Category Archives: Politics

Michael Hudson: U.S. New Cold War Policy Has Backfired

Yves here. Michael Hudson looks at the way what he calls “the New Cold War” is creating alliances among countries that the US has as designated enemies, when the classic foreign policy playbook is to do everything you can to keep your opponents isolated.

One thing that is striking about the US decision to escalate against Russia is that it’s not at all clear what the trigger was. And that raises the possibility that these hostilities were instigated out peeve, or what one might more politely call imperial reflex, reflecting the belief that Russia needed to be punished for its various sins, such as supporting Iran, outmaneuvering the US in Syria, and harboring Snowden. And the assumption appears to have been that Russia could be taken down a notch or two on the geopolitical stage at no cost to the US. Hudson explains that the reverse is proving to be the case.

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SEC’s Mary Jo White Approves of Torture

It might seem bizarre to solicit the view of a financial regulator on torture. But not only did this happen but the regulator was queried about the real deal, and more than once. The reason in SEC chairman Mary Jo White’s case is that in her prior life, she prosecuted terrorism cases, such as a 1993 plot to bomb the UN. And the tacit assumption was that if Mary Jo White approved of torture, um, the firm handling of foreign fanatics, she’d be tough with crooks in in the moneyed classes too. From FAIR’s blog last April (hat tim Mark Ames):

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Obama Administration Muzzling Its Climate Scientists

Yves here. The fact that Team Obama is gagging its climate scientists should come as no surprise. First, the Administration is obsesses with secrecy and image-management, as its extremely aggressive posture on classifying records and prosecuting leakers attests. Second, Administration climate policy is founded on a Big Lie. As Gaius Publius has written at length, its greenhouse gas measures exclude methane, the most potent greenhouse gas. That omission favors fracking, which fails the “clean green” test when you factor in methane releases. And that’s before you factor in contamination of water supplies.

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Yanis Varoufakis: Ten Questions on the Eurozone, with Ten Answers

Yves here. Yanis Varoufakis’ discussion today focuses on hot-button issues in the Eurozone, which isn’t getting the attention it warrants in the US press right now, given the competition from so many stories closer to home, such as the oil price collapse to sustained protests over police brutality to the CIA torture report.

Admittedly, while a crisis looks inevitable, with Germany committed to incompatible goals (continuing to be export-driven but not lending to its trade partners), the Troika has made kicking the can down the road into such an art form so as to have dulled the interest of most Eurozone watchers. But there’s been a bit of a wake-up call with the possibility that Greek prime minister Antonis Samaras’ gambit of calling for a presidential snap election (which is a vote within the legislature) will fail, leading to general elections. A general election is widely expected to produce a victory for the leftist party Syriza, which is opposed to more bailouts, and one is scheduled to be wrapped up within the next couple of months. Syriza wants the debts restructured and also wants to be allowed to deficit spend, which in an economy so slack, would reduce debt to GDP ratio over time (the austerians keep ignoring the results of their failed experiments: when you cut government spending, the economy shrinks disproportionately. As a result, this misguided method for putting finances on a sounder footing makes matters worse as government debt to GDP ratios rise as a direct result of spending cuts).

As much as the Syriza leader, Alexis Tsipras, has spoken against bailouts, even if he comes into power, it’s not clear that he has the resolve to bluff the Troika successfully. International lenders will rely on the notion that Tsipras can’t afford to threaten a default, since that could trigger bank runs and potentially rescues via depositor bail-ins and are likely to push back hard. But the spike up in Greek government bond yields and the near 12% plunge in the Greek stock market yesterday says investors are plenty worried about the possibility of brinksmanship, and the tail risk that Greece might actually default and print drachmas to fund its government budget, which would be grounds for kicking it out of the Eurozone.

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Elizabeth Warren Escalates Fight over Treasury Nominee Antonio Weiss, Goes to War with Wall Street Wing of Democratic Party

Earlier this week, we wrote about how the New York Times’ Dealbook, the creature of Wall Street sycophant Andrew Ross Sorkin, had launched a fierce campaign against Elizabeth Warren’s latest move, her opposition to the Obama administration’s nomination of Lazard’s Antonio Weiss, a mergers and acquisitions banker. Warren’s grounds for objecting to Weiss were straightforward: his experience was no fit for the requirements of his proposed Treasury role. On top of that, he had been involved in and therefore profited from acquisitions called inversions that Treasury opposes because they reduce the taxes paid by the acquirer, which uses the acquired company to move its headquarters to a lower-tax jurisdiction.

Dealbook published three Warren-bashing columns in as many weeks; the Washington Post and Wall Street Journal ran editorials making similar arguments, suggesting that all were picking up on the same talking points out of Treasury. One tell: the Times had to issue a correction on one of its pieces because it relied on a Treasury document that exaggerated Weiss’ accomplishments.

Warren upped the ante in a speech on Tuesday, making Weiss, who is now head of investment banking at Lazard, a symbol of what is wrong with the relationship between the government and Big Finance: that of far too much coziness between the large, influential players and financial regulators. And in sharpening and further documenting her critique, she has put the Robert Rubin wing of the Democratic party in her crosshairs.

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Bill Moyers on The Lives of the Very Very Rich

Yves here. While this site talks regularly about the 1% and the 0.1%, we don’t often give a more specific idea of who they are. A recent Bill Moyers show gave a vignette of the super-rich, not just the 0.1%, but the 0.01%, who as we know all too well are playing a vastly disproportionate role in reshaping politics and our society.

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NYTimes Dealbook’s Dishonest Salvo at Elizabeth Warren Over Calling Out an Unqualified Nominee for Treasury Post

Even though Andrew Ross Sorkin and his mini-empire, the New York Times Dealbook, are reliable defenders of their Big Finance meal tickets, they’ve managed to skim above, if sometimes just barely above, abject intellectual dishonesty. But Dealbook has published not one but three pieces in as many weeks in defense of an unacceptably weak Obama Administration nominee for an important Treasury post, the Under Secretary of Domestic Finance.

The candidate is Antonio Weiss, a Lazard mergers and acquisitions professional who was elevated to head of investment banking in 2009. There’s no doubt that Weiss is accomplished. The non-trivial problem, as Elizabeth Warren and others have pointed out, is that Weiss’ experience and skills have absolutely nothing to do with the Treasury role.

What is striking is the way that Sorkin and his colleagues have launched what amounts to a media war against Warren in defense of Weiss, and have shameless resorted to a drumbeat of Big Lies in the hope that their messaging will stick. The fact that they can’t even mount a proper case on its merits speaks volumes about Weiss’ qualifications for the job.

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Tom Engelhardt: Washington – War Party Ascendant

It was the end of the road for Chuck Hagel last week and the Washington press corps couldn’t have been more enthusiastic about writing his obituary. In terms of pure coverage, it may not have been Ferguson or the seven-foot deluge of snow that hit Buffalo, New York, but the avalanche of news reports was nothing to be sniffed at. There had been a changing of the guard in wartime Washington. Barack Obama’s third secretary of defense had gone down for the count.

But the press blood lust conveniently missed the real story, that of the ever-increasing power of the War Party within the Beltway.

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The ECB’s Balance Sheet and Draghi’s Confidence Game

Yves here. This post provides a high level summary and assessment of the ECB’s post-crisis conduct. Among other things, it demonstrates that the ECB makes the Fed look good. Some readers will take issue with the fact that Mody treats QE as a reasonable policy, when the experimental policy has goosed asset markets without doing much for the real economy. It has hurt savers by flattening the yield curve and reducing yields on longer-term investments and many economists believe it has exacerbated income inequality, which is increasingly seen as a drag on growth. However, the hair shirt of the Masstricht treaty rules out fiscal stimulus, and most economists accept the view that monetary stimulus is better than standing pat.

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Meet and Greet Natalie Jaresko, US Government Employee, Ukraine Finance Minister

The new finance minister of Ukraine, Natalie Jaresko, may have replaced her US citizenship with Ukrainian at the start of this week, but her employer continued to be the US Government, long after she claims she left the State Department. US court and other records reveal that Jaresko has been the co-owner of a management company and Ukrainian investment funds registered in the state of Delaware, dependent for her salary and for investment funds on a $150 million grant from the US Agency for International Development. The US records reveal that according to Jaresko’s former husband, she is culpable in financial misconduct.

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Gaius Publius: An “Open Rebellion Caucus” Forms in the Senate

Yves here. Gaius Publius describes how an increasingly uppity faction within the Democratic party is revolting against the way that the party has become largely indistinguishable from the Republicans on economic matters. Oh, they make more middle class friendly noises, but as Lambert puts it, “The Republicans let you know they plan to knife you in the face. The Democrats tell you they only want one kidney. What they don’t tell you is next year they are coming for the other kidney.”

But can this “Open Rebellion Caucus” make headway when the Democratic party has moved to significant central control of funding?

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Workers vs. Undocumented Immigrants: The Politics of Divide & Conquer

Yves here. Obama’s plan to give 4 million illegal immigrants temporary suspension from deportation has amped up the intensity of the already-heated debate over immigration and competition for US jobs from foreign workers.

This Real News Network interview with Bill Barry, who has organized documented and undocumented workers in the textile industry, makes an argument at a high level that many will find hard to dispute: that the fight over immigration reform and the status of undocumented immigrants diverts energy and attention from the ways in which a super-rich class is taking more and more out of the economy, to the detriment of laborers.

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Chicago Public Schools’ $100 Million Swaps Debacle Demonstrates High Cost of High Finance

I’ve been late to write up an important series published by the Chicago Tribune earlier this month on a costly swaps misadventure by the Chicago Public Schools. Like all too many state and local government entities, the Chicago Public Schools were persuaded to obtain $1 billion of needed ten-year financing not through the time-and-tested route of a simple ten year bond sale but the supposedly cost-saving mechanism of issuing a floating-rate bond and swapping it into a fixed rate. An impressive, expert-vetted analysis of the deal by the Chicago Tribune estimated that the school authority has in fact incurred $100 million in present-value losses on that $1 billion bond issue.

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