Your correspondent is currently reading Alexander Wendt's A Social Theory of International Politics: I hope to finish it by the end of this week. Nevertheless, I also read an article Wendt wrote which preceded and inspired his book; the article is: Anarchy is what States make of it: the social construction of power politics.
While I am nearly done with his book, I will refrain from applying constructivism until I have finished it.
Yet his article makes an interesting point. Of late, I have discussed moving Sino-US relations towards a grand strategy constructed around a win-win relationship. Alexander Wendt has some theoretical advice:
Of changing a system from a Hobbesian one to a more Lockean one, he writes: "The vehicle for inducing such change is one's own practice and, in particular, the practice of "altercasting"--a technique of interactor control in which ego uses tactics of self-presentation and stage management in an attempt to frame alter's
definitions of social situations in ways that create the role which ego desires alter to play.95
In effect, in altercasting ego tries to induce alter to take on a new identity (and thereby enlist alter in ego's effort to change itself) by treating alter as if it already had that identity."
Since (I, unfortunately, must nonetheless explain Wendt a little) Wendt points not to anarchy as having a constitutive effect on poor relationships between states but on how one state perceives or believes another state to be, the way to alter a system from one of absolute distrust (Hobbesian) towards one of cooperation (Lockean) is to change the other state's perception of oneself. The second quote illustrates how in Sino-US relations: China must act as if America already sees it as an ally (while reacting using the generous tit-for-tat strategy when America does not respond in kind) and make unilateral overtures appropriately.
President Hu Jintao did just that at the UN this week. This is from Reuters:
--
"We will endeavor to cut carbon dioxide emissions per unit of GDP by a notable margin by 2020 from the 2005 level," Hu said.
The pledge, which marked the first time China has said it will accept measurable curbs on its emissions, was seen as an attempt to counter critics, especially in Washington, who say Beijing is doing too little.
--
It is a good start on Beijing's part; more can yet be done. On the Taiwan issue, I believe that Beijing's and Taipei's largest museums should have a cross-museum program set up. It would celebrate their shared culture as well as put pressure on the British Museum to return some of our treasures. Taipei would display many of its best treasures in Beijing for half a year and Beijing would do the same in Taipei; that isn't quite cross-Atlantic, but it's good PR and it is a move that would demonstrate China's peaceful intentions. From another angle, by initiating this, Beijing would symbolically show itself as the center of the Chinese civilization, exploiting the kin-country syndrome that Huntington describes. China would shore up its position within its civilization as well as make a gesture of good faith. As far as using Wendt's theory is concerned, this sharing of cultures would help China form a collective identity with Taiwan, moving the system the two interact in towards a more Lockean direction.
These are simple gestures but effective ones; with some PR work and hot air, China can start acting very harmoniously. And besides, what better way to celebrate the 60th Anniversary of the party than to show some treasures of Chinese culture unseen for nearly a century?
While I am nearly done with his book, I will refrain from applying constructivism until I have finished it.
Yet his article makes an interesting point. Of late, I have discussed moving Sino-US relations towards a grand strategy constructed around a win-win relationship. Alexander Wendt has some theoretical advice:
Of changing a system from a Hobbesian one to a more Lockean one, he writes: "The vehicle for inducing such change is one's own practice and, in particular, the practice of "altercasting"--a technique of interactor control in which ego uses tactics of self-presentation and stage management in an attempt to frame alter's
definitions of social situations in ways that create the role which ego desires alter to play.95
In effect, in altercasting ego tries to induce alter to take on a new identity (and thereby enlist alter in ego's effort to change itself) by treating alter as if it already had that identity."
Since (I, unfortunately, must nonetheless explain Wendt a little) Wendt points not to anarchy as having a constitutive effect on poor relationships between states but on how one state perceives or believes another state to be, the way to alter a system from one of absolute distrust (Hobbesian) towards one of cooperation (Lockean) is to change the other state's perception of oneself. The second quote illustrates how in Sino-US relations: China must act as if America already sees it as an ally (while reacting using the generous tit-for-tat strategy when America does not respond in kind) and make unilateral overtures appropriately.
President Hu Jintao did just that at the UN this week. This is from Reuters:
--
"We will endeavor to cut carbon dioxide emissions per unit of GDP by a notable margin by 2020 from the 2005 level," Hu said.
The pledge, which marked the first time China has said it will accept measurable curbs on its emissions, was seen as an attempt to counter critics, especially in Washington, who say Beijing is doing too little.
--
It is a good start on Beijing's part; more can yet be done. On the Taiwan issue, I believe that Beijing's and Taipei's largest museums should have a cross-museum program set up. It would celebrate their shared culture as well as put pressure on the British Museum to return some of our treasures. Taipei would display many of its best treasures in Beijing for half a year and Beijing would do the same in Taipei; that isn't quite cross-Atlantic, but it's good PR and it is a move that would demonstrate China's peaceful intentions. From another angle, by initiating this, Beijing would symbolically show itself as the center of the Chinese civilization, exploiting the kin-country syndrome that Huntington describes. China would shore up its position within its civilization as well as make a gesture of good faith. As far as using Wendt's theory is concerned, this sharing of cultures would help China form a collective identity with Taiwan, moving the system the two interact in towards a more Lockean direction.
These are simple gestures but effective ones; with some PR work and hot air, China can start acting very harmoniously. And besides, what better way to celebrate the 60th Anniversary of the party than to show some treasures of Chinese culture unseen for nearly a century?
http://www.reuters.com/article/news
President Obama's National Security Advisor Jim Jones declared that Mr Obama's foreign policy has aided and enhanced America's counter-terrorism capabilities.
"We have better human intelligence. We know where the terrorists are moving...Because of the dialogue and the tone of the dialogue between us and our friends and allies...the trend line against terrorism is positive."
Of interest to this blogger is Mr Jones' inclusivity: Mr Jones opts to include not only America's allies, but her 'friends'. Mr Jones' distinction between friends and allies implies that America has abandoned the 'with us or against us' tone of the previous Administration under Mr Bush; nations that are not America's allies can still be her friends in the effort to curb terrorism. Such a vision would include countries like China and Russia -- though not traditional American allies -- in counter-terrorist efforts.
That is wise. This blogger has long argued that the self-interests of separate nations around the world intersect very much on the issue of terrorism. So far, terrorists have confined themselves to weapons that cause local damage; in the age of what Mr Milligan-Whyte, founder of the Center of China-America Partnership and pioneer of the 'New School' of Sino-Chinese relations, terms Species Lethal Weapons, terrorist attacks can no longer be considered domestic, national threats. Mr Milligan-Whyte points out that "the danger is that after an attack or accident using Species Lethal Weapons or Science, there may be little or no need for a solution to terrorism, because the attack or accident may be species lethal."
Referring to 9/11, he writes, "If the attackers' desire had been to cause more catastrophic permanent damage to America...other more destructive targets could ahve been selected, such as nuclear power plants, biological research centers and disease control centers."
Mr Obama's Secretary of State, Hillary Clinton, has reportedly read Mr Milligan-Whyte's book, "China & America's Emerging Partnership: A Realistic New Perspective". Jones' description of Mr Obama reaching out to world leaders out of national friendship reflects Mr Milligan-Whyte's policy advice: "Greater American tolerance and respect for other nations' interests, ideals and different ways of life are fundamental requirements. Diversity in the international system...is innate in mankind."
Mr Obama's refreshing approach to international relations has given America new tools to fight terrorism even as Mr Obama retracts old ones leftover from the Bush Administration ('aggressive interrogation'). In effect, Mr Obama has been able to ease tension between America and partners she must work with (but perhaps not love) and regain her moral authority by curbing torture while simultaneously enhancing America's effectiveness at counter-terrorism.
Mr Obama's recognition and acceptance of diversity, as well as what Mr Jones' describes as a "radically different" foreign policy strategy, likely reflects Ms Clinton's reading of Mr Milligan-Whyte who advocates exactly this sort of win-win strategies.
That is promising.
President Obama's National Security Advisor Jim Jones declared that Mr Obama's foreign policy has aided and enhanced America's counter-terrorism capabilities.
"We have better human intelligence. We know where the terrorists are moving...Because of the dialogue and the tone of the dialogue between us and our friends and allies...the trend line against terrorism is positive."
Of interest to this blogger is Mr Jones' inclusivity: Mr Jones opts to include not only America's allies, but her 'friends'. Mr Jones' distinction between friends and allies implies that America has abandoned the 'with us or against us' tone of the previous Administration under Mr Bush; nations that are not America's allies can still be her friends in the effort to curb terrorism. Such a vision would include countries like China and Russia -- though not traditional American allies -- in counter-terrorist efforts.
That is wise. This blogger has long argued that the self-interests of separate nations around the world intersect very much on the issue of terrorism. So far, terrorists have confined themselves to weapons that cause local damage; in the age of what Mr Milligan-Whyte, founder of the Center of China-America Partnership and pioneer of the 'New School' of Sino-Chinese relations, terms Species Lethal Weapons, terrorist attacks can no longer be considered domestic, national threats. Mr Milligan-Whyte points out that "the danger is that after an attack or accident using Species Lethal Weapons or Science, there may be little or no need for a solution to terrorism, because the attack or accident may be species lethal."
Referring to 9/11, he writes, "If the attackers' desire had been to cause more catastrophic permanent damage to America...other more destructive targets could ahve been selected, such as nuclear power plants, biological research centers and disease control centers."
Mr Obama's Secretary of State, Hillary Clinton, has reportedly read Mr Milligan-Whyte's book, "China & America's Emerging Partnership: A Realistic New Perspective". Jones' description of Mr Obama reaching out to world leaders out of national friendship reflects Mr Milligan-Whyte's policy advice: "Greater American tolerance and respect for other nations' interests, ideals and different ways of life are fundamental requirements. Diversity in the international system...is innate in mankind."
Mr Obama's refreshing approach to international relations has given America new tools to fight terrorism even as Mr Obama retracts old ones leftover from the Bush Administration ('aggressive interrogation'). In effect, Mr Obama has been able to ease tension between America and partners she must work with (but perhaps not love) and regain her moral authority by curbing torture while simultaneously enhancing America's effectiveness at counter-terrorism.
Mr Obama's recognition and acceptance of diversity, as well as what Mr Jones' describes as a "radically different" foreign policy strategy, likely reflects Ms Clinton's reading of Mr Milligan-Whyte who advocates exactly this sort of win-win strategies.
That is promising.
http://www.washingtonpost.com/wp-dyn/co
Not so long ago, the United States made the pursuit and maintenance of moral authority one of the tenants of its foreign policy. The incident that comes first to this blogger's mind is one that Henry Kissinger has roundly criticized in his 1994 book DIPLOMACY: America's intervention on the side of Egypt during the Suez Crisis of 1956 against its English and French NATO allies.
Mr Kissinger's analysis (which I do not have on hand and, regrettable, cannot therefore quote) is a good starting point. He writes that Egypt sought to make overtures to both NATO and the Soviet Union, playing the two blocs against each other to better place Egypt in the new world order; when Egypt warmed to the Soviets, America and England withdrew their financial commitments to Egypt (the building of the Aswan Dam). To finance the construction of the Dam, Egypt nationalized the Suez Canal, an old Anglo-French joint colonial venture. As the old colonial powers and the new state of Israel geared up for war, America forced its NATO and Israeli allies to withdraw. America, then under President Eisenhower, realized that it could not condemn the Soviets' brutal suppression of Hungary while simultaneously supporting colonial imperialist gestures in Egypt. To retain its moral authority to inspire revolutions to destabilize the Soviets, America -- putting it bluntly -- betrayed its allies to side with a country that was warming to the Soviets. But what is counter-intuitive from a strictly geo-political standpoint is wise and prescient in a more nuanced analysis: for America to inspire revolutions behind the Iron Curtain it had to stand apart as an ideal example. Today, for America to undermine religious fanaticism, it must similarly deploy moral authority as part of its arsenal; to do that it must again stand apart and stand morally upright.
Mr Holder's step is a positive one. Mr Obama, like Mr Eisenhower, has felt that retaining (or, in our modern case, retaking) America's moral authority is more important than the loyalty it owes to the CIA. The analogy can yet be carried farther: in much the same way that America sought to destabilize the Warsaw Pact by inspiring popular, democratic, and capitalist revolutions through leading by example, America is now seeking to win 'hearts and minds' in much the same way. If America is to destabilize and deprive radical Islam of its recruits, it must deprive them of something to rail against; transparency and accountability is one step for America to regain its moral authority.
A new best-seller, CHINA & AMERICA'S EMERGING PARTNERSHIP: A REALISTIC NEW PERSPECTIVE argues that for America to regain its position as a world leader, it must lead through moral authority. Deprived of moral authority, the American military is powerless: in stabilizing Iraq, it was the moral support lent to General Petraeus by Muqtada al-Sadr that armed American troops with the support (or, at least, lack of hostility) of the local population. Moving forward, America will need the same support--willingly given--if it is to combat terrorist threats; to do that, America must first regain and then deploy its influence with strong, persuasive moral authority. The book, which is part of a series of eight books written by Mr John Milligan-Whyte which together form a 'New School of America-China Relations', is a persuasive text and I urge you all to read it.
Re-opening the old wounds of 'enhanced interrogations' hurts; but it is a good first step for America to begin to recapture its moral authority. Mr Eisenhower understood the need for moral authority to undermine the Soviet bloc; I trust Mr Obama understands the need for moral authority in the fight to keep America safe from terrorists.
Not so long ago, the United States made the pursuit and maintenance of moral authority one of the tenants of its foreign policy. The incident that comes first to this blogger's mind is one that Henry Kissinger has roundly criticized in his 1994 book DIPLOMACY: America's intervention on the side of Egypt during the Suez Crisis of 1956 against its English and French NATO allies.
Mr Kissinger's analysis (which I do not have on hand and, regrettable, cannot therefore quote) is a good starting point. He writes that Egypt sought to make overtures to both NATO and the Soviet Union, playing the two blocs against each other to better place Egypt in the new world order; when Egypt warmed to the Soviets, America and England withdrew their financial commitments to Egypt (the building of the Aswan Dam). To finance the construction of the Dam, Egypt nationalized the Suez Canal, an old Anglo-French joint colonial venture. As the old colonial powers and the new state of Israel geared up for war, America forced its NATO and Israeli allies to withdraw. America, then under President Eisenhower, realized that it could not condemn the Soviets' brutal suppression of Hungary while simultaneously supporting colonial imperialist gestures in Egypt. To retain its moral authority to inspire revolutions to destabilize the Soviets, America -- putting it bluntly -- betrayed its allies to side with a country that was warming to the Soviets. But what is counter-intuitive from a strictly geo-political standpoint is wise and prescient in a more nuanced analysis: for America to inspire revolutions behind the Iron Curtain it had to stand apart as an ideal example. Today, for America to undermine religious fanaticism, it must similarly deploy moral authority as part of its arsenal; to do that it must again stand apart and stand morally upright.
Mr Holder's step is a positive one. Mr Obama, like Mr Eisenhower, has felt that retaining (or, in our modern case, retaking) America's moral authority is more important than the loyalty it owes to the CIA. The analogy can yet be carried farther: in much the same way that America sought to destabilize the Warsaw Pact by inspiring popular, democratic, and capitalist revolutions through leading by example, America is now seeking to win 'hearts and minds' in much the same way. If America is to destabilize and deprive radical Islam of its recruits, it must deprive them of something to rail against; transparency and accountability is one step for America to regain its moral authority.
A new best-seller, CHINA & AMERICA'S EMERGING PARTNERSHIP: A REALISTIC NEW PERSPECTIVE argues that for America to regain its position as a world leader, it must lead through moral authority. Deprived of moral authority, the American military is powerless: in stabilizing Iraq, it was the moral support lent to General Petraeus by Muqtada al-Sadr that armed American troops with the support (or, at least, lack of hostility) of the local population. Moving forward, America will need the same support--willingly given--if it is to combat terrorist threats; to do that, America must first regain and then deploy its influence with strong, persuasive moral authority. The book, which is part of a series of eight books written by Mr John Milligan-Whyte which together form a 'New School of America-China Relations', is a persuasive text and I urge you all to read it.
Re-opening the old wounds of 'enhanced interrogations' hurts; but it is a good first step for America to begin to recapture its moral authority. Mr Eisenhower understood the need for moral authority to undermine the Soviet bloc; I trust Mr Obama understands the need for moral authority in the fight to keep America safe from terrorists.
I have taken a long break from blogging because the end of my high school career is fast approaching and I want to spend more time doing things I never had time to do before and become better friends with people I never had the chance to in the years past. Given that this is my senior summer, I will probably extend my blogging holiday through mid June.
In the interim period, I already know what I'd like to discuss. I am reading a book by groundbreaking IR theorist Alexander Wendt titled "Social Theory of International Politics". I will expand my thoughts on the European project from the Idealist perspective that I expect to be armed with after my reading. I also met an Assistant-Secretary General to the UN, a Doctor Edward Luck while I was visiting Dartmouth College. I had lunch with him with five other students; it was a surprisingly close lunch where I managed to have a good dialogue with him. As director of the UN's R2P (Right to Protect) initiative, Dr Luck had much to say about intervention on humanitarian grounds; I had discussed the possibility of a paramilitary wing given to the Hague and I have more thoughts on that as well.
Today, of course, Free Exchange continues its tradition of celebrating Malcolm X's birthday. Mr X does not have his own day as Dr King does. That's unfortunate because Dr King's pacifist option would likely have been much less appealing if Mr X's much scarier speeches were not the alternative.
This year, Free Exchange would like to focus not on his political views (as your correspondent chose to last year), but his personal life. Mr X embodies the spirit of inquiry I have sought to foster at Free Exchange. Mr X's trip to Mecca marks a change in his rhetoric and a fundamental change in his beliefs. Increasingly wary of the Nation of Islam and beginning to doubt its message, Mr X made a pilgrimage to Mecca.
His pilgrimage and search taught him that the Islamic message he had long been preaching was flawed. Islam's original tenets were about one thing; he had been preaching another. Publicly and in his actions, Mr X changed from a determined racial separatist to one willing to extend a hand to the other side. While he still fundamentally believed that black men ought to accept that they were victims, move on, and empower their communities, he understood that not all white men were enemies. Indeed, he came to believe that, ideally, there ought to be peace between the races, not enmity.
I founded Free Exchange to air my own thoughts but it has since become a way for me to see my ideas challenged, taken down. Hegel's theory of thesis-antithesis as the driving force of progress is correct in its assessment of the transformation of knowledge. Malcolm X, among many other things, embodies a willingness to accept a new synthesis after one explores both thesis and antithesis.
Today, in a more personal post, I do not recommend policy nor fashion analysis for a country, institution, or the world; instead I urge a personal and, above all, intellectual course of action -- that of introspection, questioning, and an acceptance of error in the pursuit of more nuanced understanding and better modes of inquiry. Malcolm X did not make superficial changes: he did not merely tweak his rhetoric, nor did he internally change but refuse to acknowledge fault in public. Malcolm X underwent a fundamental change and changed his life accordingly. That is the lesson I wish to keep in mind this year and the lesson Free Exchange will continue to embody and promote.
In the interim period, I already know what I'd like to discuss. I am reading a book by groundbreaking IR theorist Alexander Wendt titled "Social Theory of International Politics". I will expand my thoughts on the European project from the Idealist perspective that I expect to be armed with after my reading. I also met an Assistant-Secretary General to the UN, a Doctor Edward Luck while I was visiting Dartmouth College. I had lunch with him with five other students; it was a surprisingly close lunch where I managed to have a good dialogue with him. As director of the UN's R2P (Right to Protect) initiative, Dr Luck had much to say about intervention on humanitarian grounds; I had discussed the possibility of a paramilitary wing given to the Hague and I have more thoughts on that as well.
Today, of course, Free Exchange continues its tradition of celebrating Malcolm X's birthday. Mr X does not have his own day as Dr King does. That's unfortunate because Dr King's pacifist option would likely have been much less appealing if Mr X's much scarier speeches were not the alternative.
This year, Free Exchange would like to focus not on his political views (as your correspondent chose to last year), but his personal life. Mr X embodies the spirit of inquiry I have sought to foster at Free Exchange. Mr X's trip to Mecca marks a change in his rhetoric and a fundamental change in his beliefs. Increasingly wary of the Nation of Islam and beginning to doubt its message, Mr X made a pilgrimage to Mecca.
His pilgrimage and search taught him that the Islamic message he had long been preaching was flawed. Islam's original tenets were about one thing; he had been preaching another. Publicly and in his actions, Mr X changed from a determined racial separatist to one willing to extend a hand to the other side. While he still fundamentally believed that black men ought to accept that they were victims, move on, and empower their communities, he understood that not all white men were enemies. Indeed, he came to believe that, ideally, there ought to be peace between the races, not enmity.
I founded Free Exchange to air my own thoughts but it has since become a way for me to see my ideas challenged, taken down. Hegel's theory of thesis-antithesis as the driving force of progress is correct in its assessment of the transformation of knowledge. Malcolm X, among many other things, embodies a willingness to accept a new synthesis after one explores both thesis and antithesis.
Today, in a more personal post, I do not recommend policy nor fashion analysis for a country, institution, or the world; instead I urge a personal and, above all, intellectual course of action -- that of introspection, questioning, and an acceptance of error in the pursuit of more nuanced understanding and better modes of inquiry. Malcolm X did not make superficial changes: he did not merely tweak his rhetoric, nor did he internally change but refuse to acknowledge fault in public. Malcolm X underwent a fundamental change and changed his life accordingly. That is the lesson I wish to keep in mind this year and the lesson Free Exchange will continue to embody and promote.
The exciting stock-market rally of the last few weeks persisted in part because the government and the Fed's announcements of optimism and detailed plans to shore up the American financial system have given investors a sense of confidence. Confidence in America's political stability and the rule of law in protecting economic transactions has long been a pillar that held and still holds up the American economy. It is a mistake to allow that pillar to fall into disrepair.
As I have argued before, the executives did not deserve their pay; but the stakes are far higher. A friend of mine summed up the fiasco over the AIG bonus payments as "the American government extorting its citizens." Indeed, most of the American executives promptly returned their bonus money following death threats on their families and public outrage. Alexis de Tocqueville eloquently called it "tyranny of the majority"; your correspondent lacks his sense of restraint -- it is mob rule. The 90% tax on executive pay is not only unconstitutional because of it targets a select group, it is an alarming example of when the American government responded to an outraged majority to target a minority.
The unconstitutionality of the bill and its mob-rule origin chip away at the pillar of political stability that is key to any economy, and one that has seen the American dollar replace gold as an international standard. Today, the Federal Reserve reported that requests for loans from the Term Asset-Backed Securities Loan Facility (TALF) dropped 64% this month from $4.7b to $1.71b.
“It is a big disappointment,” said Stephen Stanley chief economist at RBS Securities Inc. in Greenwich, Connecticut. “There are some folks who have decided they just don’t want to play in any government programs.”
Undoubtedly, Mr Stanley is referring to comments like these (pulled for Bloomberg): “I can do very well for my clients without venturing into federal waters which are inhabited by sharks...We are leery of doing anything with the federal government.” -- David Kotok, the chairman of Cumberland Advisors Inc. in Vineland, New Jersey, who manages about $1 billion.
The market's performance in January through February was demonstration enough of what lack of confidence in the political pillar can do: from January 1 through February 27, the Dow dropped 19.52%. The government ought to hold more rigorously to the constitution than ever before, and make a public point of it; it should also resist the public choice temptation to respond to populist outrage. If political winds continue to blow the populist way, the gust will gnaw further at the crucial political pillar that helps hold up the American economy. Every dent in that pillar will correspond to a drop across American indexes.
Now, more than ever, we must carefully examine the speeches of the likely candidates running for election (or re-election) to Congress to see which way politicians are leaning. At this stage of the recession, reassuring both foreign and domestic investors that America is politically stable and rational is crucial. Data and reports are, obviously, important. But in the coming months, politics will play as large (if not larger) a role than data and financial reports.
It's time to renovate the pillar after the damage the AIG fiasco caused.
As I have argued before, the executives did not deserve their pay; but the stakes are far higher. A friend of mine summed up the fiasco over the AIG bonus payments as "the American government extorting its citizens." Indeed, most of the American executives promptly returned their bonus money following death threats on their families and public outrage. Alexis de Tocqueville eloquently called it "tyranny of the majority"; your correspondent lacks his sense of restraint -- it is mob rule. The 90% tax on executive pay is not only unconstitutional because of it targets a select group, it is an alarming example of when the American government responded to an outraged majority to target a minority.
The unconstitutionality of the bill and its mob-rule origin chip away at the pillar of political stability that is key to any economy, and one that has seen the American dollar replace gold as an international standard. Today, the Federal Reserve reported that requests for loans from the Term Asset-Backed Securities Loan Facility (TALF) dropped 64% this month from $4.7b to $1.71b.
“It is a big disappointment,” said Stephen Stanley chief economist at RBS Securities Inc. in Greenwich, Connecticut. “There are some folks who have decided they just don’t want to play in any government programs.”
Undoubtedly, Mr Stanley is referring to comments like these (pulled for Bloomberg): “I can do very well for my clients without venturing into federal waters which are inhabited by sharks...We are leery of doing anything with the federal government.” -- David Kotok, the chairman of Cumberland Advisors Inc. in Vineland, New Jersey, who manages about $1 billion.
The market's performance in January through February was demonstration enough of what lack of confidence in the political pillar can do: from January 1 through February 27, the Dow dropped 19.52%. The government ought to hold more rigorously to the constitution than ever before, and make a public point of it; it should also resist the public choice temptation to respond to populist outrage. If political winds continue to blow the populist way, the gust will gnaw further at the crucial political pillar that helps hold up the American economy. Every dent in that pillar will correspond to a drop across American indexes.
Now, more than ever, we must carefully examine the speeches of the likely candidates running for election (or re-election) to Congress to see which way politicians are leaning. At this stage of the recession, reassuring both foreign and domestic investors that America is politically stable and rational is crucial. Data and reports are, obviously, important. But in the coming months, politics will play as large (if not larger) a role than data and financial reports.
It's time to renovate the pillar after the damage the AIG fiasco caused.
Two weeks ago, CNN reported on a website called BlueServo.net, where vigilant private citizens may watch 15 cameras that monitor the Mexican-American border.
From the article:
"Lawmakers are raising concerns about drug-related violence spilling into the United States from Mexico. And, bucking an upward trend, there has been an apparent decrease in illegal immigration into the United States because of the struggling economy, according to a report from the Department of Homeland Security. Look at where the border wall is located »
The Bush administration made a number of attempts to curb illegal immigration from the south. The administration added troops to the area and also built a wall along parts of the U.S.-Mexico border, drawing criticism from environmentalists and immigration advocates."
Two week ago, the Economist analyzes the global drug trade in depth, concluding (as befitting their liberal tradition) that the legalization of drugs is "the least bad" solution to protecting addicts and slowing the crime and murder associated with the drug trade.
That is one aspect of the problem. Another part is implicitly alluded to in the CNN article. The Bush Administration's response to the Mexican Question tackles symptoms, not the root problem.
American policy makers ought to ask regarding this issue is: why are so many Mexicans leaving? America's consistent track-record of meddling in the internal affairs of other countries suggests that "that's their problem" approach is laziness, or worse, hints at a lack of ideas. America has never hesitated to manipulate events within other countries to serve its ends (for good or ill), and it should not hesitate to offer American assistance and activities to the Mexican government. Of what specific sort -- military, military-advisors, ear-marked economic aid -- I would hesitate to specify.
Nonetheless, allowing American assistance within Mexico would empower the Mexican federal government by setting a precedent for state action superseding provincial authority.
America can no longer afford the mind-our-own-business sentiment captured by this statement from Republican senator John Barrasso: "Why would you disarm someone when they potentially could get caught in the crossfire?...The United States will not surrender our second-amendment rights for Mexico's border problem."
The Mexican Question isn't and never was a mere border problem; failed states fail because of internal problems. If America is to prevent Mexico from failing -- and thus forestall the nightmare of having a narco-state neighbor -- then America must help the Mexican federal government deal with internal Mexican affairs.
From the article:
"Lawmakers are raising concerns about drug-related violence spilling into the United States from Mexico. And, bucking an upward trend, there has been an apparent decrease in illegal immigration into the United States because of the struggling economy, according to a report from the Department of Homeland Security. Look at where the border wall is located »
The Bush administration made a number of attempts to curb illegal immigration from the south. The administration added troops to the area and also built a wall along parts of the U.S.-Mexico border, drawing criticism from environmentalists and immigration advocates."
Two week ago, the Economist analyzes the global drug trade in depth, concluding (as befitting their liberal tradition) that the legalization of drugs is "the least bad" solution to protecting addicts and slowing the crime and murder associated with the drug trade.
That is one aspect of the problem. Another part is implicitly alluded to in the CNN article. The Bush Administration's response to the Mexican Question tackles symptoms, not the root problem.
American policy makers ought to ask regarding this issue is: why are so many Mexicans leaving? America's consistent track-record of meddling in the internal affairs of other countries suggests that "that's their problem" approach is laziness, or worse, hints at a lack of ideas. America has never hesitated to manipulate events within other countries to serve its ends (for good or ill), and it should not hesitate to offer American assistance and activities to the Mexican government. Of what specific sort -- military, military-advisors, ear-marked economic aid -- I would hesitate to specify.
Nonetheless, allowing American assistance within Mexico would empower the Mexican federal government by setting a precedent for state action superseding provincial authority.
America can no longer afford the mind-our-own-business sentiment captured by this statement from Republican senator John Barrasso: "Why would you disarm someone when they potentially could get caught in the crossfire?...The United States will not surrender our second-amendment rights for Mexico's border problem."
The Mexican Question isn't and never was a mere border problem; failed states fail because of internal problems. If America is to prevent Mexico from failing -- and thus forestall the nightmare of having a narco-state neighbor -- then America must help the Mexican federal government deal with internal Mexican affairs.
More Isocratic business, I'm afraid. I do end with a proposal though. This time, your correspondent is responding to a heartfelt call for morally inspired foreign policy. My response is below.
--
I'm afraid I am an unapologetic member of a different club; if you recall, our time-honored clubs played a rather droll game of cricket one sunny afternoon in the Mediterranean -- history likes to call that little encounter by the name Thucydides gave it: the Melian Dialogue. My club was in vogue in the nineteenth century; yours, the twentieth.
But the objections of the Realist School aside, I'd like to point out an inherent contradiction in your thoughts.
You begin indignantly: "Is this not a worrying notion? Working from the quotation, requiring a citizen to "repair to the standard of his country whenever it was reared..." Does this not sound to you like a death-wish to very many nations? Imagine any proactive action, such as the liberation of Darfur from the murdering extremists who control it, undertaken by such a nation. The elected officials of a nation decide that it is time to intervene, and the populace draws lots and marches off to war... does this not abridge the freedoms of the individual?"
You end filled with righteous energy: "These are not men who wish to be reasoned with, and diplomatic overtures to such men seem like madness where I'm sitting. Ought we not say that those nations with the power to free other human beings from bondage are all but morally bound to do so?"
There is a contradiction here. Your first contention is a liberal one; you argue, rightly, that leaders oughtn't translate their personal moral code into foreign policy, dragging their constituents (who may individually have different moral beliefs) into it. You end defending those very leaders, arguing that they must be craft a national foreign policy to reflect their pangs of conscience. There is no way to resolve the two.
I am compelled to end with the same question you posed at the beginning of your argument: "Are we not thusly voluntarily suborning ourselves to the whim of our elected officials, putting our lives on the line in the process?"
Yes, I believe we would be. The problem with foreign policies founded on moral indignation is that most situations are rarely as simple as the Holocuast, Darfur, or Rwanda. Should Tibet be invaded and the Chinese government overthrown? Should the Australian government be toppled and the land restored to the Aboriginal people? Should Washington be dismantled, and the Native Americans be given back their sprawling fields? As you said we are "risking any politician having hold of a population that the law forces to fight in conflicts that may be against their will."
And on the other hand, we too often hid behind the standard of Realism and its motto (put simply, "Things Are More Complicated Than You Think") to justify inaction. If Hitler did not conquer any land and simply exterminated the Jewish race, I doubt the Realist School would have lifted a finger, much less choke on their morning coffee. In response to your question: no, I do not believe we are always bound to free other humans from bondage nor to pre-emptively prevent tyrants from assuming power. But we are bound to prevent the extermination of innocent people. The difference is that the former would mean we should invade Venezuela and Singapore; the latter would impel us to intervene in Darfur.
If I began bitingly, I apologize. I take the Nietzschean view of things when I have to be harsh: best to get it over with all at once and quickly, rather than slowly and drawn out. You make a compelling case for the creation of an international police force that would intervene to prevent gross human rights violations. But rare is the case of human rights abuse so simple that good and evil are plain to see; far more often are cases like Tibet or Palestine where both sides have, at some point or another, lost their moral high ground.
--
While we're referencing history, we might as well list the Praetorian Guard as a guard force that overstepped its charter. An international force could, perhaps, answer to The Hague; the force would not be used for invasion or occupation, but as high class kidnappers. As a tool of the Hague, it's paramilitary arm would be responsible for the extradition of criminals to the Court for prosecution. It's military arm would, as I argued at Isocracy, step in to defend the lives of innocent people in a gross human rights violation case as determined by the judges at the Hague. The judges already deliberate on what constitutes gross human rights violations; this merely gives them teeth.
Just as Germany's version of the Supreme Court is a political force, so too should the ICC at the Hague.
--
I'm afraid I am an unapologetic member of a different club; if you recall, our time-honored clubs played a rather droll game of cricket one sunny afternoon in the Mediterranean -- history likes to call that little encounter by the name Thucydides gave it: the Melian Dialogue. My club was in vogue in the nineteenth century; yours, the twentieth.
But the objections of the Realist School aside, I'd like to point out an inherent contradiction in your thoughts.
You begin indignantly: "Is this not a worrying notion? Working from the quotation, requiring a citizen to "repair to the standard of his country whenever it was reared..." Does this not sound to you like a death-wish to very many nations? Imagine any proactive action, such as the liberation of Darfur from the murdering extremists who control it, undertaken by such a nation. The elected officials of a nation decide that it is time to intervene, and the populace draws lots and marches off to war... does this not abridge the freedoms of the individual?"
You end filled with righteous energy: "These are not men who wish to be reasoned with, and diplomatic overtures to such men seem like madness where I'm sitting. Ought we not say that those nations with the power to free other human beings from bondage are all but morally bound to do so?"
There is a contradiction here. Your first contention is a liberal one; you argue, rightly, that leaders oughtn't translate their personal moral code into foreign policy, dragging their constituents (who may individually have different moral beliefs) into it. You end defending those very leaders, arguing that they must be craft a national foreign policy to reflect their pangs of conscience. There is no way to resolve the two.
I am compelled to end with the same question you posed at the beginning of your argument: "Are we not thusly voluntarily suborning ourselves to the whim of our elected officials, putting our lives on the line in the process?"
Yes, I believe we would be. The problem with foreign policies founded on moral indignation is that most situations are rarely as simple as the Holocuast, Darfur, or Rwanda. Should Tibet be invaded and the Chinese government overthrown? Should the Australian government be toppled and the land restored to the Aboriginal people? Should Washington be dismantled, and the Native Americans be given back their sprawling fields? As you said we are "risking any politician having hold of a population that the law forces to fight in conflicts that may be against their will."
And on the other hand, we too often hid behind the standard of Realism and its motto (put simply, "Things Are More Complicated Than You Think") to justify inaction. If Hitler did not conquer any land and simply exterminated the Jewish race, I doubt the Realist School would have lifted a finger, much less choke on their morning coffee. In response to your question: no, I do not believe we are always bound to free other humans from bondage nor to pre-emptively prevent tyrants from assuming power. But we are bound to prevent the extermination of innocent people. The difference is that the former would mean we should invade Venezuela and Singapore; the latter would impel us to intervene in Darfur.
If I began bitingly, I apologize. I take the Nietzschean view of things when I have to be harsh: best to get it over with all at once and quickly, rather than slowly and drawn out. You make a compelling case for the creation of an international police force that would intervene to prevent gross human rights violations. But rare is the case of human rights abuse so simple that good and evil are plain to see; far more often are cases like Tibet or Palestine where both sides have, at some point or another, lost their moral high ground.
--
While we're referencing history, we might as well list the Praetorian Guard as a guard force that overstepped its charter. An international force could, perhaps, answer to The Hague; the force would not be used for invasion or occupation, but as high class kidnappers. As a tool of the Hague, it's paramilitary arm would be responsible for the extradition of criminals to the Court for prosecution. It's military arm would, as I argued at Isocracy, step in to defend the lives of innocent people in a gross human rights violation case as determined by the judges at the Hague. The judges already deliberate on what constitutes gross human rights violations; this merely gives them teeth.
Just as Germany's version of the Supreme Court is a political force, so too should the ICC at the Hague.
In addition to school-work I have been occupied at Isocracy:
In response to a post on the Isocracy Network, I wrote:
--
The Platonic vision of citizenship is one I respect tremendously: a good citizen is one who is active in the politics of his society. I think you have characterized the relationship between pundits and the citizenry as one between father and son. I do not obey my pundit as I might my father. I do admire Jon Stewart's particular talent of using humor to be critical.
Aren't pundits being good citizens? They are actively involving themselves in the politics of their society the only way they know how. Being involved in politics doesn't mean making unilateral decisions as citizens; being involved means being willing to join a discussion and talk. One of the foundations of the Isocratic charter is the hope that policy (be it foreign policy or economic policy) would be tailored on a case-by-case basis to the needs of the problem. The solution would be arrived at through discussions.
If the relationship between pundit and citizen has grown to become paternalistic, that is the fault of the citizenry, not the pundit. We all ought to be pundits; we all ought to offer our own analysis and opinions. The key is that the pundit-citizen must be willing to discuss his view and modify it accordingly.
--
As a regular blogger, your correspondent is understandably defensive about his role as an opinionated commentator!
In response to a post on the Isocracy Network, I wrote:
--
The Platonic vision of citizenship is one I respect tremendously: a good citizen is one who is active in the politics of his society. I think you have characterized the relationship between pundits and the citizenry as one between father and son. I do not obey my pundit as I might my father. I do admire Jon Stewart's particular talent of using humor to be critical.
Aren't pundits being good citizens? They are actively involving themselves in the politics of their society the only way they know how. Being involved in politics doesn't mean making unilateral decisions as citizens; being involved means being willing to join a discussion and talk. One of the foundations of the Isocratic charter is the hope that policy (be it foreign policy or economic policy) would be tailored on a case-by-case basis to the needs of the problem. The solution would be arrived at through discussions.
If the relationship between pundit and citizen has grown to become paternalistic, that is the fault of the citizenry, not the pundit. We all ought to be pundits; we all ought to offer our own analysis and opinions. The key is that the pundit-citizen must be willing to discuss his view and modify it accordingly.
--
As a regular blogger, your correspondent is understandably defensive about his role as an opinionated commentator!
On March 9th, I wrote:
--
...
This is less a criticism of President Obama's budget, and much more a criticism of his projections. The statement "3.1 percent by 2019" assumes a certain figure for GDP in 2019. The economic forecasts of Goldman Sachs, JP Morgan, the Treasury and the Fed have all been re-evaluated over and over in the last year; the recent movement of the DJI suggests that they may be re-evaluated again. Lack of confidence in Mr Obama's fiscal stimulus in Wall Street and worries about the absence of a systematic plan to deal with the financial system doesn't help things much.
Mr Obama's projections (http://www.econbrowser.com/archives/20
--
This is in from Forbes:
--
"The Congressional Budget Office said Friday that the national debt under the president's budget will be $2.3 trillion deeper than the White House estimates...When the White House released its budget in February, its economic forecast was in the same ballpark as other estimates, but decidedly on the sunny side. One assumption, for example, was that the average unemployment for 2009 would be 8.1%. That assumption was quickly blown to pieces when the Bureau of Labor Statistics announced two weeks later that unemployment had already reached that level by January. The CBO projects 2009 unemployment will instead be 8.8% before peaking in 2010...That economic reality could be even worse than what the CBO projects.
The White House estimates are "incredibly high by recent historical standards," says Martin Regalia, chief economist for the U.S. Chamber of Commerce. The Chamber, quick to point out that it supported both the $700 billion bank bailout and the stimulus package, is opposed to Obama's budget. If spending stays elevated without a robust recovery, an increase in taxes is one of the only ways to close the deficit.
--
As the theory of Ricardian Equivalence points out, savvy citizens will realize that all the money they make now ought to be saved so that they can pay the hike in taxes in the future. Even if Mr Obama's projections are on target, taxes will have to be increased; if the projections are too sunny, then the taxes will either go on for very very long, or be very very high. Either way, if David Ricardo is to be believed, smart investors will save all the money the government gives them and the gains they make today in the market to pay for their taxes later. Spending now may be a patriotic duty, but it might also make for leaner years in the future; being modest now may lend a more comfortable spending power down the road.
Let's hope Ricardo is wrong and that people do not think that far ahead; a sudden increase in spending would be detrimental to the economy's recover and, ironically, mean more government spending and even higher taxes later. Saving was always a negative externality, but perhaps it's cost has just gone higher.
--
...
This is less a criticism of President Obama's budget, and much more a criticism of his projections. The statement "3.1 percent by 2019" assumes a certain figure for GDP in 2019. The economic forecasts of Goldman Sachs, JP Morgan, the Treasury and the Fed have all been re-evaluated over and over in the last year; the recent movement of the DJI suggests that they may be re-evaluated again. Lack of confidence in Mr Obama's fiscal stimulus in Wall Street and worries about the absence of a systematic plan to deal with the financial system doesn't help things much.
Mr Obama's projections (http://www.econbrowser.com/archives/20
--
This is in from Forbes:
--
"The Congressional Budget Office said Friday that the national debt under the president's budget will be $2.3 trillion deeper than the White House estimates...When the White House released its budget in February, its economic forecast was in the same ballpark as other estimates, but decidedly on the sunny side. One assumption, for example, was that the average unemployment for 2009 would be 8.1%. That assumption was quickly blown to pieces when the Bureau of Labor Statistics announced two weeks later that unemployment had already reached that level by January. The CBO projects 2009 unemployment will instead be 8.8% before peaking in 2010...That economic reality could be even worse than what the CBO projects.
The White House estimates are "incredibly high by recent historical standards," says Martin Regalia, chief economist for the U.S. Chamber of Commerce. The Chamber, quick to point out that it supported both the $700 billion bank bailout and the stimulus package, is opposed to Obama's budget. If spending stays elevated without a robust recovery, an increase in taxes is one of the only ways to close the deficit.
--
As the theory of Ricardian Equivalence points out, savvy citizens will realize that all the money they make now ought to be saved so that they can pay the hike in taxes in the future. Even if Mr Obama's projections are on target, taxes will have to be increased; if the projections are too sunny, then the taxes will either go on for very very long, or be very very high. Either way, if David Ricardo is to be believed, smart investors will save all the money the government gives them and the gains they make today in the market to pay for their taxes later. Spending now may be a patriotic duty, but it might also make for leaner years in the future; being modest now may lend a more comfortable spending power down the road.
Let's hope Ricardo is wrong and that people do not think that far ahead; a sudden increase in spending would be detrimental to the economy's recover and, ironically, mean more government spending and even higher taxes later. Saving was always a negative externality, but perhaps it's cost has just gone higher.
Reuters reports on the rumor that Timothy Geithner, America's Secretary of the Treasury, would finally release the details of his plan to remove toxic assets from bank's portfolios:
"The slow start of the new Federal Reserve consumer lending program this week has been seen as a sign that private capital may shun the toxic-asset plan because of public outrage over large executive bonuses.
Many big private investors are worried they could face tough new rules in U.S. financial rescue programs after Congress pressed ahead with efforts to claw back bonuses paid to executives at failed insurer American International Group."
The employees at AIG do not deserve their bonuses; certainly they are dishonorable, and they definitely deserve to be denounced. But there is much more at stake here than a few hundred employees and several million dollars.
The American financial system needs to get back on its feet quickly; the government must help them get rid of their toxic assets so that America does not live through Japan's '90s example of perpetual unending write-downs.
The way the American government has handled the AIG bonus fiasco neglects the bigger picture. America knows that the world's financial system cannot afford to allow any one of those institutions (AIG, JPM, GS, BAC, C) fail. As your correspondent mentioned recently, the world's financial system came within 24 hours of total collapse. What's more, those financial institutions know they will not be allowed to fail.
In other words, the American government needs its bankers, wayward or not. Raising their ire over their bonus is counter-productive at best, downright dangerous at worst. Mr Bernanke, the Chairman of the Fed, cannot rescue finance by himself; bound by the operating rules of the Fed, he cannot create a bad bank or a toxic asset fund the way the Treasury can. The bankers may rely on Mr Geithner for the survival of their companies, but Mr Geithner depends on the bankers for the survival of America and the world.
Who has more leverage? Those who brought down AIG do not deserve the compensation they received. But America does not deserve the treatment it will receive if the financial system is not brought back to order, and quickly. For Mr Bernanke's hopeful prediction on Sixty Minutes to be realized, Congress must abandon its unwise, though absolutely morally justified, course of action. The Senate must trash the bill.
An alternative might be a more targeted bill: if Congress were to pass a bill levying a 90% tax on companies who have been bailed out by the government more than thrice and received more than $100b in aid, the target of their ire is clear. Banks like JPM and WFC who had TARP aid forced onto them by the Treasury last year would not suffer. Besides, a company bailed out by the government more than three times really ought to preserve its capital, however little the bonuses amount to.
But passing the bill as it is, with its general scope, will harm the US financial industry both in the talent drain it will create and in the way it will tie the already embattled Mr Geithner's hands. Target AIG's employees, not the company; target AIG, not the US financial system; and target priorities -- Congress must realize that there are, to be colloquial, much bigger fish to fry.
So must the Treasury. This (again, from Reuters) is unacceptable:
"The source said the exact timing of when the Treasury will unveil the plan is unclear because Treasury would first like to resolve the issue of executive bonuses, which lawmakers are trying to restrain for institutions involved in government rescue efforts."
"The slow start of the new Federal Reserve consumer lending program this week has been seen as a sign that private capital may shun the toxic-asset plan because of public outrage over large executive bonuses.
Many big private investors are worried they could face tough new rules in U.S. financial rescue programs after Congress pressed ahead with efforts to claw back bonuses paid to executives at failed insurer American International Group."
The employees at AIG do not deserve their bonuses; certainly they are dishonorable, and they definitely deserve to be denounced. But there is much more at stake here than a few hundred employees and several million dollars.
The American financial system needs to get back on its feet quickly; the government must help them get rid of their toxic assets so that America does not live through Japan's '90s example of perpetual unending write-downs.
The way the American government has handled the AIG bonus fiasco neglects the bigger picture. America knows that the world's financial system cannot afford to allow any one of those institutions (AIG, JPM, GS, BAC, C) fail. As your correspondent mentioned recently, the world's financial system came within 24 hours of total collapse. What's more, those financial institutions know they will not be allowed to fail.
In other words, the American government needs its bankers, wayward or not. Raising their ire over their bonus is counter-productive at best, downright dangerous at worst. Mr Bernanke, the Chairman of the Fed, cannot rescue finance by himself; bound by the operating rules of the Fed, he cannot create a bad bank or a toxic asset fund the way the Treasury can. The bankers may rely on Mr Geithner for the survival of their companies, but Mr Geithner depends on the bankers for the survival of America and the world.
Who has more leverage? Those who brought down AIG do not deserve the compensation they received. But America does not deserve the treatment it will receive if the financial system is not brought back to order, and quickly. For Mr Bernanke's hopeful prediction on Sixty Minutes to be realized, Congress must abandon its unwise, though absolutely morally justified, course of action. The Senate must trash the bill.
An alternative might be a more targeted bill: if Congress were to pass a bill levying a 90% tax on companies who have been bailed out by the government more than thrice and received more than $100b in aid, the target of their ire is clear. Banks like JPM and WFC who had TARP aid forced onto them by the Treasury last year would not suffer. Besides, a company bailed out by the government more than three times really ought to preserve its capital, however little the bonuses amount to.
But passing the bill as it is, with its general scope, will harm the US financial industry both in the talent drain it will create and in the way it will tie the already embattled Mr Geithner's hands. Target AIG's employees, not the company; target AIG, not the US financial system; and target priorities -- Congress must realize that there are, to be colloquial, much bigger fish to fry.
So must the Treasury. This (again, from Reuters) is unacceptable:
"The source said the exact timing of when the Treasury will unveil the plan is unclear because Treasury would first like to resolve the issue of executive bonuses, which lawmakers are trying to restrain for institutions involved in government rescue efforts."
The silver lining in the economic gloom is the political effect it has had on the EU:
From the BBC:
"Mr Barroso said doubling the emergency funding ceiling to 50bn euros would be "a good signal that the EU is ready to show solidarity and support... to the countries that may need it.""
This blog and the Economist have both argued that this recession provides an opportunity for the EU to demonstrate its dedication to a workable transnational system. Europe ought to continue to support its member states; good job so far.
From the BBC:
"Mr Barroso said doubling the emergency funding ceiling to 50bn euros would be "a good signal that the EU is ready to show solidarity and support... to the countries that may need it.""
This blog and the Economist have both argued that this recession provides an opportunity for the EU to demonstrate its dedication to a workable transnational system. Europe ought to continue to support its member states; good job so far.
Bryce's graph, the founder of Prospective Value may be eerily prescient. We will see how closely we follow the trend of the Great Depression. Ben Bernanke, the Chairman of the Federal Reserve, is a student of history and specializes in the Great Depression; he is intimately familiar with the mistakes made by the Federal Reserve (or, more specifically, by the New York Federal Reserve while in the midst of a power struggle with the Board of Governors) leading up to the bank runs of 1931.
Here's a concrete example of Mr Bernanke learning from his predecessors' mistakes:
----
On C-Span, Rep. Paul Kanjorski (D-PA) explained how the Federal Reserve told members of Congress about an electronic run on the banks "to the tune of $550 billion dollars" within "an hour or two" last fall.
According to Kanjorski, on September 18, 2008 the Fed tried to "stem the tide" by pumping money into the financial system but it didn't work and decided instead to announce an immediate increase in deposit insurance to $250,000 per account to stop the panic.
Said Kanjorski: "If they had not done that, their estimation is that by 2 p.m. that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it."
----
And, in keeping with his determination to prevent the failure of major banks, Mr Bernanke has aggressively eased credit (precisely the opposite of what the Fed did in 1931), bringing down the federal funds rate to the 0-0.25% range at the Federal Open Market Committee on December 16, 2008. As Mr Bernanke said in his interview with 60 minutes last night, he believes that the recovery of the general economy will follow only after inter-bank and bank-to-consumer lending is back to normal. The 1 month London Interbank Offered Rate (LIBOR), the inter-bank interest rate for a one month loan, measures 0.56 this week; in a healthy economy, LIBOR measures 0.35; last year, the 1 month LIBOR rate measured 2.89.
These are short term considerations. Robert Samuelson calls for thinkong on a longer time horizon. Mr Samuelson argued in March of 2008 that "In judging what that balance should be, the Fed needs to be less intimidated by present problems and more concerned with long-term consequences."
Pointing back to the 1970s, Mr Samuelson writes, "Unfortunately, the Fed shows signs of overreacting to these pressures and repeating the great blunder of the 1970s. Underestimating inflation then, the Fed repeatedly shoved out too much money and credit in a vain effort to keep the economy near "full employment." Inflationary psychology became widespread, and the resulting wage-price spiral fed on itself. Now, switch to the present. Again, the Fed has underestimated inflation. It expected the economic slowdown to suppress inflation spontaneously."
Given the events in September 2008 your correspondent detailed above, Mr Bernanke is understandably more concerned with a general collapse of the economic system than inflation. But the latter is a legitimate concern. Will the period following the recession we're in right now be characterized by stagflation?
Mr Bernanke is a student of history, and I doubt that he pulled blinders on to study the Depression isolated from event leading up to it and following it. No: Mr Bernanke -- should Mr Obama reinstate him as Chairman -- will likely move aggressively to tackle inflation when he feels the financial system can bear sharper credit conditions. Disclaimer.
Here's a concrete example of Mr Bernanke learning from his predecessors' mistakes:
----
On C-Span, Rep. Paul Kanjorski (D-PA) explained how the Federal Reserve told members of Congress about an electronic run on the banks "to the tune of $550 billion dollars" within "an hour or two" last fall.
According to Kanjorski, on September 18, 2008 the Fed tried to "stem the tide" by pumping money into the financial system but it didn't work and decided instead to announce an immediate increase in deposit insurance to $250,000 per account to stop the panic.
Said Kanjorski: "If they had not done that, their estimation is that by 2 p.m. that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it."
----
And, in keeping with his determination to prevent the failure of major banks, Mr Bernanke has aggressively eased credit (precisely the opposite of what the Fed did in 1931), bringing down the federal funds rate to the 0-0.25% range at the Federal Open Market Committee on December 16, 2008. As Mr Bernanke said in his interview with 60 minutes last night, he believes that the recovery of the general economy will follow only after inter-bank and bank-to-consumer lending is back to normal. The 1 month London Interbank Offered Rate (LIBOR), the inter-bank interest rate for a one month loan, measures 0.56 this week; in a healthy economy, LIBOR measures 0.35; last year, the 1 month LIBOR rate measured 2.89.
These are short term considerations. Robert Samuelson calls for thinkong on a longer time horizon. Mr Samuelson argued in March of 2008 that "In judging what that balance should be, the Fed needs to be less intimidated by present problems and more concerned with long-term consequences."
Pointing back to the 1970s, Mr Samuelson writes, "Unfortunately, the Fed shows signs of overreacting to these pressures and repeating the great blunder of the 1970s. Underestimating inflation then, the Fed repeatedly shoved out too much money and credit in a vain effort to keep the economy near "full employment." Inflationary psychology became widespread, and the resulting wage-price spiral fed on itself. Now, switch to the present. Again, the Fed has underestimated inflation. It expected the economic slowdown to suppress inflation spontaneously."
Given the events in September 2008 your correspondent detailed above, Mr Bernanke is understandably more concerned with a general collapse of the economic system than inflation. But the latter is a legitimate concern. Will the period following the recession we're in right now be characterized by stagflation?
Mr Bernanke is a student of history, and I doubt that he pulled blinders on to study the Depression isolated from event leading up to it and following it. No: Mr Bernanke -- should Mr Obama reinstate him as Chairman -- will likely move aggressively to tackle inflation when he feels the financial system can bear sharper credit conditions. Disclaimer.
Though lacking Karl Marx's sense of the dramatic (not to mention the metaphysical), your correspondent is nonetheless concerned that Mexico has retaliated to the US' protectionism by imposing tariffs.
The specter of Smoot-Hawley is not truly rising; at least, not yet. When Senator Reed Smoot (R - UT) and Representative Willis Hawley (R - OR) proposed raising tariffs on some twenty thousand goods in 1930, all of America's largest trading partners retaliated with tariffs of their own. This was hostile game theory at its worst. Credited for choking off nearly two-thirds of America's exports, the 1930 Smoot-Hawley Act became one of the many mistakes that pushed America into the Great Depression.
Mexico's response is minor in comparison . In brief, Congress reacted to pressure from America's trucking industry to protect American truckers from Mexican competition by disallowing Mexican access to US roads, effectively hurting Mexican truckers. In retaliation, Mexico has raised tariffs on American exports to Mexico amounting to $2.4b dollars. This loss, in accordance with the way GDP is calculated, amounts to $2.4b subtracted from GDP.
Leaving out, for the moment, the short-term effect protectionist escalation within and without NAFTA on America's economy, America must consider how its actions will affect the world. American protectionism would increase the likelihood of protectionism around the world. I am most concerned with protectionism within the EU ; your correspondent has made every effort to laud the EU for its pioneering of soft diplomacy on Free Exchange. Protectionism within the EU would herald the end of the European project; the damage of protectionism would spill over from economics into international relations.
The abstracts of interdisciplinary ruin aside, the American economy cannot afford to conjure up the ghost of Smoot-Hawley. Economically, a two-thirds reduction in exports would cripple the economy; a two-thirds reduction in import would then cripple the economies of others'. A break-up of the EU due to economic protectionism would cripple credit markets along with the death of the Euro as a viable currency; politically, America would have to deal with some twenty odd nations instead of one finance minister.
Expect, then, a G20 meeting this week dominated by vigorous opposition to protectionism by EU members. David Brooks once described Obama's administration as a valedictocracy -- rule by the valedictorians (joking that "If a foreign enemy attacks the United States during the Harvard-Yale game any time over the next four years, we’re screwed."); I believe and trust that the Obama Administration will exorcise the specter of Smoot-Hawley in the wake of the Mexican response and the G20 meeting.
The specter of Smoot-Hawley will likely remain just that: a specter. Both vocally at the G20 meeting and reaffirming his declarations with swift action, Mr Obama must refrain from exhuming the corpse.
The specter of Smoot-Hawley is not truly rising; at least, not yet. When Senator Reed Smoot (R - UT) and Representative Willis Hawley (R - OR) proposed raising tariffs on some twenty thousand goods in 1930, all of America's largest trading partners retaliated with tariffs of their own. This was hostile game theory at its worst. Credited for choking off nearly two-thirds of America's exports, the 1930 Smoot-Hawley Act became one of the many mistakes that pushed America into the Great Depression.
Mexico's response is minor in comparison . In brief, Congress reacted to pressure from America's trucking industry to protect American truckers from Mexican competition by disallowing Mexican access to US roads, effectively hurting Mexican truckers. In retaliation, Mexico has raised tariffs on American exports to Mexico amounting to $2.4b dollars. This loss, in accordance with the way GDP is calculated, amounts to $2.4b subtracted from GDP.
Leaving out, for the moment, the short-term effect protectionist escalation within and without NAFTA on America's economy, America must consider how its actions will affect the world. American protectionism would increase the likelihood of protectionism around the world. I am most concerned with protectionism within the EU ; your correspondent has made every effort to laud the EU for its pioneering of soft diplomacy on Free Exchange. Protectionism within the EU would herald the end of the European project; the damage of protectionism would spill over from economics into international relations.
The abstracts of interdisciplinary ruin aside, the American economy cannot afford to conjure up the ghost of Smoot-Hawley. Economically, a two-thirds reduction in exports would cripple the economy; a two-thirds reduction in import would then cripple the economies of others'. A break-up of the EU due to economic protectionism would cripple credit markets along with the death of the Euro as a viable currency; politically, America would have to deal with some twenty odd nations instead of one finance minister.
Expect, then, a G20 meeting this week dominated by vigorous opposition to protectionism by EU members. David Brooks once described Obama's administration as a valedictocracy -- rule by the valedictorians (joking that "If a foreign enemy attacks the United States during the Harvard-Yale game any time over the next four years, we’re screwed."); I believe and trust that the Obama Administration will exorcise the specter of Smoot-Hawley in the wake of the Mexican response and the G20 meeting.
The specter of Smoot-Hawley will likely remain just that: a specter. Both vocally at the G20 meeting and reaffirming his declarations with swift action, Mr Obama must refrain from exhuming the corpse.
"Hitherto Mr Zardari may have trusted to support from America, Britain and Pakistan’s army, who are all, to varying degrees, wary of the populist and conservative Mr Sharif. He can no longer do so—the Punjab police’s decision to free Mr Sharif from confinement was very likely in response to an army command. Indeed, this may be a positive development in the effort to rebuild Pakistan’s much-abused democracy"
This is a shocking speculative comment. Military involvement in politics, as a rule, is never "a positive development". By definition, the military is incompatible with politics. Politics revolves around discussion, around compromise; politics is (supposed to be) a vehicle for citizens to voice and express their opinions. Politics is (again: supposed to be) rule from below.
The military is exactly the opposite: the men in uniform rule from above. The general passes orders down the ranks, not the other way around. So in a state where the military is actively involved in politics, this is, more often than not, the case:
http://news.bbc.co.uk/2/hi/africa/79467
"Soldiers have seized one of the palaces of embattled Madagascar President Marc Ravalomanana in the centre of the capital Antananarivo..."The palace is occupied. This was our mission for today. For now, we have no more orders," an army colonel, who declined to be named, told Reuters news agency inside the captured palace."
Military intervention, for the best of reasons, is not a good thing. I am unwilling to say that military intervention should never ever happen; in the most extreme of cases, a conscience-driven military intervention may be a good thing -- a military intervention to oust a government bent on genocide, for example. But just though that may be, it is still a blow to democracy.
This is a shocking speculative comment. Military involvement in politics, as a rule, is never "a positive development". By definition, the military is incompatible with politics. Politics revolves around discussion, around compromise; politics is (supposed to be) a vehicle for citizens to voice and express their opinions. Politics is (again: supposed to be) rule from below.
The military is exactly the opposite: the men in uniform rule from above. The general passes orders down the ranks, not the other way around. So in a state where the military is actively involved in politics, this is, more often than not, the case:
http://news.bbc.co.uk/2/hi/africa/79467
"Soldiers have seized one of the palaces of embattled Madagascar President Marc Ravalomanana in the centre of the capital Antananarivo..."The palace is occupied. This was our mission for today. For now, we have no more orders," an army colonel, who declined to be named, told Reuters news agency inside the captured palace."
Military intervention, for the best of reasons, is not a good thing. I am unwilling to say that military intervention should never ever happen; in the most extreme of cases, a conscience-driven military intervention may be a good thing -- a military intervention to oust a government bent on genocide, for example. But just though that may be, it is still a blow to democracy.
A more detailed look at The Street's interview of Jim Cramer:
http://www.roughlydrafted.com/2007/08/0
Some quotes from Jim Cramer --
1. "...fomenting the market [the act of using disinformation to manipulate stock prices[... [is] actually blatantly illegal, but when you have six days and your company may be in doubt because you are down, I think it is really important to foment."
2. "It’s important to get people talking about it as if something is wrong with RIM. Then you would call the Journal [The Wall Street Journal] and talk to the bozo reporter on Research in Motion and you would feed that Palm has got a killer it is going to give. These are the things that you must do on a day like today. And if you are not doing it, maybe you shouldn’t be in the game."
3. "I think it’s important for people to realize that the way that the market really works is to have that nexus of: hit the brokerage houses with a series of orders that can push it down, then leak it to the press, and then get it on CNBC; that’s also very important. And then you’ll have a vicious cycle down. It’s a pretty good game. It can be played for a percent or two."
This all reminds me of this little sound clip:
That's from the movie Wall Street, where Gordon Gekko tells Bud Fox to call up a reporter at the Wall Street Journal to spread disinformation to manipulate the price of Anacot Steel, a fictional company listed on the NYSE. Spoiler alert: the fictional Mr Gekko, by the way, ends up behind bars by the end of the movie.
Economists often describe the stock market as 'perfect' because it reacts instantly to reflect new information. The problem, as this blog has pointed out before, is that the information the stock market reflects may not be genuine. Mr Cramer has explicitly confirmed what many of us have long suspected or heard about: that fund managers often employ disinformation to manipulate prices. Jon Stewart has taken that train of thought to its logical conclusion: that "the game" -- usually played with short-selling -- Mr Cramer speaks of is being played at the expense of common investors.
Has the media lost touch with its responsibilities? A comment left on my last post suggested that Mr Cramer is an entertainer; well and good, but should a news corporation focus on entertainment or journalism designed to expose those who undermine society?
http://www.roughlydrafted.com/2007/08/0
Some quotes from Jim Cramer --
1. "...fomenting the market [the act of using disinformation to manipulate stock prices[... [is] actually blatantly illegal, but when you have six days and your company may be in doubt because you are down, I think it is really important to foment."
2. "It’s important to get people talking about it as if something is wrong with RIM. Then you would call the Journal [The Wall Street Journal] and talk to the bozo reporter on Research in Motion and you would feed that Palm has got a killer it is going to give. These are the things that you must do on a day like today. And if you are not doing it, maybe you shouldn’t be in the game."
3. "I think it’s important for people to realize that the way that the market really works is to have that nexus of: hit the brokerage houses with a series of orders that can push it down, then leak it to the press, and then get it on CNBC; that’s also very important. And then you’ll have a vicious cycle down. It’s a pretty good game. It can be played for a percent or two."
This all reminds me of this little sound clip:
That's from the movie Wall Street, where Gordon Gekko tells Bud Fox to call up a reporter at the Wall Street Journal to spread disinformation to manipulate the price of Anacot Steel, a fictional company listed on the NYSE. Spoiler alert: the fictional Mr Gekko, by the way, ends up behind bars by the end of the movie.
Economists often describe the stock market as 'perfect' because it reacts instantly to reflect new information. The problem, as this blog has pointed out before, is that the information the stock market reflects may not be genuine. Mr Cramer has explicitly confirmed what many of us have long suspected or heard about: that fund managers often employ disinformation to manipulate prices. Jon Stewart has taken that train of thought to its logical conclusion: that "the game" -- usually played with short-selling -- Mr Cramer speaks of is being played at the expense of common investors.
Has the media lost touch with its responsibilities? A comment left on my last post suggested that Mr Cramer is an entertainer; well and good, but should a news corporation focus on entertainment or journalism designed to expose those who undermine society?
Jim Cramer, the host of CNBC's investment show "Mad Money", and Jon Stewart, the host of Comedy Central's "The Daily Show with Jon Stewart", spent twenty minutes together on Stewart's show. Actually, to be precise, Cramer spent twenty minutes with Stewart being lectured to.
I looked a the comments below the video. I think some people are missing the point of the interview:
1. "I've been watching Cramer's show for years, and I've read his books. He always says, "Do your homework". So anybody who buys stocks "because Jim said so" is not following his lessons. Since Oct. '08 the market has lost 40-50%, and I've lost only 20% because I followed his rules, not his stockpicks. In a recession you get into high dividend stocks, food and drug stocks, and cash. Don't chastise him because most of his stock picks went down. 90% of the market went down. He teaches the fundamentals of the market. Thanks to his lessons, I stayed away from banks. They were too volatile, even if Jim thought they would rebound. He always said they were high risk. Jon is disregarding Jim's frequent disclaimers.
by wally48159"
2. "MONDAY, FEBRUARY 9, 2009 Cramer's recommendations underperform the market by most measures. From May to December of last year, for example, the market lost about 30%. Heeding Cramer's Buys and Sells would have added another five percentage points to that loss, according to our latest tally http://online.barrons.com/article/SB123
by johndaman"
They miss the point. Mr Stewart is not angry that Mr Cramer was wrong; Mr Stewart is incensed because Mr Cramer, along with the financial experts hosted by news corporations, don't act as reporters but as entertainers. Mr Stewart plays video clips of Mr Cramer, taken in context, advising hedge fund managers to spread disinformation to cause the stock market to go broadly down so that hedge funds can make money off short selling. Mr Cramer then, in the same video, uses Apple as an example to explain in greater detail how to spread disinformation.
Mr Cramer has since left the financial sector to join a media giant. Media is supposed to side with the powerless; they report and expose what the powerful are doing and how it might hurt the powerless. Instead of pointing out disinformation regularly and taking men like Dick Fuld to task, Cramer and his counterparts in other media giants like CNN and MSNBC host shows called "Fast Money" and "Mad Money", becoming themselves an outlet for disinformation and market manipulation.
Mr Stewart points out, quite rightly, at the end of the interview that Mr Stewart, the comedian, should be making fart jokes and toilet jokes, not doing the serious reporting that Mr Cramer, as a financial expert, ought to be doing. The point is not that Mr Cramer made mistakes; the point is that Mr Cramer was and still is in a position to publicly expose different market movements as disinformation to protect the public though he chooses not to.
Mr Cramer may claim all he wants that he always opposed manipulation: video evidence proves the contrary. But even more to the point, Mr Stewart said it best when he said that the mark of a man is not what he says after the fact but what he does in the eye of the storm.
That fund managers use the media to spread disinformation for their own profit at the expense of 401ks and pensions, and that many people in the media know this but choose not to expose it publicly, is the point of Mr Stewart's interview with Mr Cramer.
I looked a the comments below the video. I think some people are missing the point of the interview:
1. "I've been watching Cramer's show for years, and I've read his books. He always says, "Do your homework". So anybody who buys stocks "because Jim said so" is not following his lessons. Since Oct. '08 the market has lost 40-50%, and I've lost only 20% because I followed his rules, not his stockpicks. In a recession you get into high dividend stocks, food and drug stocks, and cash. Don't chastise him because most of his stock picks went down. 90% of the market went down. He teaches the fundamentals of the market. Thanks to his lessons, I stayed away from banks. They were too volatile, even if Jim thought they would rebound. He always said they were high risk. Jon is disregarding Jim's frequent disclaimers.
by wally48159"
2. "MONDAY, FEBRUARY 9, 2009 Cramer's recommendations underperform the market by most measures. From May to December of last year, for example, the market lost about 30%. Heeding Cramer's Buys and Sells would have added another five percentage points to that loss, according to our latest tally http://online.barrons.com/article/SB123
by johndaman"
They miss the point. Mr Stewart is not angry that Mr Cramer was wrong; Mr Stewart is incensed because Mr Cramer, along with the financial experts hosted by news corporations, don't act as reporters but as entertainers. Mr Stewart plays video clips of Mr Cramer, taken in context, advising hedge fund managers to spread disinformation to cause the stock market to go broadly down so that hedge funds can make money off short selling. Mr Cramer then, in the same video, uses Apple as an example to explain in greater detail how to spread disinformation.
Mr Cramer has since left the financial sector to join a media giant. Media is supposed to side with the powerless; they report and expose what the powerful are doing and how it might hurt the powerless. Instead of pointing out disinformation regularly and taking men like Dick Fuld to task, Cramer and his counterparts in other media giants like CNN and MSNBC host shows called "Fast Money" and "Mad Money", becoming themselves an outlet for disinformation and market manipulation.
Mr Stewart points out, quite rightly, at the end of the interview that Mr Stewart, the comedian, should be making fart jokes and toilet jokes, not doing the serious reporting that Mr Cramer, as a financial expert, ought to be doing. The point is not that Mr Cramer made mistakes; the point is that Mr Cramer was and still is in a position to publicly expose different market movements as disinformation to protect the public though he chooses not to.
Mr Cramer may claim all he wants that he always opposed manipulation: video evidence proves the contrary. But even more to the point, Mr Stewart said it best when he said that the mark of a man is not what he says after the fact but what he does in the eye of the storm.
That fund managers use the media to spread disinformation for their own profit at the expense of 401ks and pensions, and that many people in the media know this but choose not to expose it publicly, is the point of Mr Stewart's interview with Mr Cramer.
Who watches the Watchmen? I just saw the 2009 film adaptation of Alan Moore's critically acclaimed graphic novel, Watchmen. The graphic novel is the only comic book to make Times magazine's top 100 books of all time. The film does not disappoint.
Free Exchange, at my leisure, will spend the next month profiling each of the Watchmen. Over the course of a week or two, I intend to dedicate each post to examining one aspect of each Watchmen. The first to be profiled will be Rorschach, the alter-ego of Walter Kovac. As a preview, your correspondent intends to examine Kovac's transformation into Rorschach through the analytical lens afforded by Nietzsche's Beyond Good and Evil, Thus Spoke Zarathustra and Conrad's Heart of Darkness. Nite Owl II is the next logical profile as Marlowe, the counterpart to Rorschach's Kurtz.
Look forward to that. As a disclaimer, Nietzschean analysis may be far more repetitive than Conradian analysis simply because I haven't had the honor of reading all of Thus Spoke Zarathustra, the work Nietzshe was most proud of.
Who watches the Watchmen? Free Exchange will.
Free Exchange, at my leisure, will spend the next month profiling each of the Watchmen. Over the course of a week or two, I intend to dedicate each post to examining one aspect of each Watchmen. The first to be profiled will be Rorschach, the alter-ego of Walter Kovac. As a preview, your correspondent intends to examine Kovac's transformation into Rorschach through the analytical lens afforded by Nietzsche's Beyond Good and Evil, Thus Spoke Zarathustra and Conrad's Heart of Darkness. Nite Owl II is the next logical profile as Marlowe, the counterpart to Rorschach's Kurtz.
Look forward to that. As a disclaimer, Nietzschean analysis may be far more repetitive than Conradian analysis simply because I haven't had the honor of reading all of Thus Spoke Zarathustra, the work Nietzshe was most proud of.
Who watches the Watchmen? Free Exchange will.
David Brooks needs to be more rigorous with his analysis:
"The White House has produced a chart showing nondefense discretionary spending as a share of G.D.P. That’s spending for education, welfare and all the stuff that Democrats love. Since 1985, this spending has hovered around 3.7 percent of G.D.P. This year, it’s about 4.6 percent. The White House claims that it is going to reduce this spending to 3.1 percent by 2019, lower than at any time in any recent Republican administration. I was invited to hang this chart on my wall and judge them by how well they meet these targets."
This is less a criticism of President Obama's budget, and much more a criticism of his projections. The statement "3.1 percent by 2019" assumes a certain figure for GDP in 2019. The economic forecasts of Goldman Sachs, JP Morgan, the Treasury and the Fed have all been re-evaluated over and over in the last year; the recent movement of the DJI suggests that they may be re-evaluated again. Lack of confidence in Mr Obama's fiscal stimulus in Wall Street and worries about the absence of a systematic plan to deal with the financial system doesn't help things much.
Mr Obama's projections (http://www.econbrowser.com/archives/20
"The White House has produced a chart showing nondefense discretionary spending as a share of G.D.P. That’s spending for education, welfare and all the stuff that Democrats love. Since 1985, this spending has hovered around 3.7 percent of G.D.P. This year, it’s about 4.6 percent. The White House claims that it is going to reduce this spending to 3.1 percent by 2019, lower than at any time in any recent Republican administration. I was invited to hang this chart on my wall and judge them by how well they meet these targets."
This is less a criticism of President Obama's budget, and much more a criticism of his projections. The statement "3.1 percent by 2019" assumes a certain figure for GDP in 2019. The economic forecasts of Goldman Sachs, JP Morgan, the Treasury and the Fed have all been re-evaluated over and over in the last year; the recent movement of the DJI suggests that they may be re-evaluated again. Lack of confidence in Mr Obama's fiscal stimulus in Wall Street and worries about the absence of a systematic plan to deal with the financial system doesn't help things much.
Mr Obama's projections (http://www.econbrowser.com/archives/20
Profile
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free_exchange- Matthew Lu