period. The upward movement in commodity prices has persisted for 6½ years. It looks as though too much extra demand is pressing on too little ability to increase global supply.
The result is unexpectedly big increases in overall inflation: the consensus for world consumer price inflation in 2008 has jumped from the 2.4 per cent forecast in February 2007 to the 4.3 per cent forecast in June 2008. These jumps are modest, but not that modest. Nor is the forecast level. If people get used to the idea that inflation can jump like this, the notion may well become embedded in expectations, with dire consequences.
Yet how can we have an incipient global inflationary process when the US economy and those of other significant high-income countries are slowing down? The proximate reason is that they matter far less than they used to. The underlying explanation lies in the forces driving both global demand and supply.
On demand, two big things are happening: convergence and the imbalances. Under convergence comes the accelerated growth of emerging economies, above all of China and India. Under imbalances come the interventions in currency markets aimed at supporting competitiveness.
Charles Dumas of London-based Lombard Street Research notes that, at purchasing power parity, China now generates a little over a quarter of world economic growth in a normal year, while emerging and developing countries together generate 70 per cent. Even at market exchange rates, the growth of China’s gross domestic product is as big as that of the US in normal years for both countries.
The emerging countries are also in a good position to keep on growing, largely because they have such strong external positions. Many emerging economies have intervened in currency markets on a huge scale, principally in order to keep export competitiveness up and current account deficits down. Over the seven years to March 2008, global foreign currency reserves jumped by $4,900bn (€3,175bn, £2,505bn), with China’s reserves alone up by $1,500bn. Indeed, as much as 70 per cent of today’s reserves have been accumulated over this period. “Never again,” said the emerging countries hit by crises in the 1980s and 1990s; “not even once,” said China.
Interventionist policies aimed at sustaining export competitiveness expand economies. The results normally include rapid rises in net exports, low interest rates, aimed at curbing the capital inflow, and expansion in the monetary base, despite attempts at sterilisation. The Chinese economy is overheating as a direct result of this trio of effects.
Most of these reserves were accumulated by countries more or less explicitly targeting the US dollar and accumulating US liabilities. The resulting capital flow financed the US trade and current account deficits. But a trade deficit is contractionary: for any given level of domestic demand, it lowers domestic output. Thus, the US needed to expand domestic demand, in order to offset the contractionary effect of the external deficits. Some groups within the economy needed to spend more than their incomes. The most important such group turned out to be households. Thus the growth in US household indebtedness that led to today’s “credit crunch” is a direct result of the global imbalances.
Today, the hapless Federal Reserve is trying to re-expand demand in a post-bubble US economy. The principal impact of its monetary policy comes, however, via a weakening of the US dollar and an expansion of those overheating economies linked to it. To simplify, Ben Bernanke is running the monetary policy of the People’s Bank of China. But the policy appropriate to the US is wildly inappropriate for China and indeed almost all the other countries tied together in the informal dollar zone or, as some economists call it, “Bretton Woods II”.
Thus, not only have the imbalances proved hugely destabilising in the past, but they are going to prove even more destabilising now that the US bubble has burst. When most emerging economies need much tighter monetary policy, they are forced to loosen still further.
Meanwhile, on the supply side of the world economy, almost every piece of news has been bad. Whatever optimism one might feel about long-run possibilities for increased supply of energy, it is impossible to be optimistic about the short run.
What we see then is an incipient global inflation. Yet the central bank with the greatest influence on global monetary policy is the one confronting the post-bubble credit crunch. Its post-bubble predicament is made worse by the soaring energy prices that result from the strong growth of the world economy.
This then is a global challenge. The advanced countries are no longer the global driving force: they are importing inflation. If the world had a single central bank and a single currency, the former would surely tighten its monetary policy, in light of the evidence on the constraints on the rate of growth of potential global supply. In the absence of such a central bank, the right alternative has to be greater exchange rate flexibility and targeting of domestic inflation.
The world as a whole cannot import inflation: if every central bank assumes that the rise in commodity prices is the product of policies made elsewhere, general overheating must be the result. Worse, if that feeds into expectations the world will be depressingly similar to the 1970s. We are not there. Policymakers must ensure we never do get there.
Wall Street hits three-month lows
By Jeremy Lemer
US stocks hit three-month lows on Tuesday morning after industrial bellwether UPS lowered its earnings forecasts and new data showed that the slump in house prices and consumer confidence continues.
On Monday night, UPS, the world’s largest shipping carrier, reduced its earnings expectations for the second quarter, blaming slowing US growth and higher fuel costs.
Customers have traded down from premium products to save money while fuel surcharges have not kept pace with the rapid rise in costs.
The reduced guidance came after UPS had already lowered its full year expectations back in April, and the company admitted that the current quarter had been even tougher than it anticipated even a few months ago.
UPS is considered a key indicator of the health of US business system because its business depends on the flow of goods around the economy.
Last week rival FedEx similarly disappointed markets when it posted a bigger-than- expected fourth quarter loss. Together, these results will further heighten fears about the impact of elevated oil prices on the wider economy.
As if to reinforce that worry, oil prices jumped higher early in New York. US crude prices were up $1.72 at $138.46 a barrel on concerns about disruptions to output in Nigeria.
UPS lost 4.2 per cent to $63.47 while FedEx fell 1.4 per cent to $79.02, dragging the broader industrials sector down 1.4 per cent.
Markets took another downward leg after the release of the latest depressing data on housing and consumer confidence.
The Standard & Poor’s/Case-Shiller national house price showed the biggest decline on record in April, with the 20-city composite down 15.3 per cent year-on-year although that was less than expected.
A massive overhang of properties on sale has depressed prices but done little to spark buying interest or to cure that same glut of inventory.
According to analysts, foreclosures are partly to blame as they typically sell at a 20 per cent discount to the market price.
In areas such as Las Vegas and San Diego, foreclosures account for nearly 40 per cent of home sales, according to Radar Logic.
Homebuilders Lennar and KB Home dropped 1.1 per cent to $14.01 and 1.1 per cent to $17.30 respectively.
Data on consumer sentiment offered little consolation. The Conference Board’s index of consumer confidence fell from 58.1 in May to 50.4 in June - the weakest reading since February 1992.
That was far worse than expected, as falling home prices, record high energy prices, rising unemployment and a sell-off in the stock market all took their toll.
Lehman analysts said: “The sharp drop in confidence largely contrasts with continued gains in consumption. The unprecedented gap between the two suggests downside risks to consumer spending.”
All ten major industry groups retreated in early trading, dragging the benchmark S&P 500 down 0.9 per cent to 1,306.45 points. The Dow Jones Industrial Average slipped 0.8 per cent to 11,744 while the Nasdaq Composite lost 1.1 per cent to 2,358.43.
On Monday US stock markets ended flat after a choppy day of trading, as rising oil prices buoyed the energy sector but hurt consumer facing stocks. Financials also took a pummelling after a series of analyst downgrades threw up the prospect of further losses and writedowns and a prolonged slump in earnings.
The S&P 500 has lost 10.2 per cent since the start of the year while the Dow Jones is within touching distance of the levels struck during the Bear Stearns crisis.
That performance has kept many investors on the sidelines. Last week the Merrill Lynch Global Fund Managers survey showed that investors are running cash overweight positions in record numbers, suggesting that risk tolerance is at very low levels.
Meanwhile, the Federal Reserve will unveil its decision on interest rate hikes on Wednesday, (it is widely expected to keep rates on hold), adding to the air of uncertainty.
David Shairp, global strategist at JPMorgan Asset Management, said: “The overall picture is one of caution, based on market behaviour, which suggests that it is too early to make the shift back into equities.”
Inflation worries have become increasingly acute in recent weeks, a trend that looks set to continue as producers pass on higher input costs.
On Tuesday, Dow Chemical said it would raise prices by up to 25 per cent and institute freight surcharges to combat high energy prices. The price hikes are the second in a month. Dow fell 1.5 per cent to $37.04.
In the background, financials continue to cast a pall over wider market sentiment. On Tuesday Merrill Lynch became the latest brokerage to lower its earnings estimates for its peers, cutting its projections JP Morgan and Citigroup.
Adding to the gloom, Bloomberg reported that the world’s financial institutions might cut as many as many as 175,000 jobs within a year.
JP Morgan fell 1.1 per cent to $36.46 while Citigroup added 0.4 per cent to $18.48 and the financial sector as a whole lost 0.8 per cent setting taking to its lowest level in five years.
The consumer discretionary sector was hit hard by the Conference Board and housing data dropping 1.2 per cent in short order.
Ian Shepherdson, chief US economist at High Frequency Economics, said: “As home prices drop, people’s ability to extract and spend home equity is diminishing by the day. Inevitably, once the tax rebate effect fades in the fall, this will become the key factor depressing spending.”
Dillards, Macy’s and Coach were among the leading fallers, losing 4.6 per cent to $12.07, 4.3 per cent to $19.27 and 4.1 per cent to $28.81 respectively.
The exception was Eastman Kodak, which soared 13.5 per cent to $14 after the photography company said its board had authorised a $1bn share repurchase. Over the last year Eastman shares have lost about half of their value.
Amid the gloom some observers found reason for optimism .
Phil Orlando, chief equity market strategist at Federated Investors, said the current market weakness could be a prelude to a recovery in the second half as the lagged impact of Fed easing, the fiscal stimulus and attractive valuations took effect.
“We are in the middle of a healthy seasonal correction but if we retest the mid-March lows and bounce back we will have set up a nice triple bottom...and I think we could see record highs for equity markets in the next six to twelve months.”
The Big Let Down
Obama Scolds Black Fathers, Gets Bounce in Polls
By ISHMAEL REED
It’s obvious by now that Barack Obama is treating black Americans like one treats a demented uncle, brought out from his room to be ridiculed and scolded before company from time to time, the old Clinton Sistah Souljah strategy borrowed from Clinton’s first presidential campaign when he traveled the country criticizing the personal morality of blacks and wooing white voters by objecting to what he considered anti -white lyrics sung by rapper Sistah Souljah.
As in Clinton’s case, Obama’s June 14th finger wagging at black men was a case of pandering to white conservative voters. This follows a pattern of using public perceptions of black men fanned by the media and Hollywood to win political favor. Bush One and his sleazy cohorts won votes by depicting black men as dangerous. After the Willie Horton ad, featuring a black rapist, was aired, support for Bush soared to 20% among southern white males, according to Willie Brown, former San Francisco mayor. Obama, by depicting them as irresponsible, saw his poll numbers climb to a 15% lead over McCain, according to a Newsweek poll. With his speech, he received a bounce in the polls that was denied to him after he gained the democrat nomination. He also enjoyed the bounce in the polls from Pennsylvania and Ohio.
According to pundits, the reason he lost these states during the primary was because he couldn’t bowl His Father’s Day speech was meant to show white conservative males that he wouldn’t cater to “special interests” groups, blacks in this case. This was the consensus of those who appeared on MSNBC and other opinion venues of the segregated media on 6/16/2008 even the progressive ones. (Segregated? Not quite. The two percent of African Americans who support Bush all seem to have jobs as 
pundits, columnists and Op-eders). Michael A. Cohen, writing in The New York Times, June 15, 2008, acknowledging Mr. Obama’s Sister Souljah moment wrote “Indeed, just yesterday, Barack Obama had his own mini- “Souljah moment” as he decried the epidemic of fatherlessness and illegitimacy among black Americans. While it is a message that Mr. Obama has voiced before to other black audiences, speaking unpleasant truths about issues afflicting the black community may provide political benefit for a candidate whom some working-class white voters are suspicious of — just as it did for Clinton 16 years ago. ” ( When is Cohen going to air “unpleasant truths about issues afflicting” his community?).
The talking heads also concluded that Obama’s speech before a black congregation in which he scolded black men for being lousy fathers and missing in action from single parent households and being boys, etc. , was cleary aimed at those white male Reagan democrats, who, apparently, in Obama and the media’s eyes, provide the gold standard for fatherhood, which fails to explain why there are millions of destitute white women, “ displaced housewives”and their children whose poverty results from divorce, or why, according to one study, 90% of middle class white women have been battered , or have witnessed their mothers sisters, or daughters being battered. A smug John Harwood of The New York Times said that Obama was telling black men to “shape up. ” As long as men of Mr. Harwood’s class dominate the avenues of expression, who’s going to tell white men to “shape up?”Judging from my reading American men of all races, ethnic groups and classes need to shape up when it comes to the treatment of women.
Blaming black men exclusively for the abuses against women is a more profitable infotainment product. Hypocrisy is also involved. MSNBC host, Joe Scarborough, who welcomed Juan William’s latest demagogic attack on blacks, printed in The Wall Street Journal , still hasn’t addressed the mysterious circumstances surrounding the death of his staffer, Lori Klaustis (http://www. whoseflorida. com/lori_klausutis. htm) who was found dead on the floor of his office or why he had to resign abruptly from Congress. And is Juan Williams, whose career has been marred by repeated sexual harassment complaints against him really one to criticize the personal morality of others? Is Bill Crosby?
According to the Census, a woman’s income on the average is reduced by 73% after divorce in a country in which 50% of marriages end in divorce. Moreover the Times revelation, shocking to some, that elderly whites are taking to cocaine and heroin, a genuine epidemic, hasn’t drawn a response from the legions of columnists and commentators and book publishers who profit from any signs of social”dysfunction” among blacks. Nor has Harwood, George Will, David Brooks, Pat Buchanan, who are always scolding blacks for whatever , commented on the rising incarceration rates of white women. Apparently, Lindsay and Paris are not alone, nor are the Barbie bandits.
Don’t expect Obama to bring up this rampant substance abuse before a white congregation. He had to just about whisper about the values of blue-collar whites, those whom he said clung to guns and religion;he was exposed by a woman who recorded his comments, furtively. Even though the media, which rank ratings above facts, continue to criticize him for these remarks and have made them a campaign issue, sixty percent of Pennsylvanians, according to an April 17, Zogby poll, agreed with him. (The media were also wrong to suggest that Hillary got the worst of it from the press during the primary. A Pew study from Harvard contradicts this. )
Predictably, Obama’s verbal flagellation of black men, who don’t have the media power with which to fight back, was cheered on the front page of The New York Times, which places a black face on every story about welfare, domestic violence and unmarried mothers, and uses Orlando Patterson to parrot these attitudes on the Op-ed page, yet a study published by the Times showed a steep decline in the rate of births to unmarried black women over the decade while the rate among Hispanic women has increased, contradicting what Cohen described as an “epidemic of illegitimacy” among blacks. An indication that the Op ed editors at the Times are so willing to believe the folklore perpetrated by such writers as Cohen that they don’t fact check a writer whose assumptions are at odds with the reports from The Centers of Disease Control and Prevention that they published on Dec. 6, 2007, and at odds with their token black columnist, Bob Herbert, who said on 6/20/08 that illegitimate births have “skyrocketed” over the decades.
Patterson, Williams and Herbert have to rough up the brothers and sisters from time to time in order to hew the editorial line set by their employers. This was the conclusion of a study (Times, 6/23/08) by Bob Sommer, who teaches public policy communications at Rutgers and John R. Maycroft, a graduate student in public policy. They examined 366 opinion articles published in The Times, The Wall Street Journal and the Star-Ledger. “At each newspaper” the found, ” 90 to 95 percent” of the published article agreed with the editorial page stance on the issue at hand. ”
Moreover, why aren’t Obama and other tough lovers acquainted with a study cited by Michael Eric Dyson in Time magazine, 6, 30, 08? In his Viewpoint piece, The Blame Game, in which he also takes Obama’s blame the victim speech, he refers to research by Boston College social psychologist that found “black fathers not living at home are more likely to keep in contact with their children than fathers of any ethnic or racial group?”
I asked for a correction of both Herbert and Cohen’s assertions and received an automatic reply from the Times. Since the CDC report indicated a higher rate per thousand of births to unmarried Hispanic women, why don’t the legion of politicians like Obama, writers like The Manhattan Institute’s John McWhorter, Fox New’s Juan Williams, Harvard’s talented tenthers, all of whom scold blacks under the guise of tough love, love Hispanics, the country’s largest minority group? No box office appeal? No publishing contracts? No votes from Reagan democrats?
A 2007 report from the Centers for Disease Control and Prevention showed some alarming statistics. “Latino high school students use drugs and attempt suicide at higher rates than their black and white classmates.” In addition “Latino students were more likely than either blacks or whites to… ride with a driver who had been drinking alcohol, or use cocaine heroin or ectasy. ”
Other studies show that of the 300 gangs located in Los Angeles, over sixty percent of their members are latino. Most of the nation’s drive by shootings occur in Los Angeles. Over fifty percent of the nation’s school dropouts are Hispanic.
It’s been over a month since the 2007 report and I haven’t read a single tough love column about the conclusions. Not even from the handful of Hispanic commentators or syndicated columnists, who, like the Colored Mind Doubles, are restricted about what they say lest they alienate the white viewers or readership by appearing to be angry. I asked Jonathan Capehart, the genteel editorial writer for The Washington Post, whose assignment from MSNBC is to link Rev. Wright to Barack Obama, why he didn’t explore the relationship of Senator Clinton and John McCain to pastors who’ve made outrageous statements? I mentioned McCain’s buddy, the late Rev. Fallwell’s remark that the Anti Christ was a Jew. Capehart answered that this wasn’t the topic.
While white commentators might range over a number of topics, the black commentators have to stick to their assignment lest they appear to be out of control or “angry. ” That’s why the black commentator who spends the most time on camera at MSNBC and elsewhere is Michelle Barnard, president of the far right Independent Women’s forum. She apparently puts the white audience at ease. People For The American Way provides some information about The Independent Women’s Forum at their website:
* The International Women's Forum (IWF) is an anti-feminist women’s organization founded to counter the influence of the National Organization for Women (NOW) and "radical feminists" on society.
* Frequent targets: Title IX funding, affirmative action, the Violence Against Women Act, full integration of women in the military, and those who oppose President Bush’s controversial judicial nominees.
* Opposes the United Nation’s Convention on the Elimination of all forms of Discrimination Against Women (CEDAW).
* IWF’s credo/mission: "The Independent Women's Forum provides a voice for American women who believe in individual freedom and personal responsibility. We have made that voice heard in the U. S. Supreme Court, among decision makers [sic] in Washington, and across America's airwaves. It is the voice of reasonable women with important ideas who embrace common sense over divisive ideology."
* IWF was organized in defense of Supreme Court nominee Clarence Thomas during his controversial nomination hearings.
* In the words of Media Transparency, “The Independent Women’s Forum is neither Independent, nor a Forum. Not independent because it is largely funded by the conservative movement. Not a forum because it merely serves up women who mouth the conservative movement party line. " Two other black MSNBC favorites are Ron Christie, former aide to Bush and Cheney and Joe Martin, Republican strategist.
Either Obama and the pundits don’t love Hispanics or there’s more money and political opportunity in exhorting blacks. Racist appeals played a role in the election of Richard Nixon, Ronald Reagan, Both Bushes and even Clinton, but there is such euphoria among many African Americans about the possibility of a black presidency that his dumping of a bunch of lazy clichés on them will be forgiven. They will forgive him for throwing them under the bus as he did Rev. Wright, whose criticism of American foreign policy and remarks about the toxic attacks on the inner city were based upon facts. He provided his corporate media critics with a bibliography, but they apparently were too busy paling around with the people whom they cover to read it.
Blacks will overlook Obama’s snubbing of the distinguished panel of black educators politicians and intellectuals who appear on Tavis Smiley’ annual “State of the Black Union, ” and overlook the fact that he found the time to appear before AIPAC where he made belligerent threats against Arab nations and even promised Israel an undivided Jerusalem, he got so carried away, which undercuts a notion held by Maureen Dowd, and Susan Faludi that he is the feminine candidate. When it comes to seeking Jewish votes and putting down black men, in order to obtain votes from white male conservatives, he can become John Wayne.
Finally does anyone doubt that the hypocrisy exhibited by some leaders of the conservative movement in recent years doesn’t trickle down to many of their white working class followers in both states, who are idealized like a Norman Rockwell by talking heads like Hitler apologist Pat Buchanan.
I had a glimpse of these talking heads’ lifestyle when walking toward a restaurant called The Bombay Palace, last May, located across the street from CBS. The street was lined with chauffeurs awaiting the talking heads, who pose as experts on the white working class.
And if many African-Americans agree with John McWhorter that racist attacks on African Americans, including predatory mortgages, racial profiling, capricious traffic stops, racism in the criminal justice system, job and medical discrimination, outlaw drug experiments and the exoneration of police who murder unarmed blacks will end the day after the election of a black president, they’re in for a big letdown. Again.
Yahoo!, eBay and Amazon
The three survivors
What the diverging fates of Yahoo!, eBay and Amazon say about the internet
AND so Yahoo! survives. The internet company—which, at the age of 14, is one of the oldest—appears in the end to have rebuffed Microsoft, the software Goliath that wanted to buy it. It has done so, in part, by surrendering to Google, the younger internet company that is its main rival. In a vague deal apparently designed to confuse antitrust regulators, Yahoo! is letting Google, the biggest force in web-search advertising, place text ads next to some of Yahoo!'s own search results. Google thus controls some or all of the ads on all the big search engines except Microsoft's. Yahoo! lives, but on the web's equivalent of life support.
Yahoo!'s descent, first gradual then sudden, during this decade marks a surprising reversal of the fates of the only three big internet firms to have survived since the web's earliest days. Back in 1994 Jerry Yang and David Filo, truant PhD students at Stanford, started to publish a list, eventually named Yahoo!, of links to cool destinations on the nascent web. Around the same time, Jeff Bezos was writing his business plan for a website, soon to be called Amazon, for selling books online. The following year, Pierre Omidyar, a French-born Iranian-American, put an auction site on the web that would become eBay.
Even as hundreds of other dotcoms fell by the wayside at the turn of the century, these three made it through the great internet crisis and have since prospered, to varying degrees and at different times. Their fates have reflected the evolution of the web as a whole, and now suggest its future direction. For many years eBay and Yahoo! made more money than Amazon, which, as a capital-intensive retailer, struggled longer with losses and then made profits at lower margins (see chart). And yet, says Pip Coburn of Coburn Ventures, an investment adviser, Yahoo! is now drifting and eBay is a washed-up quasi-monopoly, whereas Amazon finds itself at the internet's cutting edge.
Yahoo! set out to be a new sort of media company. To that end, it hired a Hollywood mogul, Terry Semel, during the internet depression in 2001. He had a backward-looking idea of the media business. Yahoo!'s site became a tawdry strip mall, with big, flashing advertisements next to users' e-mail inboxes. The firm slipped into a mindset of product silos, with the teams for the home-page, e-mail, finance and sports pages competing with each other and for advertisers, and confusing users.
Yahoo!'s bigger mistake was not to see how the web was changing. Google, also founded by two truant Stanford PhD students, became the leader of a new generation with a vision that web search, rather than Yahoo!'s “portal” approach, would guide surfers around the internet. Google valued simplicity, interactivity and the collective intelligence gleaned from the web and its users. Yahoo! belatedly tried to keep up and bought sites such as flickr for photo-sharing and del.icio.us for bookmark-sharing, but it “put them in the curio cabinet” without transforming the company, says Jerry Michalski, a technology consultant. Yahoo! was “so bent on being the future”, he says, that it “missed the new”. Mr Yang replaced Mr Semel last year, but the crisis was so grave that he has now ended up surrendering to Google.
EBay took a different route, recognising that its business—in effect, online yard sales—had potential network effects: in short, that sellers and buyers would flock to whichever site already did the most trading. The firm became a de facto monopoly, but with that came a culture that left many of its users disenchanted, and growth slowed. Some measures, such as the number of new listings of items for sale, are even in decline. Buyers and sellers increasingly rely on Google's search model, or online social networks, to find things and one another. EBay's new boss, John Donahoe, is not facing a crisis like Yahoo!'s—but neither does he appear to have a big idea for the future.
Amazin'
Amazon, by contrast, has found exactly that. It is the only one of the three that has been led continuously by the same man, its founder Jeff Bezos. A caricaturist's dream, Mr Bezos has an outsized neck, striking pate and an infectious guffaw that spreads enthusiasm. And, unlike his peers at the other two firms, Mr Bezos has stuck to his original vision—while adding two new ideas as they presented themselves.
His original plan, in the 1990s, was to become “Earth's biggest river” of merchandise, from books and toys to electronics and almost anything else that can be shipped. He tried and failed to become a rival to eBay in auctions. But then Mr Bezos realised that the same online store-front and logistics system that worked for Amazon itself could also work for others. So he added an entirely new category of customers: third-party sellers, who account for 30% of all items sold through Amazon's site today. They range from one-man-bands to huge retailers, such as Target.
Then, about four years ago, another, and potentially bigger, idea struck Mr Bezos. “We had built this huge infrastructure internally for us,” says Mr Bezos. “We thought, surely others out there could use the same infrastructure services.” That infrastructure consists of Amazon's prodigious numbers of server computers and storage discs, rivalled in scale by only a few other firms in the world, including Google. So Mr Bezos again added an entire category of customers: firms that wanted to rent computing capacity—from processing to storage to database functionality—from Amazon over the internet, rather than build their own data centres in a warehouse. It has signed up over 370,000 customers, ranging from web start-ups to the New York Times, which used Amazon's infrastructure to digitise much of its archive.
Almost by accident, Amazon has thus “backed into cloud computing,” as Mr Michalski puts it, using the buzzword for today's next big thing: the trend among both consumers and companies to compute and store data on the internet, rather than on a local computer. If there is a leader in the cloud, it is Google. But Amazon is now right up there. Better yet, although Amazon overlaps with Google in the cloud, it does not rival it directly. Google mostly offers entire applications, such as word processing or spreadsheets, to consumers though their web browsers. Amazon offers services to programmers so they can build and run their own applications.
So there they are. Jerry Yang is still boss of Yahoo!, although angry, restive shareholders may oust him at their annual meeting on August 1st, and his top lieutenants are leaving in droves. John Donahoe is looking hard for a purpose that will enable eBay to survive another decade. And Mr Bezos is right where he wants to be.
Oil prices
Still sky high
Politicians' efforts to lower the oil price will achieve nothing until supply and demand adjust
THERE is no pleasing oil traders. Or so King Abdullah of Saudi Arabia must think. No sooner had he pledged to pump more oil in a bid to lower the price, than the price began rising. On Tuesday June 24th it approached $138 a barrel.
There were two main reasons for the market’s sceptical response. Saudi Arabia has only offered to boost its output by 200,000 barrels a day (b/d), about 0.2% of the world’s current consumption of 87m b/d. Worse, its leaders had told various foreign grandees about their plans in the preceding weeks, so oil traders had already digested the news and were looking for more.
And even as Saudi Arabia’s output rises, Nigeria’s is falling. Insurgents in the country's oil-rich delta region have attacked a pipeline belonging to Chevron and an offshore oil platform owned by Royal Dutch Shell in recent days, forcing both firms to cut production. Some 300,000 b/d of output has been lost, outweighing Saudi Arabia’s gesture.
This is just the sort of news that makes oil traders jumpy. The world’s demand for oil has been growing faster than supply in recent years, leaving little spare capacity. So even a small loss of output can lead to a big leap in the price. The markets see potential disruptions around every corner: political tensions over Iran, say, or the impending hurricane season in the Gulf of Mexico.
In theory, the world still has a little more spare capacity, in Saudi Arabia. The latest increase will raise the kingdom’s output to 9.7m b/d, its highest level in decades. But it claims to be able to pump as much 11m b/d, and further expansions to that capacity are supposed to be ready imminently. If King Abdullah really wants to deflate the oil markets, he could try announcing an increase in output of a few million barrels a day.
It is hard to know why Saudi Arabia does not do so. Perhaps it is not as sympathetic to hard-pressed oil consumers as King Abdullah claims. Perhaps it is too scarred by the memories of the late 1990s, when oil prices fell low, government revenues plummeted, the economy stagnated, unemployed youths became restive and observers wondered whether the monarchy’s days were numbered. Or perhaps it is struggling to raise production, as a result of the declining fecundity of its (and the world’s) biggest field, Ghawar.
Whatever the reason, politicians such as Gordon Brown, Britain’s prime minister, who had been pinning their hopes on a grand gesture from oil producers, must look elsewhere for a means to lower the oil price. They are lashing out in all directions. Italy is imposing a “Robin Hood” tax on oil companies to finance schemes to help the poor cope with high energy prices. Barack Obama wants to do something similar in America.
John McCain, Mr Obama’s rival for the presidency, wants to suspend America’s relatively paltry tax on petrol, to secure lower prices for angry drivers. George Bush, the incumbent, wants Congress to let oil firms drill in areas of Alaska and coastal waters that are currently off-limits for environmental reasons. Congress sees more virtue in a crackdown on speculation in the oil markets. Joe Lieberman, a prominent senator, plans to hold hearings on the subject on Tuesday.
None of these ideas will do much good in the short term; most of them would be entirely counter-productive. Instead, politicians and drivers will have to wait for high prices to temper demand and stimulate extra supply. There are some signs of hope: demand is falling in the rich world and slowing in fast-growing parts of the developing world, such as China and the Middle East. Several governments have cut fuel subsidies in recent weeks, a move that should help to stifle demand. China’s imports may also start to decline once its refineries have built up special stockpiles to see them through the Olympic games in Beijing.
On the supply side, the outlook is much less promising, as Nigeria’s troubles show. There are some signs that stocks of more viscous oil are building, since it is harder (and less profitable) to refine. But to make the most of it, the world needs more refineries of a certain design, and those do not spring up overnight. Politicians are no more likely to tell voters that it will be a long, hard slog, however, than King Abdullah is to declare that Saudi Arabia will not do much to help.
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