GROWING WORRIES IN ATHENS
A Greek Default Would Hit the ECB Hard
Hopes that Greece can be saved are dwindling. Athens had hoped to reach a deal with its creditors on a 50 percent debt haircut, but banks have now made it clear that efforts to reach an agreement could fail. Should the country go bankrupt, the European Central Bank stands to lose the most.
Opinion: GOP’s ‘alternate universe’ Matt Stoller, Politico
An intellectually honest conservative faction might be arguing that this is what it seeks — a revolutionary change.
Meanwhile, Republicans assert that unemployment benefits are what’s stopping the nation’s jobless from finding work, though the U.S. lost millions of jobs in the economic crisis and employment is now higher than 9 percent.
So there is little discussion about extending unemployment insurance, even as benefits run out, because the deficit is the GOP’s gravest economic emergency. There’s no debate about ways to address high unemployment — just deny reality and enforce it with the Leninist-style propaganda arm of Fox News, Rush Limbaugh and Glenn Beck.
But there is a big problem. America is simply not set up to handle one political party that bases its political organizing on an alternate reality and the raw power of propaganda. The U.S. government, and our public debates, are organized around the idea that there’s some measure of good faith in both parties, some common basis on which to make decisions.
I do not think most Republicans realize this is how their party operates — but the more cynical high-level operatives certainly do.
When George W. Bush ran for president in 2000, one of his campaign promises was to avoid nation-building. His presidency, of course, shifted America toward endless war and occupation of foreign countries — based on overt deceptions, like implying there was a link between the Sept. 11 terrorists and Saddam Hussein. Bush had his secretary of state, Colin Powell, hold up a vial of powder at the U.N. to show we had allegedly solid intelligence about Hussein’s weapons capabilities.
Back in 2004, a Bush administration official laid out what is now clearly the Republican Party’s guiding philosophy. The official spoke to a journalist as though he were from a foreign land — since he hailed from “what we call the reality-based community.”
“When we act,” the official said, “we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.”
It’s unclear whether the Republicans want to, or even can, leave this alternate universe that they have constructed. Unfortunately, it’s also unclear whether our society can survive it.
Matt Stoller worked on the Dodd-Frank financial reform law and Federal Reserve transparency issues as a staffer for Rep. Alan Grayson (D-Fla.). He is now a fellow at the Roosevelt Institute.
During the Depression bankers became so unpopular that bank robbers, such as Bonnie and Clyde, became folk heroes.[54]
By most counts, the U.S. economy started growing in the middle of last year. For many Americans, though, it does not feel as if the Great Recession has ended—unemployment and underemployment are still alarmingly high, and job growth is weak. Many causes have been suggested for both the economic collapse and mediocre recovery, but one that is hardly ever mentioned is income inequality. This is a mistake. Growing income inequality in the United States and the policy responses it has spawned have done tremendous damage to our economy. And because we continue to ignore this underlying problem, the risks of our policies leading to another calamity will not go away, no matter what we do to reform the financial sector.
Since 1968, income inequality has been steadily increasing in the United States. I am not referring to the Croesus-like income of a John Paulsen, the hedge fund manager who in 2008 netted over $3 billion, about 75,000 times the average household income. I refer to a more worrying everyday phenomenon that confronts most Americans, the disparity in income growth rates between a manager at the local supermarket and the typical factory worker or office assistant. Since the 1970s, the wages of the former, typically workers at the 90th percentile of the wage distribution in the United States, have grown much faster than the wages of the latter, the typical median worker. Or consider the table below, which shows that the wages of occupation groups that are paid more than the national average in 2002 have grown much faster since then than the wages of occupation groups below the average:
The Inequality Gap Is Ruining the American Economy—and Bernanke Is Just Making it Worse Raghuram G. Rajan
In every recession over the last three decades, it has been America’s small businesses — those Lilliputian companies with fewer than 100 employees — that stepped forward, began hiring and pulled the country out of the mire.
Not this time.
Small firms are on the sidelines, and it’s not just because of tight credit from the financial meltdown, as the Obama administration and others have been saying.
Rather, a host of factors — some well-recognized and others seemingly unnoticed in the national debate over economic policy — are converging to restrain small-business owners from hiring.
Among them:
Near-stagnant demand for goods and services as a result of consumers’ reluctance to return to their free-spending ways.
A disturbing falloff in the creation of new small businesses.
The devastation of the real estate market.
Uncertainty about the economic outlook at home and abroad.
“Small businesses are not hiring, and until then, we will not have a strong, sufficient recovery,” said Rep. Daniel Lipinski (D-Ill.), a member of the House Committee on Small Business. “I think this is why the economic recovery is moving very slowly.”
It’s a historical change of major proportions. In each of the previous three economic recoveries, small employers accounted for the vast majority of new jobs — the bulk of them coming from firms with fewer than 20 workers, according to Census Bureau data.
Small business sidelined in slow economic recovery Los Angeles Times.
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Just image if the illuminati geniuses in Washington had infused 700B directly into the Main Street economy instead of the non-productive, currently lifeless parasites, I mean financial community, to engorge themselves at taxpayer expense! Now the Obama OMG magic factory wants you and me to promote “austerity” through higher taxes and reduced services. -BJS
(Fortune) — At Tuesday’s epic Goldman Sachs hearing, Senator Carl Levin of Michigan led a public grilling of Wall Street not seen by a government panel since the Depression-investigating Pecora Commission. Fortune wanted to know what Levin thought of the answers he got from executives, including CEO Lloyd Blankfein, whether Goldman can save its reputation, and what his committee has learned from its hearings on the financial crisis.
It was surprising how much the Goldman Sachs (GS, Fortune 500) executives talked. How did you get them to reveal what they did?
By confronting them with their own documents. A lot of time and work goes into getting huge amounts, literally millions, of documents … I think when people are confronted by their own documents by someone who’s really studied those documents; it’s easier to force them to respond.
They obviously were trying to delay and evade answering. We had a willingness to take them on and not let them talk forever, telling them, “Hey we’ll stay here all night if we have to, but we’re going to get the information we want.”
And when they did answer?
When they did answer, some people have asked me, “Were they telling you the truth?” The answer is yeah, and that’s what’s even more troubling than the evasions — they are defending what most people would say are indefensible actions. They shouldn’t be betting against what they’re selling at the same time they’re telling you: “Here, these are our securities, our names are on the prospectus.”
I think people think that someone selling something believes their product needs to succeed in some general way; that they want it to succeed. But [Goldman Sachs] are betting against [their product] and basically say they are going to profit from its failure. At that point, in most people’s minds, clearly in mine, there’s a conflict of interest. You’re betting against a product that you’re holding out to the public, by fair assumption, as a good product.
They were trying to turn this into, “We can’t guarantee that people are making money,” but that’s not the point. The point is that at the same time you’re holding this thing out as something that presumably you’d like to see provide something good for your customer, you’re betting against it and making a heck of a lot of money by its failure. And you’re not disclosing that.
To add insult to injury, in those emails that call it “junk” that they’re selling, “crap,” and I won’t get into the “shitty” word but anyway, that adds insult to injury. When you’re putting together a product, hold that out and then are betting against that same product, I think it’s a conflict and at minimum you have to tell people, not some boilerplate that you might be on the other side, but in clear language that you’re betting against [the security].
Regulators have taken a lot of blame for the crisis but doesn’t part of this come from the laws — or lack of laws — surrounding these activities? Goldman seemed to testify that its actions were unseemly but not illegal.
The reaction of one guy when I asked about his reaction to his emails was, “That shouldn’t have been in an email.” There are two different worlds here. My reaction was, “You shouldn’t believe that, you shouldn’t feel that.”
The regulators pointed out things in emails and visits to the bank … but they never enforced it. There’s a failure to stop the abuses. Then you have credit rating agencies susceptible to pressure, acknowledge it in emails, and are involved in an inherent conflict of interest. They’re being pressured to put higher ratings on financial documents by the people who will benefit from those ratings and they’re being paid by those people. You have the problem of the person who pays the fiddler calling the tune.
Then you get down to Wall Street with their vacuuming up these securities and getting the risk off their books without disclosing it. It’s not limited to Wall Street’s unbridled greed, it comes all the way from upstream.
How Carl Levin Got Goldman Sachs’s Goat – Paul Smalera, Fortune
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| Flagging: a US sailor stands on the flight deck of the aircraft carrier USS George Washington |
If a week is a long time in politics, a decade is starting to look like an age in geopolitics. Comparing the America that began the 21st century with the America of today is to witness a country that has in some ways quite radically altered its view of itself and its relationship to the world.
In short, the metallic rust of decline has crept into the American soul. “You could argue that the first decade of the 21st century was the last decade of the American century,” says David Rothkopf, a former Clinton administration official and student of US foreign policy. “We are now entering the multipolar century.”
I think Calvin Trillin–or at least his bar-room companion–is really on to something here:
“The financial system nearly collapsed,” he said, “because smart guys had started working on Wall Street.” …
I reflected on my own college class, of roughly the same era. The top student had been appointed a federal appeals court judge — earning, by Wall Street standards, tip money. A lot of the people with similarly impressive academic records became professors. I could picture the future titans of Wall Street dozing in the back rows of some gut course like Geology 101, popularly known as Rocks for Jocks. …
“Two things happened. One is that the amount of money that could be made on Wall Street with hedge fund and private equity operations became just mind-blowing. At the same time, college was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years they’d have so much money they could then become professors or legal-services lawyers or whatever they’d wanted to be in the first place. That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.”
I’d put it just slightly differently (and I realize Trillin is only about three-quarters serious): The key change on Wall Street was more sociological than intellectual. That is, it wasn’t so much that the smart guys went to Wall Street–though the intellectual caliber of the financial sector certainly increased with all those quants running around. The relevant change was that a lot of “outsiders” suddenly came to Wall Street, which had previously been dominated by insiders.
Strategerizing: Military intellectuals envision a 50-year “Long War” against al Qaeda consisting of counterinsurgency operations spanning Iraq, Afghanistan, Pakistan, the Horn of Africa, the Philippines and beyond, Tom Hayden discusses in The Nation. “Comparing al Qaeda in AfPak to al Qaeda in Iraq . . . illustrates both the pros and cons of building U.S. strategy in South Asia around a counterinsurgency campaign in Afghanistan,” Brian Fishman suggests in Foreign Policy. If Obama submits to Veep Joe Biden’s campaign to shift the focus from the Taliban in Afghanistan to al Qaeda in Pakistan, “as I suspect he will, is there any reason to think America won’t simply preside over the rebirth of al Qaeda? Probably not,” Thomas P.M. Barnett blogs for Esquire Magazine. “Al Qaeda is implementing its game plan in the South Asian war theater as a part of its broader campaign against American global hegemony that began with [9/11],” the organization’s “guerilla chief” tells Asia Times.
An Inside Look at How Goldman Sachs Lobbies the Senate, by Matt Taibbi: …Later on this week I have a story coming out in Rolling Stone that looks at the history of the Bear Stearns and Lehman Brothers collapses. The story ends up being more about naked short-selling and the role it played in those incidents than I had originally planned…, but it turns out that there’s no way to talk about Bear and Lehman without going into the weeds of naked short-selling…
It’s the conspicuousness … that is the issue here, and the degree to which the SEC and the other financial regulators have proven themselves completely incapable of addressing the issue seriously, constantly giving in to the demands of the major banks to pare back (or shelf altogether) planned regulatory actions. There probably isn’t a better example of “regulatory capture” … than this issue.
In that vein, starting tomorrow, the SEC is holding a public “round table” on the naked short-selling issue. What’s interesting about this round table is that virtually none of the invited speakers represent shareholders or companies that might be targets of naked short-selling, or indeed any activists of any kind in favor of tougher rules against the practice. Instead, all of the invitees are either banks, financial firms, or companies that sell stuff to the first two groups.
In particular, there are very few panelists — in fact only one, from what I understand — who are in favor of a simple reform called “pre-borrowing.” Pre-borrowing is what it sounds like; it forces short-sellers to actually possess shares before they sell them.
It’s been proven to work, as last summer the SEC, concerned about predatory naked short-selling of big companies in the wake of the Bear Stearns wipeout, instituted a temporary pre-borrow requirement…
The lack of pre-borrow voices invited to this panel is analogous to the Max Baucus health care round table last spring, when no single-payer advocates were invited. So who will get to speak? Two guys from Goldman Sachs, plus reps from Citigroup, Citadel (a hedge fund that has done the occasional short sale, to put it gently), Credit Suisse, NYSE Euronext, and so on.
In advance of this panel and in advance of proposed changes to the financial regulatory system, these players have been stepping up their lobbying efforts… Goldman Sachs in particular has been making its presence felt.
Last Friday I got a call from a Senate staffer who said that Goldman had just been in his boss’s office, lobbying against restrictions on naked short-selling. The aide said Goldman had passed out a fact sheet about the issue that was so ridiculous that one of the other staffers immediately thought to send it to me. When I went to actually get the document, though, the aide had had a change of heart.
Which was weird, and I thought the matter had ended there. But the exact same situation then repeated itself with another congressional staffer, who then actually passed me Goldman’s fact sheet.
Now, the mere fact that two different congressional aides were so disgusted by Goldman’s performance that they both called me on the same day — and I don’t have a relationship with either of these people — tells you how nauseated they were.
I would later hear that Senate aides between themselves had discussed Goldman’s lobbying efforts and concluded that it was one of the most shameless performances they’d ever seen from any group of lobbyists, and that the “fact sheet” … was, to quote one person familiar with the situation, “disgraceful” and “hilarious.” …
The consumer retreats
The world economy entered the current crisis in a badly lopsided condition, with the American consumer borrowing massively to buy products from Chinese and European manufacturers who happily socked away all their extra cash while producing more than their home markets could absorb. Now, pressed by rising unemployment and the need to rebuild shrunken household wealth, the American shopper is tapped out.
The consumer’s retreat is making itself felt around the world. The first six months of this year, Americans bought $18 billion fewer German-made goods than during the same period in 2008. For German factories, that meant the loss of more than 35% of their U.S. orders. It was the same story for Japan, which saw $31 billion worth of sales vanish — 42% of its total.
Major auto-producing countries weren’t the only ones to feel the chill. Chinese factories shipped almost $21 billion fewer goods to the U.S. during the first half of this year than during the same period last year. And with consumers still confronting several years of paying down debt and repairing their balance sheets, many economists say the world confronts a permanent shift in economic drivers.
“The world is going to be adjusting for years to slow growth from the U.S. consumer,” says economist Kenneth Rogoff of Harvard University. “The U.S. consumer has been the engine of world growth for the last quarter century; that engine has stalled.”
Not everyone agrees. Christian Broda, head of international economic research for Barclays Capital, says the world may be headed for slower growth, but that doesn’t mean no growth. Substantial monetary and fiscal easing that has been put in place has yet to make itself felt. As it does, growth will improve. Stories of a complete change in Americans’ behavior, he says, have been overdone.
“Savings will go up, but these processes will take years. …You won’t rebuild your wealth in a year,” he says.
Something has to give
Rather than seeking to restart the same engine in the same way, U.S. policymakers say, they want to construct a more durable economic foundation. Lawrence Summers, head of the president’s National Economic Council, said last month that the U.S. economy “must be more export-oriented and less consumption-oriented” as it emerges from the crisis.
That’s a sensible goal, but unfortunately, the U.S. isn’t alone in embracing it. German Chancellor Angela Merkel says there is “no alternative” to continuing her country’s longstanding reliance upon exports rather than boosting demand at home. Japan, too, shows no signs of making a fundamental shift. And Chinese officials, while acknowledging a desire to promote greater domestic consumption in the long run, are wary of moving too quickly for fear of killing jobs in their export factories.
“The world can’t cope with the U.S. and China both acting like China,” Magnus says. “What’s going to give?”
That’s not clear. Chinese consumption could accelerate faster than expected, though there’s no sign that is imminent. Through July, Chinese savings deposits rose at an annual rate of 29%, vs. 11.3% in the same period in 2008, according to DBS Group Research in Singapore. Alternatively, China might continue binging on investment. But that’s only a short-run fix, which would ultimately swell both production capacity and inventories, depressing global prices. Or the world recovery could limp along at an especially anemic pace for years.
The difficulties in achieving the sort of global rebalancing required are evident in the U.S.-China relationship. U.S. exports in June ticked up for the second-consecutive month, but by a modest 2.2% from the month before. And the value of total shipments remains deeply depressed compared with the year-ago period.
Rising exports, aided by the slumping dollar, have whittled away at the U.S. trade deficit. China’s corresponding trade surplus also is shrinking, but bigger reductions depend on getting Chinese consumers to buy more.
Chinese household consumption is among the lowest in the world, amounting to roughly 35% of economic output, vs. nearly 70% in the U.S. Chinese consumers save rather than spend, in part, to guard against unexpected medical expenses in a country that lacks a health insurance system.
Until China can put in place a national health care system, household consumption is unlikely to rise. “We need to be aware of the difficulties and should not be over-idealistic,” central banker Zhou Xiaochuan, head of the People’s Bank of China, said in a July 3 speech.
But reorienting China’s producers to serve local consumers rather than distant markets also would require far-reaching changes in several other national policies. An undervalued currency, rock-bottom interest rates set by government fiat and a lack of labor rights all effectively subsidize producers at the expense of consumers.
“There’s a whole bunch of policies that constrain consumption and boost production,” says Pettis, a former investment banker.
Quarterbacks Abound: Exports Can’t Fuel Global Recovery – USA Today
Jamie Dimon has won big. JP Morgan Chase now stands alone, both in financial position and political clout – including special access to the White House and, as explained in today’s NYT, Rahm Emanuel’s likely attendance at his next board meeting tomorrow.
Dimon’s semiotics have been brilliant throughout the crisis – it wasn’t his fault, he was forced to take TARP money, and – in phrasing that will make the history books – bankers should not be “vilified”. But now he has a problem.
Larry Summers forcefully stated Friday that high recent profit levels for big banks (i.e., JPMorgan and Goldman) are based on the support they received and still receive from the government (listen to his answer to the second question, from about the 6:10 to 10:30 mark). At that level of generality, in a period of financial stabilization and consequent reduction in executive branch discretion, this statement does not threaten Dimon or anyone else.
And Summers’ statement on the dangers of “too big to fail” was “too vague to succeed”. Dimon saw this one coming and is very much aligned with Tim Geithner on the technocratic fixes that will supposedly take care of this – the mythical “resolution authority”, which will not actually achieve anything because it has no cross-border component, so the next time a major multinational bank (e.g., JP Morgan) fails, the choice again will be “collapse or bailout” (as Summers put it in the same Q&A Friday). Yes, I know the G20 is supposedly working on this; no, I don’t think they are making progress.
But Summers also drew a line in the sand on consumer protection.
Reformists within the administration really need a new consumer protection agency for financial products – there is little else they will be able to point to as an achievement on banking issues. Summers did not, for example, on Friday even mention the need for stronger regulation over derivatives; Dimon has likely already prevailed on this.
Consumer protection is easy for people to understand. If the banking lobby really defeats or defangs it this year – as it almost certainly can – won’t that make meaningful re-regulation of banking a big issue for the midterm elections in 2010 and beyond?
And does Dimon really want to publicly confront and defeat Larry Summers?
It must be tempting for Dimon to now press home his advantage, including at the White House. But as JP Morgan Chase stands alone at the top of our banking hierarchy, how far should he push his luck?
Summers has an unparalleled ability to move the consensus. And if he is now running from the left to become chair of the Fed – which was my impression on Friday – this will shift all candidates, including Ben Bernanke, towards being tougher on banks.
Why doesn’t Dimon instead seize on greater consumer protection as a way to rebuld legitimacy for finance – and to shape the new rules so as to create barriers to entry and growth for future rivals?
What would John Pierpont Morgan have done?
Jamie Dimon vs. Larry Summers – Simon Johnson, Baseline Scenario
The death of Robert McNamara has confronted the architects of another massive national catastrophe with a challenge: Will they, like McNamara in his post-Vietnam agony, acknowledge their failings and confess the error of their ways? Will they come up with a list, as McNamara did, of what to do differently next time?
There has already been speculation aplenty about whether Donald Rumsfeld will ever reassess his performance in the Iraq war. But I’m not thinking about Rumsfeld or the other men who brought us the war in Iraq. I have in mind the architects — every bit as cerebral and self-certain as McNamara — of the financial world that imploded last year. The real latter-day McNamara may not be Rumsfeld but Robert Rubin, Treasury secretary under Bill Clinton.
In fact, the similarities between the men who crafted the Iraq war and the men who crafted Vietnam aren’t that strong. McNamara’s hubris was that of a hyper-rationalist. He and his whiz kids, his systems analysts and efficiency experts, stormed into an intellectually sleepy capital determined to subject what had been the haphazard realm of policy to scientific measurement. The Air Force flyboys may have wanted to bomb the bejesus out of the commies, but McNamara’s boys could tell you precisely what tonnage would destroy precisely what industrial capacity. Victory was just an equation or two away.
The hubris of the late and unlamented Bush presidency was of a different order. If it was McNamara’s math that made it hard for him to grasp how a peasant army could resist half a million American troops, it was a simple refusal to take seriously the utterly predictable consequences that Saddam Hussein’s removal would have on a fractured Iraq that led Bush and his crew to plunge us, and Iraq, into a needless war. As once the hyper-rationalists had failed to factor for human complexity, so too, four decades later, did the ideologues who disdained the reality-based community do the same. Brought low by the hubris of the brilliant, we were brought low again by the hubris of fools.
Our time is no stranger to the hubris of the brilliant, though. To find it, we need to look not to Washington but to Wall Street. The real successors to McNamara’s whiz kids are the economic geniuses, the “quants,” who figured out how to build a tower of investment on a dot of assets, arbitrage everything, and hedge any risk, except, of course, the ones that plunged us into a depression.
The devastation they wrought may not have reached the level of the Vietnam War, which embittered this nation for decades and cost the lives of tens of thousands of Americans and many times more Vietnamese. But considering that they were merely economists, bankers and their ideologues, the damage is impressive enough. It’s not just the millions of jobs lost, the retirement savings wiped out, the homes foreclosed on. It’s also the offshoring of American manufacturing and the concomitant creation of mountains of consumer debt (which the American people owed to Wall Street) so that their compatriots could continue to consume even though their incomes had stagnated. It’s the transformation of a nation that once invested in productive enterprise into a nation sustained by asset bubbles.
Will the creators of this crisis wander through an intellectual and moral desert as McNamara did for decades? As yet, the mea culpas have been few and, like McNamara’s, incomplete. Alan Greenspan did admit to a congressional committee that his belief in the rational behavior of financial institutions had been shattered. But the confessions of failure and assumptions of responsibility from Chicago School economists, leading Wall Street bankers and lax governmental regulators, all of whom assured us that the very profitable financial vehicles they had devised also reduced the risk to the rest of us, are almost nowhere to be found.
If there’s an analogous figure to McNamara in this mess, then, it’s probably Rubin — socially liberal, like McNamara; concerned with the world’s poor, like McNamara; architect, like McNamara, of a system perfected by the best minds of his time, a system that should have worked but that failed catastrophically. Rubin’s repentance is a private matter, but the lessons that his protégés Larry Summers and Tim Geithner derive from the failure of deregulated hypercapitalism are of the utmost public concern. Whiz kids themselves, do they still believe in the capacity of their fellow whizzes to concoct financial devices so mathematically sound that strong regulation would be superfluous? Their reluctance to tightly regulate credit-default swaps suggests that they haven’t really been disenthralled of their faith in self-regulating markets. If we’re lucky, the image of Bob McNamara calculating the war on his slide rule, and spending the subsequent decades trying to understand where he went wrong, may bring them to their senses. It certainly should do that for us.
Is Robert Rubin Today’s McNamara? – Harold Meyerson, Washington Post
President Obama’s visit to Moscow this week may turn out to be a very good thing. Forget all this jibber-jabber about nuclear disarmament.
There is no better reminder than the former Soviet Union for how the fantasies of a few collectivist zealots can turn into unending nightmares for its people — and for how a state-run economy ends up with no economy at all.
If we’re lucky, a little Russian history on this trip will turn into a welcome wake-up call for Mr. Obama.
It’s not that Mr. Obama is some radical who carries a warm nostalgia for the Soviet Union from his university days. He’s way too young and too smart for that.
But the president believes in the state, certainly more than any other recent American president. He believes the state must actively intervene in the economy and that the state can bring about a better future. And it seems he believes it is his destiny to lead the state to that future.
In that way — and others — Obama reminds me of Vladimir Lenin, the founder of the Soviet state.
CNBC’s Jim Cramer made the Obama-Lenin comparison back in February. And the more I’ve thought about it, the more it holds.
Associated Press
Of course, Obama is a reformer, not a revolutionary. And he’s certainly no communist.
But just like Lenin, Obama is a supremely self-confident leader — an intellectual heavyweight and a clever political tactician — an elitist moralizer and a populist champion. And just like Lenin, Obama carries the true-believers’ righteous fervor for “change.”
I was thinking of Lenin as I watched the president’s Rose Garden remarks on energy and innovation last Thursday.
After his eight minutes in front of the teleprompter, the president turned to walk away, and a reporter blurted out a question, “Mr. President, do you have a message for the small businesses on health and economy?”
The president should have just walked away. But it was as if he couldn’t stop himself as he launched into a rambling, haughty answer that I found…well, a bit scary.
It was scary because it demonstrated that Mr. Obama — almost half a year in office — still has no grasp of the everyday realities faced by America’s small businessmen. They can’t make payroll, but the president is directing them to buy LED lightbulbs and urging them to contact “clean energy” CEOs.
And it was scary because it showed that the president is still possessed by an unshakable conviction in the power of the state over the individual and of the future over the past.
As he put it in the Rose Garden, we have to change the health-care system. We have to change how we use energy. We have to change how we “train our young people.” “We are not folks who are scared of the future or look backwards. We always meet the challenges by moving forward.”
Political clichés? Of course.
But the president seems to actually believe his clichés. And some of his Rose Garden remarks could have been lifted from Lenin’s speeches circa 1918 – the same hectoring tone and the same mockery of opponents who long for the “status quo”.
Even Mr. Obama’s call to move “forward.” “Forward!” in fact was one of the Soviets’ favorite slogans.
The good news for those of us who are a little freaked out by Mr. Obama is that even Lenin did an about-face after the utter failure of his initial hard-left economic policies.
By early 1921, faced with the ruin and famine wrought by nationalization of the economy, the Bolsheviks re-instituted a quasi-capitalist economy with its New Economic Policy. Ironically, the NEP was aimed to help small businessmen — the very same people that the Obama economy so desperately needs nowadays.
Lenin called the NEP taking “one step backward to take two steps forward.” While he’s in Moscow, President Obama may want to ask someone at the Kremlin, just what Lenin meant by that.
Editor’s Note: Mr. Newmark was a student in Moscow in 1984, worked with George Soros on Russian economic reform in 1988-89 and ran the Goldman Sachs Moscow office from 1992-1994.
Why Barack Obama Is Like Vladimir Lenin – Evan Newmark, Deal Journal
The rights of Irish sovereignty
Sovereignty is the quality of having supreme, independent authority over a geographic area, such as a territory.
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European Council
The European Council gives direction to the EU, and convenes at least four times a year. It comprises the President of the European Council, the President of the European Commission and one representative per member state; either its head of state or head of government. The European Council has been described by some as the Union’s “supreme political authority”.[58] It is actively involved in the negotiation of the treaty changes and defines the EU’s policy agenda and strategies.
The European Council uses its leadership role to sort out disputes between member states and the institutions, and to resolve political crises and disagreements over controversial issues and policies. It acts externally as a “collective Head of State” and ratifies important documents (e.g. international agreements and treaties).[59]
On 19 November 2009, Herman Van Rompuy was chosen as the first permanent President of the European Council. On 1 December 2009, the Treaty of Lisbon entered into force and he assumed office. Ensuring the external representation of the EU,[60] driving consensus and settling divergences among members are tasks for the President both during the convocations of the European Council and in the time periods between them.
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The EU became illegitimate when it refused to accept the rejection of theEuropean Constitution by French and Dutch voters in 2005. There can be no justification for reviving the text as the Lisbon Treaty and ramming it through by parliamentary procedure without referenda, in what amounted to an authoritarian Putsch. (Yes, the national parliaments were themselves elected – so don’t write indignant comments pointing this out – but what was their motive for denying their own peoples a vote in this specific instance? Elected leaders can violate democracy as well. There was a corporal from Austria … but let’s not get into that).
Ireland was the one country forced to hold a vote by its constitutional court. When this lonely electorate also voted no, the EU again disregarded the result and intimidated Ireland into voting a second time to get it “right”.
This is the behaviour of a proto-Fascist organization, so if Ireland now – by historic irony, and in condign retribution – sets off the chain-reaction that destroys the eurozone and the European Union, it will be hard to resist the temptation of opening a bottle of Connemara whisky and enjoying the moment. But resist one must. The cataclysm will not be pretty.
The horrible truth starts to dawn on Europe’s leaders Ambrose Evans-Pritchard, Telegraph