Showing posts with label Obama. Show all posts
Showing posts with label Obama. Show all posts

Saturday, July 11, 2009

Are Inflation Fears Real? An Economist Says No

Scott Fullwiler, an economist writing at the blog Economic Perspectives From Kansas City, observes that fears of inflation that have been expressed in various circles lately, all having to do with the large amounts of liquidity the Federal Reserve has pumped into the economy (you know, Obama’s economy recovery package?), are misplaced. In fact, he says,
As of July 2, 2009, the Fed reported the following assets on its balance sheet:

* Term Auction Credit: $283 billion
* Commercial Paper Lending Facility: $115 billion
* Central Bank Liquidity Swaps: $115 billion
* "Other" Loans (includes the Primary Dealer Credit Facility): $119 billion

Together, these assets amount to $632 billion. And what do they all have in common? They are all LOANS. Note also that they comprise the bulk of the $726 billion in reserve balances held by banks the Fed reports on its liability side.
Moreover, all of the loans in question are short-term, and have already been repaid.

The fear among Fed critics is apparently that the Fed lacks an “exit strategy;” i.e., it has no clear plan to counter the rise in reserve balances, which they claim will lead to inflation. Yet Fullwiler explains that
Banks DO NOT use reserve balances to create loans. They create loans and deposits simultaneously out of thin air. They use reserve balances to settle payments or meet reserve requirements ONLY. If a bank is short reserve balances for either of these purposes, the Fed provides an overdraft AUTOMATICALLY at a stated penalty rate, which the bank then clears via the money markets or the cheapest alternative. Whether banks in the aggregate hold $1 or $1 trillion in reserve balances, there operational ability to create loans is the same . . . infinite! (Though the creation of even 1 loan requires a willing, credit-worthy borrow in the first place, of course.)...That is how loan creation works in a modern monetary system. The belief that banks need reserve balances in order to lend is only applicable in a gold standard-type of monetary system.
In short, there’s no danger of inflation stemming from the Fed’s activities discussed above & there’s no need for an exit strategy.

Interestingly enough, Fullwiler observes that the financial press (he cites the Wall Street Journal specifically) doesn’t understand how the Fed works.

Wednesday, June 18, 2008

It's Not Arugula, It's Race

In It's Not Race, It's Arugula, Noemie Emery rejects the widely accepted argument that racism is behind much of the reluctance among working class white voters. (Roy Edroso has commented briefly on this article here, but I feel compelled to take it further, for reasons to be explained below.)

“In this view,” writes Emery, “race is the issue, and the big years in history were 1964 and 1965, when Lyndon B. Johnson did the Right Thing, signing the Civil Rights and Voting Rights Acts, and consigning his party to electoral darkness by losing the South for the next several eons. By these lights, bigotry and fear are the main factors, and all the others are thinly masked surrogates for them. If Obama loses, this will be the excuse of the campaign and of the press that supports it."

Instead, Emery borrows a simplistic classification scheme from Michael Barone and Ron Brownstein between “academicians” (or to Brownstein, “priests”) and “Jacksonians” (Brownstein’s “warriors”).

The academicians, according to Barone, like peace (and/or appeasement) and moral equivalence; are against force; “traffic in words and abstractions, and admire those who do likewise;” love nuance and fairness; disdain Jacksonians; and their theme songs are "Kumbaya" and "Imagine.” (You can add Volvos, Birkenstock sandals, lattes, etc.) Incidentally, public employees are included in the above category, for reasons Emery does not explain.

Jacksonians, according to Barone, valorize the warrior ethos; dismiss the work of academics and public employees; favor “a notion of natural liberty: People should be allowed to do what they want, subject to the demands of honor;” like men of action, clarity, justice and just force; think academicians are inconsequential; and like country music. In other words, real men.

Until 1968, according to Emery, Democrats “frequently sported a veneer of priesthood, but it covered a Jacksonian heart.” After they “lost their warrior edge...Democrats started losing the White House.” Emery claims that Reagan Democrats abandoned the Democratic Party due to resentment of “post-1968 liberal activism--and racial preferences and busing much more than the original Civil Rights measures--but they also were drawn to the muscular foreign policy, democracy promotion, and unabashed patriotism of the FDR-HST-JFK line.” Academicians who claim that the GOP uses race to convince white working class voters to vote against their interests, according to Emery, are forgetting that national defense and security are the most important issues to such voters.

Apparently not recognizing the image reflected in her mirror, Emery asserts that “[t]his neglect often leads to a reading of history that aligns rather poorly with the facts.” She then lists a succession of electoral contests in which the Democrats nominated an academician and, predictably (if the Barone/Brownstein/Emery theory is your guide), lost.

Why Reject Racism as Causal?

Emery remarks in a tone of sarcasm that LBJ did “the Right Thing” in signing the Voting Rights Acts. What’s the point of the sarcasm? Does Emery doubt that it was right to enable black people to vote in this country 100 years after the end of the Civil War?

She goes on to say, “[b]y these lights, bigotry and fear are the main factors...If Obama loses, this will be the excuse of the campaign and of the press that supports it.” The term “excuse” is generally used as a synonym for ‘rationalization’; i.e., an explanation used to deflect attention away from the genuine cause. The generally sarcastic tone of the paragraph and the phrase “[b]y these lights” make clear Emery’s rejection of the idea that racism is at cause. However, she makes no effort to articulate any reason she might have for that rejection. This is all the more striking given the history of racism in electoral politics since 1964.

Lyndon Johnson famously said upon signing the first Voting Rights Act into law that he’d just signed away the South to the GOP for a generation. In this he was optimistic, as events would prove. When George C. Wallace gained unexpected primary strength in 1968, the GOP presidential candidate, Richard M. Nixon, took note and began appealing to southern white racism in an effort to put the South solidly in the GOP column going forward. This was the result of a conscious strategy developed by Nixon in conjunction with his aide Patrick Buchanan, among others.

From then until now, the GOP has relied on appeals to white racism, whether overt (Sen. Jesse Helms’ ad against affirmative action, featuring a pair of gnarled white hands crumpling a job rejection letter) or covert (arguments for states’ rights serve as a dog whistle to those adhering to the view that the Confederacy, which fervently argued in exactly those terms, was on the side of right in the Civil War). There’s no need to recite the endless stream of examples—just a few will suffice: The Willie Horton ad, Reagan’s campaign opening in Philadelphia, MS, the GOP pandering over the Confederate flag flying over the South Carolina state capital, the racist button for sale at the recent Texas state GOP convention. Is Emery arguing that these things haven’t happened? If not, does she claim that they were ineffective? Considering that the GOP has adhered to these techniques for the past 40 years, isn’t it logical to conclude that either (a) they are effective or (b) the GOP is incredibly stupid to continue relying on them?

Then there are the exit polls. In West Virginia, 30% of whites stated openly that they voted against Obama because of race. The result was similar in Kentucky. Moreover, due to reactive measurement effects, it is reasonable to suppose that the same dynamic was at work in Texas and elsewhere. (Ohio may be a special case due to the intrusion of Canada’s conservative government in the primary with its now questionable report on a conversation with one of Obama’s top economic advisers.) Is there some particular reason why Emery discounts this evidence?

Given the enormous amount of evidence supporting the theory that race is at cause in Obama’s problems with working class white voters, why does Emery reject the theory out of hand? She does not say.

The (Ahem) Theory

Here’s Emery’s rather remarkable rundown of the distinctions between her two ideal types:

“While the term Academician explains itself, Jacksonian comes from Andrew Jackson, the first of the Democrats' warrior heroes (with an echo perhaps of Senator Henry "Scoop" Jackson, who seems now to have been one of the last)...In this reading of history, the critical year would be 1968, when the Democrats splintered on crime and security issues, and afterwards became the party of peace (and/or appeasement), of moral equivalence, and of aversion to force. In this reading, the Jacksonians or warriors reject Obama less because he is black than because he is a priest or academician...”

Notice the long chain of binary oppositions above. Is it just coincidence that the qualities associated with each echo the smears and taunts directed, overtly or by implication, by the GOP against Democrats in every election since 1976? One wonders whether the attributes listed above were arrived at through the research of Barone/Brownstein/Emery, or whether they started with the former and then shaped the latter to fit. (Of course, the latter approach would be totally out of character for neoconservatives, as observers of the prelude to the invasion of Iraq know.) At the very least, it seems that Barone and Emery have trouble distinguishing between ideal types and politically motivated stereotypes. Anyone trying to use such obviously biased classifications in the social sciences would be laughed right out of academia—by social scientists of all political persuasions.

Note also that peace is equated, in true neocon fashion, with appeasement—in reference to 1968, no less. This clearly reflects a frame of reference according to which Vietnam was, in Ronald Reagan’s formulation, “a noble cause” that was betrayed (here the right wing updates Ludendorff and Hindenburg’s responsibility-deflecting “stab-in-the-back thesis,” transferring blame from the Jews in the original thesis to hippies, intellectuals, liberals and the Democratic Party in its post-Vietnam reincarnation. Those manly Jacksonians/warriors would not have appeased communism, as we morally equivalent latte-sippers supposedly did by opposing the war in Vietnam (and again, of course, in re the current war in Iraq). No siree—they would have stayed the course (in the words of President Katrina) and fought on, no matter how long (a la McCain), simply because, having gotten in, it would be supposedly ignoble to, y’know, bother to notice whether there was (a) a convincing reason for our involvement in the conflict in the first place; (b) any understanding on the part of our government of the culture and history of the country we’d invaded; (c) a realistic goal motivating our efforts; (d) the means and methods sufficient to achieve such goal consistent with our values and interests; and (e) lacking the above, stop and withdraw. Never mind (a) the fact that, in both conflicts, the arguments given the American public for our involvement in the conflict were patently false; (b) each case essentially amounted to the U.S. attempting to reengineer an existing society (of whose culture and history we were essentially ignorant) to more closely resemble our own, regardless of what the inhabitants of each country wanted; (c) consistent military superiority by U.S. forces in each conflict proved to be almost irrelevant to the outcome because of the arrogance and ignorance of our civilian leadership as to the limits of our capabilities in re (b) above, and the political nature of the underlying conflict; and (d) oh, by the way, perhaps Emery and her neocon friends never noticed this, but the monolithic communism against which we were supposedly fighting in Vietnam and which would take over all of Southeast Asia if we didn’t? Well, it wasn’t monolithic in the first place, as border wars between China and the USSR, between China and Vietnam after the U.S. withdrawal, and between Vietnam and the Pol Pot Regime of Cambodia made abundantly clear. Secondly, rather than taking over Southeast Asia, communism took a different shape in each communist country, and that shape had to do with the culture, history and political realities faced by each country rather than some supposedly shared overarching ideology. In other words, just as with Iraq, one of the most important stated reasons for our involvement was false.

The reference to 1968 also reflects the inability of neocons to recognize (or at least, to admit) that there was another limitation on our options in Vietnam—contra Barone’s and Emery’s pathetic attempt to rewrite history, China made explicit at the time that extention of U.S. ground forces and bombing any closer to the Chinese border would have triggered direct involvement in that conflict by the People’s Republic of China—something feared not only by those nuance-loving civilians in the White House at the time, but many in the military brass as well. (Gen. Maxwell Taylor, for one, had been a member of the Never Again Club after the Korean War—the title referring to a land war in Asia. Gen. Curtis LeMay wanted to bomb North Vietnam back to the Stone Age, as he famously said, but his was by no means the only view in the Pentagon.)

If this argument involving the Vietnam War seems a little off-topic, that’s only because the underlying premise of Emery’s piece is a decidedly non-reality based alternative (ahem) history of that conflict.

Emery’s (and Barone’s and Brownstein’s) argument is an insultingly stupid example of reductio ad absurdem. If you doubt that, consider the number of latte-sipping, arugula-eating lefties who supported the invasion of Afghanistan (not to mention our involvement in World War II) but who opposed the war in Iraq. Here’s a really difficult concept for neocons to get their little heads around—one war involved an organization that attacked us and had a symbiotic relationship with the government that shielded them in Afghanistan; the other had no justification whatsoever and has brought nothing but grief to both Iraq and the U.S. What do you know—logic, evidence and the moral and intellectual rigor required to refrain from acting in the absence of both really matter. When the neocons contrast their belligerence to our opposition to senseless wars it’s not evidence of disproportionate allocations of testosterone between the two groups; rather, it reflects a refusal on the part of the neocons to think. And if arguments like Emery’s are any evidence, perhaps it’s because they don’t know how.

Emery’s argument is frankly ridiculous—and ordinarily I wouldn’t devote so much time to something so preposterous. What motivated me to write this response was the fact that it was recommended by an Obama supporter! I find that frankly astounding and disturbing. Surely we must be able to see through foolishness such as Emery’s article. We ought to be aware as well of the nature of The Weekly Standard, on whose website Emery’s article appeared. The Weekly Standard is generally considered to be the house organ of the neoconservatives and of the Bush Administration. Its editors are William Kristol and Fred Barnes. Kristol, in addition to infesting the Op-Ed page of the New York Times, was also one of the founders of the Project for a New American Century, a neocon group formed to push U.S. foreign policy into greater belligerence, and among whose members were many future top officials of the Bush Administration—such as Dick Cheney, Paul Wolfowitz, and Richard Perle. The mentality of The Weekly Standard is typified by a recent commentary in its pages by Michael Goldfarb arguing that obedience to the president overrides the rule of law (See Glenn Greenwald’s comments on this here.). Why anyone supporting Barack Obama would recommend such a discreditable source I cannot understand for the life of me.

Saturday, May 31, 2008

DNC RBC Decision--Background

emptywheel (naturally) has a very good primer on the lead-up to the Florida and Michigan primary decisions here.

DNC Rules and Bylaws Committee Decisions

Tonight the Democratic Party’s Rules and Bylaws Committee made its decisions regarding the seating of Florida and Michigan delegates at the party’s convention in August.

The Florida delegation will be seated at full strength, but each delegate will have only half a vote. That represents a turnaround from the committee’s original decision to impose 100% exclusion, but is consistent with the committee’s stated rule that disobeying the rules will result in a reduction of voting strength to 50%. The Clinton camp had, of course, lobbied for a complete restoration of the Florida delegates with one vote per delegate while the Obama campaign had called for a 50-50 split. The committee’s vote seemed to split the difference and although the Clinton people opposed the decision, it was obvious they weren’t going to fight about it. There was first a motion to restore the Florida delegation to full strength, which failed, 15-12. The second vote was for the compromise and the many Clinton supporters on the committee voted for it, passing it unanimously. A peaceful resolution and unity seemed close at hand.

Michigan was another story entirely. A GOP-dominated state legislature had voted to schedule that state’s primary between those of Iowa and New Hampshire (as had the GOP-controlled Florida legislature). As punishment (and to ward off other states that also wanted to reschedule their primaries similarly), the Rules & Bylaws Committee imposed the 100% penalty on Michigan (as it had on Florida). Both states were told that their primaries would not count, the crucial difference between the two being that while neither Clinton nor Obama appeared on the Florida ballot, Clinton (who publicly stated at the time that the vote would not count) did leave her name on the Michigan ballot while Obama did not. Since Michigan went ahead with the primary regardless, all candidates whose names were not on the ballot were represented (if that’s the word for it) by the category “Undecided”. Adding to the confusion, Michigan has a law whereby write-in votes are not counted unless explicitly authorized by the candidate in question prior to the vote.

As it happens, Clinton won a majority of the (then) non-binding vote, while Undecided got about 40% of the vote. Approximately 30,000 write-in votes were cast, but for the reasons already mentioned, they were not counted.

All the candidates agreed at the time the penalties were imposed that the Florida and Michigan primaries would not count. Indeed, Harold Ickes and Terry McCaulliff were among the committee members who voted to exclude the results of both primaries. However, as Henry Adams once observed, “the vast majority of men choose interest when deciding morals,” a principle that certainly seems to apply to this controversy. Once Hillary Clinton’s campaign found the delegate requirement for the nomination slipping out of reach, they suddenly became ardent opponents of the “disenfranchisement” of Florida and Michigan voters, something the candidate herself recently compared to the situation in Zimbabwe and the 2000 fiasco in Florida.

In any event, the Rules and Bylaws Committee was presented with 3 proposals for resolution of the Michigan situation:

1. The Clinton campaign argued for complete restoration of the Michigan delegation with one vote per delegate.

2. The Obama campaign sought a 50-50 split with one vote per delegate.

3. The Michigan Democratic Party tried to split the difference, diviining an allocation of delegates based on a combination of the percentages of the actual votes plus the write-ins and undecided votes, based on the assumption that the latter two would have been for Obama had he left his name on the ballot.

The Clinton campaign objected to options 2 & 3 on the principle that an arbitrary split would violate the principle of reflection; i.e., that the apportionment of delegates would not mirror the relative percentages of the actual votes cast. The Obama campaign countered that the Michigan primary was a seriously flawed process; as such, there was no basis for the claim that the actual vote totals represented the will of the voters, since many who might have voted probably refrained after learning that the primary wouldn’t count, and since there’s no way of knowing how many write-ins and undecided votes would have been for Obama (or John Edwards, who also was not on the ballot).

In the end, the committee voted to restore the full complement of Michigan delegates, but apportioned according to option 3, and with half a vote per delegate. The vote was 19-8 in favor. Harold Ickes made an impassioned speech afterwards in which he decried what he termed the “hijacking” of the process, the loss of 4 delegates to Obama, and informed the committee that Hillary Clinton had authorized him to take the issue to the Credentials Committee. And that, folks, means they’ll fight on to the convention in August, general election be damned. Clinton supporters in the gallery began chanting “Denver, Denver, Denver.” We may be headed for a long, hot summer.

Here’s what puzzles me: Why did the Clinton campaign acquiesce in the Florida decision but declare holy war over Michigan? Both states are delegate-rich. The Rules Committee’s position with respect to the Clinton campaign’s arguments in re both state primaries was that, as Donna Brazile put it memorably, “my momma told me you don’t change the rules after the game is played.” So what’s the distinction between the two outcomes as far as the Clinton campaign is concerned? Is there a distinction between the two processes, or is it a matter of sequence—the second determining conclusively that Hillary Clinton’s campaign is over?

Please feel free to educate me on this in the Comments section.

Saturday, May 24, 2008

Is Obama a Muslim?

As per Matt Iglesias, I'm linking to this site in the hope that its Google rank will be thus increased.

It's absurd that we even have to bother with such things, but we all know what the GOP is made of...

Sunday, March 16, 2008

History and Geraldine Ferraro

Just about everyone has already opined on Geraldine Ferraro's statements about Barack Obama's supposed race-based advantage in the current primary contest. I see no reason why I should be left out. Rather than rehash the whole chain of events, I'd like to propose a reading list for anyone (certainly including Ms. Ferraro) who is still a bit hazy as to the history of racism and slavery in this country. I do not claim that the list below is anywhere near exhaustive; time limitations preclude comprehensiveness, I'm afraid. What follows therefore, is a list of some of the most powerful and influential books on the subject. Please feel free to add your own suggestions in Comments.

A parade of evidence and book titles ran through my mind when I read and heard Ferraro's comments--facts and titles of which, I'm certain, Ferraro is (amazingly, at this point in our history) unaware.http://www.blogger.com/img/gl.link.gif

Among those books are The Peculiar Institution, by Kenneth Stampp, a meticulously researched and dispassionately written explanation of the conditions and practices of slavery in the United States. This book (written in 1955) demolished the long existing pattern of rationalizations in defense of slavery within the American history profession. After this book was released, no knowledgeable person could honestly claim that slavery had been anything but an extraordinarily cynical economic enterprise dependent on the thoroughgoing dehumanization of one group of people by another.

Nor did emancipation eradicate the physical, social, political or psychological conditions of slavery. In fact, Reconstruction at best temporarily interrupted some of those factors in specific locations. Reconstruction: America's Unfinished Revolution, 1863-1877 by Eric Foner, is a magisterial account of the gradual unraveling (under relentless pressure of unreconstructed former slaveholders and other bigots and opportunists) of efforts to establish legal and social equality for African Americans in the aftermath of the Civil War.

After the secret bargain between Republicans and Democrats in the 1876 election, Rutherford B. Hayes became president and formally ended Reconstruction. What followed, a series of laws formalizing the legalized racial oppression of African Americans throughout the south know as Jim Crow, is outlined in C. Vann Woodward's The Strange Career of Jim Crow. This was the system that remained in place until the civil rights legislation of 1964 and 1965.

It is amazing to consider that only 45 years ago, black and white citizens of this country could not drink from the same water fountains, go to the same schools, ride the same buses, or live in the same neighborhoods; nor could black Americans even vote in many states. Nor has the bigotry underlying such laws disappeared from our society, although its expression continues to bubble, usually under the surface. If you doubt that, please try to explain honestly the obvious success of GOP campaign tactics such as the Willie Horton ad, and claims in the 2000 South Carolina primary that John McCain had supposedly fathered a black child. Then consider the murder of James Byrd a few years ago in Texas, and the consistent study results, year after year, showing clear evidence that black mortgage applicants and renters with the same credentials as white applicants are steered to "black" areas and "black" neighborhoods. See also the consistent study results showing that black job applicants with credentials identical to those of whites have their applications rejected at a much higher rate than the latter. And while we're at it, consider the various efforts by the GOP to repeal or limit the civil rights laws and their (allegedly) principled opposition to affirmative action.

Consider all of the above and try to convince me that Geraldine Ferraro's statements were not ignorant and/or perverse.