Why are emerging economies failing? (Video)

Counting the Cost revisits emerging markets and asks who is to blame for falling currencies and rising inflation.

Source:Al Jazeera

 Emerging markets are having a tough time the world over, but who is to blame? Is it the rich world's monetary policies or have more deep-seated problems merely been masked for years by stellar economic growth?

A few months ago, the headline was simple: The blame for slumping currencies from Brazil to Indonesia was to be put firmly at the door of the United States Federal Reserve.

Guido Mantenga, Brazil's finance minister, made it clear when he declared: "We are now facing new turbulence in the financial markets caused by the Fed, which has caused serious problems not only in Brazil but around the world."

But there are those who say all is not as it seems.

In India, for example, Raghuram Rajan, the new governor of the Central Bank, faces an uphill challenge. That country's appetite for gold and oil means that it is running a current account deficit, while subsidies and welfare programmes have increased its budget deficit. And rampant inflation and corruption are only making the situation worse.

Then there is another aspect to this problem. According to Bloomberg, emerging markets, with the exception of China, have more than $2.8tn of currency reserves. But it seems that they are saving that money and using interest rates to stop the outflow of money, which is failing to have the desired impact of slowing a rout in currencies.

At the G20 in St Petersburg, BRICS nations pledged to create a $100bn pool of currency reserves to protect themselves from any shocks. Despite that pledge, China and Russia stressed the need for nations to look within to rebalance their economies, thus ruling out bailouts.

Indonesia is a key example of the troubles afflicting emerging markets. Until a year ago, its economy was doing well. But now its currency has plunged, growth is slowing and inflation is increasing rapidly. The government has announced new economic measures, including the easing of regulations and tax deductions, in a bid to restore investor confidence, but will this be enough to fix one of the most important economies in Asia?
On this edition of Counting the Cost, we revisit the world's falling currencies. But this time we turn the spotlight on emerging economies and ask if they need to share some of the blame for their malaise.

Water wars 
Will the wars of the future be fought over water?

Many of us can simply turn on a tap and have near unlimited access to water. But what happens when this isn't the case? And are many of us oblivious to just what a source of conflict water can be?

Take the River Nile, for example. That flows through 11 African countries and has prompted all sorts of battles for its control. Then there is the River Jordan. Jordan, Israel and the Occupied Palestinian Territories depend on it. And the diversion of the river was one of the causes of the 1967 Arab-Israeli war. The Euphrates River has been at the heart of conflict between Turkey and Syria in the past, while India and Pakistan are in disagreement over the water that flows from Indian-administered Kashmir into Pakistan's Indus River basin.

Will these types of conflicts become more widespread and serious? It is World Water Week, so Counting the Cost decided to take a closer look at a potential source of conflict.

Africa's aviation hub?
If you think of an aviation hub, what comes to mind? London's Heathrow for Europe, Changi Airport in Singapore, or Dubai in the Middle East, perhaps?

But could Nigeria fulfil this role for Africa?

More than 10 million people travel through its 22 airports each year and that number is set to increase to 50 million over the next decade.

China has invested $500m to build more international terminals in the country and to assist with training and investment in virtually every area of the aviation sector.

"Essentially what we want to accomplish, at the end of the day, is to have Nigeria become the natural hub for the region, and then extend it for the continent, because we want to leverage on the population that we have," Princess Stella Adaeze Oduah, Nigeria's minister of aviation, declared.

However, some travellers passing through Nigeria's 22 airports say they are yet to feel the changes and improvements being made in the sector.

"Its been chaotic. I think if there had been a little bit more organisation, in terms of where departures are, arrivals, in terms of customs checks and so forth, it would be a better experience," a passenger named Prithvi told Al Jazeera.

Analysts say previous governments have not been committed to improving the aviation sector, but that this administration is investing heavily in infrastructure and training to get its ambitious ideas off the ground.

So, will the Nigerian government achieve its goal? And if it does, how could this impact the Nigerian economy?

 

President Barack Obama Weekly Address May 17, 2013 (Video/Transcript)

Remarks of President Barack Obama
Weekly Address
The White House
May 17, 2013

Hi, everybody.  Over the past few months, I’ve laid out a series of commonsense ideas to reignite the true engine of our economic growth: a rising, thriving middle class. 

The way I see it, there are three areas where we need to focus.  One: making America a magnet for good jobs.  Two: making sure our workers have the education and skills they need to do those jobs.  And three: making sure your hard work leads to a decent living.

I’ve also been visiting cities across the country that are doing some interesting and creative things along these lines. 

On Friday, I stopped by a factory in Baltimore that’s creating good jobs here at home by exporting digging equipment abroad. 

I read with young kids in a pre-K program, where kids are getting a head start learning the skills they’ll need to succeed in life. 

And I stopped by a program that’s helping folks in tough circumstances – especially low-income dads – get the training and guidance they need to find work and support their families. 

That’s why I like getting out of the Washington echo chamber whenever I can – because too often, our politics aren’t focused on the same things you are.  Working hard.  Supporting your family and your community.  Making sure your kids have every chance in life.

More than anything, the American people make me optimistic about where we’re headed as a nation.  Especially after all we’ve been through the past several years.  And that should encourage us to work even harder on the issues that matter to you.

In a little over three years, our businesses have created more than 6.5 million new jobs.  And while our unemployment rate is still too high, it’s the lowest it’s been since 2008.  But now we need to create even more good, middle-class jobs, and we need to do it faster. 

Corporate profits have skyrocketed to all-time highs.  But now we need to get middle-class wages and incomes rising too. 

Our housing market is healing.  But we still need to help a lot more families stay in their homes, or refinance to take advantage of historically low rates. 

And our deficits are shrinking at the fastest rate in decades.  But now we need to budget in a smarter way that doesn’t hurt middle-class families or harm critical investments in our future. 

So in a lot of sectors, things are looking up.  The American auto industry is thriving.  American energy is booming.  And American ingenuity in our tech sector has the potential to change the way we do almost everything. 

In the coming weeks, I’m going to visit more cities like Baltimore, and Austin, Texas – where I was two weeks ago; places where Americans are coming together to strengthen their own communities and economies – and in the process, making this country better for all of us. 

And I’m going to keep trying to work with both parties in Washington to make progress on your priorities.  Because I know that if we come together around creating more jobs, educating more of our kids, and building new ladders of opportunity for everyone who’s willing to climb them – we’ll all prosper, together.  

Thanks. And have a great weekend.

"The Retirement Gamble" Facing Us All (Video)

Watch The Retirement Gamble on PBS. See more from FRONTLINE.

April 23, 2013, 10:09 am ET · by Martin Smith

If you’ve been watching any commercial television lately, you are well aware that the financial services industry is very busy running expensive ads imploring us to worry about our retirement futures. Open a new account today, they say.

They are not wrong that we should be doing something: America is facing a retirement crisis. One in three Americans has no retirement savings at all. One in two reports that they can’t save enough. On top of that, we are living longer, and health care costs, as we all know, are increasing.

But, as I found when investigating the retirement planning and mutual funds industries in The Retirement Gamble, which airs tonight on FRONTLINE, those advertisements are imploring us to start saving for one simple reason. Retirement is big business — and very profitable. It doesn’t take a genius to figure out that the more we save into the industry’s financial products, the more money they make in fees and commissions trading our hard-earned cash. And as long as they don’t run away with our money or invest it in a Ponzi scheme, they have little in the way of accountability to us when something goes wrong. And even then it can be hard to fight back.

Big banks, brokerages, insurance companies and other financial service providers operate under something called a suitability standard — which says they don’t have to give you the best advice, just advice that isn’t too egregiously terrible.

Let’s say you sit down with an adviser at your brokerage or bank and ask for some advice on how you should allocate your retirement savings, or which funds you might want to choose for your IRA.

You’ll get lots of advice, but chances are it won’t be worth much. Eighty five percent of all financial advisers and financial planners are really just brokers or salesman. Their incentive is to sell you a product that makes them a higher commission, not necessarily a product that maximizes your chances of saving more. Only 15 percent of advisers are “fiduciaries” — advisers who by law must operate with your best interests in mind.

Last year, the Obama administration proposed a rule to mandate that all financial advisers, financial planners and other assorted financial wizards would have to adopt a fiduciary standard when it came to employee retirement accounts such as your 401(k) or IRA account. The financial services industry, which today manages something upwards of $10 trillion of our retirement nest eggs, thought this was a bad idea and pushed back hard. Scores of their protest letters poured into the U.S. Labor Department, the branch of our government responsible for regulating employee retirement accounts.

“As long as they don’t run away with our money or invest it in a Ponzi scheme, they have little in the way of accountability to us when something goes wrong. And even then it can be hard to fight back.”

Congress, too, was hit with a furious lobbying campaign. This would be way too expensive, the industry said; if we have to provide such a standard of service, we will either have to pack up and find another business line, or have to pass the increased costs on to our customers. The Obama administration pulled their proposal last fall.

How would a new fiduciary rule change things? Chances are you would be sold less expensive products, not only in your IRA accounts but inside your company 401(k) as well. It’s all about fees. While reporting on retirement plans for FRONTLINE, nothing has been more surprising to me than the corrosive effect of fees on our retirement savings.

It’s this simple: Fund fees can erode as much as half or more of your prospective gains.
For the sake of dramatizing the point, John Bogle, founder of Vanguard, the world’s largest mutual fund company and pioneer of low-cost index funds, gave me a startling example while we were filming. Assume you are invested in a mutual fund, he says, with a gross return of 7 percent, but that the mutual fund charges you an annual fee of 2 percent.

Over a 50-year investing lifetime, that little 2 percent fee will erode 63 percent of what you would have had. As Bogle puts it, “the tyranny of compounding costs” is overwhelming.

In short, fees matter. So what can you do? You aren’t going to find a fund that invests your money for free, but experts say you can come close by buying index funds. Their fees can be a tenth of what the average mutual funds charges. And over time, in bull and bear markets, on average, index funds perform better than their more expensive actively managed fund cousins. This is no secret to anyone who is paying attention.

So why aren’t our trusted financial advisers and those ads telling us to buy index funds? Why do some 401(k) plans not even offer them on their menus?

It’s because even though an index fund might be a better option for you and me, a broker operating under a suitability standard has no incentive to sell it to us. He or she will make higher commissions from options that have higher fees.

Sadly, a recent AARP study reported that 70 percent of mutual fund savers were not even aware that they were paying any fees at all.

Is there hope for change? The Labor Department says they plan to reintroduce a new fiduciary rule this summer that will force the financial services industry to think of us first when it comes to retirement. We’ll see how that goes.

In the meantime, The Retirement Gamble airs tonight (check your local listings here). What I uncovered while making this documentary made me rethink my financial future. It just might do the same for you.

The Sprit of Ferdinand Pecora

It’s time for the street to be scared-Very scared.

By Micheal M. Thomas Source: Newsweek December 24, 2012 issue

THE ELECTORATE has returned to the White House a man who, for many who voted for him four years ago, turned out to be a sheep in wolfs clothing when it came to dealing with Wall Street. In 2008 it was expected that one of his first priorities would be to deal with the Wall Street miscreants largely responsible for the financial crisis through a combination of punishment and reform. That didn't happen, and it was evident early on that it wasn't in the cards.

Even before the new president-elect had slept a night in the White House, Wall Street knew it was home free and off the hook. On Nov. 21, 2008, a date (which some say will live in infamy) falling barely two weeks after the election of a candidate representing "hope and change," President-elect Obama's transition team announced that the incoming administration's economics team would be headed by Lawrence Summers and Timothy Geithner.

As a character in a novel I'm working on observes of this development, "That's like appointing a couple of Ku Klux Klans-men to run the NAACP." On Wall Street, the Summers-Geithner announcement was cause for cracking open jeroboams of Dom Pérlgnon, lighting up the pre-Castros, and stuffing the garter belts of Scores pole dancers with $100 bills. The city's leading steak houses were once again suffused with that singular suffocating mixture of testosterone and profanity that marks a traders' bull market in full cry. The Dow Jones rocketed 1,000 points in two days. The sun came out from behind the clouds. 

And the auguries turned out to be every bit as blessed as could be wished for: over the following four years, this president would serve Wall Street's interests and purposes more lucratively than any chief magistrate since the palmy days of Calvin Coolidge. Despite this, starting in 2010, the Street reached deep down into its infinite capacity for self-destruction and launched an all-out propaganda campaign against the administration, turning on their new best friend in the White House with a vehemence that made little sense, attacking Obama for being anti-capitalist, for preaching "class warfare," for being a "socialist." Pretty tough language to use on a man whose leadership was protecting fat bonuses that have kept Ferrari dealers and high-end Hamptons realtors grinning like the Cheshire Cat while many in the country are eating cat food and sleeping rough. As the 2012 election approached, the outcry became increasingly strident, and in some cases -if taken at face value-beyond stupid: the hedge-fund magnate Leon Cooperman wrote an open letter to the president that on the face of it may have been as morally tone-deaf a rich man's public utterance as 1 have ever read.

Did Wall Street mean it-or was it just a bluff? A favorite recent addition to my lexicon is "agnotology," defined as "the study of culturally induced ignorance or doubt, particularly the publication of inaccurate or misleading scientific data." If 1 put on my conical-shaped agnotologists' hat (think of Mickey in Fantasia), 1 can't but harbor the faint suspicion that the anti-Obama invective was intended to generate tens of thousands more "anti-Romney" votes for the president than positive votes for his opponent.

There are serious people who believe this, Michael Hudson of the University of Missouri, Kansas City, is one of the most clear-sighted, common-sensical observers of the current state of the nation's political economy. Here's his theory: "The Democrats could not have won so handily without the Citizens United ruling. That is what enabled the Koch Brothers to spend their billions to support right-wing candidates that barked and growled like sheepdogs to give voters little civilized option but to vote for 'the lesser evil.' This will be President Obama's epitaph for future historians. Orchestrating the election like a World Wrestling Federation melodrama, the Tea Party's sponsors threw billions of dollars into the campaign to cast the president's party in the role of "good cop" against stereotyped opponents attacking women's rights, Hispanics, and nearly every other hyphenated-American interest group."

It's an ingenious way of looking at things-but too clever by half, in my view. I'm a great believer in "Hanlon's Razor," an epistemological axiom that advises "Never attribute to malice that which is adequately explained by stupidity." The problem with an intricate game plan carried out by people who think with their wallets is that it can backfire. I think the vituperation directed at the president by Wall Street is going to come back to bite the Street, and 1 think the Street knows it. More than the fiscal cliff or a bump in the base rate, or any other of the thousand man-made shocks that flesh is heir to, the Street fears being awakened on Christmas Eve by a visiting spirit hung all about with law books and handcuffs, who with a baleful, fixed glare pronounces the dread words, "1 am the spirit of Ferdinand Pecora-and this time I'm not fooling!"

Pecora was the federal prosecutor who in 1933 conducted a series of hearings in which various Wall Street titans, notably several partners of JPMorgan and Co. and the Chase and First National City banks, made so clear what an insiders' game Wall Street was that the Glass-Steagall Act (separating banking from speculating) and the Securities and Exchange Commission were created by the New Deal.

What is not generally recognized is that Pecora's great moment was Congress's second bite at the rotten apple. The previous year (1932, Herbert Hoover still in the White House) a first series of hearings on the 1929 crash had been conducted, and went nowhere, thanks to the soft-ball quality of the interrogatories. Among those put on the stand during the first go-round was the managing partner of Goldman Sachs, which during the roaring '20s had built giant ziggurats of interlocked investment companies that were sold to the public at high prices and subsequently went bust (shares of the Goldman Sachs Trading Company that were flogged to the public at around $50 could be picked up three or four years later for a dime; 1 mention this solely for the comfort of those who, like myself, are under absolutely no illusions about the moral composition of Goldman's DNA).

Now, a year later, came Pecora. But he wasn't the main difference maker. Between the first hearings in 1932 and the second series in 1933, an election had been held. Hoover was out, and FDR was now president, a man who came from the moneyed class and understood them, a man who four years later, running for reelection, would declare, "Wall Street hates me-and I welcome their hatred!" The game had changed. Enter Pecora, who induced one financial megasaur after another to show himself to be an arrogant pig for whom notions like public-mindedness meant zero, and who opened pathways that would lead to jail for one or two prime offenders. Interestingly enough, however, Goldman Sachs wasn't summoned back for the Pecora round. It may be that some form of double jeopardy protected the firm. My own theory is that rising Goldman star Sidney Weinberg had been FDR's principal Wall Street fundraiser, and this made the difference. As much as any politician, FDR understood that toast has two sides that need to be buttered.

This president has had four years to grasp a nettlesome truth that social researchers have known for a long time and in proof of which the nation has paid an extraordinarily high price: namely that the two professions most attractive to sociopaths and psychopaths are politics and finance. Will this impel him to deal more forthrightly with Washington and Wall Street? To substitute the straitjacket for the soft word? Suppose the administration decides to go after the neo-feudal finance oligarchy that seems to run this country? Decides that if Wall Street feels free to declare its hatred of him, he's free to hate back? Decides to unleash a second Pecora?

We'll know soon enough, when the president announces his choices for his economic quarterbacks. As I write. Warren Buffett is pushing JPMorgan Chase's Jamie Dimon for Treasury secretary. I have a measured respect for Buffett, but a worse choice for Treasury I can't imagine, especially after Dimon's bank's adventure in options trading known as "the London whale," the losses from which make even Captain Ahab's worst day look like a walk in Hyde Park. Personally, I'd like to see Treasury put in the hands of someone from "Industry," as we used to call the then-dominant sector of the economy. Someone who knows what real work looks and feels like. 1 always liked Paul O'Neill, former head of Alcoa, whom George W. Bush fired for speaking truth to power.

If the White House hasn't been bought off for a second term, the next four years could initiate the fresh start this country needs. So far, as I write, the signs are favorable: Obama has met with industry, small business, and labor. Dimon and his lot have gone largely uninvited. Of course, it could be a bluff a la Michael Hudson, but it could also be a first step in the right direction: to make the American people understand not only what has been done to them, but by whom, and for how much, in a way that makes them good and properly angry, at which point they can demand that their government do something about it. People may squeal about "class warfare," but what's wrong with that if the class being warred against has acquired its gross comparative advantages through fraud, legislative corruption (take a bow. Sen. Charles Schumer!), inside dealing, unlimited bank credit for speculation and all the other lucrative enriching tools reserved to or appropriated by the uppermost fractions of the 1 percent?

The need for reform is there, but the urge to reform can take hold effectively only if articulated from the bully pulpit. A skein of op-ed and talk-show pontifications rising from here to Mars won't get the job done. The country has reelected a president who, no matter what else he may be, is nothing if not articulate. The question is: in what does he believe? I remain skeptical, but I've often been wrong, and I hope I am now.

Among the more arresting images left in its wake by Hurricane Sandy is a photograph of one of the giant parking lots that serve the public beaches along the westernmost reaches of Long Island's south shore. The surface of the lot is entirely covered in great mounds of debris, the detritus of scores of houses destroyed by the tempest. When I first saw this photo, my first reaction was, naturally, pity and sympathy for the unfortunate people whose homes had been leveled and lives blown upside down. My second, however, was less poignant and humane. What a perfect analogy, 1 thought, for the public-sector balance sheets, and finances in general, of the United States-from the Federal Reserve to government "affiliates" like Fannie and Freddie to banks and other federally guaranteed savings and depositary institutions.

Thanks to a perfect conjunction of private sector greed and recklessness and public sector corruption, just as Sandy represented the coalescence of two violent storm systems, financial spaces created for public utility and convenience have been converted into vast junkyards into which has been dumped the wreckage of the housing-driven financial crisis that came to a head in 2008. Sooner or later, these will have to be cleaned up once and for all and restored to their proper use. In a perfect world, those most proximately responsible for the disaster would be compelled to clean up or render fair compensation for the mess they made. This was the great fear that gripped Wall Street following the 2008 election, and I think it is the great fear that grips Wall Street now.

You know something? If 1 were those people. I'd be scared, too. NW

Michael M. Thomas is a frequent commentator on Wall Street and the author, most recently of Love and Money.

Robots and Robber Barons

By PAUL KRUGMAN

The American economy is still, by most measures, deeply depressed. But corporate profits are at a record high. How is that possible? It’s simple: profits have surged as a share of national income, while wages and other labor compensation are down. The pie isn’t growing the way it should — but capital is doing fine by grabbing an ever-larger slice, at labor’s expense. 

Wait — are we really back to talking about capital versus labor? Isn’t that an old-fashioned, almost Marxist sort of discussion, out of date in our modern information economy? Well, that’s what many people thought; for the past generation discussions of inequality have focused overwhelmingly not on capital versus labor but on distributional issues between workers, either on the gap between more- and less-educated workers or on the soaring incomes of a handful of superstars in finance and other fields. But that may be yesterday’s story. 

More specifically, while it’s true that the finance guys are still making out like bandits — in part because, as we now know, some of them actually are bandits — the wage gap between workers with a college education and those without, which grew a lot in the 1980s and early 1990s, hasn’t changed much since then. Indeed, recent college graduates had stagnant incomes even before the financial crisis struck. Increasingly, profits have been rising at the expense of workers in general, including workers with the skills that were supposed to lead to success in today’s economy. 

Why is this happening? As best as I can tell, there are two plausible explanations, both of which could be true to some extent. One is that technology has taken a turn that places labor at a disadvantage; the other is that we’re looking at the effects of a sharp increase in monopoly power. Think of these two stories as emphasizing robots on one side, robber barons on the other.

About the robots: there’s no question that in some high-profile industries, technology is displacing workers of all, or almost all, kinds. For example, one of the reasons some high-technology manufacturing has lately been moving back to the United States is that these days the most valuable piece of a computer, the motherboard, is basically made by robots, so cheap Asian labor is no longer a reason to produce them abroad. 

In a recent book, “Race Against the Machine,” M.I.T.’s Erik Brynjolfsson and Andrew McAfee argue that similar stories are playing out in many fields, including services like translation and legal research. What’s striking about their examples is that many of the jobs being displaced are high-skill and high-wage; the downside of technology isn’t limited to menial workers.

Still, can innovation and progress really hurt large numbers of workers, maybe even workers in general? I often encounter assertions that this can’t happen. But the truth is that it can, and serious economists have been aware of this possibility for almost two centuries. The early-19th-century economist David Ricardo is best known for the theory of comparative advantage, which makes the case for free trade; but the same 1817 book in which he presented that theory also included a chapter on how the new, capital-intensive technologies of the Industrial Revolution could actually make workers worse off, at least for a while — which modern scholarship suggests may indeed have happened for several decades. 

What about robber barons? We don’t talk much about monopoly power these days; antitrust enforcement largely collapsed during the Reagan years and has never really recovered. Yet Barry Lynn and Phillip Longman of the New America Foundation argue, persuasively in my view, that increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees. 

I don’t know how much of the devaluation of labor either technology or monopoly explains, in part because there has been so little discussion of what’s going on. I think it’s fair to say that the shift of income from labor to capital has not yet made it into our national discourse.

Yet that shift is happening — and it has major implications. For example, there is a big, lavishly financed push to reduce corporate tax rates; is this really what we want to be doing at a time when profits are surging at workers’ expense? Or what about the push to reduce or eliminate inheritance taxes; if we’re moving back to a world in which financial capital, not skill or education, determines income, do we really want to make it even easier to inherit wealth?

As I said, this is a discussion that has barely begun — but it’s time to get started, before the robots and the robber barons turn our society into something unrecognizable.

Source: The New York Times

4 Ways Obama Might Win the Debt Ceiling Brawl

—By Kevin Drum

What happens after we get a deal on the fiscal cliff? If Republicans are to be believed, we'll just sail right into a second crisis, this time over raising the debt ceiling. They're insisting that, once again, they'll refuse to raise the ceiling unless President Obama agrees to massive spending cuts.

We'll see. But it's worth pondering what Obama's options are for simply ignoring the debt ceiling and continuing to spend money regardless of whether Republicans agree to raise it. Several theories have been floating around since the first debt ceiling crisis last year. Here they are:

• The 14th Amendment: Under this theory, the president would simply invoke the 14th Amendment, which says, "The validity of the public debt of the United States, authorized by law […] shall not be questioned." Bill Clinton thinks this would work, but it strikes me as unlikely. Even if the debt ceiling isn't raised, the public debt is still valid and the Treasury can continue to pay it. Lots of other spending would have to be cut, but not debt payments.


• The platinum coin: There's an obscure statute that authorizes the Treasury to mint platinum coins "in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time." Jack Balkin suggests that the secretary of the Treasury could simply mint a $1 trillion platinum coin, deposit it at the Federal Reserve, and then write checks on it. I don't buy this one either. It's just too outré. It's the kind of thing that sounds cute to a blogger tapping away on his laptop, but there's no way an actual president would ever try anything so obviously childish.


• Priority of legislation: In general, recent legislation overrides older legislation when there's a conflict. The president could argue that the last debt ceiling increase was passed in August 2011, and that any spending legislation passed since then implies Congress' consent to raise the debt ceiling. They knew we were running a deficit when they approved the spending, after all. Obama would just have to make sure to fund mandatory programs first (Social Security, Medicare, etc.), since they were authorized decades ago, and then issue new debt only to fund discretionary spending.


• You and whose army? This is the most important argument of all. Regardless of the legal justification, the real question is whether a court would interfere. Many people think the filibuster is unconstitutional, for example, but everyone agrees that it doesn't matter because no court will ever touch the subject. It's an internal matter for Congress to decide. This is similar: the debt ceiling is a political argument between two branches of government, not a legal one. Jonathan Zasloff adds a little meat to this argument, suggesting that there's literally no one with proper standing to sue in the first place.

During the last debt ceiling fight, Obama never suggested he'd resort to unilateral action like this. Partly that's because he genuinely wanted to make a "grand bargain" on spending, and the debt ceiling fight was pretty good political cover for that. This time he doesn't, so he might be more likely to try it. However, one interesting question about this is whether he's ever asked the Office of Legal Counsel for an opinion about any of these theories. If he has, and it was negative, that would probably restrain him. If he hasn't, he'd probably need to in order to maintain his credibility on the issue. That's a risk, of course, since there's no telling what OLC's lawyers would come up with. There's a political risk too: Congressional Republicans could go ballistic and become even more obstreperous than they are now. Fun times.

UPDATE: Via Twitter, Brian Beutler reminds me that OLC has given guidance to Obama on the 14th Amendment question. We just don't know what they said. However, given Obama's comments at the time, they probably told him no dice.

UPDATE 2: Several people have pushed back on my dismissal of the platinum coin ploy. I'm not a lawyer, but my sense is that this is so wildly contrary to the intent of the law, which was to allow the Treasury to issue commemorative and bullion coins, that a court probably would intervene if the president tried to pull this off. The other ploys are at at least minimally plausible, but this one is banana republic territory.

UPDATE 3: For what it's worth, I agree that the president's best option is to simply start shutting down chunks of the government if Congress refuses to raise the debt ceiling. Republicans seem to have convinced themselves that the lessons of 1995 no longer apply, but I think they do. This would be a PR disaster for them. They'd cave before long.
The thing they don't understand is that Obama wasn't playing hardball in 2011. He actually wanted a deal, and they were nuts not to take him up on it. This time he doesn't, and he has the power and the credibility to make sure that Republicans take the blame when national parks get closed and passports stop getting issued.

Source: Mother Jones

Bill Clinton full DNC Speech 2012

Lies On Parade

By Kevin Baker
Published on harpers.org
 
How do I lie to thee? Let me count the ways.

There were so many last night at the Republican National Convention—and I don’t mean just the usual convenient, half-apologetic, hey-what-do-you-expect-it’s-politics lies that conventions have been delivering by the bushel ever since the Anti-Mason Party convened the very first national political convention in America in 1831 (to nominate William Wirt, a Mason).

Nor do I mean the sort of standard, jingoistic, chest-thumping lies that all powerful nations have to feed themselves to keep the dreadful business of nationalism staggering forward until it collapses in a heap of Soviet-style self-contradictions and inanities.

No, I mean really imaginative, mind-boggling, pure-evil-genius lies, almost exquisite as an example of the genre. The bad news for America is that after a night of alarming drift and dysfunction, the Republican Party is back on its game, presenting a lineup of political professionals in the tried-and-true Donald Segretti-Lee Atwater-Karl Rove ratfucker mode. This dream team relentlessly hammered home the three or four agreed-upon talking points—over and over and over again—and thereby crafted a shiny new assault-rifle clip of meretriciousness.

How shall I count the ways?

The biggest lie by implication, the one that the mainstream media has focused on, was tossed out last night by the new Blue-Eyed Mr. Death of the right, Paul Ryan. In a meticulously crafted bit of legalese, he managed to blame President Obama for the GM plant shuttering in Janesville—an act that completed the long, sad deterioration of another small American city into a festering ruin, all under Ryan’s utterly indifferent watch. (Take a look at Danny Wilcox Frasier and Charlie LeDuff’s superb Mother Jones photo essay.)

The plant actually closed down in December 2008—when sitting president George W. Bush, Mitt Romney, and the entire Republican Party were still advocating that the American auto industry curl up and die. But Ryan suggested that Obama had broken a “promise” made when, during a campaign stop in Janesville in 2008, the candidate expressed the “hope” that the plant would remain open for another hundred years. (Later on last night, in a brazen MSNBC interview, the same point was made by Ryan’s tag-team pal, Scott Walker.)

But never mind. This was hardly the most outrageous lie last night. We also got to hear amazing lies of omission, lies of commission, lies with statistics, the Big Lie, and any number of small, needling, sociopathic lies that even the Republican handlers probably can no longer discern from reality.

Some examples? Sure. How about Senator John McCain, in the most grotesque speech of his life, asserting that “an American president always, always, always stands up for the rights, and freedoms, and justice of all people”—or at least did, until Barack Obama.

How about Senator John Thune condemning “the arrogance of a president whose first instinct is to condemn achievement.” That’s right, Barack Obama goes about “condemning achievement.”

How about Ohio businessman Steve Cohen, a prime-time speaker, condemning the president’s “war on coal”? Or Tim Pawlenty asserting that Joe Biden is not “a real vice president”?
Want sloppy, uncaring, historical lies from the party that talks incessantly about its love of the American past? Well, here’s Mike Huckabee sounding off on the “Founding Fathers of our great nation” and crafters of our “magnificent Constitution,” many of whom “died to pass on that heritage.”

Sorry, save for Alexander Hamilton, who was shot dead in a duel because he considered the sitting vice president to be a devious, lying asshole, all of those Founding Fathers died peaceful deaths. (Something tells me that today’s G.O.P. leaders would’ve been fighting duels almost continually if they had been around in 1804.)

Want a geopolitical lie?
Here’s Condi Rice claiming that “our friends and allies” abroad, “from Israel to Colombia, from Poland to the Philippines,” no longer “trust us.” A domestic lie? Here’s New Mexico Governor Susana Martinez claiming that Democrats “have not even passed a budget in Washington, D.C., in three years.”

Martinez, easily the most obnoxious speaker on a night that was a nonstop battle for that distinction, also strongly implied that to request Mitt Romney’s tax returns is to “demonize the American dream.” No doubt that was the implicit dream of our Founding Fathers as they fell dying on the battlefield: a world in which nobody would fight a fossil fuel, condemn achievement, or close the Janesville GM plant.

Supreme Court Upholds Health Care Law, 5-4, in Victory for Obama

By ADAM LIPTAK 
Published: June 28, 2012 
New York Times 

WASHINGTON — The Supreme Court on Thursday upheld President Obama’s health care overhaul law, saying its requirement that most Americans obtain insurance or pay a penalty was authorized by Congress’s power to levy taxes. The vote was 5 to 4, with Chief Justice John G. Roberts Jr. joining the court’s four more liberal members.

The decision was a victory for Mr. Obama and Congressional Democrats, affirming the central legislative achievement of Mr. Obama’s presidency. 

“The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax,” Chief Justice Roberts wrote in the majority opinion. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” 

At the same time, the court rejected the argument that the administration had pressed most vigorously in support of the law, that its individual mandate was justified by Congress’s power to regulate interstate commerce. The vote was again 5 to 4, but in this instance Chief Justice Roberts and the court’s four more conservative members were in agreement. 

The court also substantially limited the law’s expansion of Medicaid, the joint federal-state program that provides health care to poor and disabled people. Seven justices agreed that Congress had exceeded its constitutional authority by coercing states into participating in the expansion by threatening them with the loss of existing federal payments. 

Justice Anthony M. Kennedy, who had been thought to be the administration’s best hope to provide a fifth vote to uphold the law, joined three more conservative members in an unusual jointly written dissent that said the court should have struck down the entire law. The majority’s approach, he said from the bench, “amounts to a vast judicial overreaching.”

The court’s ruling was the most significant federalism decision since the New Deal and the most closely watched case since Bush v. Gore in 2000. It was a crucial milestone for the law, the Patient Protection and Affordable Care Act of 2010, allowing almost all — and perhaps, in the end, all — of its far-reaching changes to roll forward. 

Mr. Obama welcomed the court’s decision on the health care law, which has inspired fierce protests, legal challenges and vows of repeal since it was passed. “Whatever the politics, today’s decision was a victory for people all over this country whose lives are more secure because of this law,” he said at the White House. 

Republicans, though, used the occasion to attack it again. 

“Obamacare was bad policy yesterday; it’s bad policy today,” Mitt Romney, the presumptive Republican presidential nominee, said in remarks near the Capitol. “Obamacare was bad law yesterday; it’s bad law today.” He, like Congressional Republicans, renewed his pledge to undo the law. 

The historic decision, coming after three days of lively oral arguments in March and in the midst of a presidential campaign, drew intense attention across the nation. Outside the court, more than 1,000 people gathered — packing the sidewalk, playing music, chanting slogans — and a loud cheer went up as word spread that the law had been largely upheld. Chants of “Yes we can!” rang out, but the ruling also provoked disappointment among Tea Party supporters.  

In Loudoun County, Va., Angela Laws, 58, the owner of a cleaning service, said she and her fiancé were relieved at the news. “We laughed, and we shouted with joy and hugged each other,” she said, explaining that she had been unable to get insurance because of her diabetes and back problems until a provision in the health care law went into effect. 

After months of uncertainty about the law’s fate, the court’s ruling provides some clarity — and perhaps an alert — to states, insurers, employers and consumers about what they are required to do by 2014, when much of the law comes into force. 

The Obama administration had argued that the mandate was necessary because it allowed other provisions of the law to function: those overhauling the way insurance is sold and those preventing sick people from being denied or charged extra for insurance. The mandate’s supporters had said it was necessary to ensure that not only sick people but also healthy individuals would sign up for coverage, keeping insurance premiums more affordable.

Conservatives took comfort from two parts of the decision: the new limits it placed on federal regulation of commerce and on the conditions the federal government may impose on money it gives the states. 

Five justices accepted the argument that had been at the heart of the challenges brought by 26 states and other plaintiffs: that the federal government is not permitted to force individuals not engaged in commercial activities to buy services they do not want. That was a stunning victory for a theory pressed by a small band of conservative and libertarian lawyers. Most members of the legal academy view the theory as misguided,if not frivolous.

“To an economist, perhaps, there is no difference between activity and inactivity; both have measurable economic effects on commerce,” Chief Justice Roberts wrote. “But the distinction between doing something and doing nothing would not have been lost on the framers, who were practical statesmen, not metaphysical philosophers.” 

Justice Ruth Bader Ginsburg, in an opinion joined by Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan, dissented on this point, calling the view “stunningly retrogressive.” She wondered why Chief Justice Roberts had seen fit to address it at all in light of his vote to uphold the mandate under the tax power. 

Akhil Reed Amar, a Yale law professor and a champion of the health care law, said that it was “important to look at the dark cloud behind the silver lining.” 

“Federal power has more restrictions on it,” he said, referring to the new limits on regulating commerce. “Going forward, there may even be laws on the books that have to be re-examined.”

The restrictions placed on the Medicaid expansion may also have significant ripple effects. A splintered group of justices effectively revised the law to allow states to choose between participating in the expansion while receiving additional payments or forgoing the expansion and retaining the existing payments. The law had called for an all-or-nothing choice. 

The expansion had been designed to provide coverage to 17 million Americans. While some states have indicated that they will participate in the expansion, others may be resistant, leaving more people outside the safety net than the Obama administration had intended.

Although the decision did not turn on it, the back-and-forth between Justice Ginsburg’s opinion for the four liberals and the joint opinion by the four conservatives — Justice Kennedy and Justices Antonin Scalia, Clarence Thomas and Samuel A. Alito Jr. — revisited the by-now-familiar arguments. Broccoli made a dozen appearances. 

“Although an individual might buy a car or a crown of broccoli one day, there is no certainty she will ever do so,” Justice Ginsburg wrote. “And if she eventually wants a car or has a craving for broccoli, she will be obliged to pay at the counter before receiving the vehicle or nourishment. She will get no free ride or food, at the expense of another consumer forced to pay an inflated price.” 

The conservative dissenters responded that “one day the failure of some of the public to purchase American cars may endanger the existence of domestic automobile manufacturers; or the failure of some to eat broccoli may be found to deprive them of a newly discovered cancer-fighting chemical which only that food contains, producing health care costs that are a burden on the rest of us.” 

All of the justices agreed that their review of the health care law was not barred by the Anti-Injunction Act, which allows suits over some sorts of taxes only after they become due. That could have delayed the health care challenge to 2015. The conservative dissenters said that the majority could not have it both ways by calling the mandate a tax for some purposes but not others. 

“That carries verbal wizardry too far, deep into the forbidden land of sophists,” they said.

As a general matter, Chief Justice Roberts wrote that the decision in the case, National Federation of Independent Business v. Sebelius, No. 11-393, offered no endorsement of the law’s wisdom. 

Some decisions, the chief justice said, “are entrusted to our nation’s elected leaders, who can be thrown out of office if the people disagree with them.”

Justice Ginsburg, speaking to a crowded courtroom that sat rapt for the better part of an hour, drew a different conclusion.

President Obama Campaigns in Virginia

In Tampa, Florida the GOP is holding its convention and all the seekers are pouncing on President Barak Obama and claim that he lacks leadership. Who is making peace with the countries who had turned away from the U.S.A during the Bush Presidency? Who cares about the people who are less fortunate? Who care about the minorities in the world not just in the U.S. Who wants a world in peace? Who has a positive vision of the future?
People should also listen to President Obama like here in Virginia.
President Obama is showing the audience how important it is to vote in November.

Niall Ferguson attacks President Obama

Niall Ferguson: "Obama’s Gotta Go”

 is what Ferguson wrote in the news issue of The Newsweek.

One must take into account that Niall Ferguson had been an adviser to John McCain which points out his own ideology which might have clouded his view when writing his article.

Furthermore Niall Ferguson wrote, “Why does Paul Ryan scare the president so much? Because Obama has broken his promises, and it’s clear that the GOP ticket’s path to prosperity is our only hope.”

In in article he uses detailed numbers to validate his argument but he does not consider the question why Obama could not keep his promises. 

President Obama took office during the worst financial crises since the Great Depression after the passage of the United States' Smoot-Hawley Tariff in the 1930s. 

President Obama took office during a time when the income tax for the wealthiest in the United States was and still is at a historical low.

President Obama took office during a time when bankers got reworded for causing this financial crisis.

Nonetheless President Obama took on the challenge to tackle Healthcare despite overwhelming opposition from the right (GOP) as well as interest groups who feared a loss in their revenue, like insurance companies who otherwise could charge whatever they want. Surely what President Obama got was not perfect but only a compromise.  It would have been better if  the U.S. would have gotten a single payer system like the Europeans or in Asians have. However, to call President Obama's compromise a failure shows where Niall Ferguson interests are situated.  

Moreover  Niall Ferguson complains about President Obama's diplomacy. He calls him weak because President Obama is not like J.W. Bush and probably also Mitt Romney and Paul Ryan a war president. Do we really want to go back to the time of J.W. Bush and start a war again just because we want to look tough? Being cautious is not a sign of weakness but wisdom. 

And now Niall Ferguson’s solution is, to elect a man to become president who is a millionaire but who is clearly  not interested in the struggling American middle-class but in the ones who supported him with billions during this election cycle. In addition Niall Ferguson argues for a vice-president who wants to make the American people suffer in the same way as those in Greece, Spain, Portugal etc.  So the Mitt Romney and Paul Ryan pact can continue to give more money to the banks which have caused this misery in the first place.

Niall Ferguson suggest to have valued added tax like in Germany which would be even unfairer as the current tax giveaway to the super-wealthy. It would make life for the poor as well as the middle-class even more difficult.

Writers like Niall Ferguson are out to protect their wealth regardless of the suffering of the common man around the world. I often wonder about this kind of journalism. I wonder about the ones who have their own private agenda, the ones who protect their own interests as Niall Ferguson does and see in the GOP ticket as a path to more prosperity for themselves and the ones who have more than they ever need.