surplus to political requirements
2 years ago
Analysis of Geopolitics, Human Rights, Globalization and the Politics of International Development
When Ford replaced Nixon, Greenspan became the chair of the Council of Economic Advisors. And when Reagan took power, Greenspan was no longer the voice crying in the wilderness, he was the very center of the establishment. Objectivism and Conservatism had united in Market Fundamentalism, and that force was on a jihad against regulation of any kind.
For the next thirty years, Greenspan would cheer the deregulation of the S&Ls and join John McCain in trying to protect Charles Keating from regulators. He would praise the deregulation of energy trading, and assure everyone that companies like Enron were pointing the way to greater efficiency and lower consumer prices -- and collect the 2000 "Enron Prize" in exchange. He would urge not only the creation of credit default swaps, but applaud their lack of regulation and invisibility in the system. He would argue against oversight, against limits on CEO pay, and for the increasingly complex systems by which banks generated new instruments of credit.
No one person did more to spread Rand's message of unregulated markets, unconstrained free trade, and unlimited power for corporate officers than Alan Greenspan.
First, a no-brainer: the U.S. budget will need to be cut to pay for the "rescue." Unless we can mobilize a strong counterweight, the cuts will mainly come from domestic programs — education, health, alternative energy, infrastructure improvements. There may be cosmetic cuts to some military programs.
Military spending will continue to be essentially unproductive but its share of government spending may grow. The military spending that focuses on healthcare and education for veterans is "productive," but that may suffer in this climate. We must push for meaningful military budget cuts. For instance, we might argue for a commission on closing U.S. overseas military bases. We should argue for cutting military programs like missile defense, which are both destabilizing and wasteful.
Americans will remain afraid — and rightly so. Homeland security is, in a word, a mess. Current U.S. foreign policy results in too many accidental killings of Afghan, Pakistani, and Iraqi civilians, and creates more resentment abroad. Economic anxiety will feed into feelings of insecurity.
There will be pressure to approve any program that is said to create jobs, including programs to sell military equipment and nuclear technology overseas. We've seen it already. The long-term counterproductive aspects of these programs will be deemphasized. We need to resist the jobs-at-any-cost mantra and emphasize not only how military spending is less productive than other modes of spending, but also how military and technology export programs have a tendency to "blow back."
As after 9/11, American leaders will likely become even more cautious about domestic and foreign policy. Our "leaders" will hunker down, think small, and point fingers. Unless we can mobilize a dramatic rethinking of U.S. foreign policy, it will likely remain much the same no matter who is in the White House. Now is the time to push for creative solutions and stress the need for big thinking. We need to stress how the conventional wisdom has been wrong, not only on U.S. foreign policy but also on the environment, health care, education, and energy. The progressive community needs to continue to be farsighted, proactive, and bold.
For her part, Sarah Palin, who has lately taken to calling Obama "Barack the Wealth Spreader," seems to be something of a suspect character herself. She is, at the very least, a fellow-traveller of what might be called socialism with an Alaskan face. The state that she governs has no income or sales tax. Instead, it imposes huge levies on the oil companies that lease its oil fields. The proceeds finance the government's activities and enable it to issue a four-figure annual check to every man, woman, and child in the state. One of the reasons Palin has been a popular governor is that she added an extra twelve hundred dollars to this year's check, bringing the per-person total to $3,269.
A few weeks before she was nominated for Vice-President, she told a visiting journalist—Philip Gourevitch, of this magazine—that "we're set up, unlike other states in the union, where it's collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs." Perhaps there is some meaningful distinction between spreading the wealth and sharing it ("collectively," no less), but finding it would require the analytic skills of Karl the Marxist.
McCain identifies closely with the unilateralist instincts and Manichean worldview of the coalition of Israel-centred neo-conservatives and aggressive nationalists who dominated the first term of President George W. Bush's administration and place a premium on military power, as opposed to diplomacy or other forms of "soft power".
Indeed, McCain is surrounded by advisers, such as his main foreign policy spokesman, Randy Scheunemann, from both traditions. But he reportedly also consults closely with their nemeses, the foreign policy "realists", most notably former secretaries of state Henry Kissinger, Lawrence Eagleburger, James Baker, and Richard Armitage, who served as deputy secretary of state under Colin Powell. While not shy about using military power or acting unilaterally as a last resort, they place greater emphasis on diplomacy and working with other countries to further U.S. national interests.
Obama, on the other hand, is generally seen as grounded in the "liberal internationalist" school, whose founding is credited to President Woodrow Wilson and which became the basis for the U.S.- and western-led multilateral order -- presided over by the United Nations, the two Bretton Woods institutions, and an embryonic World Trade Organisation -- elaborated in large part by President Franklin Roosevelt in the waning days of World War II.
[A] number of influential realists, most recently Bush's first-term secretary of state, Gen. Colin Powell, have come out in strong support of Obama and are also found among his top advisers.
Indeed, the candidate has himself extolled as a model the foreign policy record of former President George H.W. Bush's administration -- widely considered the most realist of the past generation -- and publicly stressed his admiration for the ranking member on Biden's committee, Republican realist Sen. Richard Lugar who, along with another Republican, Sen. Chuck Hagel, has been mentioned as a possible secretary of state under Obama.
The inclusion of prominent realists -- who, more than any other school, constitute what could be called the foreign policy "Establishment" -- as advisers in both campaigns may be designed primarily to reassure independent and centrist voters that their respective candidates will avoid radical departures of the kind that resulted in the 2003 invasion of Iraq, when the influence of the neo-conservatives and aggressive nationalists reached their zenith.
But whoever wins the Nov. 4 election is likely to come to office in January with a foreign policy team that spans a fairly broad spectrum of advisers susceptible to fundamental disagreements regarding the definition of U.S. national interests, the appropriate use of military force, and the degree to which Washington should rely on multilateral institutions, as opposed to taking unilateral action, if those interests are threatened.
What's happening in this country, and in this election, is rather simple and easy to see: (1) the country is in total shambles -- possibly far worse than what people even realize; (2) we have lived for the last eight years under virtually absolute GOP rule; (3) the public knows this; (4) the Republican President and his party are therefore intensely -- historically -- unpopular; and (5) the voting public doesn't want to continue living under the rule of the same faction and same political party that has driven the country into the ground.
That the Right believes in the fundamental stupidity of the American voter while simultaneously pretending to revere and speak for them them is reflected in their belief that they can successfully blame the financial crisis and the country's woes generally on Democrats, who -- while hardly covering themselves with glory -- haven't had any meaningful power in this country for as long as one can remember. Ponder how stupid you must think Americans are to believe that you can blame the financial crisis on the 2004 statements of House Democrats about Fannie Mae and Freddie Mac when that was a time when the GOP controlled all branches of the Government and nothing could have been more inconsequential than what Barney Frank or Maxine Waters, languishing in the minority in Tom DeLay's tyrannical House, said or did about anything.
A lot depends on how countries are managing their economies while stockpiling dollars.The big winners appear to be in Asia, where corporations have kept debt in check and banks have largely shunned the risky mortgage-backed paper from the U.S. Despite ill-timed investments in the likes of Morgan Stanley (MS) and Merrill Lynch (MER), government investment funds such as China Investment Corp. and Singapore's Temasek can still buy stakes in U.S. companies at bargain rates once the smoke clears.
Beijing's problem recently has been too much foreign cash, which has led to stock speculation and overinvestment. But if a U.S. slowdown hits China's exporters, the nearly $2 trillion in foreign assets Beijing controls leaves plenty of leeway to expand credit. Council on Foreign Relations geoeconomist Brad W. Setser estimates foreign assets in Chinese institutions swelled by $700 billion just this year. "This gives them enormous freedom to stimulate the economy," Setser says.
It is amazing to watch the U.S. imperialist establishment, including the media, wax indignant about "Russian aggression," Russian "brutality," and a renewal of Russian "expansionism." This establishment can never admit its own regular, serial, and massive aggressions—the word was never used by mainstream reporters or editors to describe the attack on Vietnam, 1954-75, or Iraq in 2003 and onward. And the Iraq war has never been ascribed to a planned expansionism, although this "projection of power" in the Middle East and beyond was actually announced in advance in the Project for a New American Century's Rebuilding America's Defenses (2000) and the National Security Policy program of 2002. We may kill millions in Indochina and Iraq—including in the latter the 500,000 children's deaths from the "sanctions of mass destruction" that were "worth it" (to Madeleine Albright)—but this is not "brutal," a word used freely in the case of the hundreds killed in the Russian aggression. What this shows is that the U.S. establishment can swallow anything, no matter how outlandish, to rationalize that projection of power now built-in to the U.S. political economy. While McCain relishes it, Obama also bows down to it as he seeks electoral victory here.
We and our "defense department" are protecting U.S. "national security," according to the cliché-myth. That the electoral intervention, political capture, arming, and proposed absorption of Georgia into NATO posed a security threat to Russia was barely recognized in the West. If the Russians (or Chinese) had entered into a military alliance with Mexico, supplied it with arms and military advisors, used a Russian or Chinese version of the "National Endowment for Democracy" and other agents to bring about political change in Mexico (recall that Mexico has had a series of elections won by fraud), and perhaps put some ABMs in place to protect Mexico against a possible threat from Colombia, can you imagine the frenzy of U.S. politicos and the "free press?"
For the imperialist establishment only this country and its clients have "national security" threats. Certainly the Russians don't, even as we encircle them and arrange for ABMs on their very borders.
When it is occasionally recognized that the NATO expansion and U.S.-client status and arming of Georgia does worry Russia, this wasn't accompanied by suggestions that maybe we should lay off, withdraw, and stop trying to bully Russia (or China) into subservience. No, it was used to explain that this gave Russia an excuse to resume its expansionist ways, that is, it "gave Putin an easy excuse to exercise his iron fist" (Friedman, "What Did We Expect?", August 20).
Only Russia has bad motives. Georgia's President Saakashvili merely made a "mistake" or foolishly "baited" the Russians or the United States was careless or not very observant in failing to constrain him—but neither of them was guilty of aggression, brutality, blackmail, or expansionism.
A new international financial architecture, based on different rules, is a reform that has long been demanded by different sectors and is now "inevitable" in the face of the "universal and systemic crisis" originating in the United States, says Brazilian Finance Minister Guido Mantega.
The need for "regulation, controls and supervision" to limit excessive indebtedness on the part of financial institutions has been highlighted by the crisis, which is systemic because it has "obstructed credit" around the world and created difficulties for all financial institutions, the minister said Thursday at a press conference with foreign reporters in Rio de Janeiro.
Unless there are new rules, "confidence, which is vital in the financial system, will not be restored," he said, announcing that he would raise the issue at an International Monetary Fund (IMF) meeting to be held in Washington in early October.
The crisis may be creating a new world scenario, in which "the role of advanced countries, that are in fact prostrated" by economic and demographic stagnation, will give way to greater leadership by "emerging countries, that represent the future" because of their population, wealth and economic growth, he said.
It is no longer possible to keep countries that today are "the engines of global growth" out in the cold, with scant representation or none at all on international bodies, he added, mentioning BRIC (Brazil, Russia, India and China), which is excluded from the Group of Seven most powerful countries (G7), in which Russia has only "partial" participation.
The present crisis arose from a combination of financial troubles in the United States and soaring commodity prices, which reached their height in June and July, according to Mantega, an economist belonging to the governing leftwing Workers' Party (PT), who is close to President Luiz Inácio Lula da Silva.
Commodity prices have declined or increased more slowly since August, because of the end of a wave of speculation, but 2009 will still be a difficult year for countries around the world, the minister predicted.
The worst effects will be felt in "fragile countries, that is, the advanced countries" that were directly involved in U.S. bank and investment fund collapses or losses, have a "shrinking" domestic market, and in some cases have serious fiscal deficits and negative trade balances, like the United States, he said.
The "strong countries" at this juncture are the "emerging" economies, which have expanding domestic markets that can offset falls in exports, and a stronger fiscal situation with plenty of foreign exchange reserves, and are not hampered by the "rotten assets" that rich countries now have to absorb, the minister said.
The BRIC countries, with their dynamic economies, will suffer a more moderate impact from the crisis, with a mild slowdown in economic growth. In Brazil, Mantega predicted gross domestic product (GDP) growth of "over four percent" in 2009, and of between five and 5.5 percent in 2008.
Economist Fernando Cardim de Carvalho, of the Federal University of Rio de Janeiro, told IPS that seeking to reform the international financial system at a meeting similar to the 1944 United Nations Monetary and Financial Conference at Bretton Woods is not a viable prospect right now.
"There is no consensus," at the moment, and neither is there a dominant world power to "enforce it," as the United States did at the end of World War II, he said.
Cardim, who regards it as an "exaggeration" to speak of a systemic crisis today, said that only "a monumental disaster," more serious than the present one, could produce a global agreement for a new financial world order. Previous attempts, like that of the Basel Committee on Banking Supervision (BCBS), met with failure, he said.
The crisis will continue, however, because the U.S. model of financial organisation, based on independent institutions, "is moribund," and the European alternative of a universal bank has not proved efficient, Cardim said. Uncertainty will reign for a long time to come.
"What is happening in the markets in the US is affecting the credit markets worldwide," . . . "We are in a crisis of confidence. There is just no confidence in financial institutions in the market."
"One of the things that must come out of this crisis that did not come out of previous crises is some form of international accounting standards," . . . "We really need a set of internationally accepted regulatory norms. We are too tied together in a globalized world."
The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street’s largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down.
The S.E.C.’s oversight responsibilities will largely shift to the Federal Reserve, though the commission will continue to oversee the brokerage units of investment banks.
Also Friday, the S.E.C.’s inspector general released a report strongly criticizing the agency’s performance in monitoring Bear Stearns before it collapsed in March. Christopher Cox, the commission chairman, said he agreed that the oversight program was “fundamentally flawed from the beginning.”
“The last six months have made it abundantly clear that voluntary regulation does not work,” he said in a statement. The program “was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily. The fact that investment bank holding companies could withdraw from this voluntary supervision at their discretion diminished the perceived mandate” of the program, and “weakened its effectiveness,” he added.
Mr. Cox and other regulators, including Ben S. Bernanke, the Federal Reserve chairman, and Henry M. Paulson Jr., the Treasury secretary, have acknowledged general regulatory failures over the last year. Mr. Cox’s statement on Friday, however, went beyond that by blaming a specific program for the financial crisis — and then ending it.