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U.S. tourists unlikely to bring democracy to Cuba
THE OPPENHEIMER REPORTU.S. tourists unlikely to bring democracy to Cuba
BY ANDRES OPPENHEIMER
I'm not opposed to the growing push in Washington, D.C., to liberalize U.S. travel restrictions to Cuba, but the stated reason behind the move -- that a flood of U.S. tourists will bring democracy to the island -- is wishful thinking.
Last week, more than 20 key senators -- including the Senate Democratic Policy Committee chairman, Sen. Byron Dorgan of North Dakota, the Senate Banking Committee chairman, Sen. Christopher Dodd, D-Conn., and the ranking Republican on the Senate Foreign Relations Committee, Sen. Richard Lugar, R-Ind. -- introduced a bill that would allow Americans to visit the island freely. The bill was backed by a diverse coalition, including the U.S. Chamber of Commerce and Human Rights Watch.
Meantime, there is growing speculation in Washington that President Barack Obama will announce new initiatives to relax the travel ban to Cuba before the April 17 Summit of the Americas in Trinidad and Tobago.
Obama, meeting a campaign promise, last month scrapped some restrictions on family travel and remittances imposed by the Bush administration.
But claims that a broader easing of U.S. travel to Cuba would accelerate a political opening on the island are highly misleading.
''Tourism has not brought down a totalitarian regime anywhere in history,'' says James Cason, a former head of the U.S. Interests Section in Havana, who heads the Washington-based Center for a Free Cuba advocacy group. ``No study of Eastern Europe or the former Soviet Union alleges that tourism had anything to do with the end of communism. Radio Free Europe did.''
Cason and other skeptics cite the following reasons to doubt that a massive influx of U.S. visitors would have a major political impact on the island:
• Cuba's dictatorship penalizes interactions of ordinary Cubans with foreigners. Under Cuban law 80, of 1999, it is a crime for Cubans to accept foreign publications from visitors.
And a 2004 Ministry of Tourism memo to hotel workers prohibits them from interacting with foreigners outside their workplaces.
• Virtually all foreign tourists in Cuba stay at hotels in isolated places where they have little contact with nontourism workers. Of the 103 four- or five-star hotels in Cuba, 67 percent of them are located in Varadero, Cayo Coco and other places in the countryside, and only 19 percent are in Havana.
• Few Americans speak Spanish well enough or care to have political conversations with ordinary Cubans. Most tourists go to Cuba for three things that start with ''s'': sun, songs and sex.
• Over the past decade, more than 15 million tourists from Canada, Europe and Latin America have visited Cuba, without any visible impact on the island's totalitarian system.
''Castro has put in place a tourist apartheid system: The Cubans the tourists are permitted to talk to are trained to say the right thing, spontaneously hail Fidel and joyously sing Guantanamera,'' Cason told me.
My opinion: Obama should go ahead with his campaign promises to relax family travel and remittances restrictions for Cuban Americans, and he should lift restrictions on academic exchanges with the island, which is within his authority. Congress should eliminate all restrictions on family visits, and perhaps even lift the travel ban on tourists altogether.
But this should be done based on Americans' rights to freely travel anywhere, and in conjunction with a U.S. diplomatic offensive to press Cuba to allow fundamental freedoms.
It should not be based on false assumptions that a flood of U.S. visitors will spark an outcry for democracy on the island. It is more likely that interaction with American tourists carrying expensive video cameras would drive even more Cubans to flee to Miami.
POST SCRIPT: Talking about the upcoming Summit of the Americas, Obama should tell Latin American and Caribbean leaders who will ask him to lift all U.S. sanctions on Cuba: ``OK, I'm willing to enter into that discussion, but only if you do your part, and abide by hemispheric agreements calling for the collective defense of democracy anywhere in the region, including in Cuba.''
Many major Latin American countries, including Brazil, are turning a blind eye to the 2001 Inter-American Democratic Charter and other deals that commit them to demand respect for basic political rights wherever they may be violated in the Western hemisphere.
By ignoring these treaties, they are not only hurting the cause of democracy in Cuba, but are setting a bad precedent for the future defense of democracy in their own countries.
The Chapter 11 solution
The Chapter 11 solution
Chapter 11 for GM and Chrysler would make Lehman seem like a party
When Lehman Brothers went bankrupt last September, the financial world shook. A major money-market fund "broke the buck," as it was no longer able to honor its deposits at 100 cents on the dollar. Banks stopped normal inter-bank lending, and investors everywhere bought Treasury debt as the one safe asset.
Many economists came away from the Lehman bankruptcy thinking that we could never let a bank fail again. Although this conclusion does not follow (we can and should let some banks go through an ordered bankruptcy), economists are right to be cautious about the effects of an uncontrolled bankruptcy of a major corporation.
Had General Motors and Chrysler been allowed to go into bankruptcy last fall, it would have quickly led to a chain of bankruptcies by a whole set of parts suppliers, all of whom are owed large amounts of money by these two companies. It is virtually certain that these companies and their suppliers would be forced to shut down, because no one would have stepped forward to provide credit to operate through bankruptcy without a government guarantee. Because Ford shares many of these suppliers with GM and Chrysler, the disruption to the supply chain almost certainly would have been enough to push Ford over the line as well.
This would have meant almost a complete shutdown of the auto industry in the states of Michigan, Indiana and Ohio. In these states, the auto industry and its suppliers account for close to 6% of total employment. Imagine if the country suddenly lost 8.4 million jobs (more than twice the actual job loss over the last five months). Such is the impact these three states would face were the Big Three to cascade into bankruptcy.
This sort of catastrophic job loss would have had huge ripple effects in the region, as laid-off autoworkers would be forced to cut back on all sorts of spending in the local economy. Many would face losing their homes. Already hard-pressed state and local governments in the region would be swamped with demands for services at the same time that their tax revenue would be plummeting. The area would soon be seeing suffering and poverty that matched what the country experienced during the Great Depression.
President Obama (like President Bush) was right in opting not to go this route. It is unfortunate that we are in a situation in which the government has to bail out the auto industry.
The fault lies first and foremost with the incredibly incompetent performance of the Federal Reserve board and other financial regulators. This economic collapse was entirely foreseeable and preventable. The Big Three and their employers, and the regions that are economically dependent on them, are the victims. They may deserve blame for many serious mistakes, but they are on life support right now not because of their own errors but because of Wall Street's sins.
Dean Baker, co-director of the Center for Economic and Policy Research, writes on economic reporting at the American Prospect's Beat the Press blog.
An interesting phrase, this "uncontrolled bankruptcy." Sounds kind of like a Category 5 hurricane and Santa Ana inferno rolled into one -- only even more deadly, at least if you swallow the absurd-on-its-face notion that bankruptcy proceedings on three companies would immediately liquidate each and every one of the 8.4 million auto-related jobs in Michigan, Indiana and Ohio.
What actually happens in a bankruptcy? Typically, a judge sits down with a company, holds off many of its creditors, helps negotiate sales of various divisions, works with management on reforms, keeps productive factories churning out product and so on. In other words, it is the imposition, not absence, of "control," usually by someone who -- unlike your garden-variety president -- actually has experience in the field.
If bankruptcy were merely corporate genocide, we wouldn't be here arguing today. After all, the parent company of the L.A. Times is going through ... bankruptcy! No one but the most radical of media doomsayers is predicting that this august institution will cease to exist next month, next year or even next decade. The brand is too strong, the demand for news is still too great, and if things really get dire, Rupert Murdoch would buy the hollowed-out husk of Spring Street in a New York minute -- prompting, no doubt, howls of protest from the exact same Nation magazine crowd currently plumping for a massive bailout of newspaper companies. But I digress.
Big companies go bankrupt all the time. In 2001, WorldCom was No. 23 on the Forbes 500 list, with 85,000 employees. By 2002, in the wake of various scandals, it was the biggest bankruptcy in history. Did those employees all disappear? Did the domestic telecommunications industry collapse? Did Americans stop using high-speed Internet infrastructure? Nope. The company changed its name to MCI, restructured and was eventually bought up by Verizon. This is what happens to bankrupt companies with valuable assets and products. To the extent that the Big Three make valuable products in a way that different managers could extract profit from, their brands and showrooms would survive Chapter 11.
One begins to suspect that the word "uncontrolled" is less descriptive about a legal process than it is reflective of a generalized anxiety about capitalism. And that's an understandable emotion: Companies and conditions in generally free markets change with a speed that'll make your head spin. A&P was the dominant supermarket chain in the country back when GM still ruled the world, yet few now have even heard of it. Traumatic as that was for the company's managers and employees, did Americans stop buying groceries or stop creating domestic retail giants that employ tens of thousands of people? No.
So yes, 6% of a three-state workforce is a big number. But how about two out of every five workers? That's the ratio of Americans who were employed by the agricultural industry in 1900, compared with a measly one in 42 today. Does that mean we have 38% unemployment now? No. It means we've figured out how to farm more efficiently, allowing the rest of us to pursue more enriching, less backbreaking work.
Look, even though it's not my cup of tea, I don't mind if people are nostalgic for the Company Man 1950s (though I'll take the “Bad News Bears” ’70s any day). But when they start using our tax dollars to preserve in amber the worst practitioners of a heavily technological industry, those companies are yanked even further away from their customers and more toward the temporal enthusiasms of politicians. And the reforms they require are kicked further down the road.
The federal government should be a referee, not a kingmaker, establishing clear and simple rules and procedures for industry and otherwise getting the hell out of the way. One of those procedures is the controlled force of bankruptcy. If GM can't make a profit selling the beloved Cadillac, it's long since time to find owners who can figure it out.
Matt Welch is editor in chief of Reason magazine.
How America Was Sold on World War
How America Was Sold on World War
Remembering George Creel, the founder of modern war propaganda
Brian DohertyGeorge Creel is largely forgotten in American history. In the first half of his career, he skipped from Georgism to civic reform activism and journalism; from writing jokes and comics for the Hearst newspapers to helping set up feckless reform organizations like the "National Fellowship of the University Militant."
Creel found his place in history running the Committee on Public Information (CPI), founded during President Woodrow Wilson's second term. CPI ran the most comprehensive and sophisticated program of war propaganda the world had yet seen, drafting historians, P.R. experts, journalists, and tens of thousands of ordinary citizens to harangue each other in movie theaters, or anywhere they could get a crowd. Long distrusted by more individualist and isolationist historians, Creel's story is told for the first time in over 60 years in the new book Selling the Great War: The Making of American Propaganda by Alan Axelrod, a prolific author of popular histories from Patton on Leadership to The Real History of World War II.
Axelrod takes a nuanced view of a character easy to hate, given how he, as Axelrod notes, sought “the total monopolization of information, shaping news, shaping images, shaping emotions to create a reality in which President Wilson’s war emerged as not merely desirable but inevitable"; who propagandized for Wilson in 1916 as the man who kept us out of war, but within a year became an equally enthusiastic proselytizer for getting us into it.
Although the machinery of information control Creel created, buttressed with the legal powers of the Espionage Act and Sedition Act, helped send thousands of Americans to jail for speaking their minds, Axelrod on the whole came out seeing him as an honorable man seeking idealistic—though possibly wrongheaded—goals that he hoped would overtake the need for actual censorship.
Senior Editor Brian Doherty interviewed Axelrod by phone this week, discussing what Creel did and how, why it may have been a mistake, and how it’s unlikely another Creel could achieve what he did.
Reason: Who was George Creel, and why write (or read) a book about him?
Alan Axelrod: George Creel was a crusading journalist of the generation of muckrakers at the start of the 20th century. When President Wilson first ran for the White House in 1912 he became a passionate supporter. Wilson was a progressive reformer, and Creel wrote an entire book in defense of Wilson’s decision to avoid entering World War I. [Wilson and the Issues]
In 1916, Wilson ran on the slogan "he kept us out of war." When within a few weeks after Wilson was inaugurated for a second term he went to Congress to request a declaration of war, Creel offered his services to Wilson to help in any way he could. Wilson had initially wanted to impose absolute censorship on the press; he was concerned, he said, about espionage.
Creel countered that if censorship was imposed the government would lose the support of the people, and he proposed as a counter to this, in effect, complete control of the news—not censoring things but controlling what was released to the public. Not stopping anything from getting out but creating all of these stories that got out. Creel was put in charge of the newly created Committee of Public Information, the first ministry of propaganda the U.S. had ever had.
Within a very short time an organization of about 100,000 people, an instant bureau of the government, was in operation. Using various quite brilliant tactics that included recruiting the pioneers of the emerging industry of Public Relations—most significant among them Edward Bernays, pretty much the father of American P.R.—Creel created an organization that was responsible for virtually every scrap of info about the war that reached the American public and much of the world.
Reason: I detected a certain nuance, or even sympathy, toward Creel in your book, a character that lots of individualist historians have mistrusted and criticized. After all, who likes a professional "propagandist"?
Axelrod: As Creel saw "propaganda," it wasn't a bad thing. He defined it as creating the faithful in a good cause. World War I was a kind of quasi-religious endeavor. For Woodrow Wilson and I think for a lot of Americans, democracy is a kind of secular religion, linked to a God-given right to be free that is to be disseminated through the world and, if necessary, imposed on the world.
Creel believed this, and he believed Wilson’s problem was to sell what was essentially America's first ideological war. The U.S. wasn't directly menaced by Germany, but Wilson wanted to promote the idea that Germany was attacking democracy and therefore posed a threat to the U.S., and that it was the duty of the U.S. to promote democracy around the world. Propaganda became a way of managing—Creel would say of educating—the American people, a way of managing their perception of what was worth fighting for.
Reason: Did Creel seem of particular interest to you to write about in the Iraq War context?
Axelrod: My initial interest in Creel predated the Iraq War. He was a figure who had received very little attention, yet who single-handedly created a vast propaganda machine that was so impressive it became a model for the Nazis. Joseph Goebbels told a reporter who conveyed this to Edward Bernays, that Goebbles read all of Bernays books, and Hitler himself in Mein Kampf cited the propaganda efforts of America in World War I as a model for what propaganda would do.
The Bush administration’s manipulation of media did become increasingly naked and obvious. This whole idea of taking correspondents and embedding them with troops [arose from a precedent Creel set]. Reporters who were honest talked of the psychological effect of being embedded: You instantly take their side, you are one of them, you are co-opted even if no one tells you you have to be.
Reason: Anytime I've come across Creel's name and project, especially from libertarian-leaning historians, it has generally been in a pretty negative context, but your book is by no means dedicated to attacking the guy.
Axelrod: I decided Creel was an honorable man, and that the news that he reported was probably as accurate as any that any fully independent set of correspondents would have gathered. There really was an attempt to be honest, to simply present the facts and deal these out on a perfectly equal basis to all media outlets.
The slant came in the P.R. part of the operation, which sought directly to shape public opinion by giving them a stake in the war, in this idea of a world safe for democracy. Creel wrote a book, How We Advertised America, but it really was not advertising that CPI did—it was P.R. The difference being that advertising will promote a product, but P.R. seeks to shape opinion.
I certainly understand libertarian objections to Creel, but from his point of view CPI was very American, because it was an alternative to the un-American idea of clamping down and censoring news. He wanted to create and control news and he swore to be honest about it. And I concluded that his organization was probably as honest and objective about the facts of the war in terms of battles, in terms of what happened at the front, as anybody could have been. But in trying to shape public opinion, they created an apparatus that reached into every aspect of American life, into news, movie theaters, schoolrooms, churches, the lodge halls, everything.
Creel came before commercial radio; the only real mass media were newspapers and movies, and it was a big effort to control them, but they could be controlled. It was done with a sometimes not so subtle combination of legal threat and patriotic shaming and also supplying media outlets with really good products that were very well-written and well-reported.
But was it creepy for government to do this? Yeah. Is it dangerous to declare war on ideological grounds, is it dangerous to take for granted that democracy is a good thing that everyone should have whether they want it or not? Yes, that’s very dangerous, and I think it was a mistake for America to enter World War I. I came away after much thinking, and not just while writing this book, but studying the subject for years, to think it was a mistake, a war of choice that was unnecessary. And had we not gone into that war Germany would have won and there's every chance the world would have been spared World War II.
Reason: Would a repeat of Creel's efforts be able to replicate his success in the 21st century?
Axelrod: I just heard in the last few days about the Chinese government paying thousands of bloggers to blog favorable things about China. That reminded me of something like the "Four Minute Men" Creel had created, this army of ordinary people who would make a patriotic war-related speech tailored to fit exactly within the four minutes it took a projectionist to change reels, which made four minutes of dead time [during movie showings] when speakers could address audiences about war-related topics. The Four Minute Men were issued talking points but they would speak as part of the community. It was sheer genius. The speakers were ordinary yet respectable members of the community perceived by audiences as one of them, speaking the government line yet in their own words.
If the government can get supposedly disinterested ordinary people, bloggers, to blog the party line...but I tend to doubt it could really work in the U.S., and on balance having a means of disseminating information to a mass audience that is not directly controlled by corporate entities or government entities, that's not a one-way broadcast medium like TV, makes it inherently more difficult to seize control of mass media the way Creel was able to do.
Senior Editor Brian Doherty is author of This is Burning Man (BenBella), Radicals for Capitalism (PublicAffairs) and Gun Control on Trial (Cato Institute).
Estimated U.S. taxpayer cost for bailout jumps
Estimated U.S. taxpayer cost for bailout jumps
WASHINGTON (Reuters) - U.S. congressional budget analysts have raised their estimate of the net cost to taxpayers for the government's financial rescue program to $356 billion, an increase of $167 billion from earlier estimates.
The Congressional Budget Office had originally projected the $700 billion Troubled Asset Relief Program would cost taxpayers $189 billion.
The additional cost, which applies to TARP spending for fiscal years 2009 and 2010, was included in the CBO's March projection of a $1.8 trillion deficit for fiscal 2009, which ends September 30.
The TARP cost projection was raised due to changes in financial market conditions, new transactions and a shift in expected timing of payments, the CBO said.
The Treasury Department announced plans to use some of the money to help avoid home foreclosures and made new deals with Bank of America and American International Group. Those programs involved higher subsidy rates than previously estimated, the report said.
Congress passed the Wall Street bailout program in October with the goal of stabilizing banks and reassuring jittery markets.
Whistleblower exposes insider trading program at JP Morgan ( PDF File of Leaked Document)
Whistleblower exposes insider trading program at JP Morgan ( PDF File of Leaked Document)
A confidential memo obtained by Wikileaks shows that not only has the U.S. Securities and Exchange Commission created an insider trading loophole big enough to drive a truck through, but that Wall Street is taking full advantage of it, establishing ‘how-to’ programs and even client service divisions to help well-heeled clients circumvent insider trading regulations.
Note: Wikileaks has been taken down but many of their leaked documents to include this one are now in our possession.
Most of us think of insider trading as illegal. It allows those with inside knowledge to tilt the playing field, with the small investors invariably losing to the privileged few. Unfortunately for the small investor, the big boys get to play by different rules, and it has all been made legal, thanks to the SEC.
In 2000 the SEC promulgated Rule 10b5-1. The new Rule was designed to address the confusion caused by a series of court decisions that had left investors uncertain about what constitutes insider trading. Rule 10b5-1 was designed to “clarify” what constitutes illegal insider trading.
But top Wall Street houses were not to be deterred from advantaging their big clients at the expense of their small ones. Wall Street firms like JP Morgan found loopholes in Rule 10b5-1 that allowed them to continue trading on inside information “legally.” Indeed, JP Morgan has gone so far as to set up an entire ’selling program’ within its Securities division to help their clients profit from the loophole.
Documents obtained earlier this month by Wikileaks from JP Morgan Private Bank, which subtitles itself as “World class solutions for wealthy individuals and families”, show the firm has a dedicated ‘10b5-1 Selling program,’ along with a ‘dedicated 10b5-1 team’ to help its clients take advantage of the loophole.
Here’s how it works:
1. An insider client transfers all or a portion of their company stock into a JP Morgan Securities Inc. brokerage account.
2. The insider then develops, in conjunction with the 10b5-1 team, a ‘phased, pre-planned sales program to be executed at either market or specified prices’.
3. Depending on the information available to the insider (but not the public), the insider can decide whether to execute the sale or not.
By gaming the system this way, JP Morgan teaches insiders how to use their knowledge to create a rigged market, one in which it is the “house” that always wins, and the small investor that always loses.
Alan D. Jagolinzer, an assistant professor at Stanford University Graduate School of Business, completed a study of roughly 117,000 trades in 10b5-1 plans by 3,426 executives at 1,241 companies. He found that trades inside the plans beat the market by 6% over six months. By contrast, executives at the same firms who traded without the benefit of plans beat the market by only 1.9%.http://businessweek.com/magazine/content/06_51/b4014045.htm
One can only guess at how many wealthy executives profited under JP Morgan’s “insider trading program,” leaving small investors holding the bag.
Go to this link: http://www.freedomfighterradio.net/jpmorganfile.pdf
The meaning of freedom
Religion and human rights
The meaning of freedom
From The Economist
Why freedom of speech must include the right to “defame” religions
AT FIRST glance, the resolution on “religious defamation” adopted by the UN’s Human Rights Council on March 26th, mainly at the behest of Islamic countries, reads like another piece of harmless verbiage churned out by a toothless international bureaucracy. What is wrong with saying, as the resolution does, that some Muslims faced prejudice in the aftermath of September 2001? But a closer look at the resolution’s language, and the context in which it was adopted (with an unholy trio of Pakistan, Belarus and Venezuela acting as sponsors), makes clear that bigger issues are at stake.
The resolution says “defamation of religions” is a “serious affront to human dignity” which can “restrict the freedom” of those who are defamed, and may also lead to the incitement of violence. But there is an insidious blurring of categories here, which becomes plain when you compare this resolution with the more rigorous language of the Universal Declaration of Human Rights, adopted in 1948 in a spirit of revulsion over the evils of fascism. This asserts the right of human beings in ways that are now entrenched in the theory and (most of the time) the practice of liberal democracy. It upholds the right of people to live in freedom from persecution and arbitrary arrest; to hold any faith or none; to change religion; and to enjoy freedom of expression, which by any fair definition includes freedom to agree or disagree with the tenets of any religion.
In other words, it protects individuals—not religions, or any other set of beliefs. And this is a vital distinction. For it is not possible systematically to protect religions or their followers from offence without infringing the right of individuals.
What exactly is it the drafters of the council resolution are trying to outlaw? To judge from what happens in the countries that lobbied for the vote—like Saudi Arabia, Egypt and Pakistan—they use the word “defamation” to mean something close to the crime of blasphemy, which is in turn defined as voicing dissent from the official reading of Islam. In many of the 56 member states of the Organisation of the Islamic Conference, which has led the drive to outlaw “defamation”, both non-Muslims and Muslims who voice dissent (even in technical matters of Koranic interpretation) are often victims of just the sort of persecution the 1948 declaration sought to outlaw. That is a real human-rights problem. And in the spirit of fairness, laws against blasphemy that remain on the statute books of some Western countries should also be struck off; only real, not imaginary, incitement of violence should be outlawed.
Good manners, please; not censorship
In much of the Muslim world, the West’s reaction to the attacks of September 2001, including the invasions of Afghanistan and Iraq, has been misread as an attack on Islam itself. This is more than regrettable; it is dangerous. Western governments, and decent people everywhere, should try to ensure that the things they say do not entrench religious prejudice or incite acts of violence; being free to give offence does not mean you are wise to give offence. But no state, and certainly no body that calls itself a Human Rights Council, should trample on the right to free speech enshrined in the Universal Declaration. And in the end, given that all faiths have undergone persecution at some time, few people have more to gain from the protection of free speech than sincere religious believers.
The United States, with its tradition of combining strong religious beliefs and religious freedom, is well placed to make that case. Having taken a politically risky decision (see article) to re-engage with the Human Rights Council and seek election as one of its 47 members, America should now make the defence of real religious liberty one of its highest priorities.
Geithner Says Government Would Remove Bank Chiefs if Needed
Geithner Says Government Would Remove Bank Chiefs if Needed
DAMIAN PALETTA
WASHINGTON -- Treasury Secretary Timothy Geithner said the federal government might remove top bank executives or board members if "exceptional" assistance is required to keep the banks operating in the future.
"When in the future -- or I would say, if in the future -- banks need exceptional assistance in order to get through this, then we'll make sure that assistance comes with conditions, not just to protect the taxpayer, but to make sure this is the kind of restructuring necessary for them to emerge stronger," Mr. Geithner said on CBS's "Face the Nation." "Where that requires a change of management and the board, we will do that."
Both the auto and financial industries have received financial help from the government, but the Obama administration has come under criticism for taking a harder line with the auto industry than with Wall Street. Last month, administration officials pushed out former General Motors Corp. chief executive Rick Wagoner, after a federal auto restructuring task force determined he wasn't restructuring the auto company fast or deep enough.
Mr. Geithner pointed to the Bush administration's treatment of executives and board members at Fannie Mae, Freddie Mac, and American International Group Inc., to which the government gave major financial assistance over the last several months. Top executives and board members at those companies were replaced.
Top executives at Citigroup Inc. and Bank of America Corp., which have also received large government capital injections, haven't been replaced, however. That has led to growing criticism on Capitol Hill that the White House was going easy on Wall Street.
Mr. Geithner suggested that the government would be aggressive in its effort to clean up bank balance sheets, though it remains unclear whether the Obama administration would force banks to sell bad assets into new government programs.
"We'll do what's necessary to make sure our banking system emerges out of this stronger because, again, economies depend on credit to recover," he said. "We want to make sure they are strong enough to lend even if we go through a longer downturn."
He rejected criticism that the Obama administration would try to evade new laws limiting the compensation of executives of companies that participate in government rescue programs.
"Our obligation is to apply the laws that Congress just passed on executive comp and we're going to do that," Mr. Geithner said. "Now, we're also going to make sure that these programs are as effective as possible in making credit more available to businesses and families across the country."
Mr. Geithner said the economy was showing "encouraging" signs, particularly with mortgage rates, which are at extremely low levels. But he said there was "a lot of pain and suffering across the country."
"We need to keep acting as forcefully as we can," he said.
He declined to say whether the Obama administration might ask for another stimulus package from Congress. "I can't make that judgment at this time," he said.
Correcting perceptions
Correcting perceptions
Discarding the negative old stereotypes
M. Ashraf Haidari
As we and our international partners strive to secure Afghanistan, three misperceptions about corruption, narcotics and popular support for international presence have gained currency in certain capitals of our nation-partners.
A reality check against each misperception propagated by the media is necessary to help us build upon our shared achievements thus far and to work together toward overcoming the challenges we face today. Failure to do so is certain to strengthen our common enemies - the Taliban and al Qaeda - in further destabilizing Afghanistan and the whole region.
• Corruption is not a cause but a symptom of weak governance due to severe underinvestment both in capacity and resources in Afghanistan's key state institutions over the last eight years. Because the judiciary and the police constitute the first point of contact between public and government, people tend to judge the government's legitimacy and performance based on their daily experience with those institutions.
When the international community re-engaged in Afghanistan in 2001, the country was completely stateless, and our partners had to begin building the state institutions from the ground up under harsh circumstances. Hence, the strength or weakness of governance in Afghanistan today is clearly a function of how much effective, coordinated aid has gone into building a functional state in the country.
For example, it is apparent from the meager level of resources committed so far to reforming and building the Afghan judiciary and police that corruption prevails in these two key state institutions today. It is obvious that better-paid, better-trained and better-equipped officials in any government in any part of the world would have less incentive to be corrupt - and Afghanistan is no different from others.
Nonetheless, the Afghan government has frequently taken serious action against corrupt officials and introduced drastic measures to curb corruption in the whole government. Several inept ministers and more than a dozen corrupt administrators, governors, police chiefs and diplomats have been fired.
The Afghan government recently appointed a new interior minister to accelerate the reform and building of the police, while establishing the High Office of Oversight and Anti-Corruption to fight systemic governmental corruption that is at the heart of the problem.
• Generalizing Afghanistan as a "narco-state" is misleading and diverts our attention from how to fight narcotics as a transnational security threat rather than as an Afghan problem alone. The fact is that since 2001 Afghanistan's share of licit economy has outstripped that of its illicit, which is now less than a third of our annual gross domestic product. But we know from international experience that global demand for narcotics finds supply in environments where state institutions are weak, where general instability is high, and where poverty is rife. Although Afghanistan is in such a dire situation today, the number of drug-free provinces in the country has increased from six in 2006 to 18 in 2008. This means no opium is grown in more than half of the country's 34 provinces. This progress has been made in provinces where the government has been in firm control, delivering alternative assistance to farmers and prosecuting drug traffickers.
To be effective, counter-narcotics efforts must target all players in the long chain of the opium trade, including traffickers, distributors and dealers, who pull in about 80 percent of the export value of Afghan narcotics. We need proactive international cooperation to implement the United Nations Security Council resolution 1818 of July 2008 to curb the flow of precursor chemicals into Afghanistan and export of narcotic products out of our country to the end markets through neighboring states.
At the same time, farmers must have the opportunity and resources to grow alternative crops. To make these crops more lucrative, investments in infrastructure are needed. In addition to water, seed and fertilizer, farmers must have access to reliable farm-to-market roads or to cold-storage facilities to preserve products for later export.
• Finally, there are frequent and absolutely incorrect references to Afghanistan as a "graveyard of empires," where democratic nation-building is impossible. A monthlong stay among the Afghan people will reveal to any serious observer that the hardships and suffering the Afghan people have endured during the last 30 years have changed their worldview. The youth who constitute more than 60 percent of the Afghan population look to the future in today's globalized context.
Afghans demand security, justice and pluralism, which they know can only be restored by long-term international engagement. We understand that premature international disengagement from Afghanistan in the early 1990s made the country a no-man's land where transnational extremists, terrorists and criminals freely roamed and used the stateless country to endanger international peace and security. The tragedy of Sept. 11, 2001, is a sad reminder.
Hence, irrelevant comparisons such as premodern wars or the 1979 Soviet invasion of Afghanistan to the 2001 international re-engagement to free Afghans of the tyranny of the Taliban are neither accurate nor helpful.
Afghans view American and NATO forces as their liberators, while they perceived the Soviet forces as invaders and occupiers with a godless ideology.
Historical comparisons often no longer hold true, and they do not in Afghanistan. We should rather focus on delivering on the basic expectations of the Afghan people: security, rule of law and jobs - expectations that have given them hope after 2001.
M. Ashraf Haidari is the political counselor of the Embassy of Afghanistan.
The Bailout Goes Global
The Bailout Goes Global
The Group of 20 gets a trillion-dollar headline and the markets get a boost. Another ugly jobs report.
THE GANG OF 20 MET IN LONDON LAST WEEK to cope with the global economic crisis. To some extent, the powwow of the big chiefs was a bit anticlimactic, since the global stock markets had already decided the crisis was over. But grandees love summits not for what they accomplish but for the opportunity it affords them to take a break from the serious business of keeping the natives happy back home. And especially these days, when the living isn't easy, those natives can get pretty ugly.
Besides, it gives the beloved leaders a chance to size up the other potentates and eyeball any special behavioral warts and tics that can be exploited should it become necessary to doff the phony smiles and get down and dirty in dealing with their opposite numbers. And of course, in contrast to the old gangs, this one, in addition to the usual suspects, embraces a whole new and unfamiliar bunch.
Old and new members alike repeated the mantra that this meeting, designed to roll back the powerful tides of recession, would not repeat the mistakes of the last such London summit held back in 1933, in the shadow of the Great Depression. We took that to mean that, come hell or high water, the group was determined to make its own mistakes.
How successful they are in that admirable endeavor, it's too early to say, except to hazard that they're off to a promising start by planning to spend $1.1 trillion on they know-not-exactly-what. The U.S., frugal as always, tried to whittle down the final figure to $750 billion, and the Europeans, notorious tightwads, thought $500 billion was more than enough. But, happily, airier heads prevailed.
For, as the astute policy parsers at ISI Group observe, "It looked to us like the G-20 leaders were looking for a trillion-dollar headline to impress markets, and it worked." For the most part, they reckon, the results of the lavishly ballyhooed confab were a tad disappointing, but the G-20 headlines served as " a match dropped on technical kindling," providing fresh fuel for a spirited global stock-market rally already under way.
The biggest chunk of that trillion-plus bequest, or $750 billion, is ticketed for the IMF (its formal moniker, in case it has slipped from memory, is the International Monetary Fund), which like the rest of us in these straitened times can use a few extra hundred billion. As ISI points out, of the $500-billion boost in the IMF's current lending capacity, only half is now funded and the remaining $250 billion "has not been secured."
Even if the final tally comes up a bit shy of a trillion, the infusion of dough should provide needed balm to struggling, lesser-developed economies, especially in Eastern Europe, where the abyss yawns especially large. But in concentrating on virtuous action to the exclusion of facing up to the financial mess in which the world economy is mired, the summiteers reverted to evasive form.
As Harvard's Kenneth Rogoff acidly observed (we're quoting from a piece in the New York Times): "The rich countries are in denial about the depth of the problems remaining in their financial sectors. They want to congratulate themselves for taking all the right steps already, as if the only problem now is how to help emerging markets."
To be charitable (one of our gravest faults), our gallant leaders are only human. Their motto, regardless of the particular language they express it in, is "No blame, no pain." Which explains why they unfailingly leave the politically disagreeable heavy lifting to their minions.
Unfinished business, moreover -- no matter how critical to the state of the world -- has its uses as well: It's a great excuse for another summit.
STOKING THE STOCK-MARKET RALLY, along with all the hoopla heralding the bailout's going global, was the unsurprising news that the Financial Accounting Standards Board, which no one has ever accused of exhibiting a profile in courage, caved to Congress and aggrieved bankers -- a motley combo if ever there was one -- and changed the rules on how banks should treat troubled loans (the polite term for toxic assets).
Fearful of inducing your eyes to glaze over, we'll spare you the fine points of the switch. Essentially, it allows the banks to avoid valuing those distressed assets at what they might fetch on the market -- so-called marking to market -- and, instead, permits them to value the sour loans by (as cynics not unjustifiably describe it) marking to make-believe.
As it happens, such assets in the aggregate run into the megabillions, constituting a huge and seemingly indelible stain on the banks' balance sheets that can be cleansed only by write-offs and write-downs and fire sales. The trouble with the last is that demand has all but evaporated -- and so too, for all intents and purposes, has any semblance of a market for soiled assets.
Presumably, thanks to the grace extended by the FASB, heavily burdened banks will no longer be pressed to write off their toxic assets and, in the process, decimate their earnings. Which, of course, is not the least of the reasons that bank and kindred sectors have bounced so vigorously in anticipation of the shift.
As we intimated, the actual change is a bit more complex than our recounting suggests, but we think we've captured its basic intent and thrust, and our bare-bones recapitulation certainly squares with investor response.
What we find deliciously ironic is a possible unintended consequence of the FASB action. As several sharp-eyed Street hands have noted, the banks, no longer under the gun to account for their sins, might well cool to Tim Geithner's ambitious plan to form a private-public posse that would ride to the banks' rescue by scooping up those toxic assets.
Since, as we appraised it in last week's scribblings, under the plan, the privateers get the lion's share of the potential reward and the taxpayers (a.k.a. "the public") bear all but a sliver of the risk, we can only say, thank heavens for unintended consequences.
VAMPIRES AND PEOPLE-CHEWING monsters are all the cinematic and video rage among the younger set, or so a lot of our tut-tutting and purportedly adult friends complain these days. So far as we're concerned, there's nothing like a blood-curling DVD to pass the time on a dark and stormy night.
So we have no compunction in offering some gratuitous advice to the guys and gals at the Bureau of Labor Statistics: If you're hungering for fame and fortune (especially fortune), try your hand at working up a scary script for Hollywood or even an indie. Gosh knows, you've a wealth of experience, churning out those chilling horrors that pass for monthly employment reports.
For working stiffs, as we got official confirmation on Friday, March was a lousy month, extending the long string of lugubrious months that preceded it. Payrolls shrank by 663,000 jobs -- and the total further swells if you toss in the 86,000 jobs missed in the initial count for January and February and the 114,000 additions conjured up out of the thin air by the BLS with the aid of its magical birth/death model.
The unemployment rate shot up to 8.5%, from 8.1% in February, the highest in more than a quarter of a century. Moreover, if you include folks working part time because they can't find full-time jobs, along with those miserable, discouraged souls who gave up even looking for a slot, the percentage mounts to a formidable 15.6%, a new high since the bureau began keeping track in 1994.
Since the onset of recession in December '07, 5.1 million jobs have gone up in smoke, nearly two-thirds of them in the past five months alone. There are now more than 13 million workers involuntarily idled, while another nine million are part-time because they've either had their hours slashed or can't land a full-time spot. Obviously, we're talking big numbers here.
The pink slips handed out last month were prominent throughout the broad sweep of commerce and industry. Construction continued to take some painful lumps, as 126,000 jobs were lost in the building trades. And, note Philippa Dunne and Doug Henwood of the Liscio Report, nonresidential construction took a bigger hit than its residential counterpart. Manufacturing, despite all the murmurings to the contrary on Wall Street, continues very much on the rocks, as evidenced by the 161,000 layoffs in that amorphous sector.
Even someone with a job might have reason for rue, Philippa and Doug observe, as the slack labor market shows up in the truncating of the work week to an all-time low and in the feeble uptick in average hourly earnings. And they add that "it wouldn't surprise us at all to see wage gains erode further in the coming months."
On that score, Sung Won Sohn, at Cal State's Smith School of Business, expects that humongous stimulus being injected into the economy and the Fed's open spigot to provide a lift to the economy (how could they not?). But, he cautions, that won't prevent businesses from continuing to slash jobs in an effort to weather the still-harsh going likely ahead. And by his reckoning, that blessed day when corporations begin to hire instead of fire won't dawn until sometime next year.
In sum, keep those hatches battened down.
On The Wrong Side Of History
On The Wrong Side Of History
Leadership: Facing the daunting challenges of the 21st century, President Obama has conferred with the man who tried to salvage communism. Time to reread some recent history.
The president and Vice President Joe Biden met last Friday with former Soviet premier Mikhail Gorbachev, according to a Gorbachev who did not elaborate on what was discussed.
Presumably, President Obama wanted Gorbachev's input on how to deal with his current successor, Russian ruler Vladimir Putin, who has become increasingly confrontational toward the West.
Ex-President Jimmy Carter grins as he leaves the White House after talks with President Obama’s top security adviser.
Earlier in the week the worst president of the 20th century, one James Earl Carter, spent an hour and a half in the West Wing of the White House, reportedly for a private briefing from Obama national security adviser Jim Jones.
(Uh oh — is Carter planning another meeting with the leader of an Islamist terrorist group, like the one he had last year in Syria with Hamas leader Khaled Mashal?)
The president is said to have "briefly greeted" Carter during his visit. But if it had been more than that, no one could blame the White House for covering it up. Carter's legacy includes the fall of the shah and the consequent Islamist revolution in Iran still in power and seeking nuclear arms.
Add to that the fact that the Soviets invaded Afghanistan on Carter's watch, after he repeatedly made it clear in public statements that he did not believe the United States had much ability to influence events in the world anymore.
After just a couple of months in office and a serious economic downturn to deal with, it's doubtful our new president wants Americans to think he was spending any time meeting with a predecessor who gave the country 21.5% interest rates, stagflation and long lines at the gas pump.
Considering the faith that both Jimmy Carter and Barack Obama seem to place in government over the private sector, and conciliation over American assertiveness in foreign policy, would it be unseemly to wonder if the two did share more than a "brief greeting" last week?
Both Carter and Gorbachev are remembered indelibly as being on the wrong side of history. The answer to Soviet aggression was not to kiss Leonid Brezhnev on both cheeks at Vienna, then be shell-shocked to discover he had lied as Red Army tanks rolled into Afghanistan.
Instead, the answer was to announce to the world exactly what the Communists were — an Evil Empire — and rebuild our defenses.
The way to deal with the Berlin Wall was not to learn to live with it permanently, but to go there and demand that Mr. Gorbachev tear it down. Can any American imagine Jimmy Carter going there and saying such a thing? The crowds would have barely stifled their laughter.
And the solution to mutual assured destruction (MAD) by nuclear missiles was not to talk to the Kremlin's professional liars at the negotiating table. It was action, in the form of building and deploying missile defense.
As Gorbachev insisted that a human face could be put on the murderous tyranny of the USSR, and preserve it and the Communist Party that ran it, Carter's successor, Ronald Reagan, exposed it to the light and killed it.
It could indeed even be said that both Gorbachev and Carter were fooled into accepting the invincibility of Soviet communism. Reagan never was, just as Gorbachev's successor Boris Yeltsin never was.
All these years later, missile defense remains important in confronting Russian imperialism. Like during the 1930s, and at the end of World War II, the great nation of Poland is hoping that the free world will not abandon it to a monstrous tyranny next door.
Polish leaders today fear Obama will renege on U.S. plans for a missile shield deployed on Polish territory to defend against former KGB operative Putin's aggression.
It isn't too difficult to surmise what Carter and Gorbachev's dovish advice to the president on the matter would be — as with matters regarding our other adversaries, from al-Qaida to Iran to North Korea and China.
Barack Obama would do better hosting a visit from the ghost of the Gipper.
1 comment:
This article is very timely and relevant. As I quote Cameron Muir, an economist, "Home sales are unlikely to fall much further..That being said we expect home sales not to decline much further."
But it's never too late, with the right business plan set up, it will lead to valuable outcome. This is what most counselors would give as an advise.
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