So, it’s going to be an interesting few weeks. I will once again be live blogging the Rising Tide conference of New Orleans Bloggers next Saturday. The topic is Oil on the Water and it promises to be a great one (Number 7). This evening I will be a guest on Loisirslit. This is a radio show dedicated to giving the community of New Orleans information on ways to improve literacy, arts and music. Its purpose is to inspire citizens to become change agents for these things in New Orleans. I will be talking about Sky Dancing Blog andabout my role as a New Orleans Blogger at our little corner of the blogosphere. I’m really excited about both of these projects and their role in shaping the city and its culture. I’ve always believed that activism begins in the place where you have the most to lose. I will be bringing several people with me to the show. The first is a representative from Rising Tide. The second is my friend Otter who runs the Backyard Ballroom. You may remember my adventures in playing the music for her play “Bourbon Street” a few years ago. I’m hoping to get some tape to share with you. We’ll be discussing our hopes for a New Orleans Renaissance. The panel–of which I am one of several people–will discuss the response to Hurricane Issac, our badly defunded and crippled criminal ‘justice’ system, and the quest for a New Orleans Renaissance. I’m really excited to bring our community here into the spotlight.
Well, some of us in New Orleans are trying to keep it real. The Republican party remains in the la la land of lies and obfuscation.
The Republicans appear to have nothing left this campaign season but a stack of lies. BB told me about John Kasich’s outrageous lies and misogyny yesterday. Try this one on for size: John Kasich: Political Spouses Are At Home Doing Laundry. Is this the HEY! Iron MY Shirt moment of this election?
Only, his wife is actually a career woman and very active in other things outside the home. This is not the party of respect for women no matter what their calling.
“It’s not easy to be the spouse of an elected official,” Ohio Governor John Kasich said at a rally for Mitt Romney in Cincinnati on Wednesday. “You know, they’re at home doing the laundry and doing so many things while we’re up here on stage getting a little bit of applause.” His comment set off a flurry of outrage .
But few have pointed out that for many years of Kasich’s political career, his wife worked outside of the home.
According to a 2010 article in The Columbus Dispatch, for nearly twenty years, until around 2002, Karen Kasich worked in marketing and public relations, serving most notably as vice president of public relations at Gerbig, Snell and Weisheimer, a healthcare advertising agency. The Kasichs began dating in 1989 and married in 1997, meaning that for much of the Governor’s political life (which began when he became a member of the Ohio Senate in 1978), Karen Kasich was working outside of the home.
Though she ended her almost two-decades-long professional career two years after giving birth to the couple’s twin daughters, she continues to stay highly involved in public life. Her official website states that she “is honored to have an opportunity to increase awareness on topics that are near and dear to her heart: children’s wellness and women’s heart health” and to this end she works with both The Partnership at Drugfree.org and Ohio Valley’s Go Red For Women Council. She’s run the Columbus and the Air Force marathons, she helped coach the girls’ soccer team, and she met her husband when she helped assemble the Ohio State University football guide and included a picture of the then-Representative.
It seems like Rush Limbaugh and Lynn Cheney are the only ones out defending Romney’s outrageous politicization of the death of US American diplomats through lies and disturbing sociopathic smirks. Limbaugh is on such a streak of unbelievable lies that one has to question if he’s gone back to using drugs. Maybe Community College Flunk-Outs just shouldn’t be doing foreign policy.
Polite and serious pundits were shocked when Mitt Romney suggested, and RNC Chairman Reince Priebus outright declared, that President Obama “sympathized” with those who killed American diplomats in Libya. But anyone familiar with the alternative universe version of Obama created by the right shouldn’t be too surprised. As TPM’s Josh Marshall wrote, the charge was “picked wholesale from the right-wing blogosphere.”
It’s now taken for granted on the far right that the statement issued by the U.S. Embassy in Cairo condemning the anti-Islamic film that sparked the violence (which was expressly not authorized by the Obama administration) is tantamount to ”apologizing to Al-Qaida,” as Fox News host Steve Doocy said this morning. But for those prone to believe Obama is a secret Muslim radical, or at least feckless enough to sympathize with them, there’s always been that one key bit of evidence that even a heavy does of cognitive dissonance can’t ignore — Obama authorized the mission that killed bin Laden.
Well, Rush Limbaugh today finally offered a Unified Theory of Obama’s Radical Muslim Sympathies, with a clever workaround for the bin Laden thing: Al-Qaida intentionally “gave up Osama Bin Laden” in order to “mak[e] Obama look good.” The “wild theory,” as Limbaugh himself call it, flagged by Media Matters, says al-Qaida wants to keep Obama in power because the Democrat is bad for Israel, so Islamists have a better chance of destroying the country than under a Republican president:
Liz Cheney has come up with a totally off-the-wall idea that apologies caused the attacks now that we know that Romney’s assertion that the apology came after the attack is completely untrue. This party not only has a war on women, it has declared war on Truth, Reason, and Reality.
As GOP foreign policy hands balk at Mitt Romney’s statements about the attacks on American diplomats in Libya and Egypt, the governor’s campaign and its surrogates continue to push the line that Obama’s “weak” foreign policy and his purported “apologies” for America invited the violence:
– LIZ CHENEY: “Apologizing for America, appeasing our enemies, abandoning our allies and slashing our military are the hallmarks of Mr. Obama’s foreign policy.” [Romney Press Release, 9/12/2012]
– SEN. JOHN MCCAIN (R-AZ): “The United States is weak and withdrawing and that’s why you’re seeing a lot of leaders reacting.” [Today Show, 9/13/2012]
— SEN. JIM INHOFE (R-OK): “What foreign policy? The policy of appeasement. Yes, it’s happening as a result of that.” [The Hill, 9/13/2012]
These direct swipes at the State Department and Hillary Clinton’s leadership of the state department goes beyond the pale. Are you aware that the Cairo Embassy is actually run by a woman who has been a Clinton, Bush and Obama Appointee? Ambassador Anne Patterson is one of the most experienced foreign service officers in the diplomatic corps.
Meanwhile, back here in reality where people actually count, SOS Clinton takes time to condemn the violence triggered by religious nuts offending other religious nuts.
Today, U.S. Secretary of State Hillary Rodham Clinton and Moroccan Foreign Minister Saad-Eddine Al-Othmani launched the U.S.-Morocco Strategic Dialogue at the U.S. Department of State in Washington, D.C. Before addressing the first session of this Strategic Dialogue, Secretary Clinton commented on events unfolding in the world. The Secretary said:
“We are closely watching what is happening in Yemen and elsewhere, and we certainly hope and expect that there will be steps taken to avoid violence and prevent the escalation of protests into violence.
“I also want to take a moment to address the video circulating on the internet that has led to these protests in a number of countries. Let me state very clearly — and I hope it is obvious — that the United States Government had absolutely nothing to do with this video. We absolutely reject its content and message. America’s commitment to religious tolerance goes back to the very beginning of our nation. And as you know, we are home to people of all religions, many of whom came to this country seeking the right to exercise their own religion, including, of course, millions of Muslims. And we have the greatest respect for people of faith.
“To us, to me personally, this video is disgusting and reprehensible. It appears to have a deeply cynical purpose: to denigrate a great religion and to provoke rage. But as I said yesterday, there is no justification, none at all, for responding to this video with violence. We condemn the violence that has resulted in the strongest terms, and we greatly appreciate that many Muslims in the United States and around the world have spoken out on this issue.
“Violence, we believe, has no place in religion and is no way to honor religion. Islam, like other religions, respects the fundamental dignity of human beings, and it is a violation of that fundamental dignity to wage attacks on innocents. As long as there are those who are willing to shed blood and take innocent life in the name of religion, the name of God, the world will never know a true and lasting peace. It is especially wrong for violence to be directed against diplomatic missions. These are places whose very purpose is peaceful: to promote better understanding across countries and cultures. All governments have a responsibility to protect those spaces and people, because to attack an embassy is to attack the idea that we can work together to build understanding and a better future.”
You can read the Secretary’s full remarks here.
So, would all those Romney backing assholes that call themselves Hillary supporters like to refer to her as an apologist for the sake of consistency or should we think any kind of rationality out of insane right wing nuts is just expecting a bull to give milk? Again, I find every voting strategy other than voting for Romney/Ryan rational. Supporting bigotry, racism and lies is unacceptable in my ethos.
There are lots of right wing lies going on about this event. One of the big ones is that the Marines at the Cairo Embassy weren’t allowed live ammo. Again, this swipe at Hillary Clinton’s leadership is purely political and aimed at making the Obama administration weak for the benefit of Chicken–4 time draft dodger–Mittens. This outright lie was hyped by a Fox guest and is all over right wing blogs right now. The Marine Corps itself has discredit this LIE.
In response, the U.S Marine Corps discredited the rumor, calling it “not accurate.” From the Corps congressional liaison’s memo:
The Ambassador did not impose restrictions on weapons or weapons status on the Marine Corps Embassy Security Group (MCESG) detachment. The MCESG Marines in Cairo were allowed to have live ammunition in their weapons. The Ambassador and Regional Security Officer have been completely and appropriately engaged with the security situation. Reports of Marines not being able to have their weapons loaded per direction from the Ambassador are not accurate.
Additionally, as Mother Jones points out, a glance at the State Department’s guidelines reveals that an ambassador could not give such an order. Accordingly to State Department regulations, Marines may be assigned “duties other than those previously described in this section to the Marines as may be required by urgent or security-related circumstances requiring immediate action,” but “[s]uch duties shall not contravene established Department or Marine Corps policy and shall not unduly jeopardize the safety or well-being of any Marine.”
I’m shuddering at the thought of having any Republican near the Fed right now. Here’s a Guardian article on ‘Ben Bernanke rescues the US economy from the nihilism of the right’. My guess would be that Romney wouldn’t care if the economy crashed because he’d just take his family and plant his ass where his money is.
Still, one can only imagine the teeth-gnashing and frothing at the mouth from conservatives and libertarians that will greet Thursday’s announcements.
It’s hard to know if the Republicans simply want to destroy the economy in order to deny Obama re-election, or if they really believe that Bernanke is corrupting the soul of America. In the end, it doesn’t really matter. It’s what Ben Bernanke does that matters.
Contrast this act of lashing himself to the mast to the hesitant and diffident statements made by the Fed chairman earlier this year, in which he admitted that the economy was doing poorly but wouldn’t commit to doing anything about it. And compare earlier statements of angst over tarnishing the Fed’s “hard-won inflation credibility” to the more recent statement of concern about the fate of America’s unemployed. Back then, it was clear that Bernanke, the clear-minded professor who knew what needed to be done, had been sidelined by Bernanke, the brow-beaten and bullied. Not any longer.
I suspect that the right’s unyielding and vitriolic nihilism towards the economy has been an education for Professor Bernanke. From Thursday’s actions, we can only infer that it has finally freed Chairman Bernanke to do the right thing.
I have a feeling that Bernanke will eventually change his voter registration. I’m not sure what to, but I’m pretty positive that he’s too smart to be a Republican or to back Romney.
What’s on your reading and blogging list today?
I admit to being completely exhausted. So, let’s see what I can dig up while I’m half asleep.
Josh Holland at AltNet thinks right wingers shouldn’t get too excited about Scott Walker’s win in Wisconsin on Tuesday.
An honest reading of the published exit poll leads to an important conclusion about Walker’s victory that has little to do with unions, Walker’s policies, the economy or any of the other factors that have pundits’ tongues wagging.
Fully 70 percent of those voters polled believed that recall elections are either never appropriate (10 percent) or are only appropriate in the case of official misconduct (60 percent).
The governor won 72 percent of this group. And it’s worth noting that a third of those voters who said “official misconduct” is a good reason to recall a governor voted to oust Walker, who has seen six of his staffers charged with 15 felonies in the “John Doe” probe.
While Walker himself has not yet been charged, reports suggest that the investigation is circling closer to him. Over the past seven weeks, he transferred $160,000 from his campaign funds to a legal defense fund, according to the Milwaukee Journal-Sentinel.
Mohamed A. El-Erian –CEO and co-Chief Investment Officer of the global investment company PIMCO speculates on US economic growth at Project Syndicate. He wonders “Is American Healing Fast Enough?”
Six internal factors suggest that the United States’ economy is slowly healing. For some observers, these factors were deemed sufficient to form the critical mass needed to propel the economy into escape velocity.
While I hoped that they might be proven right, the recent stream of weak economic data, including May’s timid net job creation of only 69,000, confirmed my doubts. With this and other elements of a disheartening employment report now suddenly raising widespread worries about the underlying health and durability of America’s recovery, it is important to understand the positive factors and why they are not enough as yet.
For starters, large US multinational companies are as healthy as I have ever seen them. Their cash balances are extremely high, interest payments on debt are low, and principal obligations have been termed out. Many of them are successfully tapping into buoyant demand in emerging economies, generating significant free cash flow.
Company cash is not the only source of considerable spending power waiting on the sidelines. Rich households also hold significant resources that could be deployed in support of both consumption and investment.
The third and fourth positive factors relate to housing and the labor market. These two long-standing areas of persistent weakness have constituted a major drag on the type of cyclical dynamics that traditionally thrust the US out of its periodic economic slowdowns. But recent data support the view that the housing sector could be in the process of establishing a bottom, albeit an elongated one. Meanwhile, job growth, while anemic, has nonetheless been consistently positive since September 2010.
Great! The richer are richer and big corporations are making it big abroad. What about the poor American worker? Evidently the Fed must think things are shaping up because Bernanke and Yellen are both hinting that the days of historically low interest rates might be nearing the end.
In spite of May’s weak jobs report, Fed Chairman Ben Bernanke still sees no reason for the central bank to expand its efforts to boost the American economy. The Fed is assessing whether the economy would continue to grow fast enough to reduce the unemployment rate without further intervention, he said.
This is an interesting youtube by Mauro Martino at Northeastern University. It’s aninfographic of fundraising by the presidential candidates from March 2011 to Feburary 2012.
There’s a lot going on here, but the animated graphic shows how much each of the candidates raised each week and what states it came from, based on the amount of contribution per capita. The top half lists the states on a spectrum from most liberal to most conservative.
What’s great about the graphic is it shows just how drastically Mitt Romney and Barack Obama are in a different monetary league than the other Republican candidates who battled Romney for the nomination. That’s most obvious in the spikes — Ron Paul, Newt Gingrich, and Rick Santorum seldom did better than Romney even on their best days, but Romney’s highest peaks are exponentially larger than theirs.
The disparity becomes clear in the geographic breakdown, too. Romney and Obama tend to raise the most money in the same set of states: D.C., Massachusetts, California, New York, Florida, Texas, Connecticut, and Colorado. Of those states, five are solid Democratic, one is solid Republican, and two are swing. But they’re also the states with the highest concentrations of wealthy people. Meanwhile, the circles for Santorum, Gingrich, and Paul are fairly consistent across the map. At a time when the role of money and politics is fiercely debated, this visualization shows just how far out of proportion the relation between money and votes is. Obama has no chance of winning Texas, but it’s a cash cow for him; the same goes for Romney and California. It’s not hard to imagine how that distorts incentives for candidates. It’s not just that Romney and Obama are playing in a different league. Until August or so, they might as well be playing in a different nation, one comprised of 10 states or so.
Alec MacGillis asks: “Why we are listening to Bill Clinton on Wall Street?” over at TNR in an interesting article called “Let Us Bow Down before the Big Dog”.
Left largely unsaid, though, is that it is also hardly unsurprising for Clinton to be speaking up in defense of high finance. Remember: this is the man who as president presided over the alliance of Wall Street and the Democratic Party, embodied in his treasury secretary, Goldman Sachs veteran (and future Citigroup executive) Robert Rubin. It was Clinton who signed the repeal of Glass-Steagall, the 1933 law breaking up securities firms and commercial banks; it was Clinton whose advisers, notably Rubin and Larry Summers, blocked Brooksley Born’s push for tighter regulation of derivatives; it was Clinton who lowered the capital gains tax in 1997, vastly boosting the bottom line of private equity managers like Mitt Romney who, via the carried interest loophole, had their compensation treated as capital gains rather than ordinary income.
Surely it is no accident that Clinton’s other recent remark undermining Obama was also related to Obama’s allegedly over-populist stance toward high finance and the very wealthy. In an interview last fall with Newsmax — yes, Newsmax — Clinton critiqued Obama’s talk of raising taxes on millionaires who currently pay at very low rates (“The Buffett Rule”) by saying that it was a bad idea to raise anyone’s taxes “until we get this economy off the ground.” He added for good measure: “We don’t have a lot of resentment against people who are successful. We kind of like it, Americans. It’s one of our best characteristics that, if we think someone earned their money fairly, we do not resent their success. Americans lost the fact that, whatever you think about this millionaire surcharge — I don’t really care because I would pay it but it won’t affect me because I already paid income because I live in New York. I will pay more, but it won’t solve the problem.” Clinton tried to clarify these remarks later, but not before Crossroads GPS, the group founded by Karl Rove, built an Obama attack ad around the remarks.
What is utterly lost in the pundits’ exaltation of Clinton’s comments on Bain is that there is, in fact, a real debate going on within the Democratic Party, and that the reaction to the Obama campaign’s attacks on Bain are bringing out the intra-party tensions. On the one side are Democrats like Obama who have seen many former Wall Street supporters turn away from them for daring to hold them responsible for the 2008 financial collapse, for proposing reforms like closing the carried-interest loophole, and for generally believing that the explosive growth of the financial sector the past three decades has not exactly been healthy for the country. These Democrats argue that, while attacks on Bain might not play so well in the Acela Corridor, they may well resonate in Ohio. On the other side of the debate are Democrats like Clinton and Cory Booker, the mayor of the 68th biggest city in the country, who have managed to remain in the good graces of Wall Street, not least because they are not in the position of having to fix what went terribly wrong in the fall of 2008, and who also, it must be noted, are indebted to the high-finance world — Booker for its crucial support of his campaigns, and Clinton for its support of his post-White House philanthropic efforts.
Big dogs never bite the hand that feeds them.
So, this is my offering this morning. What’s on your reading and blogging list today?
The importance of central bank autonomy has been an incredibly deep and absolutely noncontroversial line of academic research for decades. There’s all kinds of proxies you use in empirical regression models to measure how much or little political interference with central banks because high political interference has been shown to be extremely bad for a country’s economic performance. In the past, politically railroading a central bank–like the Fed–been associated with incredibly high rates of inflation and currency depreciation. I’m not in a habit of citing my academic research or my research sources here but the proxy I use to represent central bank authority in my study of foreign direct investment, trade, and optimal currency areas comes from this group of international economists at the IMF. It’s important in my line of research to control for items that basically show poor governance practices and strategies that tank an economy when you’re trying to study countries that are in the process of developing. In other words, what the Republicans are doing is a clear signal to economists, financiers and business they intend to put political power above the health o the economy. Here’s the IMF article if you want to give it a glance and you can check the ratings assigned to countries of the world.
Arone, Marco, Bernard J. Laurens, Jean-Francois Segalotto and Martin Sommer (2008), “Central Bank Autonomy: Lessons from Global Trends”, IMF Staff Papers
Again, there’s a really strong, direct, significant relationship between bad economies and a central bank influenced by politics It is one of the reasons that Greece and Spain had such horrible problems before they switched to the EURO. They still have horrible problems but it’s because of their fiscal policy now and not their monetary and fiscal policy. If you see a sign that a country’s central bank and monetary policy is overtly influenced by its politicians, bar the door! That’s basically a prime definition of banana republic and it’s not some where businesses put their investments or banks lend money.
So, in the spirit of current Republican vein of sending us back to our ante Civil War selves, why does this shock but not surprise me? Why don’t they just state their support for the mercantilism of the 18th century and get it over with? This isn’t your father’s, grandmother’s, or great grandparent’s version of capitalism. This is basically the kind of stuff you’d expect from the golden age of privateering and government-blessed trade monopolies like the Indian Tea Company when the king’s gold was all that mattered.
Here’s a statement from the General Manager of the Bank of International Settlements in Switzerland on modernizing and institution building in Albania from 2005 that’s germane to my argument. I’ll use this as an example of the general acceptability of what I’m saying rather than feed you about a 10 page bibliography of accepted research in the are from only the last two decades. It’s under his subheading of “secrets of success”. Again, my area of research is basically finding ways to get developing nations out of banana republic status while the Republican party seems to be working very hard at putting the US back there.
Over the past few decades, a consensus has emerged about what makes for good central banking. This has permitted central banks to deliver a very important public good ─ price stability ─ and has afforded them the opportunity to contribute to greater financial stability. One way of summarising this consensus is in terms of three key elements that make the central bank effective as a policy institution.
The first element is for the central bank to have a clear mandate. As Yogi Berra – the legendary American baseball player and manager of the New York Yankees – once said, “If you don’t know where you’re going, you will wind up somewhere else”. Central banks know where they are going. New central bank legislation generally accords primacy to price stability as an objective. Where statutory changes have not been made, existing legislation has been interpreted in such a way that achieving price stability is seen as the sine qua non for attaining mandated objectives. More generally, the public has come to expect central banks to deliver price stability.
The second key element is autonomy. If central banks are to achieve the objectives that have been set for them, they need to have sufficient autonomy to do so. Without it, there is a risk that short-term political or fiscal considerations will dominate. Therefore, central bank policy decisions need to be shielded from undue political pressure or sectarian interests.
Accountability is the third key element of effective central banks. It is closely linked with the other two. If a central bank is given autonomy to achieve a certain objective, it needs to be held to account for its success or failure; and the clearer the objectives, the easier it will be to determine success or failure.
Okay, so hopefully, I’ve convinced you that this is something nearly every economist, financier, and business operating throughout the world knows. So, why does Agent Orange and the Rindettes–Mitch MConnell, John Kyl, Eric Cantor– feel the need to buck modern theory and do this? (Okay, they deny all the theories of modern science, so why would economic theory be any different?)
Dear Chairman Bernanke,
It is our understanding that the Board Members of the Federal Reserve will meet later this week to consider additional monetary stimulus proposals. We write to express our reservations about any such measures. Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.
It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth or reduced the unemployment rate. To the contrary, there has been significant concern expressed by Federal Reserve Board Members, academics, business leaders, Members of Congress and the public. Although the goal of quantitative easing was, in part, to stabilize the price level against deflationary fears, the Federal Reserve’s actions have likely led to more fluctuations and uncertainty in our already weak economy.
We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy. Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers. To date, we have seen no evidence that further monetary stimulus will create jobs or provide a sustainable path towards economic recovery.
Ultimately, the American economy is driven by the confidence of consumers and investors and the innovations of its workers. The American people have reason to be skeptical of the Federal Reserve vastly increasing its role in the economy if measurable outcomes cannot be demonstrated.
We respectfully request that a copy of this letter be shared with each Member of the Board.
Not only is this appalling from a policy standpoint, it is basically asking the FED to ignore or break current law. There are laws on the books that mandate the fed to stabilize the economy; past LAWS PASSED BY CONGRESS! I now firmly believe that the Republican party intends to create the economic conditions of a country like Mexico. Their tax policies have been creating banana republic-like income equality. Their deregulation schemes have been creating banana republic-like crony monopolies. Again, this is policy made to eviscerate the middle class and create plantation and share cropper systems. Welcome back to the confederacy folks!
So, here’s a bit of the shock and awe the policy has left on the financial/economist community who have just about had it with seeing universally accepted lessons denied. From Stan Collender whose books I’ve taught from many times: GOP to Fed: Let the Economy Fail.
According to CNBC, the letter instructed the Fed “to refrain from further ‘intervention’ in the economy.
In other words, now that the GOP has made it all but impossible for fiscal policy to be used to improve they economy, they want to make sure that the only other tool the government has at its disposal — monetary policy — isn’t used either.
Why take on the Fed? The Republicans have some direct control over fiscal policy because they can either refuse to consider a proposal in the House where they are in the majority or can filibuster legislation in the Senate where they are in the minority. Because the Fed is an independent agency, the GOP can only do what they did today in the letter by threatening to bring down the wrath of god if it dares take any action to get the economy moving.
“Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers,” the letter from Republicans said.
Many economists, however, are unconvinced by these risks and argue that a weakened dollar would be good for the country because it would make American exports more attractive.
With unemployment at 9.1 percent and Congress unable to agree on fiscal policies that might encourage job creation, many advisers have been calling on the Fed to continue using whatever ammunition it has left.
The Federal Reserve is an independent body whose decisions do not have to be ratified by the president or Congress, and efforts to influence monetary policy are discouraged to maintain its credibility.
“Even if I agreed” with the Republican letter, Tony Fratto, a former adviser to President George W. Bush, wrote in a Twitter post, “I’d still disagree with the effort to put public political pressure on Bernanke.”
Over the years, there have been many efforts by members of both parties, from both the White House and Congress, to influence Fed policies, according to Allan H. Meltzer, a political economy historian at Carnegie Mellon.
Less than a year ago Michele Bachmann, a Minnesota congresswoman who is running as a Republican presidential candidate, sent a letter to Mr. Bernanke urging him to refrain from the last round of stimulus, which the Fed ultimately decided to do.
In recent months other Republican presidential candidates have stepped up their attacks on Fed policy, with Rick Perry, the governor of Texas, calling further easing “treasonous.”
Fed critics have said they are merely trying to counter pressure from Democrats for the Fed to do more.
“This is the most politicized Fed we’ve ever had,” Mr. Meltzer said. “They’ve been doing the Treasury’s work for quite some time, buying things like Treasuries and bonds. It’s no surprise that there’s political pressure coming from the other direction.”
The Federal Reserve was meant to be independent so that it would be shielded from short-term political interests, and Fed officials have repeatedly said they are unmoved by external political pressures. A Fed spokeswoman acknowledged receiving the letter on Tuesday evening but she declined to comment further.
Appearing to cave to political interests — on the left or the right — could compromise the Fed’s authority and jolt markets even more than a popular or unpopular policy decision.
Steven Benen is focused on why they would do such a thing and I have to agree that this is pure politics. The Republicans are so obsessed with regaining the White House and tanking the President, they are will to send us all straight to banana republic hell. This is the kind of behavior that assigns the sovereign debt of nations to junk bond status. Republicans are willfully trying to create a depression for all intents and purposes.
If this seems at all familiar, it’s because Republican leaders also wrote a letter to Bernanke last November, expressing “concerns” about the Fed’s efforts to boost economic growth.
There’s no shortage of problems with this. For one thing, the Federal Reserve is supposed to be an independent agency. This kind of partisan lobbying from congressional leaders is unseemly.
But given the larger circumstances, Republicans’ disregard for political norms is the least of the nation’s troubles. More pressing is the fact that the leaders of a major political party appear eager, if not desperate, to prevent steps that may improve the economy. The top four GOP members of Congress, including the Speaker of the House, practically demanded yesterday that no steps be taken at all as our anemic growth stalls and the job crisis intensifies.
The “sabotage” question comes up from time to time, and this certainly won’t help. As things stand, Republican leaders, some of whom have admitted that defeating President Obama is their single highest priority, now want the Fed to sit on its hands, want to strip the American Jobs Act of its most effective measures, and want to raise middle-class taxes. Oh, and they’re threatening to shut down the government, too. These are just the positions they’ve talked up over the last week.
Voters backed Republicans in last year’s elections because they wanted to see a healthier economy. The irony is rich.
To say it’s unusual for a political party to try to influence the Fed is an understatement.
When I was Secretary of Labor in the Clinton Administration, it was considered a serious breach of etiquette — not to say potentially economically disastrous — even to comment publicly about the Fed. Everyone understood how important it is to shield the nation’s central bank from politics.
If global investors suspect the Fed is responding to political pressure of any kind, investors will lose confidence in the independence of the Fed and its monetary policies. Even if the pressure is to tighten the money supply and keep interest rates high, it’s still politics. And once politics intrudes, lenders of all stripes worry that it will continue to intrude in all sorts of ways. Lending to the United States becomes a tad riskier. As a result, lenders charge us more.
The Republican letter puts Bernanke and his colleagues in a bind. If they decide against another round of so-called “quantitative easing” to lower long-term rates and boost the economy, they may look like they’re caving to congressional Republicans. If they decide to go ahead notwithstanding, they’re bucking the Republicans and siding with Democrats. Either way, they’re open to the charge they’re playing politics.
Congressional Republicans evidently don’t care. They want Obama out, whatever the cost. Besides, they’ve never met a government institution they don’t mind trashing.
Again, this is not the behavior of developed nations. We are facing the tyranny of a minority. It reeks of the kind of coup d’etat behavior you get from juntas in banana republics too.
We’ve talked about the earthquake in Virginia some. This is one of the most interesting op eds I’ve seen for some time and it’s written by Dr. Stuart Jeanne Bramhall who is actually a psychologist but has done some research on the subject. She argues that fracking in neaby West Virginia could’ve been responsible for the unusual and unusually large quake. I know there’s a lot of controversy about fracking but I had no idea it could cause earthquakes. Actually, fracking itself doesn’t, its another step in the process and it’s happened before in Arkansas.
According to geologists, it isn’t the fracking itself that is linked to earthquakes, but the re-injection of waste salt water (as much as 3 million gallons per well) deep into rock beds.
Braxton County West Virginia (160 miles from Mineral) has experienced a rash of freak earthquakes (eight in 2010) since fracking operations started there several years ago. According to geologists fracking also caused an outbreak of thousands of minor earthquakes in Arkansas (as many as two dozen in a single day). It’s also linked to freak earthquakes in Texas, western New York, Oklahoma and Blackpool, England (which had never recorded an earthquake before).
Industry scientists deny the link to earthquakes, arguing that energy companies have been fracking for nearly sixty years. However it’s only a dozen years ago that “slick-water fracks” were introduced. This form of fracking uses huge amounts of water mixed with sand and dozens of toxic chemicals like benzene, all of which is injected under extreme pressure to shatter the underground rock reservoir and release gas trapped in the rock pores. Not only does the practice utilize millions of gallons of freshwater per frack (taken from lakes, rivers, or municipal water supplies), the toxic chemicals mixed in the water to make it “slick” endanger groundwater aquifers and threaten to pollute nearby water-wells.
Horizontal drilling and multi-stage fracking (which extend fractures across several kilometres) were introduced in 2004.
The op ed provides links and information on the the related research and information on the prior quake experience in Arkansas.
Mitt Romney lost his cool last night in a New Hampshire Town Meeting. The dust-up was over Romney’s support of a balanced budget amendment which is basically anathema to economists. You can watch the video and the resultant hair malfunction that results. Also, interesting to note is Mediate’s use of the word “former” in front of front runner.
Former GOP presidential frontrunner Mitt Romney got into a heated exchange with a voter at a New Hampshire town hall event Wednesday over his support for a balanced budget amendment, and by the mainstream media’s selective standards, lost his cool when she tried to engage him. In clips played on MSNBC’s The Daily Rundownthis morning, Romney certainly appeared angry by those standards, and the full exchange, while slightly less damning, demonstrated a marked contrast with how President Obamadealt with an aggressive questioner recently.
The snippets that MSNBC played, of Romney snippily asking the town hall attendee to let him answer her question, were obviously designed to show the candidate as impatient and besieged, but placing them in context doesn’t change things all that much. Romney aggressively interrupts the woman’s calm, if rambling, question by asking her, “Did somebody in the room say that we don’t need any government?”
When she tries to engage his question, calling the balanced budget amendment “irresponsible,” he interrupts her again, abruptly asking, “Do you have a question, and let me answer your question.”
“Yes, how do you think the government can not provide funds for the people, its citizens?”
Romney begins to answer the question, and from there, you can’t hear what the woman is saying, but Romney reacts angrily to her attempts to follow up, saying, “You had your turn madam, now let me have mine!”
Frum Forum mentions the number of economists that think a double dip recession is inevitable. I want to bring this up now so that when you hear the villagers say most economists didn’t think that it was going to happen that you’ll see that a lot–if not most–of us do think that. Also, note that the majority of us have been saying that the Federal government has been doing the wrong Fiscal Policy things since about 2007 too. Paul Krugman mentions that the fiscal policy response has just been gunning for another recession tool.
At this point the entire advanced world is doing exactly what basic macroeconomics says it shouldn’t be doing: slashing spending in the face of high unemployment, slow growth, and a liquidity trap. It’s a global 1937. And if the result is another recession, the witch-doctors will just demand more bleeding.
Yup, the austerity demons will undoubtedly howl for more budget cuts and more tax cuts for the unjob creators.
The U.N., U.S. and NATO have unfroze Libyan assets so the transitional government can provide critical humanitarian aid to the Libyan People. This news comes from the US State Department.
The UN Security Council’s Libya Sanctions Committee approved a U.S. proposal to unfreeze $1.5 billion of Libyan assets to be used to provide critical humanitarian and other assistance to the Libyan people. The U.S. request to unfreeze Libyan assets is divided into three key portions:
Transfers to International Humanitarian Organizations (up to $500 million):
- Up to $120 million will be transferred quickly to meet unfulfilled United Nations Appeal requests responding to the needs of the Libyan people (including critical assistance to displaced Libyans). Up to $380 million will be used for the revised UN Appeals for Libya and other humanitarian needs as they are identified by the UN or other international or humanitarian organizations.
Transfers to suppliers for fuel and other goods for strictly civilian purposes (up to $500 million):
- Up to $500 million will be used to pay for fuel costs for strictly civilian needs (e.g., hospitals, electricity and desalinization) and for other humanitarian purchases.
Transfers to the Temporary Financial Mechanism established by the Contact Group to assist the Libyan people (up to $500 million):
- Up to $400 million will be used for providing key social services, including education and health. Up to $100 million will be used to address food and other humanitarian needs.
The United States crafted this proposal in close coordination with the Transitional National Council, as they assessed the needs of the Libyan people throughout the country. It responds to humanitarian concerns in a diversified way that prioritizes key needs. The United States will work urgently with the Transitional National Council to facilitate the release of these funds within days.
The President of the AFL-CIO continues his harsh criticism of President Obama. This should be interesting since labor unions provide a lot of GOTV work for elections at all levels.
The most powerful union official in the country offered reporters his harshest critique of President Obama to date Thursday, questioning Obama’s policy and strategic decisions, and claiming he aligned himself with the Tea Party in the debt limit fight.
“This is a moment that working people and quite frankly history will judge President Obama on his presidency; will he commit all his energy and focus on bold solutions on the job crisis or will he continue to work with the Tea Party to offer cuts to middle class programs like Social Security all the while pretending the deficit is where our economic problems really lie,” AFL-CIO President Richard Trumka told reporters at a breakfast roundtable hosted by the Christian Science Monitor.
Trumka dismissed Obama’s recent job creation proposals — an extended payroll tax cut, patent reform, free trade deals — as “nibbly things that aren’t going to make a difference,” and said the AFL-CIO might sit out the Democratic convention if he and the party don’t get serious.
“If they don’t have a jobs program I think we’d better use our money doing other things,” Trumka said.
The editors of Bloomberg are down on monetary policy and are asking for more relevant fiscal policy in this op ed: The U.S. Needs a Jobs Policy, Not More Cheap Money. Well, at least some body gets it. The Federal Government can create jobs. Some one just needs to get the President to believe that and fight for it.
While the Fed can only print money, the government has the power to create jobs directly. And jobs are what the economy needs now, to break the chain in which high unemployment, weak consumer demand and low business confidence reinforce one another. Bloomberg View has laid out some of the best options available for a national jobs policy:
— Public-works spending can lift demand and put people to work in capital-intensive industries such as construction.
— A tax credit for companies that increase their headcount can encourage hesitant employers to hire at minimal cost to taxpayers.
— Programs that pay the wages of new hires as they gain on-the-job training can efficiently target the long-term unemployed.
— Allowing the unemployed to collect benefits while starting up new businesses can prompt older, better-educated people to create their own opportunities.
— For some entry-level jobs, scrapping the reporting of criminal records on applications can help qualified workers get a foot in the door and stay out of prison.
— And to make the spending more palatable to congressional opponents, President Barack Obama could offer to cut some of the red tape holding back hiring and economic growth, such as the outdated Davis-Bacon Act, which artificially raises the cost of public-works projects.
Altogether, a meaningful jobs package might cost taxpayers more than $200 billion over a couple years. To provide the government the leeway it needs to support the economy in the short term, it’s crucial that the congressional supercommittee, which must find $1.5 trillion in deficit reduction over the next 10 years, recommend a combination of new revenue, spending cuts, tax reforms and entitlement changes that would put the government’s long-term finances on a sustainable path.
Whatever Bernanke says today, he can’t rescue the economy alone
Yup. But, we’ve been talking about that here for a long time. I feel a bit blue in the face, do you?
So, here’s some news from North Dakota where seven oil companies are charged with killing birds.
Seven oil companies have been charged in federal court with illegally killing 28 migratory birds in Williams County.
Slawson Exploration Company of Kansas, ConocoPhillips Company, Petro Hunt, LLC and Newfield Production Company, all of Texas, Brigham Oil and Gas, LP of Williston, Continental Resources, Inc. of Oklahoma, Fidelity Exploration and Production Company of Colorado face charges of violating the Migratory Bird Treaty Act.
Most of the dead birds were found in un-netted oil reserve pits in May. An employee of one company alerted the Fish and Wildlife service to some of the dead birds. Others were found by inspectors.
In one case, an oil spill leaked into a nearby wetland, where several ducks died as a result of exposure to the oil.
The U.S. Fish and Wildlife Service says netting is the most effective way of keeping birds from entering waste pits.
The maximum sentence they face is six months in federal prison and a $15,000 fine.
So corporations have all these people rights now, how do we get them into prison for those six months? Perhaps Uncle Clarence Thomas has a suggestion?
What’s on your reading and blogging list today?
Susie was taken to the hospital early this morning for a possible heart attack and is being kept there for observation and testing until tomorrow morning.
The Fed’s been doing some pretty nontraditional things recently under Ben Bernanke. A lot of this was not unexpected given his record of academic research on the subject of the Fed trying to be more public about its actions and the role of Quantitative Easing in Japan’s lost decade recovery. I thought I’d put a few things up about both. I’m going to have to use some monetarist jibber jabber so please ask questions if the jargon is overwhelming! It’s easier to explain the jargon downthread than write a long run on post with explanations included.
The Roosevelt Institute held a Future of the Federal Reserve Event. Here’s video via RortyBomb of Joseph Stiglitz discussing QE2 among other Fed issues. I mentioned something yesterday down thread about the effectiveness of transmission of monetary policy through the traditional interest rate channel into the real economy and Stiglitz has a fairly succinct comment on that. There is some debate on how much the Fed can actually do much at this point–with zero bound interest rates–to get at unemployment and even the inflation coming from higher oil and food prices. We know it can happen, it’s just we don’t have empirical evidence under similar situations–other than from Japan–to know the degree to which stuff can happen right now. So it could be an infinitesimally positive effect even thought it’s a positive effect.
There’s been some discussion of this on economists’ blogs since the Bernanke Presser a few days ago. Mark Thoma tweeted this critique of both him and Brad Delong on the Bernanke Presser from a monetarist’s site from blogger economist Stephen Williamson. My first masters was in Monetary Economics so I’m well-steeped in monetarist theory.
In standard form, Mark Thoma’s heartgoes out to the unemployed, as mine does. However, Mark is much more certain than I am that the Fed can actually help these people out. Here is what Mark would have asked Ben about, if he could:
The main question I wanted to hear Bernanke answer is, given that inflation is expected to remain low, why isn’t the Fed doing more to help with the employment problem? Why not a third round of quantitative easing?
In retrospect, more aggressive action by the Fed was warranted in every instance. Perhaps this time is different — I sure hope so — but the recovery has been far too slow to be tolerable. Green shoots require more than hope, they require the nourishment, and with fiscal policy out of the picture it’s up to the Fed to provide it.
Well, the answer to the question: “Why not a third round of quantitative easing?” should be: “Because it does not do anything.” (see here). In retrospect, the Fed could not have done any more than it did, even if you think that sticky wages and prices matter in a big way. Mark may think that the level of employment is intolerable, but the Fed has to tolerate it in the same way I have to tolerate the soggy weather outside.
I wanted to put this up before I linked to Krugman’s Op-Ed today which argues that Bernanke may be unduly influenced by inflationistas and Ron Paul, of all people called “The Intimidated Fed” and that he can do more. Because, I’m not so sure the FED can do much more or if it’s Ron Paul that’s the dragon needing slaying. First, I think it more like that Bernanke is being influenced by two Fed Presidents sitting on the Board of Governors right now than by Ron Paul. But, I’m not a DC or FED insider so it’s pure speculation on my part.
Some background: The Fed normally takes primary responsibility for short-term economic management, using its influence over interest rates to cool the economy when it’s running too hot, which raises the threat of inflation, and to heat it up when it’s running too cold, leading to high unemployment. And the Fed has more or less explicitly indicated what it considers a Goldilocks outcome, neither too hot nor too cold: inflation at 2 percent or a bit lower, unemployment at 5 percent or a bit higher.
But Goldilocks has left the building, and shows no sign of returning soon. The Fed’s latest forecasts, unveiled at that press conference, show low inflation and high unemployment for the foreseeable future.
True, the Fed expects inflation this year to run a bit above target, but Mr. Bernanke declared (and I agree) that we’re looking at a temporary bulge from higher raw material prices; measures of underlying inflation remain well below target, and the forecast sees inflation falling sharply next year and remaining low at least through 2013.
Meanwhile, as I’ve already pointed out, unemployment — although down from its 2009 peak — remains devastatingly high. And the Fed expects only slow improvement, with unemployment at the end of 2013 expected to still be around 7 percent.
It all adds up to a clear case for more action. Yet Mr. Bernanke indicated that he has done all he’s likely to do. Why?
Second, I’m not sure Bernanke (i.e. The FED) is in a very strong position to do much that can influence the real economy right now. The QE stuff really only shifts the FED portfolio around between long and short term debt which can influence yield curves, but, at the zero bound, there’s still a limited impact on real interest rates. You really can’t go lower than zero in nominal terms. Also, the FED’s bought all this crap from every one from Belgian cities to AIG to give them more liquidity and for the most part, that money’s not channeling back into the US economy in the forms of loans. Monetary policy is never very effective when an economy is in a liquidity trap (extremely low interest rates) and its transmission channel–the way the policy gets to the real economy where GDP lurks–morphs during various economic conditions. We’re not seeing anything resembling 20th century economic conditions.