SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?


To: nigel bates who wrote (54363)5/9/2009 11:45:55 AM
From: koan  Respond to of 149317
 
>>The longer term outcome depends on whether government has the discipline later on to halt monetary expansion.
I don't know about the US, but looking at the UK's fiscal forecasts for the next decade, I have almost no doubt that our government will succumb to the temptation of inflating away its debt.<<

Unlike Bush, I think it goes without saying Obama will go forward following social science which he feels takes us where he wants us to go.

And if Krugman cannot figure out the end game, neither can we.

PAUL KRUGMAN
Published: May 7, 2009
Hooray! The banking crisis is over! Let's party! O.K., maybe not.

Skip to next paragraph
If we had all been afraid enough to pay attention; more regulation wouldn't be
necessary.Eh?

Paul Krugman

In the end, the actual release of the much-hyped bank stress tests on Thursday came
as an anticlimax. Everyone knew more or less what the results would say: some big
players need to raise more capital, but over all, the kids, I mean the banks, are
all right. Even before the results were announced, Tim Geithner, the Treasury
secretary, told us they would be "reassuring."

But whether you actually should feel reassured depends on who you are: a banker, or
someone trying to make a living in another profession.

I won't weigh in on the debate over the quality of the stress tests themselves,
except to repeat what many observers have noted: the regulators didn't have the
resources to make a really careful assessment of the banks' assets, and in any case
they allowed the banks to bargain over what the results would say. A rigorous audit
it wasn't.

But focusing on the process can distract from the larger picture. What we're really
seeing here is a decision on the part of President Obama and his officials to
muddle through the financial crisis, hoping that the banks can earn their way back
to health.

It's a strategy that might work. After all, right now the banks are lending at high
interest rates, while paying virtually no interest on their (government-insured)
deposits. Given enough time, the banks could be flush again.

But it's important to see the strategy for what it is and to understand the risks.

Remember, it was the markets, not the government, that in effect declared the banks
undercapitalized. And while market indicators of distrust in banks, like the
interest rates on bank bonds and the prices of bank credit-default swaps, have
fallen somewhat in recent weeks, they're still at levels that would have been
considered inconceivable before the crisis.

As a result, the odds are that the financial system won't function normally until
the crucial players get much stronger financially than they are now. Yet the Obama
administration has decided not to do anything dramatic to recapitalize the banks.

Can the economy recover even with weak banks? Maybe. Banks won't be expanding
credit any time soon, but government-backed lenders have stepped in to fill the
gap. The Federal Reserve has expanded its credit by $1.2 trillion over the past
year; Fannie Mae and Freddie Mac have become the principal sources of mortgage
finance. So maybe we can let the economy fix the banks instead of the other way
around.

But there are many things that could go wrong.

It's not at all clear that credit from the Fed, Fannie and Freddie can fully
substitute for a healthy banking system. If it can't, the muddle-through strategy
will turn out to be a recipe for a prolonged, Japanese-style era of high
unemployment and weak growth.

Actually, a multiyear period of economic weakness looks likely in any case. The
economy may no longer be plunging, but it's very hard to see where a real recovery
will come from. And if the economy does stay depressed for a long time, banks will
be in much bigger trouble than the stress tests - which looked only two years ahead
- are able to capture.

Finally, given the possibility of bigger losses in the future, the government's
evident unwillingness either to own banks or let them fail creates a
heads-they-win-tails-we-lose situation. If all goes well, the bankers will win big.
If the current strategy fails, taxpayers will be forced to pay for another bailout.

But what worries me most about the way policy is going isn't any of these things.
It's my sense that the prospects for fundamental financial reform are fading.

Does anyone remember the case of H. Rodgin Cohen, a prominent New York lawyer whom
The Times has described as a "Wall Street éminence grise"? He briefly made the news
in March when he reportedly withdrew his name after being considered a top pick for
deputy Treasury secretary.

Well, earlier this week, Mr. Cohen told an audience that the future of Wall Street
won't be very different from its recent past, declaring, "I am far from convinced
there was something inherently wrong with the system." Hey, that little thing about
causing the worst global slump since the Great Depression? Never mind.

Those are frightening words. They suggest that while the Federal Reserve and the
Obama administration continue to insist that they're committed to tighter financial
regulation and greater oversight, Wall Street insiders are taking the mildness of
bank policy so far as a sign that they'll soon be able to go back to playing the
same games as before.

So as I said, while bankers may find the results of the stress tests "reassuring,"
the rest of us should be very, very afraid.



To: nigel bates who wrote (54363)5/9/2009 11:56:49 AM
From: Bread Upon The Water  Read Replies (1) | Respond to of 149317
 
Yes, its the politically easiest route as opposed to having tell people they have to tighten their belts.



To: nigel bates who wrote (54363)5/12/2009 5:54:52 PM
From: Mac Con Ulaidh  Read Replies (1) | Respond to of 149317
 
a mighty convenient suicide -

Tortured To Justify A War?
andrewsullivan.theatlantic.com

One key thing to understand about torture is that it almost never occurs when the torturers know nothing and need to find out something. That's why seeing it as an interrogation tool, properly understood, is actually oxymoronic. What torture is about is forcing a victim to tell you something you already think you know but want confirmed - either to prevent an attack or use as propaganda or deploy against another suspect. And, as one recalls, there are many things that Dick Cheney simply knows - even though the CIA, the State Department, and much of the professional machinery of government might disagree. In fact, disagreement by State and CIA actually only tends to confirm Cheney's view, in his mind, that he is always, always right.

So what were the two things of which Cheney was completely sure after 9/11, regardless of the objective evidence? He was sure that there was an operational connection between Saddam and al Qaeda, and sure that Saddam had weapons of mass destruction. In Cheney's defense, these were judgments based on completely legitimate fears - and any president or vice-president would be duty bound to figure them out. After 9/11, the possibility of al Qaeda with WMDs was terrifying, and Cheney had already been responsible for the worst attack on American soil in US history. By his reading of his oath of office, he had already broken it. So he finds two potential Qaeda suspects and they are interrogated ... but although they tell him a lot about al Qaeda, they don't tell him what he wants to know and believes is true. And what he believes is true could, in his mind, threaten the US and thousands of American lives. He wasn't alone in this fear. I was right there along with him, as most of us were. But, from all we now know, he went one step further in this quest than any American elected official had ever done in history before.

From much of what we can glean, it was only after the suspects had given up lots of info, but not the info Cheney wanted, that the torture started, as it usually does in history. It starts with someone empowered with torture to get from a victim the words that will confirm what the torturer already believes. This evidence can then be publicly cited as proof that Cheney is right ... and justify further torture and even, in this case, partly justify an entire war that killed tens of thousands and cost trillions of dollars and still has almost the entire US military locked down with no way out in the middle of the Middle East. Moreover, the result of torture - it worked! you can almost hear Cheney exult - proves that other potential torture victims could also be forced to tell us the same thing. And so the temptation to torture deepens with every session - as you believe you are nearing the truth, even as, in reality, you are entering a dark hole from which there is no escaping.

And so Ibn al-Sheikh al-Libi was first captured by the US and tortured by CIA surrogates in an Egyptian cell. Apparently, they beat him and put him in a coffin for 17 hours as a mock-burial. To end the severe mental and physical suffering, he confessed that Saddam had trained al Qaeda terrorists in deploying WMDs. This evidence was then cited by Colin Powell as part of the rationale for going to war in Iraq. Bingo! And we wonder why torture is such a temptation. Which politician wouldn't want to be able to manufacture evidence to support what he wants to do anyway? Take that, Valerie Plame!

Now you see the temptation to use Zubaydah for the same purpose.

He'd been interrogated successfully, given up huge amounts of information when being treated humanely, even kindly, in hospital and after - but not enough for Cheney. Cheney wanted Zubaydah to tell him what Cheney already knew: the Saddam-Qaeda connection. That would sure foil those pantywaist liberals in the State Department, the Congress and the press who kept asking for proof - as if proof were needed in such an emergency. And so Zubaydah was strapped to a waterboard to force a fake casus belli out of him. Here is the relevant section from the Bybee memo:

The interrogation team is certain that he has additional information that he refuses to divulge. Specifically, he is withholding information regarding terrorist networks in the United States or in Saudi Arabia and information regarding plans to conduct attacks within the United States or against our interests overseas.

But those in the "interrogation team" had no such certainty, according to Ali Soufan, who was part of it. And David Rose subsequently discovered what Bush and Cheney got out of the torture session, once the professional interrogators had been ushered out:

Rose quotes a Pentagon analyst who read the transcripts from the interrogation: “Abu Zubaydah was saying Iraq and Al-Qaeda had an operational relationship. It was everything the administration hoped it would be.” That analyst did not then know that the evidence was procured through torture. “As soon as I learnt that the reports had come from torture, once my anger had subsided I understood the damage it had done,” the analyst says.

We still have memos and a bureaucratic paper trail. But we don't have the tapes of those torture sessions which were destroyed - yes this is a Hollywood movie - by the CIA. And as for al-Libi, a man who could also flesh out the details of his torture and what Cheney forced him to say ... well, for a long time, he simply went missing:

"I would speculate that he was missing because he was such an embarrassment to the Bush administration," said Tom Malinowski, the head of the Washington office of Human Rights Watch. "He was Exhibit A in the narrative that tortured confessions contributed to the massive intelligence failure that preceded the Iraq war."

Yesterday, he was found dead in a Libyan jail, an apparent "suicide".