by Alex Evans | Sep 23, 2008 | Global system, North America
Via Steve Clemons, this excerpt from a speech by Leo Hindery – an Obama economic adviser and Chair of the New America Foundation’s Smart Globalisation Initiative – which is due to be delivered later today at a conference organised by NAF:
As we all know, the Bush administration is asking Congress to let the government buy $700 billion in troubled mortgages, which would raise the statutory limit on the national debt to $11.3 trillion from $10.6 trillion. This $700 billion is over and above the $85 billion already committed to AIG, the $29 billion related to Bear Stearns, and the very conservative $25 billion associated with the bailouts of Fannie Mae and Freddie Mac.
The solutions being proposed are the most expensive combined bailout in the nation’s history and will sharply curtail the ability of the next president to push for tax cuts or new spending. And yet I believe they are not nearly enough, since they do not adequately cover the exposure associated with leveraged loans and, especially, the credit-default swaps market which has ballooned to a nearly unimaginable $45.5 trillion, from $900 billion in 2001.
This credit-default swaps market, which was developed by financiers who hired the best lobbyists they could to keep regulators away, is essentially nothing more than insurance on debt, but because there are now many more credit-default swaps outstanding than there are bonds for them to cover, it could potentially be a black hole of distress at least as large as the sub-prime mortgage crisis. Tens of trillions of dollars ago these swaps became nothing more than a way to gamble with almost no money down.
Alan Blinder suggested over the weekend that “the root cause of all of [our credit problems] is declining house prices”, and he is correct – but his observation ignores the fact that to this particular root ball were grafted a lot of other financial instruments which have together grown into one heck of a tree.
Senators Kent Conrad, Byron Dorgan and Richard Shelby of Alabama, and others, were more right than wrong when they said last week that more than likely “we’re talking about a trillion dollars.”
by Daniel Korski | Aug 31, 2008 | Cooperation and coherence, Influence and networks, North America
As the Gulf Coast gets ready to evacuate and plans for the Republican Convention have been throw into disarray, an interesting question has emerged. To what extent can the Obama campaign use its well-established, grass-roots network to assist the official recovery effort?
Yesterday in Ohio, Senator Obama said he would mobilize its e-mail list of supporters to encourage them to volunteer or send contributions:
We can activate an e-mail list of a couple million people who want to give back. I think we can get tons of volunteers to travel down there if it becomes necessary.
Helping victims of crises can be politically-expedient, as well as the humanitarian thing to do. When Russian-Israeli tycoon Arcadi Gaydamak used his money to build “refugee” camps for victims of Hezbollah’s rockets he wrote himself into Israeli politics.
Barack Obama does not have money, but it is common knowledge that his campaign’s e-mail/grass-roots network is the largest in political history, and campaign team expects to raise $1 billion online during the 2008 campaign, 12 times as much as John Kerry raised through online fundraising in 2004. Many analysts believe that Obama, despite what the national polls say, will eventually pull ahead of McCain because of the national, internet-aided network.
But the idea of using this network for national, non-partisan purposes is novel, though logical. If it is eventually used to help victims of the hurricane and if Obama is elected to the White House could this network be “federalised” or serve as a nucleus of a new Kennedy-style Peace Corps or a way to take the newly-established Civilian Reserve Corps a step further?
by Alex Evans | Aug 28, 2008 | Off topic
At the start of the month, Richard pointed out the interesting fact that Nicolas Sarkozy has a very large television. The picture he supplied proved that this was indeed the case; but it is as nothing compared to John McCain’s barbecue, which looks like something out of Mission Control:
Richard ripostes: or does he? Mr. McCain is, of course, Senator for Arizona and an inspection of Arizona’s #1 BBQ Club suggests that his electorate have much larger contraptions. Like this one:
by David Steven | Aug 27, 2008 | Climate and resource scarcity, North America
Uniting the Republican Party and John McCain on climate change is a fiendishly difficult task, as a fascinating article by Stephen Spruiell shows.
By the time you’re done, you’ve scratched through so many lines and penciled in so many revisions that the document is barely legible. I wish I could show you my copy of the energy section of the 2008 Republican Platform’s working draft. You wouldn’t be able to read it, but you’d see what I mean.
The original draft accepted the reality of climate change and argued for ‘measured and reasonable’ action, while cautioning against “the doomsday climate change scenarios peddled by the aficionados of centralized command-and-control government.”
But it has proved contentious in committee. So what were the rows about?
Firstly, and most strangely, the word ‘global warming’ has proved controversial. Of course, experts tend not to use the term and prefer climate change (which helps “to convey that there are changes in addition to rising temperatures.”)
But Republicans are nervous about the warming word for another reason. They are unconvinced the world is getting hotter. The phrase “increased atmospheric carbon has a warming effect on the earth” has therefore been excised from the draft platform. And climate change has been used in preference to global warming throughout.
Compromise was also necessary to keep the door ajar for McCain’s preferred policy of cap and trade:
The working draft purposefully left McCain enough room to continue his support for an artificial ceiling on carbon emissions. The subcommittee improved the working draft by specifying that any proposals “should not harm the economy,” but it did not add anything that explicitly precludes McCain from supporting cap-and-trade. McCain is still free to argue that a cap-and-trade regime wouldn’t inhibit economic growth, and conservatives are still free to disagree.
Any cap and trade scheme must have no economic downside, in other words. (Or could any downside be balanced against the economic impact of unchecked warming?) Policy responses must be ‘global in nature’ as well, which would probably translate into a tough policy on China.
But this may not be enough for base. To sample its thinking, head over to the Republican Party site that solicits grassroots opinion on the platform. Here are extracts from the five most recent contributions that mention global warming:
Do NOT add “global warming” to the GOP platform. Do not fall for this nonsense. Its a fraud.
Under no circumstance should the platform even mention global warming, unless its a statement to acknowledge the evidence that we aren’t causing it.
I just saw on Drudge that there is to be a plank for global warming. If the Republicans fall for this false science, I have no one left to vote for and our economy will be ruined. Read what Senator James Imhof has to say about it all. He knows.
I cannot believe that the GOP is adding global warming to its platform. How can I respect my party if it can’t even come up with its own scams to increase the size and power of government, but has to adopt scams from the like of Al Gore.
Global Warming is a hoax! Why would we get on Al Gore’s bandwagon?
I would say there’s 80% agreement with the statement: “Man Made global warming is the biggest lie ever sold to the U.S. and the world.” For McCain as President – or for any President who bought a treaty home for ratification – there’s a long struggle ahead.
by Jules Evans | Aug 27, 2008 | Europe and Central Asia
The typical criticism of the Foreign Office is the one eloquently expressed in John Le Carre’s The Constant Gardener – that they are pitiless practitioners of real-politik who care more about stability than idealism, and who only really work to protect the interests of British corporations, rather than British values.
But on Russia, the FCO seems to have erred on the other side. They seem committed to sacrificing our strategic relationship with Russia on the altar of pointless liberal grand-standing.
The rot set in, it seems to me, when the previous ambassador to Moscow, Sir Roderic Lyne, was replaced by the present ambassador, Sir Anthony Brenton. Lyne was well-liked, tactful, amusing (always a great asset in Russia) and – in a word- diplomatic. Brenton was more of an analyst, highly intelligent, but lacking in the social skills and sureness of touch that Lyne possessed.
Brenton made the error of attending the ‘Other Russia’ political rally in 2006. The Other Russia movement was an opposition movement led by Garry Kasparov, which also included Eduard Limonov, a proto-fascist punk. Other countries, such as the US, sent government figures to the opposition conference, but the only ambassador present was the UK’s.
It was a mistake. An ambassador of course keeps touch with the various political factions in a country, but they should never publicly throw in their lot with an opposition, particularly an opposition which had so little popular support in Russia. Garry Kasparov gets an enormous amount of press in the West, but he’s barely even a marginal figure in Russian politics. And the Kremlin was furious with this public support for the opposition. Brenton is being replaced in October, but his time in Moscow has been disastrous for UK-Russian relations.
Then, when Alexander Litvinenko was brutally murdered in London, I was surprised to hear the British government come out and, basically, accuse the Kremlin of the murder, and condemn the Kremlin for failing to extradite Andrei Lugovoi. Miliband, new to the job and all-fired-up, gave the Kremlin an ultimatum – extradite Lugovoi or else.
But the Kremlin was never going to extradite Lugovoi – firstly, because the UK almost always refuses Russia’s requests for extradition (including requests to extradite Litvinenko himself) on the grounds that Russia’s judicial system can’t be trusted. So why should Russia cooperate with us? And secondly, why would the FSB, which is incredibly paranoid about MI6 and thinks it rules the world, hand over one of its agents, albeit a somewhat rogue agent, to MI6?
So Miliband was left looking outspoken, weak, and naive.
In the Georgian crisis, there were no good-guys. The Georgian government’s response to fighting with South Ossetians was extremely heavy-handed, with a huge bombardment of Tskhinvali by artillery. A balanced response would have condemned Russia’s involvement in the crisis, while also asserting the need to protect the lives of Ossetian civilians, which the Georgian government does not seem willing to protect.
But Miliband again weighed in with a surprisingly outspoken and one-sided response, which blamed Russia entirely for the conflict. His piece in the Times was such a one-sided polemic that it came as something of a shock to read at the end of it ‘David Miliband is the Foreign Secretary’.
He is now travelling to Ukraine to drum up ‘the widest possible support for a coalition against Russian aggression’. What is the gameplan here? Is this just a coalition ‘against Russia’? What are the coalition’s concrete goals?
It just seems really badly thought out, just more liberal grandstanding, more unnecessary alienation of Russia, and even potentially alienation of Ukrainians, half of whom speak Russian, and who feel more sympathy with Russia than any British youth stepping off a plane to deliver a speech. Ukraine has deep ties with Russia, and depends on Russian gas, so will never sign up to some vague ‘coalition against Russia’.
President Yushchenko might meet with Miliband and voice support, but Yushchenko is deeply unpopular and on the way out, while prime minister Timoshenko, the rising power and likely next president, has already said Ukraine wants to keep out of any military conflicts and has conspicuously failed to condemn Russia’s actions in Georgia. I wonder if she will even bother meeting Miliband.
So our foreign minister will again look weak, toothless and naive.
Yes, Ukraine’s government wants to join NATO. But its population doesn’t, so that is unlikely to happen as well. Ukraine is a country which has, at times, looked like it could be split into two, a Russian-speaking and a Ukrainian-speaking part. They are trying to forge a unity out of their young country. The last thing they need is some vain young Brit trying to draw a battle-line through the middle of their country.
Whatever happened to an intelligent, and diplomatic FCO? When did it become so shrill, so driven by the desire to look good domestically rather than achieve anything real globally?
I’m not for a moment claiming that the Russian government is anything other than a KGB kleptocracy which picks fights with small neighbouring countries in order to increase its popularity at home. But there’s no point grand-standing against it. Identify your goals, then identify the best way to achieve them. Simply mouthing off against Russia might feel noble but it’s counter-productive – the regime is very popular, and is likely to be in power for many years to come.
The best way to limit iRussian expansionism is to take away the excuse for its expansionism by making sure that former colonies – Georgia, Ukraine, the Baltic countries – respect the rights of Russian citizens living within their borders. If the EU takes a pro-active stance on that, it takes the wind out of Russia’s victimist rhetoric.
