Sunday, February 15, 2009

What brains?

Here's what struck me as an odd passage from article in the NY Times that discusses the Obama administration's response to a Congressional proposal that would block executives of banks receiving federal assistance from receiving bonuses:
Top economic advisers to President Obama opposed the pay restrictions, according to Congressional officials, warning lawmakers behind closed doors that they would cause a brain drain in the financial industry.
A brain drain? What brains?!

Thursday, February 12, 2009

Roubini and Taleb on the financial crisis

Jotman will only give the time of day to investors or economists who anticipated the financial crisis. Nouriel Roubini and Nassim Nicholas Taleb stand out in this respect. Their recent interview with CNBC on the economic outlook is worth watching:

Tuesday, February 10, 2009

Strike Two!

The above photo was taken by Jotman. It shown the expression on Obama's face on the afternoon of July 9th 2008 as he left the parking lot of the United States Senate. Moments earlier, on floor of the Senate, Obama had voted in favor of the controversial FISA amendment. It marked the first time Obama had seriously let down his supporters in the civil rights movement.

Today's announcement was the second.

"They're embracing a theory that literally places government officials beyond the rule of law" blogged Glenn Greenwald today of an alarming Obama DOJ announcement that it would continue the precedent set by the Bush Administration of evoking "state secrets" to prevent a US court from hearing evidence in a extraterritorial rendition case against Boeing's Jeppesen subsidiary that allegedly involved torture.

ACLU Executive Director Anthony Romero said of the annoucement:
Eric Holder’s Justice Department stood up in court today and said that it would continue the Bush policy of invoking state secrets to hide the reprehensible history of torture, rendition and the most grievous human rights violations committed by the American government. This is not change. This is definitely more of the same. Candidate Obama ran on a platform that would reform the abuse of state secrets, but President Obama’s Justice Department has disappointingly reneged on that important civil liberties issue.
Strike two!

The sanctimonious US media and the real Michael Phelps scandal

I can't watch this CNN video without wanting to throw up. It shows various self-righteous CNN media "experts" moralizing and pontificating about Michael Phelps' use of marijuana at a college party.

Shame on the US media for treating that which has long been an ordinary event in the life of almost any college student as if it were some kind of national scandal. And shame on Kellogg's for terminating Phelps' sponsorship contract.

Speaking of Kellogg's I came across this four-year old headline which sounds so nasty I think it's hilarious:
Kellogg Replaces Trans Fat With Genetically Modified Soybean Oil
First, the headline serves as a reminder that trans fats -- which companies like Kellogg's have for years been adding to their cereals and snack foods -- contribute to Americans' high rate of heart disease. Second, the proposed alternative to trans fats, genetically modified soybeans, are considered suspect by some scientists and banned in some countries. Third, there is mounting evidence that consuming soybeans can harm you. Finally the horrific headline reminds us that, certainly the safest thing to do is to avoid all processed foods -- a category which includes most, if not all, Kellogg's products.

Over the years, the consumption of trans-fat loaded Kellogg's products has likely ruined the health of a far greater number of Americans than marijuana smoking. Moreover, we know that Kellogg's continues to load its products with excessive amounts of sugar. Of course, sugar consumption is today linked not only to obesity but to a variety of chronic illnesses such as diabetes. Some studies have shown that cereal makers have jacked the sugar content of various products even as they have lowered the fat content.

Certainly, one good thing to have emerged from this big marijuana scandal is that it has allowed Michael Phelps to clear his name of the genuine moral blot on his sports career.

Monday, February 9, 2009

Giles Ji Ungpakorn flees Thailand, issues Red Siam Manifesto

A Jotman reader* has forwarded a provocative statement issued by Giles Ji Ungpakorn (it is written in both English and Thai). After reading the document, the first question that popped into mind was the whereabouts of its author.

A story that appeared in the Guardian today answers my question:
A leading Bangkok-based professor who has joint British and Thai nationality fled Thailand at the weekend in the face of a lengthy sentence under the country's draconian lese-majesty laws, which forbid criticism of the king.

He is the latest person to face prosecution under the laws, seen as an attempt by the government to stifle dissent.

Giles Ji Ungpakorn, 54, arrived in England at the weekend after being charged under the laws. He had been due to present himself to the police in Bangkok today and could have faced 15 years in jail if found guilty.

"I did not believe I would receive a fair trial," said Ungpakorn, an associate professor of political science at Chulalongkom University and a contributor to the New Statesman and Asian Sentinel."

"It is clear that the charge is really about preventing any discussion about the relationship between the military junta and the monarchy," Ungpakorn said. "This is in order to protect the military's sole claim to legitimacy: that it acted in the interests of the monarchy."
So much for the location of the statement's author. He is safe. As for the document? It is entitled: The "Red Siam" Manifesto. Below I have tried to give readers a general idea of the topics the manifesto covers. If you are interested in the specifics, in time it ought to be possible to Google for the document.

Giles opposition to military rule is longstanding. According to a Wikipedia article, Giles was the organizer of the first democracy protest following the 2006 military coup. (I was there, on the streets of Bangkok, live-blogging both the 2006 coup and the Giles-organized democracy protest -- see my posts from Sept. 2006). Giles' present statement, however, takes the Thai scholar's activism to another level. This statement strikes me as both newsworthy and of historic significance. I am aware of no other such statement, personally signed by such a high profile Thai figure, having been issued in recent years.

The manifesto begins by contrasting the current Thai government -- installed following a controversial high court decision -- to the Obama Administration, which has made economic recovery a priority. By contrast, Giles believes the Thai government has prioritized cracking down on the opposition through the draconian les majeste law (under which Giles has been charged). Giles further notes that the government has created a website where Thais can inform on one another.

The next part of the manifesto makes charges against the ruling monarchist-militarist elite, criticizing it for upholding what Giles holds to be an anti-democratic "monarchist" ideology. This accusation is followed by five specific charges against HM the King of Thailand (all but the most recent of these accusations relate to events discussed in a banned book by Paul Handley). This list concludes on a note critical of both the ruling monarch and the heir-apparent to the Thai throne.

Giles does not think that Thais should resort to violence to change the system. The renowned Thai scholar maintains that Thais cannot wait for former PM Thaksin or the opposition Pua Thai Party to rescue the nation. Giles asserts that a new political party should be established to bring about reform. Giles cites the need for "secret," bottom-up organizing tactics in order to build a movement invulnerable to the arrest of any of its top leaders.

Although Giles Ji Ungpakorn is an avowed Marxist, Giles declares that the new Thai political party he is calling for need not subscribe to any such ideology. Nevertheless, Giles outlines what he -- as one "red shirt" citizen -- thinks the new party should stand for.** Giles' own policy preferences encompass nine themes: 1) promoting freedom of expression and political association; 2) equality; 3) the establishment of a "welfare state" that levies taxes on the rich; 4) either the return to true constitutional monarchy -- or preferably in Giles' view -- the establishment of Thailand as a republic; 5) cutting off some of the purse strings of the military; 6) a new justice system, including trial by jury; 7) citizen management of local institutions; 8) environmentally sustainable modernization; 9) peace-promoting foreign relations.

It will be interesting to see whether Giles' desire to see the energy of the "red shirts" movement transformed into a new political party will succeed. Also worth watching is the extent to which the overtly anti-monarchical turn in Giles' own public pronouncements will be reflected in any future political movement. Given the age and extreme popularity of HM the King, some commentators have viewed some revival of republican sentiment as practically inevitable over time. Nevertheless, it is clear that an attempt to use the country's harsh lese majeste law to squelch academic freedom has hastened the public radicalization of at least one prominent figure in Thai society.

Please be aware that comments are moderated, and -- in keeping with Jotman's policy -- any comment critical of the Thai monarchy will be rejected.
___
*Hat-tip to Jotman reader David.
**Red-shirts are worn by opponents of the current Thai government who have taken to the streets in demonstration. As far as I know -- the choice of color (red) was not selected explicitly to symbolize socialism. Nevertheless, many members of this movement applaud former populist Thai leader Thaksin for initiatives that would appear to have advanced the social welfare of the rural poor.

Sunday, February 8, 2009

Doing what works

As the great American economist Irving Fisher pointed out almost 80 years ago, deflation, once started, tends to feed on itself. As dollar incomes fall in the face of a depressed economy, the burden of debt becomes harder to bear, while the expectation of further price declines discourages investment spending. These effects of deflation depress the economy further, which leads to more deflation, and so on.


And deflationary traps can go on for a long time. Japan experienced a “lost decade” of deflation and stagnation in the 1990s — and the only thing that let Japan escape from its trap was a global boom that boosted the nation’s exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time?


- Paul Krugman
Any person with conservative views about economic issues might be expected to embrace massive government spending programs at this time. Strangely, this has not been the case in the United States.

Government spending at a time like this has nothing to do with socialism. It has as much to do with socialism as the use of a cardiac defibrillator has to do with electrocution, or the administration of Demerol in an intensive care unit has to do with running an opium den.

At a time like this, "the conservative thing" is to do whatever is most likely to prevent your patient -- i.e. the economy -- faced with a debilitating illness from getting much worse. That's why the Republicans have behaved recklessly in attempting to water-down -- or altogether thwart -- the Obama stimulus package. Yes, excessive government spending could cause inflation, but for this side-effect there is a treatment (monetary authorities could raise the interest rates). Deflation, as Krugman points out, is another story -- a nightmare.

Given the prognosis that the patient's condition is likely to severely worsen, a conservative doctor would not hesitate to use whatever treatment was most likely to bring about recovery. At a time like this, any truly conservative politician would behave no different.

By contrast, the Republicans remind me of those religious groups that forbid the administration of life-saving blood transfusions to accident victims out of deference to church dogma.

Saturday, February 7, 2009

On economists who know nothing of history

Krugman blogs:
. . . economists, who should be helping introduce some clarity, are on the whole making things murkier. I had thought that the lessons of the Depression would help guide us through this crisis; but it turns out that a large part of the profession knows nothing about those lessons, and is peddling fallacies exploded three generations ago as if they were profound new insights.

So yes, we can have another depression — because those who refuse to learn from history may be condemned to repeat it.

Krugman's blog makes for sobering reading these days. If Krugman is correct, Obama's first stimulus plan -- assuming it even passes -- will fall entirely short of what would be required to set the US economy on course to recovery. The prospect of a global depression looms larger every day.

Thursday, February 5, 2009

Kyrgystan and Russia mess with Obama's Afghan plan

As we know, the situation in Pakistan has caused American military leaders to rely more on basis in Central Asia. A new development concerning Kyrgystan could make Obama's big -- and in my view, not particularly well articulated -- plan for a renewed Afghan offensive far more complicated.

Russian Jotman reader Sanjuro informs us that the Russians and Kyrgystanis appear to have conspired to make the US mission in Afghanistan more complicated and costly:
You have probably heard that Kyrgyzstan is closing the US military base at its airport Manas - something I didnt quite expect - this quick at least. Apparently the Kyrgyz govt. is indeed desperate for cash.

The base is critical to the Aghan military operation, as a major logistics hub. According to Gazeta, Russia will have to provide Kyrgyzstan with $2B preferential loan, plus complete writeoff of a previous $180M loan, plus various economic aid estimated at $150M ($150M equals the annual rent that the US has been paying for the base, according to Russia Today). Commenters among Gazeta's readership note that much of the money is likely to be embezzled by Kyrgyzstan's president K. Bakiyev and his clique, and that the Kyrgyz government will somehow attempt to sell the base again - again to the US that badly needs it for the Afghan operation, and now at a high premium.

I recall that this is happening after a recent Central Asian tour by Gen. David Paetreus where he seemed confident that the US would retain the base...
Comment from me [Sanjuro]: Without the base in Kyrgyzstan, there will be much more pressure on the southern route via Pakistan, and the southern areas of Afghanistan where the allies have no control over the roads. The US used to have a base in Uzbekistan, but lost it under similar circumstances in 2005. One country, embittered by its recent treatment by Russia (over gas pipeline project) is Tajikistan which "enjoys" even more convenient routes into Afghanistan.
On the surface, this appears to be a problem US dollars can solve. But the days when the US could successfully address strategic problems in this part of the world simply by writing big checks may be coming to an end. Although -- with oil prices falling -- the same thing could be said for the Russians.

Not that checkbook diplomacy was ever such a smart long-term strategy. Billions of dollars of US aid to Pakistan have had the opposite of the intended effect. As Sanjuro points out, it is widely assumed that Kyrgystan's leaders will pocket any new money they receive. The handouts governments in the region receive -- whether from Russia or the US -- will tend to have the effect of making the rulers less accountable to their own people and even more corrupt. Ironically, an unintended consequence of US determination to win a war in Afghanistan may be to destabilize friendly regimes in the other 'Stans.

Needless to say, a further irony here is that ensuring stability in Central Asia ought to be a shared objective of both the Americans and the Russians.

Rohingya victims of Thai Navy saved

The Guardian reports on the discovery offshore Ache Indonesia of another boatload of Rohingyans cast adrift at sea:

"Fishermen found a wooden boat without an engine drifting in the sea with 198 Myanmar [Burmese] migrants," said the Indonesian navy officer Tedi Sutardi. "They said the Thai authorities towed them out to sea and set them adrift.


"Their boat was small. It's only 12m [40ft] long and 3m wide. It had almost come apart and was held together with ropes. They were standing in the boat for 21 days because there was no space to sit. It's a miracle they survived."

According to Sutardi, the survivors recounted beatings by the Thai security forces after their arrest for illegal entry.

Are there more victims at sea that Thailand has not told anyone about? Search parties may need to be sent out. The international community should demand that Thailand provide a full account of how many boatloads of Rohingya refugee migrants have been set adrift.

This week the Economist suggested that joint US-Thai military exercises -- the annual Cobra Gold war games-- be called off on the grounds that Thailand has not shown sufficient regard for human rights over the past year. The newsweekly also cited the recent string of lese majeste charges (the outrageous Thai law´s most recent victims include a British journalist, a Thai scholar, and an Australian writer). The magazine explained that calling off the war games would impact the Thai military -- the organization most directly implicated in the abuse and killing of the Rohingyan refugees.

H-tip J-P

Monday, February 2, 2009

High stakes

In the past the US has stood for two principles: 1) free market capitalism and 2) individual liberty. In the near future, either stands to be shored-up or buried.

Concerning the first, there are suspicions that a suspected new bank-bailout plan is in the works. It would be funded by US taxpayers and would once again reward losers associated with failing banks: stockholders and bank executives. Krugman cites new evidence that the Obama Administration may be willing to go to just about any length to avoid a public take-over of the banking industry. The real question here is whether American capitalism reserves its biggest rewards for its biggest losers. If so, what will prevent a future group of bankers from manufacturing a new financial crisis? They will have the assurance of knowing that the US government rewards financial ineptitude with taxpayer money! Of course, such a system would be corrupt to its core (not to mention unsustainable over time). American capitalism would have come to resemble communism in the former USSR -- a lie.

The latter crisis concerns suggestions that Obama believes Bush Administration leaders should have immunity from prosecution. Consider that the only reason high officials are made subject to US law is to protect individuals from abuses of power by the state. The American system was originally predicated on the idea that the citizens need to be protected from the potential excesses of governments. If high US officials have broken the country's laws, but do not get held to account for their wrongdoing, then into the future, the rule of law will not powerfully constrain high political leaders from taking away the people's rights. Where laws are not enforced, they simply do not matter.

So what's at stake? More than Obama's personal integrity as a force for change, that's for sure.