Archive for January, 2016

China’s debt threatens its economic miracle

January 11, 2016

asian-debt-has-rocketed-since-the-crisis-while-the-us-has-paid-down-its-debts-as-a-percentage-of-gdp

I read a couple of articles the other day about how China’s amazing economic growth may hit a wall because of overhanging debt.

Countries get in trouble when the overall debt—governmental, individual, business and financial—increases at a faster rate that the output of goods and services (GDP).

What this means in the short run is a transfer of wealth from taxpayers and workers to holders of financial assets.  What this means if it goes on long enough is a financial crisis.

As economic Michael Hudson wrote: Debt that can’t be paid, won’t be.

The point of about debt is that no matter how rich you are, you can pile up more debt that you can pay.  And no matter how large and strong a nation’s economy, the economy can pile up more debt than can be paid.

The United States in the 1920s is an example.  The USA had the world’s strongest manufacturing economy.  It had a large domestic market and strong exports.  Yet it took more than 10 years to fully recover from the financial crash of 1929.

China has many more governmental powers to head off a crash than the U.S. government did back then.  The question is how they will be used.  Propping up failed companies and financial institutions does not solve the underlying problem.

The world as a whole is in the same situation, so it is not as if global economic growth will solve China’s debt problem—or America’s.

LINKS

China’s $28 Trillion Problem: the dark side of China’s debt by Mike Bird and Jim Edwards for Business Insider.

How China Accumulated $28 Trillion in Debt in Such a Short Time by Jim Edwards for Business Insider.

The $26 trillion dollar debt problem that is crushing competitiveness in China by Nick Edwards for the South China Morning Post.

Is the Chinese Economy Really in Trouble? by Eamonn Fingleton for The Unz Review.  The case for not selling China short.

Heed the fears of the financial markets by Lawrence Summers for the Financial Times.

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Justice and Bryan Stevenson’s “Just Mercy”

January 9, 2016

Bryan Stevenson’s  JUST MERCY: A Story of Justice and Redemption (2014) tells of a broken criminal justice system with little justice and less mercy for poor people, juveniles, minorities and the mentally ill and the mentally retarded.

He is the founder of the Equal Justice Initiative, based in Montgomery, Alabama, which provides lawyers to indigents and to people who have been denied adequate legal representation.

Stevenson and the other EJI lawyers have freed people who have been convicted of crimes they did not commit.  They also have argued for mercy for abused children, the mentally ill and the mentally retarded who have been tried and punished, sometimes with death sentences or life sentences, as if there were no mitigating circumstances.

We are all broken people in one way or another, Stevenson wrote.  None of us deserves to be judged on the basis of the worst thing we have ever done.  All of us, not just poor and abused people, are in need of mercy and mitigation.

Just Mercy weaves together three themes.  One is the story of Walter McMillan, a black man sentenced to die for a crime he obviously could not have committed, and Stevenson’s six-year struggle to prevent his execution and prove his innocence.

Another is the story of the EJI and the other individuals, both black and white, whom Stevenson has defended, not always successfully.

The third theme consists of facts and figures on the flaws in the U.S. criminal justice system—racial disparities, lack of adequate legal representation of poor people, sentencing of juveniles as adult offenders, harsh treatment of the mentally ill and mentally retarded, punishment of poor mothers who suffer miscarriages and are treated as murderesses.

Stevenson successfully argued before the Supreme Court that it is “cruel and unusual punishment” under the Eighth Amendment to the Constitution for a juvenile to be sentenced to death or to life imprisonment without parole.  Yet, he said, the intent of this decision is often thwarted by judges sentencing juvenile as adults to a term of imprisonment equal to their life expectancy.

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Why North Korea clings to nuclear weapons

January 9, 2016

Question 1– How many governments has the United States overthrown or tried to overthrow since the Second World War?

Answer: 57 (See William Blum.)

Question 2– How many of those governments had nuclear weapons?

Answer— 0

Source: Mike Whitney for Counterpunch

Of course there are other reasons for not attacking North Korea, such as not wanting to take responsibility for taking care of more than 24 million desperate hungry people.

I think that the only alternative is to negotiate with the North Korean government, totalitarian though it might be, and to provide assurances that the United States will end sanctions and guarantee not to attack if North Korea gives up nuclear weapons.

Mike Whitney and Peter Lee both wrote recently that, in fact, the purpose of North Korea’s recent nuclear test is to force the U.S. government to the negotiating table.  Without an agreement, the North Korean nuclear weapons program will continue.

As Donald Rumsfeld is supposed to have said, if a problem cannot be solved, it might not be a problem, but a fact.

LINKS

Does North Korea need nukes to deter U.S. aggression? by Mike Whitney for Counterpunch.

North Korea’s “H Bomb”: No Ado About Something by Peter Lee for China Matters.

Trump, the Clintons are fellow rich celebrities

January 8, 2016
The Clintons at Donald Trump's wedding (2005)

The Clintons at Donald Trump’s wedding reception (2005)

Hillary Clinton and Donald Trump may be political rivals, but they have a long history as social friends.  They’re part of the same circle of rich New York celebrities.

Whatever Trump says now, he used to speak well of both Hillary Clinton and her husband.  As Nick Gass of POLITICO reported:

After declining to enter the presidential race in 2012, Trump told Fox News’ Greta Van Susteren that Clinton had done a great job as secretary of state.

“Hillary Clinton I think is a terrific woman,” he said. “I am biased because I have known her for years. I live in New York. She lives in New York. I really like her and her husband both a lot.  I think she really works hard.  And I think, again, she’s given an agenda, it is not all of her, but I think she really works hard and I think she does a good job.  I like her.”

Asked whether he would support her in the case of a presidential run, Trump said that he did not “want to get into this because I will get myself into trouble.”

“I just like her,” Trump remarked, adding the same of the former president. “I like her husband.  Her husband made a speech on Monday and was very well received.  He is — he is a really good guy, and she’s a really good person and woman.”

Trump sounded a similar note in an October 2013 interview with Larry King, who asked Trump if he thought the former secretary of state would run for the White House a second time, pointing out that she is a “fellow New Yorker.”

“Yeah, and I know her very well. They’re members of my club, and I like both of them very much, and he was with you one time and he said he likes me,” Trump said, adding, “and I do like him.”

Source: POLITICO

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Obama and the CIA: a conspiracy hypothesis

January 8, 2016

For years my friend Daniel Brandt has been telling me about circumstantial evidence that the young Barack Obama and his mother, Ann Dunham, had connections to the Central Intelligence Agency.

I never tried to delve into the truth of this.  I believe that the undisputed known facts are so appalling, and so ignored, that there is no point in using my limited time, energy and brainpower in speculating on what lies beyond my knowledge.

However, a blogger named Joseph Cannon did that work for me.  What he found is, shall I say, very interesting, although, as he himself wrote, not absolutely conclusive.  Here are links to Cannon’s posts on this topic.

The money: A spooky story.   (2008)

Spies, lies, Barry and his mom.  (2008)

Tim Geithner’s dad, Barack Obama’s mom and the CIA (2009)

Obama, the passport scandal and a murder (2009)

“The name’s Obama – BARACK Obama” (2009)

Obama’s parents and the CIA (2012)

Shadow government (2016)

As Cannon notes, all his evidence is circumstantial.  It is not proof.  But if true, it explains a lot—especially why President Obama gave impunity to torturers and other war criminals, and waged an unprecedented war on whistle-blowers.  There would be just too much that the CIA had on file that Obama couldn’t afford to have known.

My own attitude toward Obama is not based on speculation as to what he and his mother did in the 1970s and 1980s.  It is based on his record as President.

Obama is what he is—someone who has continued the Bush policy of invading foreign countries that do not threaten us, someone who claims the right to order the death of anyone he says is a threat or a potential threat to the nation, someone who has recommitted the country to endless war.

The recklessness of declining powers.

January 8, 2016

Trita Parsi, president of the National Iranian American Council, wrote the following for Al Jazeera America.

The escalating tension between Saudi Arabia and Iran is the story of a declining state desperately seeking to reverse the balance of power shifting in favor of its rising rival.

160104_saudi_iran-map_0History teaches us that it is not rising states that tend to be reckless, but declining powers.  Rising states have time on their side.  They can afford to be patient: They know that they will be stronger tomorrow and, as a result, will be better off postponing any potential confrontation with rivals.

Declining states suffer from the opposite condition: Growing weaker over time, they know that time is not on their side; their power and influence is slipping out of their hands. 

So they have a double interest in an early crisis: First, their prospects of success in any confrontation will diminish the longer they wait, and second, because of the illusion that a crisis may be their last chance to change the trajectory of their regional influence and their prospects vis-à-vis rivals.

When their rivals — who have the opposite relationship with time — seek to deescalate and avoid any confrontation, declining states feel they are left with no choice but to instigate a crisis.

Saudi Arabia is exhibiting the psychology of a state that risks losing its dominant position and whose losing hand is growing weaker and weaker. … …

Source: Al Jazeera America

The observations I quoted would be just as true if Parsi had substituted “the USA” for Saudi Arabia and “China” for Iran.  Since the Vietnam era, American political leaders have entered into conflicts just to prove that we Americans were strong and willing to fight, while the Chinese leaders have quietly made their country stronger.

I don’t know what the future holds for Iran or China, but I have no doubt that we Americans need to change direction or we will lose what power we have.

Saudi leaders heat up Sunni-Shiite conflict.

January 7, 2016

Saudi Arabia is heating up the Sunni-Shiite conflict in the Middle East.  I think the U.S. government should think long and hard about letting the Saudis draw Americans further into it.

The Saudi Arabian government recently executed 47 opponents of the regime, including radical Sunni jihadists and the Shiite cleric Nimr al-Nimr.

I think this means that the Saudi government feels threatened by the radical Sunni jihadist movements, and wants to redirect their rage outward by stepping up the conflict with Iran and with Shiites generally.

Either Sunni jihadists are killed fighting in Syria and other places, or Saudi Arabia’s enemies—Iran and its ally Syria—are weakened.

Green indicates Shia predominance

Dark green indicates Shia predominance

The Sunni-Shiite conflict in the Middle East involved families who’ve lived side-by-side in peace for decades.  Why are they at each others’ throats now?

I thinks that it is because the Sunnis and Shiites are used as proxies in a struggle for political power among Saudi Arabia, the Gulf emirates, Iran, Turkey and Israel.

And this is overlaid by an economic struggle for control of oil and gas resources and pipeline routes.   It so happens that Shiites, although a minority in the Muslim world as a whole, are a majority in the oil and gas regions.

And all this has been made worse by the murderous and ineffective intervention of my own country, the United States.

But the tragic conflict also is kept going by the need of the Saudi royal family to appease Wahhabi jihadist clerics.

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Why I trust the ayatollahs on nuclear weapons

January 7, 2016
Ayatollah Khameini

Ayatollah Khameini

The Ayatollah Seyyid Hosseini Khameini, the Supreme Leader of Iran, said that Iran will not develop nuclear weapons because this is contrary to Islamic teachings.

I believe him.  The reason that I believe him is that Saddam Hussein’s Iraq used chemical weapons, including mustard gas and nerve gas, in his 1980-1988 war against Iran, and Iran never developed or used poison gas of its own.

The then Ayatollah Ruhbollah Khomeini ruled that use of chemical weapons, and also nuclear weapons were contrary to Islamic law.  Instead Iran defended itself against the invaders by sacrificing its young men in human wave attacks.

When I consider the history of how the United States developed and used atomic weapons, and our “balance of terror” strategy during the cold war, I cannot imagine my government behaving with such restraint under such circumstances.  In fact, if I were an Iranian leader today, threatened with attack by war hawks in the USA and Israel, I would want nuclear weapons as a deterrent.

I think Iran’s ayatollahs have earned the right to be believed on this issue.

The four main factions in U.S. politics

January 6, 2016

Going into the 2016 elections, I think the differences between the populist and establishment factions of the two largest U.S. political parties are as big as the differences between the two parties.  Here’s how I see the divisions:

REPUBLICANS

Right-Wing Populists.  These consist largely of socially conservative white working people who think (with some justification) that government has turned their back on their moral values and abandoned them in favor of minority groups.  They’re against government bailouts and subsidies of big corporations, but their animosity is against the government, not the corporations.  They want to preserve Social Security, Medicare and other traditional New Deal programs, but they’re against governmental programs primarily aimed at helping minorities and the undeserving poor.  They are against the Trans Pacific Partnership and other trade agreements that limit American sovereignty.  Donald Trump and Ted Cruz purport to speak for this faction.

Right-Wing Establishmentarians.  These consist of rich and powerful people, and their dupes, who embrace what Les Leopold calls the better business climate model of economic policy.  They want lower taxes on upper bracket payers, fewer governmental programs for the poor and less government regulation.  Ultimately they’d like to cut back on Social Security, Medicare and other New Deal programs.  They favor the Trans Pacific Partnership and other pro-corporate trade agreements.  Jeb Bush speaks for this faction.

DEMOCRATS

Left-Wing Establishmentarians.  These consist of rich and power people, and their dupes, who are a kinder, gentler version of the right-wing establishmentarians.  They want to govern basically in their own interest, but less harshly.   They are open to affirmative action, gay marriage, abortion rights and any other rights (except gun rights) that do not threaten the existing structure of economic and political power.  Hillary Clinton speaks for this faction.

Left-Wing Populists.  These consist of blue-collar workers, and their advocates.  Like the right-wing populists, they feel their government has abandoned them, but their animosity is directed against large corporations and Wall Street banks, whom they think (with some reason) have captured the government.  While they favor equal rights and opportunities for women, gays and racial minorities, they think the main issues are economic.  Bernie Sanders speaks for this faction.

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Something I never knew about Cuba

January 5, 2016

Cuba has 2 percent of Latin America’s population but 11 percent of its scientists

Source: New Republic

Les Leopold on runaway inequality

January 2, 2016

I grew up and spent my early working years in the golden age of capitalism, which was from 1945 to 1976.  Almost anybody—as least, any white American man—who was willing to work could get a decent job sufficient to support a family.

Then a lot of things turned bad as once.  Worker pay no longer kept pace with productivity, but the pay of CEOs and wealthy investors grew much faster.   Manufacturing declined and high finance expanded.  Hourly wages declined and debt increased.  What went wrong?

LesLeopoldRunawayInequality51uuYumpldL._SX319_BO1,204,203,200_I recently finished reading a book, RUNAWAY INEQUALITY by Les Leopold (recommended by my e-mail pen pal Bill Harvey) that explains what happened as well as anything I’ve come across.

He blames America’s current woes on the adoption of what he calls the Better Business Climate model of economic policy.

This model is based on the argument that the key to economic prosperity is economic growth, that economic growth depends on investment, and that investment depends on business profitability, and that the way to increase business profitability is lower taxes, lower social spending and fewer regulations.

0.9265We used to call this Reaganomics.  Now we call it neoliberalism.   Many people thought it was a plausible response to the economic stagnation and high inflation of the late 1970s.  I myself thought it was worth a try (more fool I).  I wouldn’t have objected to making rich people richer if everybody else had benefitted in the long run.

But this isn’t how things worked out.  Instead:

  • Wage increases stopped keeping pace with productivity.
  • The CEO-worker wage gap took off.
  • The financial sector grew at the expense of manufacturing.
  • Wall Street profits skyrocketed.
  • The income gap between the super-rich and the rest of us widened.
  • Corporate debt, consumer debt and government debt rose.

What went wrong?

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