from David Cay Johnston:
The hidden dangers of low interest rates
The Fed's campaign to hold short-term interest rates near zero is a loser for taxpayers. A rise in rates would also burden taxpayers, but it would come with a benefit for those who save.
Low rates keep alive the banks that the government considers too big to fail and reduce the cost of servicing the burgeoning federal debt. Low rates also come at a cost, cutting income to older Americans and to pension funds. This forces retirees to eat into principal, may put more pressure on welfare programs for the elderly, and will probably require the government to spend money to fulfill pension guarantees.
Raising interest rates shifts the costs and benefits, increasing the risks that mismanaged banks will collapse and diverting more taxpayers' money to service federal debt. On the other hand, higher interest rates mean that savers, both individual and in pension funds, enjoy the fruits of their prudence.
No matter which way interest rates go, taxpayers face dangers. The question is where we want to take our losses. For my money, saving the mismanaged mega-banks should be the last priority and savers the first. Of course breaking up the big banks or letting them fail also imposes costs and low interest rates benefit many Americans, though mostly those with top credit scores, but policy involves choices and rescuing banks from their own mistakes and subtly siphoning wealth from the prudent is corrosive to the ethical and social fabric.
ON THE RISE?
The federal government paid $454 billion in interest on its debt in 2011. That is the equivalent of all the individual income taxes paid last year through the first three weeks of June
If rates return to, say, 6.64 percent, the level they were in 2000, one year's interest costs would equal the individual income taxes for all of 2011 plus the first few weeks of 2012.
As a biological weapon, H5N1 is for the birds
By Peter Christian Hall The opinions expressed are his own.
Amid the furor over the U.S. government’s move to restrict publication of vital research into H5N1 avian flu, no one seems to be challenging a key assumption—that H5N1 could make a useful weapon. It wouldn’t.
The National Science Advisory Board for Biosecurity recently pressured Science and Nature not to fully publish two widely discussed papers detailing separate efforts to devise an H5N1 avian flu strain that transmits easily in ferrets and might do so among human beings. The proposed solution is to issue redacted versions and circulate details only to approved institutions.
This unprecedented interference in the field of biology could hinder research and hamper responsiveness in distant lands plagued by H5N1. If institutions there don’t know what gene changes to watch for, how quickly will we know if H5N1 replicates a pandemic combination defined by researchers on three continents?
There’s little question that this fearsome virus could wreak catastrophic harm if it learns how to circulate readily among humans. Through last week, when H5N1 killed a man near Hong Kong (site of the first official outbreak, in 1997), it has slain 60 percent of about 600 people certified as having been infected with it. Predictions of the global toll if H5N1 should turn pandemic reach as high as a billion people.
So why wouldn’t a desperate outlaw state—or terrorists—want to weaponize the most dreaded flu strain scientists have ever found?
Because H5N1 would make a wretched weapon.
from Africa News blog:
100 years and going strong; But has the ANC-led government done enough for its people?
By Isaac Esipisu
Although the role of political parties in Africa has changed dramatically since the sweeping reintroduction of multi-party politics in the early 1990s, Africa’s political parties remain deficient in many ways, particularly their organizational capacity, programmatic profiles and inner-party democracy.
The third wave of democratization that hit the shores of Africa 20 years ago has undoubtedly produced mixed results as regards to the democratic quality of the over 48 countries south of the Sahara. However, one finding can hardly be denied: the role of political parties has evidently changed dramatically.
Notwithstanding few exceptions such as Eritrea , Swaziland and Somalia , in almost all sub-Saharan countries, governments legally allow multi-party politics. This is in stark contrast to the single-party regimes and military oligarchies that prevailed before 1990.
After years of marginalization during autocratic rule, many African political parties have regained their key role in democratic politics by mediating between politics and society. Multi-partyism paved the way for genuine parliamentary opposition and the strengthening of parliaments in decision-making. However, several shortcomings still remain: many African political parties suffer from low organizational capacity and a lack of internal democracy.
Dominated by individual leaders, often times lifelong chairpersons and “Big Men”, youth and women remain marginalized within party structures.
from David Cay Johnston:
Time to junk income taxes?
This is America's 100th year for individual income tax, a system as out of touch with our era as digital music is with the hand-cranked Victrola music players of 1912. It is also the 26th year of the Reagan-era reform for both personal and corporate tax, a grand design now buried under special-interest favors.
With U.S. elections in November, and the George W. Bush tax cuts due to expire at the end of 2012, it's time for a debate that goes beyond ginning up anger over taxes and the superficial issue of tax rates.
It's time to consider whether to get rid of income taxes, personal and corporate. What are the strengths and weaknesses of our current system? Should we tax individual and corporate income -- or something else?
We need to think about it. Whatever systems we consider, we should weigh up what it takes to raise the necessary revenue along with such other attributes as minimal compliance cost, leakage and economic distortion.
Times change. Tax systems must change with them or else their lubricating effect turns to sand, wearing down the gears of commerce.
Just as the Industrial Revolution transformed a nation of farmers and mechanics into a land of factory hands and office workers, so too the digital revolution and globalization are fundamentally remaking society.
We need for our tax system to serve our 21st century civilization and its needs, including the costs of aging infrastructure and an aging population, costs that will be borne one way or another.
OneOfTheSheep,
Might I point out that you were the one who questioned my credibility, and challenged me to a game of “degree poker”.
Clearly, you are not holding a winning hand, so your bluff failed when I “called”.
Most of what you say — not only this time, but in other articles — is complete and utter nonsense.
You are not worth my time in order to respond to your rantings.
PseudoTurtle
CPA/MBA
Santorum and the Tea Party crackup
By Michelle Goldberg
The views expressed are her own.
It’s easy to read too much into Rick Santorum’s stunning finish in the Iowa caucuses after months of dismal poll numbers. In some ways he won by default, emerging as the last conservative candidate standing because no one took him seriously enough to attack him. Nevertheless, by virtually tying with Mitt Romney, he has become the leading conservative alternative in the race. And that should put to rest the exhausted conventional wisdom that the American right is primarily motivated by a desire for small government. Because Rick Santorum sure isn’t.
Since the Tea Party burst onto the political scene in 2009, we have heard over and over again that the revolt against president Obama was driven by anxiety about government expansion. Because conservatives told pollsters they were most concerned about fiscal issues, conventional wisdom hyped the belief that the culture wars were passé. In Politico, for example, Ben Smith wrote that the Tea Party had “banished the social issues that are the focus of many evangelical Christians to the background.”
Certainly, Tea Party voters wanted to shrink government spending and lower taxes. That’s perfectly in line with the ideology of the religious right, which holds that families and churches should provide the social safety net. According to Ralph Reed, the Christian Coalition’s main legislative goals in 1994 and 1995 were tax cuts for middle-class families with children and balancing the budget. And fifteen years later, polls showed that the Tea Party was largely the old Christian right in a new guise. A September Public Religion Research Institute survey found that three quarters of Tea Partiers describe themselves as Christian conservatives, while only a quarter identify as libertarians. The Tea Party-inspired House prioritized anti-abortion legislation even when it meant raising taxes, championing a bill that would have ended current tax breaks for individuals and small businesses buying health care plans that cover abortion, as the vast majority of plans now do. Nevertheless, the notion of the Tea Party as a libertarian force endured.
Santorum’s emergence as the anti-Romney, though, should make it impossible to ignore the fact that many on the right, including large numbers of self-described Tea Partiers, want more government control of our lives, not less. According to a CNN entrance poll, Santorum won a plurality of Iowa Tea Party sympathizers—64 percent of voters overall—with 29 percent, followed by 19 percent each for Romney and Ron Paul. He’s getting at least some Tea Party support in New Hampshire, winning the endorsement of Jerry DeLemus, chairman of the Granite State Patriots Liberty PAC. This despite the fact that Santorum has often disparaged limited government. In 2005, for example, he told NPR that conservatives who have taken a “Goldwaterish libertarian point of view when it comes to the interaction of government in people’s lives” have done so “to the determent of the country.”
“What’s left is weaker than the sum of its parts”
Yes, but less shaky ground and a healthier foundation to restart. Always a trade-off i’m afraid…
The year of the newspaper paywall
By Clay Shirky
The views expressed are his own.
This may be the year where newspapers finally drop the idea of treating all news as a product, and all readers as customers.
One early sign of this shift was the 2010 launch of paywalls for the London Times and Sunday Times. These involved no new strategy; however, the newspaper world was finally willing to regard them as real test of whether general-interest papers could induce a critical mass of readers to pay. (Nope.) Then, in March, the New York Times introduced a charge for readers who crossed a certain threshold of article views (a pattern copied from the financial press, and especially the Financial Times.) Finally, and most recently, were a pair of announcements last month: The Chicago Sun-Times was adopting a new threshold charge, and the Minneapolis Star-Tribune said that their existing one was working well. Taken together, these events are a blow to the idea that online news can be treated as a simple product for sale, as the physical newspaper was.
For some time now, newspaper people have been insisting, sometimes angrily, that we readers will soon have to pay for content (an assertion that had already appeared, in just that form, by 1996.) During that same period, freely available content grew ten-thousand-fold, while buyers didn’t. In fact, as Paul Graham has pointed out, “Consumers never really were paying for content, and publishers weren’t really selling it either…Almost every form of publishing has been organized as if the medium was what they were selling, and the content was irrelevant.”
Commercial radio is ad-supported because no one could figure out a way to restrict access to radio waves; cable TV collects revenues because someone figured out a way to restrict access to co-axial cables. The logic of the internet is that everyone pays for the infrastructure, then everyone gets to use it. This is obviously incompatible with print economics, but oddly, the industry’s faith in ‘every reader a customer’ has been largely unshaken by newspapers’ own lived experience of the move to the web.
I’m boycotting the nytimes.com. I use Google news to look for other sources, that’s how I found this newspaper.
from David Rohde:
Yes, we’re creating jobs, but how’s the pay?
Update: The December job numbers released this morning continued the same trend described in yesterday’s column. Of the 200,000 new jobs created last month, 78,000 – or nearly 40 percent -- were in transportation, warehousing and retail, sectors known for low pay and seasonal hiring. In a far more positive sign, manufacturing gained 23,000 workers in December after four months of little change. A vast expansion of that trend would benefit the middle class tremendously.
WASHINGTON -- Between now and November, middle class Americans are going to hear an enormous amount of bragging about job creation.
Mitt Romney will tout his role in the creation of Staples, The Sports Authority and Domino's, three firms that he says created 100,000 jobs. Barack Obama will say 2.9 million jobs have been created since March 2010, and highlight a surge of 140,000 new private sector jobs in November.
The central question for middle class Americans, however, is: What quality of job is being created? The November job surge, for example, occurred primarily in retail, leisure and hospitality, sectors known for low wages. The other high-growth areas were professional services and health care, where higher education is a central determinant of income. Manufacturing and construction, one of the few areas left in the American economy where members of the middle class without elite educational pedigrees can find strong wages, were moribund. The following chart from the Bureau of Labor Statistics breaks down the numbers.
In a rare moment of bipartisan agreement, Republicans and Democrats both recognize the problem. After years of Democratic politicians complaining about a lack of social mobility for Americans, The New York Times reported this morning that Republican candidates are complaining about the problem as well.
Presidential candidate and former Pennsylvania Senator Rick Santorum warned this fall that movement “up into the middle income is actually greater, the mobility in Europe, than it is in America,” according to The Times. Wisconsin Congressman Paul D. Ryan, a leading House conservative, recently wrote that “mobility from the very bottom up” is “where the United States lags behind.”
I have to chuckle when I read folks complaining about outsourced jobs while these same people are making ‘bang for the buck’ decisions as consumers. Connect the dots people! Your decisions as consumers are pushing companies to do the very thing you complain about. As consumers, we tend to reward those companies that offer the best ‘bang for the buck’ with our business. As investors we demand that companies grow sales and cut costs. As all this is happening, we complain about the behavior of ‘ruthless’ companies. Just silly!
from Ian Bremmer:
G-zero and the end of the 9/11 era top 2012 risks
In a video for Reuters, Ian Bremmer discusses the biggest risks facing the markets in 2012 and says the next phase in the Middle East and the post-9/11 environment pose the greatest uncertainty:
As we begin 2012, political risks dominate global headlines in a way we’ve not experienced in decades. Everywhere you look in today’s global economy, concerns over insular, gridlocked, or fractured politics affecting markets stare back at you. Continuation of the politically driven crisis in the eurozone appears virtually guaranteed. There is profound instability across the Middle East. Grassroots opposition to entrenched governments is spreading to countries such as Russia and Kazakhstan that were thought more insulated. Nuclear powers North Korea and Pakistan (and soon Iran?) face unprecedented internal political pressure... Read the full top risks report here.
You’re doing a good job describing the risks but what about quantifying them and further depict the negative impacts or positive opportunities that would occur if these risks would materialize. Moving more towards risk analysis rather than risk reporting….
Also for the sake of transparency, who is taking these risks you describe? Global economy is rather vague… be more specific from what perspective you see things. What can be described as a risk for a political segment can be an opportunity for another segment.
Michele Bachmann’s glass house
By Amanda Marcotte The views expressed are her own.
Of all the candidates who rose and fell during the prolonged Republican primary campaign going into Iowa, Michele Bachmann took the wildest ride. Bachmann won the 2011 Ames Straw Poll in August, taking 28 percent of the vote, mainly due to conservative evangelicals who supported her strong anti-abortion views and her ease in speaking Christianese. But a mere five months later, after a disastrous showing in Iowa where she only took 5 percent of the vote, Bachmann is dropping out of the race.
The campaign has blamed sexism for her precipitous fall. It’s an accusation that hasn’t done her any favors with defensive voters, but this may be one of those rare occasions when the Bachmann camp has correctly assessed reality. As a conservative female politician with an evangelical base, Bachmann was forced to hang her ambitions on voters who believe in traditional gender roles. It’s a strategy—a woman who rejects feminism who also wants to use feminism to gain serious power–that causes cognitive dissonance for voters, like fruit-flavored beer. The novelty will generate some sales, but at the end of the day, people will return to the half-dozen other beer-flavored beers available.
The sustained culture war that has created modern conservatism has many aspects to it: homophobia, racialized resentments, hostility to immigration. But anger about feminist gains surely rises to the top, with a special anger reserved for reproductive rights that free women from the kitchen and allow them to compete with men in the workplace. Bachmann herself gloated frequently about her love of traditional male power, noting publicly that she submits to her husband and strictly forbids her daughters to take the lead with boys, forcing them to adopt a strictly passive role in dating. Unsurprisingly, her belief that women should not control when they give birth has been a major platform for her, one she routinely describes as her number one priority.
That these opinions created an initial bout of enthusiasm for Bachmann is unsurprising. For decades now, conservatives have loved an anti-feminist woman, believing, correctly, that having women express hostility to women’s rights dilutes the feminist ideology. Putting anti-feminist views in a woman’s mouth allows conservatives to argue that many women are perfectly happy allowing men to take the lead. Additionally, anti-feminist women can be used to shame feminists, by asking them why they can’t just accept the status quo like conservative women do. Many pundits and writers have made a career being the woman who opposes women’s empowerment: Phyllis Schlafly, Ann Coulter, Beverly LaHaye, among others. As long as these women’s actions are seen as fundamentally supportive of male dominance, they’re applauded for speaking out, and make money doing it.
The problems arise when anti-feminist women start to seek real power for themselves. Bachmann is far from the first female candidate whose anti-feminist views gained her a flurry of enthusiasm but whose conservative base reneged at the last minute. That base is unable to grant serious power to a woman, no matter how much she promised to use it to disempower other women. Michele Bachmann is simply the latest conservative woman who has found that she’s trapped not under a glass ceiling, but in a glass house: stuck in the role of champion for male control, unable to get a piece of the pie for themselves.
It is no big secret those like Bachmann and the amazing ‘Frothy Mix’ would have us in some 14th century theocracy waging Holy War against the Muslims in Jerusalem while praying and waiting patiently for Armageddon to come given half a chance.
For those of you getting your conservative panties in a twist, if you read, she is leveling the beam squarely at Evangelical fundies at the extremes. Be they a minority or not, they are still nauseatingly vocal. Can’t we just carve out an area in the middle of Nebraska and ship them all there so they can have their fundie Utopia and left the rest of us the Hell alone?
The Trojan Horse of cost benefit analysis
By John Kemp The writer is a Reuters market analyst. The views expressed are his own.
LONDON – Should federal government agencies have to prove the benefits of new regulations outweigh the costs before introducing them?
It sounds like a simple question with an obvious answer. But the role of cost-benefit analysis in writing federal regulations (and even laws) is shaping up to be one of the biggest battles between the Obama administration and business groups in 2012.
On one side are business groups such as the U.S. Chamber of Commerce and the International Swaps and Derivatives Association (ISDA), backed by conservative lawyers such as Eugene Scalia (son of Supreme Court Justice Antonin Scalia) and a group of judges on the U.S. Court of Appeals for the District of Columbia Circuit who oversee most federal rule-writing.
On the other is the White House, the Treasury and a host of agencies stretching from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC).
QUEST FOR QUANTIFICATION
What was once an esoteric legal dispute is turning fiercely political.
@Mott,
Correction: Third paragraph should have read “Only to such extent as unelected and unaccountable government bureaucrats unreasonably and without appropriate justification impose artificial and unnecessary “qualifications” on the accomplishment of projects or employment of people is there any connection between the adverse effect of ill-considered and arbitrary bureaucratic actions and inactions and the reciprocal and adverse effect on American’s “cost of living”.
