Parenteau: Marching to Austeria* and Other Neolib Fibs

Parenteau: Marching to Austeria* and Other Neolib Fibs: "

By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute

Richard Alford has correctly identified the need to address global imbalances – rather than simply slouch our way back to some milder version of status quo before the pre- Lehman meltdown arrangement, as we presently appear to be doing – if we are to have any hope of finding a sustainable global growth path. On this much we can surely agree. As to the method of addressing global imbalances, however, and perhaps even the true nature of these imbalances, we find ourselves deeply at odds with some of his diagnosis and most of his prescriptions.

Richard specifically takes issue with those of us who have been warning about the pursuit of large, prolonged fiscal retrenchment paths in the eurozone. He believes this is a bit of a diversionary tactic on our part, akin to a stance John Connolly once took, of restating our problem as their problem to deal with, not ours. The solution to the US problem is plain and simple in Richard’s mind: stop fighting austerity policies abroad, and start advocating their implementation at home.

Now it is true, as a matter of double entry book keeping, that if the US as a nation is going to reduce the gap between its spending and its income (which would reduce the currently widening trade deficit by definition), then nations that are major trading partners of the US must be prepared to reduce their net saving. Just as it takes two to tango, there are two sides to every exchange or transaction. One nation cannot increase its financial balance or net saving with the rest of the world unless the rest of the world is prepared to reduce its net saving. So from a rational perspective, rebalancing global growth does, as a matter of fact, require both sides to move in the right direction. This is not a theory – it is simply an accounting reality. One side can initiate the move, but both must be prepared to move.

Frequently, we are told by neoliberals, who dominate the economics profession and policy making circles, that there is something called the ‘twin deficits’ that must be recognized and addressed in the US. The twin deficit story goes like this: an increase in the fiscal deficit will tend to lead to an increase in the current account (or trade) deficit. Therefore, if reducing the US current account deficit is a desirable if not a necessary policy objective, then it is surely necessary to reduce the fiscal deficit. We have been hearing this story for nearly three decades from the neolibs.

The problem with the twin deficit story is the facts do not seem to bear the theory out. Below you may observe a chart for the US the shows the current account balance as a share of GDP, and the combined government fiscal balance as a share of GDP. You will notice the twins seem unrelated – not even separated at birth.

Specifically, look at the entire decade of the ‘90s, when the twins moved in opposite directions. The fiscal balance increased, while the trade balance fell. This is supposedly impossible under the neoliberal twin deficits story. Then observe the shaded bars, which encompass recessions of the past 45 years. Lo and behold, in nearly each of the recessions of the past nearly half century, the fiscal balance has fallen while the trade balance has risen. The facts indicate the twin deficit story is at best an incomplete or unreliable story (click to enlarge).

Why might this be the case? The neoliberals are not playing with a full deck – or at least they are keeping some cards up their sleeves. In prior articles, policy briefs, and public presentations, we have traced out the fact that while for the economy as a whole, total saving out of income flows must equal total investment in tangible assets (houses, plant and equipment, etc.), this is not true for any one sector of the economy. Breaking the economy down into three sectors – government, foreign, and domestic private sectors – we can derive the following identity which must hold true at the end of any accounting period (we can provide the simple algebra to derive this upon request – it appears in other publications of ours, as well as in much of the research Wynne Godley performed while at the Levy Institute):

Domestic private sector financial balance + government financial balance – current account balance = 0

Or

DPSFB + GFB – CUB = 0

This means in order for the current account (CUB) and the fiscal balance (GFB) to be twins, as the neoliberals often assert, such that a fall in the fiscal balance (say an increase in the fiscal deficit) leads to a commensurate fall in the current account balance (say an increase in the trade deficit), then there must be little or not change in the domestic private sector financial balance (DPSFB). This, it turns out, is empirically false. The DPSFB is rarely stable, especially in the past two decades of serial asset bubbles, when both the household and nonfinancial business sectors have gone deeper than ever into deficit spending territory under the influence of asset prices kiting ever higher.

So what is the true twin of the trade deficit? We can split the DPSFB, as we hinted just above, into the household and nonfinancial business sectors.

DPSFB = HFB + NBFB

When we do so, we notice a new set of twins arises from the historical data. The true twin of the CUB is the HB, or household financial balance. And of course, this makes perfectly good sense since most of the trade deficit is in the area of tradable consumption goods (click to enlarge).

So if we decide the US CUB needs to turn around, we best find a way to increase the HFB, or the net saving positions (saving minus investment) of the household sector. How can this be achieved? Expanding and rearranging the accounting identity above, we find:

HFB = CUB – GFB – NBFB

If we want to get the two true twin financial balances increasing in value (thereby reducing the current account or trade deficit) then we have two choices available. Either reduce the government financial balance (increase fiscal deficits) or reduce the NBFB (get businesses to run down their free cash flow positions by reinvesting more of their profits in tangible capital equipment). If we rule out the former on neoliberal concerns about fiscal sustainability, we are left with but one choice to improve the position of the true twins, and that is a higher reinvestment rate in the domestic business sector.

And this, dear reader, brings us to the heart of the matter. Remember the global savings glut you keep hearing about from Greenspan, Bernanke, Rajan, and other prominent neoliberals? Turns out it is a corporate savings glut. There is a glut of profits, and these profits are not being reinvested in tangible plant and equipment. Companies, ostensibly under the guise of maximizing shareholder value, would much rather pay their inside looters in management handsome bonuses, or pay out special dividends to their shareholders, or play casino games with all sorts of financial engineering thrown into obfuscate the nature of their financial speculation, than fulfill the traditional roles of capitalist, which is to use profits as both a signal to invest in expanding the productive capital stock, as well as a source of financing the widening and upgrading of productive plant and equipment.

What we have here, in other words, is a failure of capitalists to act as capitalists. Into the breach, fiscal policy must step unless we wish to court the types of debt deflation dynamics we were flirting with between September 2008 and March 2009. So rather than marching to Austeria, we need to kill two birds with one stone, and set fiscal policy more explicitly to the task of incentivizing the reinvestment of profits in tangible capital equipment. A program to do so would include the following measures:

1) a prohibitive tax on retained earnings that are not reinvested with a 24 month period after they have been booked;

2) a financial asset turnover tax that raises the cost to businesses of playing casino games in various financial asset markets, rather than reinvesting profits in the productive capital stock;

3) a reinvigorated public or public/private investment program that helps speed up the shift to, and lower the costs of production of new energy technologies.

Regarding the last proposal, we must be willing to recognize the history of US economic development includes a number of very large and very bold public and public/private investment initiatives that provided numerous business opportunities and the basis for breakthrough technologies to emerge. The canal, railroad, highway, and other initiatives were hardly the doorway to the communist gulag they are made out to be. Indeed, if anything, Asia has mastered the use of this approach to push one of the most rapid adoptions of capitalism ever.

We know we need to reconfigure our energy infrastructure – we knew it over thirty years ago. It is time to act, and the third proposal could include such measures as solarizing all government buildings in the southern states in order to drive unit costs of solar cell production down, which in turn would increase the competitiveness of US producers of solar cells in global markets. There are undoubtedly more proposals we could bring to bear on the business sector to break the global corporate saving glut and force capitalists to act as, well, capitalists, but for the moment, this is a good enough place to start.

To conclude, Richard summarized his recent Naked Capitalism piece as follows: ‘The structural problems are reflected in mutually determined unsustainable current account and fiscal deficits, as well as depressed saving rates.’

Notice how his statement fingers the wrong twins – the fiscal and current account deficits are asserted to be mutually determined. Neoliberals tell this fib all the time. Empirically, we have shown you this is false, at least for much of the last four decades of US history, Theoretically, we have shown you this is also a suspect assertion: if you bother examine the macrofinancial balance equation in its full form, you find the neolib fib requires an implicit assumption that the DPSB show little or no change over time, which again is empirically false.

Notice the emphasis on depressed savings rates needing to be reversed and revived, when, as we argued above, the real source of US and global imbalances is a corporate savings glut. Firms are earning generous profits, but they are not reinvesting them in tangible productive assets. This visibly short circuits long run growth prospects, and is the foundation of the structural problem Richard alludes to, but we doubt he would recognize it as such.

That neoliberals with credentials, credibility, tenure, and positions of policy influence can continuously assert these glaring misconceptions is either malpractice, malfeasance, or both. It is not our place to speculate on their motives, though we have our own hunches (here is a heavy hint: just follow the money). Call it innocent fraud if you must, but neoliberals would have us marching to Austeria on the basis of their hollow, unsubstantiated slogans. It is high time for the neolibs to finally drop their fibs and step out of the way. Sorry Lady Thatcher, but there is an alternative to Austeria.

*Earlier in the month we coined the terms Austeria and Austerian Economics. We introduced these concepts in our June 10th BNN TV interview, and in our June 11 Richebacher Letter Weekly Alert to describe the policy stance we saw the G-20 embracing for Austeria, formerly know as the eurozone. (And yes, bloggers elsewhere who have been erroneously attributing these terms to Mark Thoma’s subsequent June 17th use of it at Economist’s View – please consider doing a little fact checking now and again).

"

(Via naked capitalism.)

Paul Krugman - The Third Depression - NYTimes.com

Op-Ed Columnist - The Third Depression - NYTimes.com: "Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as ‘depressions’ at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Fred R. Conrad/The New York Times
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Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

"

(Via .)

Naomi Klein: Sticking the Public With the Bill for the Bankers' Crisis

Naomi Klein: Sticking the Public With the Bill for the Bankers' Crisis: "My city feels like a crime scene, and the criminals are all melting into the night, fleeing the scene. No, I'm not talking about the kids in black who smashed windows and burned cop cars on Saturday.

I'm talking about the heads of state who, on Sunday night, smashed social safety nets and burned good jobs in the middle of a recession. Faced with the effects of a crisis created by the world's wealthiest and most privileged strata, they decided to stick the poorest and most vulnerable people in their countries with the bill.

How else can we interpret the G20's final communique, which includes not even a measly tax on banks or financial transactions, yet instructs governments to slash their deficits in half by 2013. This is a huge and shocking cut, and we should be very clear who will pay the price: students who will see their public educations further deteriorate as their fees go up; pensioners who will lose hard earned benefits; public sector workers whose jobs will be eliminated. And the list goes on. These types of cuts have already begun in many G20 countries including Canada, and they are about to get a lot worse. For instance, reducing the projected 2010 deficit in the U.S. by half, in the absence of a sizeable tax increase, would mean a whopping $780-billion cut.

They are happening for a simple reason. When the G20 met in London in 2009, at the height of the financial crisis, the leaders failed to band together to regulate the financial sector so that this type of crisis would never happen again. All we got was empty rhetoric, and an agreement to put trillions of dollars in public monies on the table to shore up the banks around the world. Meanwhile, the U.S. government did little to keep people in their homes and jobs, so in addition to hemorrhaging public money to save the banks, the tax base collapsed, creating an entirely predictable debt and deficit crisis.

At this weekend's summit, Prime Minister Stephen Harper convinced his fellow leaders that it simply wouldn't be fair to punish those banks that behaved well and did not create the crisis (despite the fact that Canada's highly protected banks are consistently profitable and could easily absorb a tax). Yet, somehow, these leaders had no such concerns about fairness when they decided to punish blameless individuals for a crisis created by derivative traders and absentee regulators.

Last week, the Globe and Mail ran a fascinating article about the origins of the G20. It turns out the entire concept was conceived in a meeting back in 1999 between then Finance Minister Paul Martin and his U.S. counterpart Lawrence Summers (itself interesting since Summers was, at that time playing a central role in creating the conditions for this financial crisis, allowing a wave of bank consolidation and refusing to regulate derivatives).

The two men wanted to expand the G7, but only to countries they considered strategic and safe. They needed to make a list but apparently they didn't have paper handy. So, according to reporters John Ibbitson and Tara Perkins, 'the two men grabbed a brown manila envelope, put it on the table between them, and began sketching the framework of a new world order.' Thus was born the G20.

The story is a good reminder that history is shaped by human decisions, not natural laws. Summers and Martin changed the world with the decisions they scrawled on the back on that envelope. But there is nothing to say that citizens of G20 countries need to take orders from this handpicked club.

Already, workers, pensioners and students have taken to the streets against austerity measures in Italy, Germany, France, Spain and Greece, often marching under the slogan 'We won't pay for your crisis.' And they have plenty of suggestions for how to raise revenues to meet their respective budget shortfalls.

Many are calling for a financial transaction tax that would slow down hot money and raise new money for social programs and climate change. Others are calling for steep taxes on polluters that would underwrite the cost of dealing with the effects of climate change and moving away from fossil fuels. And ending losing wars is always a good cost saver.

The G20 is an ad-hoc institution with none of the legitimacy of the United Nations. Since it just tried to stick us with a huge bill for a crisis most of us had no hand in creating, I say we take a cue from Martin and Summers. Flip it over, and write on the back of the envelope: Return to sender.

"

(Via .)

Gonzalo Lira: Is the U.S. a Fascist Police-State? « naked capitalism

Gonzalo Lira: Is the U.S. a Fascist Police-State? « naked capitalism: "By Gonzalo Lira, a novelist and filmmaker (and economist) currently living in Chile and writing at Gonzalo Lira

I lived in Chile during the Pinochet dictatorship—I can spot a fascist police-state when I see one.

The United States is a fascist police-state.

Harsh words—incendiary, even. And none too clever of me, to use such language: Time was, the crazies and reactionaries wearing tin-foil hats who flung around such a characterization of the United States were disqualified by sensible people as being hysterical nutters—rightfully so.

But with yesterday’s Holder v. Humanitarian Law Project decision (No. 08-1498, also 09-89) of the Supreme Court, coupled with last week’s Arar v. Ashcroft denial of certiorari (No. 09-923), the case for claiming that the U.S. is a fascist police-state just got a whole lot stronger.

First of all, what is a ‘fascist police-state’?

A police-state uses the law as a mechanism to control any challenges to its power by the citizenry, rather than as a mechanism to insure a civil society among the individuals. The state decides the laws, is the sole arbiter of the law, and can selectively (and capriciously) decide to enforce the law to the benefit or detriment of one individual or group or another.

In a police-state, the citizens are ‘free’ only so long as their actions remain within the confines of the law as dictated by the state. If the individual’s claims of rights or freedoms conflict with the state, or if the individual acts in ways deemed detrimental to the state, then the state will repress the citizenry, by force if necessary. (And in the end, it’s always necessary.)

What’s key to the definition of a police-state is the lack of redress: If there is no justice system which can compel the state to cede to the citizenry, then there is a police-state. If there exists a pro forma justice system, but which in practice is unavailable to the ordinary citizen because of systemic obstacles (for instance, cost or bureaucratic hindrance), or which against all logic or reason consistently finds in favor of the state—even in the most egregious and obviously contradictory cases—then that pro forma judiciary system is nothing but a sham: A tool of the state’s repression against its citizens. Consider the Soviet court system the classic example.

A police-state is not necessarily a dictatorship. On the contrary, it can even take the form of a representative democracy. A police-state is not defined by its leadership structure, but rather, by its self-protection against the individual.

A definition of ‘fascism’ is tougher to come by—it’s almost as tough to come up with as a definition of ‘pornography’.

The sloppy definition is simply totalitarianism of the Right, ‘communism’ being the sloppy definition of totalitarianism of the Left. But that doesn’t help much.

For our purposes, I think we should use the syndicalist-corporatist definition as practiced by Mussolini: Society as a collection of corporate and union interests, where the state is one more competing interest among many, albeit the most powerful of them all, and thus as a virtue of its size and power, taking precedence over all other factions. In other words, society is a ‘street-gang’ model that I discussed before. The individual has power only as derived from his belonging to a particular faction or group—individuals do not have inherent worth, value or standing.

Now then! Having gotten that out of the way, where were we?

Holder v. Humanitarian Law Project: The Humanitarian Law Project was advising groups deemed ‘terrorists’ on how to negotiate non-violently with various political agencies, including the UN. In this 6-3 decision by the U.S. Supreme Court, the Court ruled that that speech constituted ‘aiding and abetting’ a terrorist organization, as the Court determined that speech was ‘material support’. Therefore, the Executive and/or Congress had the right to prohibit anyone from speaking to any terrorist organization if that speech embodied ‘material support’ to the terrorist organization.

The decision is being noted by the New York Times as a Freedom of Speech issue; other commentators seem to be viewing it in those terms as well.

My own take is, Holder v. Humanitarian Law Project is not about limiting free speech—it’s about the state expanding it power to repress. The decision limits free speech in passing, because what it is really doing is expanding the state’s power to repress whomever it unilaterally determines is a terrorist.

In the decision, the Court explicitly ruled that ‘Congress and the Executive are uniquely positioned to make principled distinctions between activities that will further terrorist conduct and undermine United States foreign policy, and those that will not.’ In other words, the Court makes it clear that Congress and/or the Executive can solely and unilaterally determine who is a ‘terrorist threat’, and who is not—without recourse to judicial review of this decision. And if the Executive and/or Congress determines that this group here or that group there is a ‘terrorist organization’, then their free speech is curtailed—as is the free speech of anyone associating with them, no matter how demonstrably peaceful that speech or interaction is.

For example, if the Executive—in the form of the Secretary of State—decides that, say, WikiLeaks or Amnesty International is a terrorist organization, well then by golly, it is a terrorist organization. It no longer has any right to free speech—nor can anyone else speak to them or associate with them, for risk of being charged with providing ‘material support’ to this heinous terrorist organization known as Amnesty International.

But furthermore, as per Holder v. Humanitarian Law Project, anyone associating with WikiLeaks—including, presumably, those who read it, and most certainly those who give it information about government abuses—would be guilty of aiding and abetting terrorism. In other words, giving WikiLeaks ‘material support’ by providing primary evidence of government abuse would render one a terrorist.

This form of repression does seem to fit the above definition of a police-state. The state determines—unilaterally—who is detrimental to its interests. The state then represses that person or group.

By a 6-3 majority, the Supreme Court has explicitly stated that Congress and/or the Executive is ‘uniquely positioned’ to determine who is a terrorist and who is not—and therefore has the right to silence not just the terrorist organization, but anyone trying to speak to them, or hear them.

And let’s just say that, after jumping through years of judicial hoops, one finally manages to prove that one wasn’t then and isn’t now a terrorist, the Arar denial of certiorari makes it irrelevant. Even if it turns out that a person is definitely and unequivocally not a terrorist, he cannot get legal redress for this mistake by the state.

So! To sum up: The U.S. government can decide unilaterally who is a terrorist organization and who is not. Anyone speaking to such a designated terrorist group is ‘providing material support’ to the terrorists—and is therefore subject to prosecution at the discretion of the U.S. government. And if, in the end, it turns out that one definitely was not involved in terrorist activities, there is no way to receive redress by the state.

Sounds like a fascist police-state to me."

(Via .)

General McChrystal Failing to Follow Obama’s Afghan Policy - The Daily Beast

General McChrystal Failing to Follow Obama’s Afghan Policy - The Daily Beast: "The press is turning a story about policy into a story about penises. What matters isn’t what McChrystal said about Obama—it’s what he believes about Afghanistan.
It’s not the insubordination, stupid. It’s the war. Behind all the indignant huffing and puffing, what Stanley McChrystal actually said about his civilian superiors in Michael Hastings’ Rolling Stone profile was fairly mild. Sure, unnamed aides made juvenile cracks about Joe Biden and James Jones. But the most impolitic thing that McChrystal himself said was that he feels hectored by Richard Holbrooke. If that’s a firing offense, most of the Democratic foreign policy class should start looking for work.
If feeling hectored by Richard Holbrooke is a firing offense, most of the Democratic foreign policy class should start looking for work.
Of course, McChrystal deserves to be reprimanded for letting a reporter make him and his staff look like arrogant jerks. But by focusing on McChrystal’s supposed challenge to Obama’s manhood—is the president afraid of his generals? Will Obama show that he can’t be pushed around?—the press is turning a story about policy into a story about penises. What matters isn’t what McChrystal said about Obama; it’s what he believes about Afghanistan. That’s why he should lose his job.
• Excerpts from McChrystal’s Rolling Stone interview

• More Daily Beast contributors on McChrystal’s futureFor close to a year now, it’s been painfully clear that McChrystal, with the backing of David Petraeus and the rest of the top military brass, wants America to make an unlimited commitment to the Afghan war. Counterinsurgency, they believe, works; all it requires is an unlimited amount of money and time. As Jonathan Alter details in his book, The Promise, McChrystal and company spent last summer waging a media and bureaucratic campaign aimed at forcing Obama to make that unlimited commitment. Obama resisted, insisting on a timeline for beginning America’s withdrawal. But the fight goes on. In his book, Alter quotes Biden as pledging that ‘In July of 2011, you’re going to see a whole lot of people moving out. Bet on it.’ Confronted with that quote last weekend, Robert Gates shot Biden down, declaring that ‘that absolutely has not been decided.’
Obama’s problem isn’t that McChrystal is talking smack about him. His problem is that McChrystal isn’t pursuing his foreign policy. McChrystal wants to ‘win’ the war in Afghanistan (whatever that means) no matter what it takes. Obama believes that doing whatever it takes will cost the U.S. so much money, and so distract the administration from other concerns, that it will cripple his efforts to stabilize America’s finances and rebuild American economic power. That’s the struggle that Hastings exposes: between a single-minded general who will stop at nothing to fulfill his mission and a president who believes that even if that mission saves Afghanistan, it could bankrupt the United States. It’s a struggle about whether America is going to adjust to the new limits on its power or pretend that they don’t exist.
That’s the real relevance of the Harry Truman-Douglas MacArthur analogy. Truman didn’t just fire MacArthur because the general treated him with disrespect. He fired him because MacArthur wanted to do whatever it took to liberate the Korean peninsula, including bombing mainland China, whereas Truman came to realize that Korea must be a limited war, fought merely to preserve South Korean independence. In insisting that America’s Cold War strategy be the containment of communism, not the rollback of communism, Truman kept the pursuit of military victory from destroying American power.
Now Obama must do the same. Last summer, he tried to split the difference—surging in Afghanistan while simultaneously pledging to retreat on the theory that within eighteen months the U.S. could so weaken the Taliban that they would sue for peace. Six months in, that strategy looks increasingly absurd. As its most honest proponents concede, counterinsurgency is a long, messy business, especially when the president whose country you’re trying to save is indifferent, if not hostile, to the effort. In all likelihood, when the deadline for troop withdrawal arrives a year from now, Obama will be forced to choose between something that looks like an unlimited commitment and something that looks like defeat. He’ll be forced to make the choice that he avoided last year.
Obama should make it now. He should use McChrystal’s transgression to install a general who will publicly and unambiguously declare that America’s days in Afghanistan are numbered. He should use this moment not just to show that he won’t tolerate insubordination, but to take control of his foreign policy, as Truman did in 1951. Calling McChrystal on the carpet isn’t the point; the point is ending a war that could wreck Obama’s presidency. That would be the best revenge."

(Via .)

Robert Scheer: General Discharge - Robert Scheer's Columns - Truthdig

Robert Scheer: General Discharge - Robert Scheer's Columns - Truthdig: "After the brilliant Rolling Stone article by Michael Hastings, President Barack Obama has no valid option other than to fire Gen. Stanley McChrystal. Not because of the dozen outrageous anti-administration verbal gaffes which have been reported, but rather because this definitive piece on the ‘Runaway General’ establishes the man in charge of the Afghanistan misadventure as an egotistical flake whose half-baked Afghan war-fighting strategy should never have been endorsed in the first place. It is McChrystal’s policy of counterinsurgency (COIN) that must be fired more than the man who exemplifies its irrationality.

It was the 66-page McChrystal Report that provided Obama with the justification for escalating rather than ending the decade-long Afghanistan war: winning the hearts and minds of people who have no intention of opening either to our tender mercies. They don’t like us or trust us and probably think we smell funny and our food tastes awful. Such profound cultural differences are what make the world an interesting place, but the continuing arrogance of centuries of U.S. imperial policy insists that the rest of the world wants to be just like us.

More important, winning the affection of Afghans and turning their society into a model of Western-style secular democracy have nothing to do with the original purpose of the Afghanistan invasion—to react to the 9/11 attacks. Al-Qaida has moved on to safer havens than the Taliban could provide, most significantly in Pakistan, and ‘victory’ in Afghanistan no longer has a serious U.S. national security purpose. We are embroiled in a civil war—indeed, according to the McChrystal Report, several such wars—and all we are accomplishing is backing one gang of hopelessly corrupt and venal warlords against another.

The Taliban are not necessarily the worst of the lot, and their former allegiance to al-Qaida has been effectively severed. There was nothing in the McChrystal report to indicate that the Taliban and their allies in Afghanistan are now anything but homegrown in their preoccupations, and the appeal of the insurgency is a matter of local grievances. As McChrystal stated in his original report: ‘Afghans are frustrated and weary after eight years without evidence of the progress they anticipated.’

The Rolling Stone article makes clear that the frustration has only increased with each civilian casualty and poignantly captures McChrystal’s own dilemma of attempting to hold down that death toll without increasing the risks for the troops that he dispatches:

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‘After nine years of war, the Taliban simply remains too strongly entrenched for the U.S. military to openly attack. The very people that COIN seeks to win over—the Afghan people—do not want us there. Our supposed ally, President [Hamid] Karzai, used his influence to delay the offensive, and the massive influx of aid championed by McChrystal is likely only to make things worse. ‘Throwing money at the problem exacerbates the problem,’ says Andrew Wilder, an expert at Tufts University who has studied the effect of aid in southern Afghanistan. ‘A tsunami of cash fuels corruption, delegitimizes the government and creates an environment where we’re picking winners and losers’—a process that fuels resentment and hostility among the civilian population. So far, counterinsurgency has succeeded only in creating a never-ending demand for the primary product supplied by the military: perpetual war. There is a reason that President Obama studiously avoids using the word ‘victory’ when he talks about Afghanistan. Winning, it would seem, is not really possible. Not even with Stanley McChrystal in charge.’
Hats off to Rolling Stone for doing the tough, on-the-scene reporting that the mass media increasingly avoid. The lionization of McChrystal in much of the reporting which ignored his egregious role in the cover-up of torture in Iraq and his key role in distorting the facts in order to politically exploit the ‘friendly fire’ death of Pat Tillman, a true hero, has been a journalistic low point. 

No better was President Obama’s embrace of this man who has now betrayed him. One hopes that Obama now responds to the serious concerns this article raises about his failed policy and not merely to the barbs from the general he once so admired. An indication that he will not do so was provided Tuesday by his press secretary, Robert Gibbs, who relayed that the president will say ‘it is time for everyone involved to put away their petty disagreements, put aside egos, and get to the job at hand.’ If that job is tantamount to anything but quickly getting out of Afghanistan, they might as well keep McChrystal in charge, for he remains a true believer in sinking deeper into the quagmire."

(Via .)

Cause and effect in the War on Terror

Cause and effect in the War on Terror: "

American discussions about what causes Terrorists to do what they do are typically conducted by ignoring the Terrorists explanation for why he does what he does.  Yesterday, Faisal Shahzad pleaded guilty in a New York federal court to attempting to detonate a car bomb in Times Square, and this Pakistani-American Muslim explained why he transformed from a financial analyst living a law-abiding, middle-class American life into a Terrorist:

If the United States does not get out of Iraq, Afghanistan and other countries controlled by Muslims, he said, 'we will be attacking U.S.,' adding that Americans 'only care about their people, but they don't care about the people elsewhere in the world when they die' . . . .

As soon as he was taken into custody May 3 at John F. Kennedy International Airport, onboard a flight to Dubai, the Pakistani-born Shahzad told agents that he was motivated by opposition to U.S. policy in the Muslim world, officials said.

'One of the first things he said was, How would you feel if people attacked the United States? You are attacking a sovereign Pakistan,' said one law enforcement official, who spoke on condition of anonymity because the interrogation reports are not public. 'In the first two hours, he was talking about his desire to strike a blow against the United States for the cause.'  

When the federal Judge presiding over his case asked him why he would be willing to kill civilians who have nothing to do with those actions, he replied:  'Well, the people select the government. We consider them all the same' (the same rationale used to justify the punishment of the people of Gaza for electing Hamas).  When the Judge interrupted him to ask whether that includes children who might have been killed by the bomb he planted and whether he first looked around to see if there were children nearby, Shahzad replied:

Well, the drone hits in Afghanistan and Iraq, they don't see children, they don't see anybody. They kill women, children, they kill everybody. It's a war, and in war, they kill people. They're killing all Muslims. . . .

I am part of the answer to the U.S. terrorizing the Muslim nations and the Muslim people.  And, on behalf of that, Im avenging the attack.  Living in the United States, Americans only care about their own people, but they dont care about the people elsewhere in the world when they die. 

Those statements are consistent with a decade's worth of emails and other private communications from Shahzad, as he railed with increasing fury against the wars in Afghanistan and Iraq, drone attacks, Israeli violence against Palestinians and Muslims generally, Guantanamo and torture, and asked:  'Can you tell me a way to save the oppressed? And a way to fight back when rockets are fired at us and Muslim blood flows?'

This proves only what it proves.  The issue here is causation, not justification.   The great contradiction of American foreign policy is that the very actions endlessly rationalized as necessary for combating Terrorism -- invading, occupying and bombing other countries, limitless interference in the Muslim world, unconditional support for Israeli aggression, vast civil liberties abridgments such as torture, renditions, due-process-free imprisonments -- are the very actions that fuel the anti-American hatred which, as the U.S. Government itself has long recognized, is what causes, fuels and exacerbates the Terrorism were ostensibly attempting to address.  

Its really quite simple:  if we continue to bring violence to that part of the world, then that part of the world -- and those who sympathize with it -- will continue to want to bring violence to the U.S.  Al Qaeda certainly recognizes that this is the case, as reflected in the statement it issued earlier this week citing the war in Afghanistan and support for Israel as its prime grievances against the U.S.  Whether thats what actually motivates that groups leaders is not the issue.  They are citing those policies because they know that those grievances resonate for many Muslims, who are willing to support radical groups and support or engage in violence only because they see it as retaliation or vengeance for the violence which the U.S. is continuously perpetrating in the Muslim world (speaking of which:  this week, WikiLeaks will release numerous classified documents relating to a U.S. air strike in Garani, Afghanistan that killed scores of civilians last year, while new documents reveal that substantial amounts of U.S. spending in Afghanistan end up in the hands of corrupt warlords and Taliban commanders).  Clearly, there are other factors (such as religious fanaticism) that drive some people to Terrorism, but for many, it is a causal reaction to what they perceive as unjust violence being brought to them by the United States.

Given all this, it should be anything but surprising that, as a new Pew poll reveals, there is a substantial drop in public support for both U.S. policies and Barack Obama personally in the Muslim world.  In many Muslim countries, perceptions of the U.S. -- which improved significantly upon Obamas election -- have now plummeted back to Bush-era levels, while Obamas personal approval ratings, while still substantially higher than Bushs, are also declining, in some cases precipitously.  As Pew put it:

Roughly one year since Obama's Cairo address, America's image shows few signs of improving in the Muslim world, where opposition to key elements of U.S. foreign policy remains pervasive and many continue to perceive the U.S. as a potential military threat to their countries.

Gosh, where would they get that idea from?  People generally dont like it when their countries are invaded, bombed and occupied, when theyre detained without charges by a foreign power, when their internal politics are manipulated, when they see images of dead women and children as the result of remote-controlled robots from the sky.  Some of them, after a breaking point is reached, get angry enough where they not only want to return the violence, but are willing to sacrifice their own lives to do so (just as was true for many Americans who enlisted after the one-day 9/11 attack).  Its one thing to argue that we should continue to do these things for geopolitical gain even it means incurring Terrorist attacks (and the endless civil liberties abridgments they engender); as amoral as that is, at least thats a cogent thought.  But to pretend that Terrorism simply occurs in a vacuum, that its mystifying why it happens, that it has nothing to do with U.S. actions in the Muslim world, requires intense self-delusion.  How much more evidence is needed for that?

* * * * * 

Three other brief points illustrated by this Shahzad conviction:  (1) yet again, civilian courts -- i.e., real courts -- provide far swifter and more certain punishment for Terrorists than do newly concocted military commissions; (2) Shahzads proclamation that he is a 'Muslim soldier' fighting a 'war' illustrates -- yet again -- that the way to fulfill the wishes of Terrorists (and promote their agenda) is to put them before a military commission or indefinitely detain them on the ground that they are 'enemy combatants,' thus glorifying them as warriors rather than mere criminals (see this transcript of a federal judge denying shoe bomber Richard Reid's deepest request to be treated as a 'warrior' rather than a common criminal); and (3) the Supreme Courts horrendous decision yesterday upholding the 'material support' statute is, as David Cole explains, one of the most severe abridgments of First Amendment freedoms the Court has sanctified in a long time; this decision was justified by the need for courts to defer to executive and legislative branch determinations regarding 'war,' proving once again that as long as this so-called 'war' continues as a 'war,' the abridgments on our core liberties will be as limitless as they are inevitable.  At some point, we might want to factor that in to the cost-benefit analysis of our state of perpetual war (for more on yesterdays Supreme Court ruling, see my podcast discussion from February with Shane Kadidal of the Center for Constitutional Rights, counsel to the plaintiffs in this case, on the day the Court heard Oral Argument, regarding the issues that case entailed).

"

(Via Salon: Glenn Greenwald.)

A big step in China’s global economic maturation

A big step in China’s global economic maturation: "

China’s decision to gradually abandon their hard peg to the US$ takes us back to pre July ‘08 when it more freely floated. Yes, this comes right before the G20 meeting and with growing international pressure, particularly from the US Congress, but China understands that the move is in their best long term interests in terms of growing the purchasing power of their citizenry, tempering inflation pressures and slowing the incredible trade imbalances that has seen their FX reserves grow to $2.4 Trillion, about 70% of which is in US$s. For China’s growing stature in the world this is great news, although short term difficult for low margin Chinese manufacturers. To those critics in the US of China’s fixed peg, be careful now of what you wished for. The Renminbi has taken a big step to being a global reserve currency and smaller trade imbalances will mean less Chinese purchases of US Treasuries. At last count they own $900b worth.

As evidence that shifting higher the value of one’s currency is not a panacea for its competitors whose currency moves lower, all we need to look at are the Japanese and the yen move from 278 in Nov ‘82 to the 90ish level today, a 67% appreciation. At the same time, Toyota became the most successful car company in the world while GM eventually went bankrupt. Bottom line, today’s move is more symbolic than anything because the revaluation of the yuan will be very gradual and not one off but it is a very important step in China’s maturation and global economic relevance.

"

(Via The Big Picture.)

Do Laws Even Matter Today?

Do Laws Even Matter Today?: "

Below is today’s column exploring the growing anger of voters and the possible linkage of controversies ranging from the bank bailouts to immigration to the BP oil spill.

As soon as Arizona passed its recent immigration law, some reporters and commentators were quick to cast the story with the usual actors: ‘Tea Partiers,’ race activists, conservatives and liberals. Like our politics, much of our news media coverage has become a clash of caricatures — easily categorized groups with one-dimensional motives for mass consumption. Some commentary even suggested that supporters of the law are either open or closeted racists. Rep. Keith Ellison, D-Minn., recently called the law both ‘fascist’ and ‘racist.’

Though I am a critic of the Arizona law, I do not view its supporters in such one-dimensional terms. Indeed, I do not view the public response in purely immigration terms. Whether it is illegal immigration or the mortgage crisis or corporate bailouts, there seems to be a growing sense among many citizens that they are expected to play by the rules while others are exempt.

With polls showing about 60% of people supporting the Arizona law and almost half supporting similar laws in their states, it is implausible to suggest that all these people are racists or extremists — let alone fascists. Notably, a majority of Americans also opposed the bank bailouts and mortgage forgiveness. In each of these controversies, there is a sense that the government was stepping in to protect people from the consequences of their actions.

In the mortgage crisis, tens of thousands of people accepted high-risk, low-interest loans while other citizens either declined to buy homes or agreed to higher monthly payments to avoid such deals. When Congress intervened with mortgage relief, some of those who had acted responsibly wondered whether they acted stupidly by rejecting low rates and later federal support.

Bailouts and immigration

Then there were the corporate bailouts. For citizens to secure a loan, they have to meet exacting terms and disclosures. Yet, when banks and firms concealed risks or engaged in financial wrongdoing, Congress bailed them out and allowed their executives to reap fat bonuses. The laws on fraud and deceptive practices simply did not seem to apply to them. Just as several companies were declared ‘too big to fail,’ many of their executives appeared too big to lose money — unlike the millions of citizens burned by their business practices.

Those prior controversies coalesced with the immigration debate. The last time Congress granted amnesty to illegal immigrants was 1986 — and it was criticized at the time for rewarding those who had evaded deportation. Complaints over the lack of federal enforcement had been percolating for years but exploded along Arizona’s long desert border. When a law mandated state enforcement of federal laws, the Obama administration moved to block it.

Indeed, high-ranking Obama officials such as John Morton, head of the Immigration and Customs Enforcement, have suggested that they might refuse to deport those arrested under the Arizona law. While we continue to tell millions around the world that they must wait for years to immigrate legally, Congress and the White House are considering a new amnesty proposal to benefit an additional 11 million illegal immigrants.

In each of these areas, the perception is that the law says one thing but actually means different things for different people. It is a dangerous perception, and it is not entirely unfounded. Such double-standards have become common as Congress and presidents seek to avoid unpopular legal problems.

•Torture: While acknowledging that waterboarding is torture and that torture violates domestic and international law, President Obama and members of Congress have barred any investigation or prosecution of those crimes.

•Pollution: While citizens are subject to pay for the full damage they cause to their neighbors and are routinely fined for their environmental damage for everything from dumping in rivers to leaf burning, Congress capped the liability for massive corporations such as BP and Exxon at a ridiculous $75 million. Though BP is likely to spend much more in litigation (particularly if prosecuted criminally), the current law requires citizens to pay the full cost of their environmental damage while capping the costs for companies producing massive destruction.

•Privacy: When the telecommunications companies found themselves on the losing end of citizen suits over the violation of privacy laws, Congress (including then-Sen. Obama) and President Bush simply changed the law to legislatively kill the citizen suits and protect the companies.

An arbitrary system

The message across these areas is troubling. To paraphrase Animal Farm, all people are equal, but some people are more equal than others.

A legal system cannot demand the faith and fealty of the governed when rules are seen as arbitrary and deceptive. Our leaders have led us not to an economic crisis or an immigration crisis or an environmental crisis or a civil liberties crisis. They have led us to a crisis of faith where citizens no longer believe that laws have any determinant meaning. It is politics, not the law, that appears to drive outcomes — a self-destructive trend for a nation supposedly defined by the rule of law.

Jonathan Turley, the Shapiro Professor of Public Interest Law at George Washington University, is a member of USA TODAY’s Board of Contributors.

USA Today: June 15, 2010

"

(Via JONATHAN TURLEY.)

John McCain on the Evil, Barbaric Iranians

John McCain on the Evil, Barbaric Iranians: "

John McCain has a new article in The New Republic -- which is exactly where it should be -- calling for regime change in Iran.  The whole article contains one paragraph after the next of the favorite pastime of Americas political and media class:  self-righteously condemning other nations for what we ourselves do (at least) as much.  Of all McCains paragraphs, this is probably my favorite (h/t sandbun):

"

(Via Salon.)

BP vs. Obama's Climate Complacency

BP vs. Obama's Climate Complacency: "

Engulfed by the worst environmental disaster in US history, Barack Obama is trying to change the subject. On May 26 the president pledged to 'keep fighting to pass comprehensive energy and climate legislation,' and on June 2 he declared, 'The time has come, once and for all, for this nation to fully embrace a clean-energy future.' Pivoting from oil spill to climate bill makes sense; a mandatory, declining cap on emissions is Americas best chance to wean itself off of fossil fuels—and Obamas best chance to wring some good out of the catastrophe. With the Senate expected to vote today on Sen. Lisa Murkowski's (R-Alaska) call to march in the wrong direction—a resolution stripping the EPA of the power to regulate greenhouse gases—this will clearly be a battle. But what did the president mean by 'keep fighting?' As the campaigners on the front lines of the climate war know, Obama has not yet begun to fight.

In the early days of the administration, Al Gore sent the new president a confidential memo explaining why it was essential for the US to pass a climate bill in 2009, before the UN summit in Copenhagen, where the world was supposed to negotiate a successor to the Kyoto Protocol. If the US delegation arrived empty-handed in Copenhagen, Gore wrote, the world would have no chance to reach a new global deal. American leadership was the crucial and still-missing ingredient. But except for a few days in June 2009 spent whipping the vote for the Waxman-Markey climate bill, the White House has not pushed for the cap. It has been all talk—and even the talk tends to get watered down.

Continue Reading »

"

(Via MotherJones.com.)

Bill McKibben: Missing the Real Drama of the Deepwater Horizon Blowout

Bill McKibben: Missing the Real Drama of the Deepwater Horizon Blowout: "

Cross-posted from Nieman Watchdog.

When a well started spewing oil off Santa Barbara in 1969, it spurred the first Earth Day, which in turn launched the environmental movement and a fundamental questioning of the balance between humans and the rest of nature. It turned out, in other words, to be a real Moment.

 

It makes one wonder if there really shouldnt be a little more depth to the endless coverage of the Deepwater Horizon blowout in the Gulf. (Which, just to be semantic for a moment, isnt really a 'spill,' or a 'leak,' unless youd also call a knife wound a 'bloodspill,' or a gunshot to the carotid a 'bloodleak.' BP has punched a hole in the bottom of the sea.)

 

Yes, the obvious story is important: Theres oil spewing out, BP has demonstrated infuriating nonchalance, shrimpers are watching the sheen wash up on the coastal marshes, etc. This all needs to be covered, and is being covered with the incredible agonizing boredom that only 24-hour cable channels can bring to any issue.

 

And theres a 'political angle,' which as usual has been about atmospherics. Is Obama angry enough? Is he connecting with 'real people'? This sort of thing is conventional good fun for political reporters (especially when Obama plays along, announcing hes consulting with various academics in order to see 'whose ass needs kicking.'). But isnt there something more? Isnt this potentially a Moment too?

 

Lets think about the stories that are suggested by this trouble.

 

One has something to do with peak oil. BP has gone to all this trouble for a well that taps into what they now think may be 100 million barrels of oil. And thats... five days supply for the U.S? Does that give you any sense of the precariousness of the arrangements under-girding our economy right at the moment?

 

Another -- even more important -- has to do with global warming. Lets assume that the oil from the Deepwater Horizon made it safely onshore and was refined and then burned in the gas tank of your car. What then? Well, the CO2 in the atmosphere would be doing at least as much damage as the oil spreading across the Gulf. Consider the following things that have happened since the Deepwater exploded:



* Asia and Southeast Asia have each recorded their hottest temperatures ever -- 129 degrees in Pakistan, and 117 in Burma. India is having the worst heatwave since the British started keeping records -- people are dying by the hundreds.



* Weve seen the biggest rainstorms ever recorded in lots of places, from Nashville to Guatemala -- the clear result of an atmosphere made 5% wetter because warm air holds more water vapor than cold.



* Satellite data has shown that Arctic ice is now melting even faster than in the record year of 2007.



* NASA has released new statistics showing that the past 12 months were the warmest on record and that 2010 is almost certain to set the title for the warmest calendar year yet.



All of these, it seems to me, could be considered parts of the Deepwater Horizon story because they demonstrate that fossil fuel is everywhere dirty. They change the political question from 'is Obama angry enough' to 'can Obama lead a credible fight for real energy and climate legislation?' More to the point, they connect with the mood of existential despair and anger that the oil spill has set off across the country. People are sad and bitter only in part because they see those pelicans oiled; mostly, they sense correctly that our leaders have yet to deal with what is clearly the biggest problem we face: the transition off of fossil fuels.

 

The questions that the Gulf spill raises, in other words, go well beyond: How big an idiot is Tony Hayward? What will happen to the tourist economy of the Gulf? How cool is James Camerons minisub? The questions are more like: How out of balance with the natural world are we? And what would it require to get back in balance?

 

Youd need to interview not just oil execs and colorful shrimpers, but nature writers, solar pioneers and psychologists.

 

Theres nothing pat about whats going on in the Gulf. Its the most vivid sign weve yet had that we are running into the kind of limits that people started talking about way back at that first Earth Day. But its meaning risks disappearing beneath the endless stories about Top Hat and Junk Shot. BPs great victory will come if it need merely confess to technical overreach and pay a few billion in fines -- if that happens, it can get back to making serious money, and the planet can get back to burning.

"

(Via Huffington Blog.)

Will Bunch: Along Came "Jones": Why My Generation Isnt Saving the World

Will Bunch: Along Came "Jones": Why My Generation Isn't Saving the World: "

As long as I live, I'll never forget the night that Elena Kagan and I got drunk together. It was November 4, 1980, to be exact. OK, before I go much further with this, I should make clear: I've never actually met President Obama's Supreme Court nominee, and on the night that we got drunk, I was in Providence, R.I., and she was at the Brooklyn Academy of Music. It was Election Night, and while the booze may have been flowing on elite college campus and in liberal enclaves, the election of Ronald Reagan and fellow conservatives was, oddly, enough, a seeming moment of numb clarity for a big chunk of my generation.

That would be the generation of people born between 1954 and 1965 -- a generation so lost that for most of its existence it didn't even have a name, until some sociologist guy came along to call us 'Generation Jones,' for reasons that are typically vague.

Anyway, on 11/4/80 I was on a battered sofa in front of my 9-inch black-and-white TV screen, the only one in my dorm. I was a future journalist, a poltical junkie majoring in poly-sci, and with the final weekend polls showing Reagan in a dead heat with Jimmy Carter, we dug in for what was sure to be a long election night. But at 7 p.m. NBC's John Chancellor came on the air and said, 'Ronald Reagan will win a very substantial victory tonight, very substantial.' We tossed our empty first beers toward the tiny screen. The rest of the night is a little hazy -- at the time, we blamed the boozing on boredom, but there was something else, numbing the fear that America was veering away from a righteous course that appeared to be set in the Watergate years.

A couple of hundred miles to the south, Elena Kagan was at a political wake, drinking vodka tonics and mourning not only Reagan's victory but also the defeat in New York's Senate election of Elizabeth Holtzman, a liberal hero of the Watergate scandal, by a GOP machine hack named Alphonse D'Amato. 'I got kind of drunk that night,' wrote Kagan, a top editor at the Daily Princetonian, six days later. 'A lot of people did.' She concluded:

I can say in these moments that one election year does not the death of liberalism make and that 1980 might even help the liberal camp by forcing it to come to grips with the need for organization and unity. But somehow, one week after the election, these comforting thoughts do not last long. Self-pity still sneaks up, and I wonder how all this could possibly have happened and where on earth I'll be able to get a job next year.

It was a weird time to be a college student -- the late 1970s and early 1980s. Our Generation Jones -- people like me and Kagan, the Class of '81 -- arrived on campus half wanting to relive the 1960s and half embarassed by them, which is probably why Nick Lowe and Elvis Costello felt the need by 1979 to ask what was so funny 'bout peace, love and understanding.

Besides -- everything had flipped in less than a decade. The threat of getting drafted and dying for nothing halfway around the world did not loom anymore, and the easy battles over race -- voting or riding in the front of a bus -- were long over as well. And while in the booming 1960s things like long hair or a few drug busts didn't seem like such a bad career move, in the stagflated 1970s and early 1980s we were all asking the same question as Elena Kagan...where on earth we'd be able to get a job next year.

There is a lot going on in Kagan's 1980 article -- it is kind of a Rosetta Stone for what was happening and would happen with our generation, Jones. The Reaganites were rising, and the jobs seemed to be disappearing. This was not the time to make waves. This was a time to keep your head down, to bury any progressive ideas deep in your heart, to make damn sure you got a job and rose the ladder and got to the place where, magically, you would know it was time to take off your mask and finally change the world.

Jump ahead 30 years and right on schedule, Generation Jones is taking over. Kagan (b. 1960) is nominated to the High Court, just like she'd planned, appointed by the first Generation Jones president, Barack Obama (b. 1961), advised by his chief of staff Rahm Emanuel (b. 1959). In Obama's White House, they worry about their deadly Generation Jones adversaries on the other side of the planet, people like Osama bin Laden (b. 1957) and Mahmoud Amhadinejad (b. 1956), or the political opposition of the far-right backlashers, Sarah Palin and Glenn Beck (both b. 1964). Generations Jones runs the business world, too, in person of Bill Gates (b. 1955) and Steve Jobs (also b. 1955). (And let's not forget Michael Jordan and Prince, Madonna, and Michael Jackson -- more on them in a minute.)

The Next Greatest Generation? Hardly. The reality is that Generation Jones is showing up just in time, when the planet really does need saving -- and we are blowing it, big time. The challenges faced not just by the United States but by the entire world -- global warming, a deadly addiction to fossil fuels, governments addled by debt yet unable to stop spending billions on weapons -- require bold, boat-rocking risk-takers, people who have looking into the abyss of humankind and are not afraid to make daring moves.

This is simply not my Generation Jones -- a generation in which (for Americans, anyway) there was no war from the time I was 14, when the last regular troops came home from Vietnam, until Operation Desert Storm, when I was 32, and when economic woes brought 'malaise' but not the Great Depression and then disappeared for a key time for young professionals in the 1980s and 1990s. Newsweek's Jonathan Alter described us as 'the perennial swing voters, with residual '60s idealism mixed with the pragmatism and materialism of the '80s.' He's right -- except that the pragmatism won out years ago.

We are careerists -- clinging to our conviction that we can change the world not by forceful ideas but by the mere force of our own often-coddled personalities, even if the ideas and passions that once animated our humanity have been buried under pages of resumes and cover letters The roadmap for people who wanted change was no longer the 1960s mantra of 'stickin' it to the man' but now 'working within the system,' and now that the system is collapsing underneath us in 2010 there is no Plan B -- just more calls for compromise, more reason, more digging in to be -- in the words of another 1979 hit, Supertramp's 'Logical Song', the product of 'a world where I could be so dependable, clinical, intellectual, cynical.'

Exhibit A is the man at the top, Barack Obama. No doubt he was a young man filled with a passion for what he would later advertise as 'change' -- studying how to rid the world of nuclear weapons as an undergraduate at Columbia, where he graduated in 1983, and heading to Chicago as a community organizer poised to do battle against Reagan's 'trickle-down economics,' but the reactionism of the 1980s clearly changed him. When he returned to Harvard Law School at the end of the decade, those experiences made Obama less a promoter of ideas than a seeker of compromise...while promoting himself.

'I come from a lot of worlds and I have had the unique opportunity to move through different circles,' Obama told the Los Angeles Times when he was elected the first ever black editor of the Harvard Law Review in 1990. 'I have worked and lived in poor black communities and I can translate some of their concerns into words that the larger society can embrace.' But even back then, some saw him as too prone to compromise, like second-year law student Christine Lee, who said nearly 20 years ago of Obama: 'His election was significant at the time, but now it's meaningless because he's becoming just like all the others (in the Establishment).'

The same could be said of President Barack Obama today -- from his ridiculously cautious picks to run the Pentagon and the Treasury to his stubborn search for compromise in areas like health care where no middle ground actually existed to his willingness to 'look forward' and ignore the blatant and serious law-breaking of the previous administration. He is more than willing to accept the vast presidential powers in areas like state secrets that had been grabbed by the Bush administration, because a long time ago Barack Obama began believing less and less in the power of ideology to do the right thing, and more in the power of Barack Obama.

Which is why Elena Kagan is his ideal Supreme Court nominee. Like the president, she has been sublimating the starkly liberal ideas that were nurtured in her 1960s and early 1970s childhood -- first as an 'objective' student journalist at the Daily Princetonian and then as a Supreme Court wannabe who learned quickly that to reach her ultimate goal that she would have to say little of controversy -- or consequence -- for 30 long years. The Canadian academic Gil Troy -- who not coincidentally wrote an excellent cultural history of the Reagan years -- penned an analysis of Kagan's legal career that gets it exactly right:

This woman, who posed in judicial robes for her Hunter College High School yearbook, may have been too calculating in climbing to the top. She has taken remarkably few public stands, entered into surprisingly few public controversies for a woman of her prominence and power. Even her academic writings focused on safe analyses of administrative law while other law professors debated issues passionately.

In this way, Ms. Kagan reveals she is one of Bork's Babies, a product of the searing battle that resulted in the Senate's rejecting Ronald Reagan's Supreme Court nominee Judge Robert H. Bork in 1987. At the time, ambitious law clerks like Ms. Kagan watched how critics vacuumed through Mr. Bork's past, blasting decades-old articles he authored, even snooping into his video rentals seeking something embarrassing - turned out Mr. Bork liked Fred Astaire movies. From then on, many of my Washington-oriented friends openly worried about their 'paper trails.' Their moral calculus was blunted, replaced by the ubiquitous question, 'How will it look in my confirmation hearings?'

In a way -- and it pains me to say this, because it sounds so much like a popular right-wing conspiracy theory, and I don't mean it in the same way -- Obama and Kagan really were a kind of 'Manchurian Candidate,' a type who thought they could only promote their progressive ideas in the 2010s after mostly hiding them in the 1990s and 2000s. But once you veer off that course it's almost impossible to get back, as you realize what Jackson Browne did between Kagan's freshman and sophomore years at Princeton that 'I don't know when that road turned onto the road I'm on.'

Generation Jones also dominates the profession that I and thousands of other young people pledged allegiance to in the heady days following Watergate and 'All the President's Men,' which is journalism. We saw Woodward and Bernstein rid the nation of the scourge of Nixon not through sit-ins but through dogged professionalism -- an idea that was like catnip to unflowery children of the '70s. It didn't work that way. The temple of supposed objective journalism -- just like Kagan's Way to the Supreme Court -- became a kind of warped religion incapable of effecting change, that suffered complete paralysis when a rogue White House decided to invade a foreign country for no valid reason. Writing that true story could have been a bad career move, you see.

Careerism. Not rocking the boat. It is a disease that came to affect different kinds of people from Generation Jones in different fashions. On the conservative side of my generation, the two most popular figures in 2010 -- radio's Glenn Beck and the cultural phenomenon of Sarah Palin (born, amazingly enough, on consecutive days in 1964) -- have both have the power and the right-wing incarnation of charisma to move millions of people. But they prefer to use all that political capital to make only millions of dollars for themselves.

With the arrival of Generation Jones, pop culture went from the drug-addled chaos of Woodstock to the stage-managed perfection of Madonna -- who proudly sang that she was a 'Material Girl' -- and Michael Jackson, who not only shunned any political role but moved toward a metaphorically appropriate neutrality even on racial appearance and gender. In the end, perhaps no figure has epitomized Generation Jones than basketball superstar Michael Jordan, who turned down a chance to endorse a black candidate against race-baiting Sen. Jesse Helms with the ultimate careerist come-on: 'Republicans buy sneakers too.'

Unfortunately, those Air Jordans might be mired today in the muck left by the BP oil spill -- one more sign of a generation's failure to tackle the problems confronting the world. Taking on the corporate powers that dominate this country is a risky business -- more risky, apparently, than anything our current leaders are eager or willing to tackle. I don't believe the so-called 'Greatest Generation' of the 1930s and 1940s is really inherently greater than the ones that came before or after it, but rather they were people asked to take great chances at an age when they were too young not to refuse the challenge. Generation Jones never faced anything quite like that, and the world is watching the unintended consequences.

That said, I'm not ready to give up on my generation, not yet. I know from my own experience and the people I've grown up and am now growing older with that the desire and the passion and the know-how to save the world is actually there, just buried under decades of accumulated junk. Who knows -- many Elena Kagan and Barack Obama and some of the rest of us simply need to get drunk together again, the way it was back on Nov. 4, 1980, back when we still had a road map and we weren't running on empty.

"

(Via Huffington Blog.)

Will Obama Break a Sweat on Climate Legislation?

Will Obama Break a Sweat on Climate Legislation?: "

This story first appeared on the TomDispatch website.

Here's the president on March 31st, announcing his plan to lift a longstanding moratorium on offshore drilling: 'Given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy.'

Here he is on May 26th, as political pressure starts to really build over the hole in the bottom of the sea that BP somehow seems unable to plug: 'Were not going to be able to sustain this kind of fossil fuel use. The planet cant sustain it.' Still, he added quickly, theres no need for any dramatics: 'Were not going to transition out of oil next year or 10 years from now.'

Continue Reading »

(Via MotherJones.com.)

Why We Are Screwed

Why We Are Screwed: "

Report: More than 1,400 former lawmakers, Hill staffers are financial lobbyists

Even for Washington, the revolving door between government and Wall Street spins at a dizzying pace. More than 1,400 former members of Congress, Capitol Hill staffers or federal employees registered as lobbyists on behalf of the financial services sector since the start of 2009, according to an exhaustive new study issued Thursday. The analysis by two nonpartisan groups, Public Citizen and the Center for Responsive Politics, found that the ‘small army’ of financial lobbyists included at least 73 former lawmakers and 148 ex-staffers connected to the House or Senate banking committees. More than 40 former Treasury Department employees also ply their trade as lobbyists for Wall Street firms, the study found, reports Dan Eggen:http://www.washingtonpost.com/wp-dyn/content/article/2010/06/03/AR2010060302740.html

Sent from my Verizon Wireless BlackBerry

"

(Via The Big Picture.)

Bob Herbert: ‘A Very Deep Hole’ on Jobs

Op-Ed Columnist: ‘A Very Deep Hole’ on Jobs: "Last month’s jobless numbers are the latest evidence of the severe threat the unemployment crisis poses to the well-being of the U.S."

(Via NYT > Opinion.)

Super Debt Cycle: U.S. Debt Set to Surpass Gross Domestic Product

Super Debt Cycle: U.S. Debt Set to Surpass Gross Domestic Product: "

Economists continue to line up warning of an economic meltdown as the U.S. moves toward 2012 when our debt will exceed our gross domestic product. The White House and Congress, however, continue to spend wildly on Iraq, Afghanistan, and other programs.

As we previously noted, our debt has now surpassed $13 trillion. Foreign economists are preparing for a disaster in the United States. It is being called ‘the debt super cycle trend’ and some like Dan Fuss, who manages the Loomis Sayles Bond Fund, has sold all of his Treasury bonds because he expects interest rates will rise as our leaders continue to borrow unprecedented amounts to avoid tough decisions.

For the full story, click here.

"

(Via JONATHAN TURLEY.)

Did G20 Economies Just Vote for Another Great Recession, Massive Unemployment?

Did G20 Economies Just Vote for Another Great Recession, Massive Unemployment?: "

Unless I misunderstand these stories, it appears the world’s biggest economies just decided, over US objections, to resurrect Herbert Hoover, rebury Keynes and pursue another Great Recession, tanking their economies and putting millions more out of work. And it’s all driven by a world-wide plague of deficit hysteria syndrome.

You can’t tell what the world’s largest economies just agreed on from the AP (via WashPost) article of the G-20 financial summit in South Korea. The piece has several diplomatic statements from Tim Geithner warning Europe it can’t look to a booming US economy to lift Europe, so they better have plans to grow their own economies by expanding internal demand. Stronger demand in Europe would then support US hopes to use increased exports to help drive US economic growth. That plan now looks dead.

The Financial Times coverage of the same event tells us a majority of G20 nations plus the International Monetary Fund (IMF) are planning to shrink their economies and depress demand, signaling a broad rejection of the claimed US position.

First, the US/Geithner centric version from the AP (via WashPost):

The Group of 20 welcomed measures taken by the European Union, the European Central Bank and the IMF, including a $1 trillion bailout, to help countries cope with the fallout from unsustainably high debt.

‘All of us have a strong interest in seeing those programs succeed in restoring confidence,’ U.S. Treasury Secretary Timothy Geithner told reporters after the meetings ended.

Long-term, sustainable growth will depend on rebalancing growth, he said.

‘The United States is moving aggressively to fix things we got wrong and to strengthen our economic fundamentals,’ Geithner said, noting that as Americans boost savings and investment and consume less, other countries will need to generate more growth.

‘All the countries recognize the basic reality that the U.S. is reforming and adjusting and that for the world to grow at its potential it is going to require that growth outside the U.S. will come more from domestic demand than in the past,’ he said.

Next, what the Europeans are saying, via the Financial Times (subscription required):

The communiqué of the meeting made it clear that the G20 no longer thought that expansionary fiscal policy was sustainable or effective in fostering an economic recovery because investors were no longer confident about some countries’ public finances. ‘The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability,’ the communiqué stated.

‘Those countries with serious fiscal challenges need to accelerate the pace of consolidation,’ it added. ‘We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions’.

These words were in marked contrast to the G20’s previous communiqué from late April, which called for fiscal support to ‘be maintained until the recovery is firmly driven by the private sector and becomes more entrenched’.

So, our trading partners, particularly Europe are giving up trying to increase demand through stimulus and other measures and are focused on reducing deficits, even though that switch is bound to depress economic growth and put millions of people out of work. And the deficit reduction is aimed directly at benefits and safety nets for the less well off — exactly what the deficit hawks are urging for the US through Obama’s deficit reduction commission.

It seems there’s world-wide pandemic of deficit derangement syndrome, being pushed by the usual economic elites at the expense of everyone else. And even if ‘belt-tightening’ is needed in some cases, there’s no talk of asking for shared sacrifice among the wealth.

The folks demonstrating in Europe’s cities know this is class war, being waged by the world’s economic elite, but nobody calls it that; instead, it’s all wrapped in the language of ‘fiscal responsibility’ (from FT):

Many other finance ministers accepted market realities had changed the G20’s policy, Christine Lagarde, French finance minister, said: ‘There’s a large majority for whom redressing the public finances is priority number one. For a minority, it’s supporting growth’.

Even Dominique Strauss Kahn, managing director of the International Monetary Fund who championed fiscal stimulus since January 2008, recognised the world was suddenly different. Asked whether he felt comfortable with the change in tone from the G20, he replied: ‘Totally comfortable. I am not the champion of fiscal stimulus, but the champion of right fiscal policy.’

The Obama Administration is looking at a failed economic policy. The recovery is not robust and likely to take years to deal with 15 million unemployed. Obama was unwilling to ask for more than half the fiscal stimulus his own economists told us we needed last year. Now they’re afraid to ask Congress for what the economy still needs and can do nothing while nihilist Republicans and inexcusably ignorant Blue Dogs tell us we can’t afford to keep states from laying off hundreds of thousands teachers and others as they curtail Medicaid. We can’t even afford to have summer jobs for students.

Meanwhile, Ben Bernanke told us, before he was confirmed, it’s not his problem, even though it is.

Having shackled themselves to half policies, they can’t point to a credible driver for sustained growth. Since it was unwilling to spend enough and unwilling to demand the Federal Reserve accept its mandate to pursue full employment, the Administration told us we’d use expanded trade to grow our way out of the Great Recession, looking to Eurpean expansion. But G20 just killed that.

Tell me it’s not time to give a different economic team a chance.

John Chandley

"

(Via Firedoglake.)

From Shared Sacrifice to Hedonism

From Shared Sacrifice to Hedonism: "By David Sirota

After Japan’s 1941 attack on Pearl Harbor, Franklin Roosevelt delivered a national address making eight references to the ‘sacrifice’ that would be needed in the impending war and three mentions of the ‘self-denial’ we would have to endure.

"

(Via Truthdig: Drilling Beneath the Headlines.)