Geithner makes up some new rules
http://www.nytimes.com/2009/03/26/business/economy/26regulate.html?em

Paul Krugman disagrees with Barack Obama

http://www.nytimes.com/2009/03/23/opinion/23krugman.html?em

President Obama reaches out via video to the people of Iran. This historic hand of peace between the most bitter of rivals is remarkable in the contrast to what the Ayatollah Sistani has said about Israel…

Message to Iran

Image courtesy of ESF

New Zealand scientists have proven that the danger from ice collapse of the Ross Shelf and Greenland could be closer than anyone expected. By drilling core samples under the ice, CO2 levels have been measured from the last great melt. They were measured as only slightly above our current levels.

There are still those who believe that they have a right to put the world at risk because nobody has proven that the ice sheets could add 1m or more to sea levels and drown low lying islands in the Pacific Ocean as well as submerge parts of low lying cities such as London, or Venice.

The fact is that we moving into the same CO2 content as the last time this happened.

The meme now changee: if we can not or will not do anything to prevent world catastrophie, how can we evolve around it?

We have, through inaction and a belief in luck (e.g. the financial system) convinced ourselves that we can reverse natural consequences. We believe just because we can make a few right decisions for investment that we are somehow infallible. It is like thinking a bully has the right to rule.

Our arrogance and pollution of the world is an outstanding achievement. We have been experimenting with the atmosphere and over the next 50 years the differences in the weather will continue to become less predictable.

The proof is under the ice. Conclusive evidence that excessive CO2 produces global warming that will raise sea levels. The additional water and energy in the atmosphere will also cause more storm activity and droughts.

It is the years of arrogant disbelief and denial that can now stop. Will humanity do anything about it or find more excuses to continue to destroy nature?

NZ Herald – NZ Herald

Inactivity is a drug and the supply ran dry. There is all this hunger for growth and consumption to keep the market awake. America got too greedy. What we need is more activity and less addiction to speculation at all levels, meaningful investment should be rewarded and for a market to operate it must be fair to all contributors in that market.

There has been such an un-level unreliable unfair playing field that corruption was the faith. Corruption and inactivity, their choice. Economy is elastic and can evolve – the role of Government may evolve also.

Inaction is the disturbing trend. You can not make profit based solely on risk. That is gambling.

Financial Faith

America will wake up to the financial circumstances created by years of overspending. Lucky the USA has the capability and resources to generate extraordinary wealth. It is not the end of the world.

It is the end of monetarism. Like any Ponzi scheme, it eventually means everyone folds.

There is not just light at the end of the tunnel but hope that faith in a fantasy of wealth can now be seen for what it is: borrowing overseas funds.

– posted on Current.com

American Insurance Group, or AIG was bailed out by the tax payer. It is now owned by the citizens of America. Part of the reason for the bailout were Credit Default Swaps that had to be simultaneously paid out after the collapse of Lehman Brothers. There is now a question as to which companies made these bets on failure and AIG has clammed up saying this is propriety information. Smug perhaps at the use of a legal term however it as it has now been pointed out that the American taxpayers own 80% of AIG so they are the proprietors and one can see very red faces across corporate America.

The question – the aspect that does not make sense. How can this corporate heist of public money go unanswered? It is a far greater attack on the American way of life than 9/11 ever was.

The real function of terrorism seems to elicit destructive reactions by Governments. It was the American voter that was fooled by the Bush propaganda. If Americans had spent more on their own welfare rather than worship the dollar – well – maybe the voters would have been a little more informed and not voted GW Bush into office in 2004.

The left and right attack each other. But they do not see the wood for the trees.

See also
NY Times

In the latest message from Osama bin Laden, broadcast on Al Jazeera, bin Laden called Israel’s offensive in the Gaza Strip a ”holocaust” and lashed out at Arab governments that he said failed to stop the bloodshed in an audio recording, broadcast Saturday.

He also issued military orders for fighters to move from Iraq into Jordon and the West Bank – for an attack on Israel. And here is Israel’s problem – its incursion into Gaza in December pushed away progress on peace settlements by reacting with anger and extreme force. Their logic seemed the same as the Bush rationale given for invading Iraq. Fear of what these missiles may one day bring.

Although the Hamas missiles were relatively puny when compared to the bombs dropped by Israel, it does seem that Israel want to make the penalty so severe that Hamas recalculate their strategy.

Is it now inevitable that as the US focus is lifting on Iraq it will it feel forced to invade Jordon to protect Israel? Or will the USA continue to build bridges with Syria and Jordon and by supporting better border control – avoid the consequences of infiltration by “terrorist” mercenaries?

War is negative. It takes about 3 generations before any sanity is recovered into a war ravaged world. We hear how America does not look after its returned wounded with some horror, but it is the shattered lives of the innocent bystanders that can never be recovered that makes war totally unjustifiable unless there is simply no other way.

Israel could have asked Hamas to stop sending their futile missiles by addressing the grievance of a complete lack of diplomacy between the two governments. You can not have democracy and predetermination. The Palestinians voted Hamas in, and the Bush administration and Israel both blindly refused to deal with Hamas as they had committed acts of war. As Hamas is a legitimate government these are no longer acts of terrorism, Israel should have negotiated with Hamas. Osama bin Laden has not been voted into power and yet assumes leadership of a fanatical death cult pretending to be devout Muslims. His edicts of war are encouraging acts of terrorism, and not negotiating with Osama bin Laden is completely understandable.

Modern world leadership requires complicity of the people. Fanatical devotion to a cause that will never be achieved is really wasting the time and energy of a world that is sick and tired of random death being dished out like foul medicine. Osama bin Laden has no mandate over anyone and for him to be called a “leader” implies he has a “people”. He does not. He may have a private army and he may hire mercenaries, but he is not a leader. He is wreaking the lives of millions of people by fostering war in Afghanistan both internally and with both superpowers of the day.

Imagine for a second a discontinuance of his death acceleration programme for Muslims. Schools could be providing the children of opium farmers skills that are beneficial to humanity.

For a Muslim to support the opium trade as a way of financing pointless war is evidence of evil. If the West stopped buying heroin the economy of Afghanistan would not support its people. So in a way drug addicts are keeping Afghan children alive so they can become suicide bombers?

If Osama bin Laden does not negotiate peace it will continue to be a tragedy for the Afghani children and for generations to come.

Israel has demonstrated it can defend itself. Palestine has demonstrated that it can not, except my futile efforts. Israel made no friends by going into Gaza. Israel makes no friends by not creating a state of Palestine with rules of peaceful co-existence instead of siege.

For that to occur, peaceful civilized leaders in the Palestinian world are required. This will require an act of extraordinary generosity that will never be forgotten. If Israel were able to make peace and ensure equality with the Palestinian people, it may not stop the ravings of Osama bin Laden. But then his proclamations would then be his own undoing.

By going to war with him, the USA has effectively elevated his standing to that of a cultural hero. A hero he is not. He causes suffering and death of innocents.

His continued aggressive stance in the face of radical changes in American politics belies a man without real purpose. Following his logic and edicts involves his foot soldiers in crimes against humanity and for that they may never get to the paradise of their beliefs. It therefore serves the purposes of Osama bin Laden to avoid educating the children of Islam or they may work out that he is simply misleading them.

“That is why we need to act boldly and act now to reverse these cycles. That’s why we need to put money in the pockets of the American people, create new jobs, and invest in our future. That’s why we need to re-start the flow of credit and restore the rules of the road that will ensure a crisis like this never happens again.”

Barack Obama
WhiteHouse.gov

The fundamental of the economy of any country is that it’s people are doing something productive, and for that they can eke out a living, whether it be a basic or a more expensive variety – the function they are being rewarded for is difference, change, something as a result of their actions.

But then, you could argue, there are those who create nothing but opportunities for others, like bankers. And there are those who make money lending to the bankers who in turn can create opportunities for others. Then there are those who leverage intelligent choices against huge funds so that these funds get more capital (which must mean that they come from another source, in other words are a cost on the economy – a final resting place for a growing mound of funds to support a growing user base).

Quite apart from those who hijack the system; those who are involved in primary production, those who arrange the cartage of goods, storage units, the shipping and the distribution and storing/lending funds to support these activities with work that usually has value – these and many other similar activities produce things that are needed to support our society.

There there are those that make predictions about capital change and buy up shares and futures in such productivity that helps it to grow. There are those that take bets on those predictions and those that take out insurance policies on those that take bets.

The collapse of these large traders in capital has occurred as extraordinary debts fall due. If the US Government does not print lots of money, these contracts have extraordinary meaning creating such imbalances that some will make trillions and lots of others will be in the red for billions. What exactly does that achieve? Not much, except for the guy with so much money he could start a Bill and Melinda Gates foundation every second of every day of the year and still wonder what to do. In other words it is not just pointless, but if he or she then had the decency to burn all that cash, things would suddenly get back to normal with a heap of massive bankruptcies. So long as this economic demi-God was contained and not released onto the economy at large.

Is Barack Obama thinking that the US Government will be the fat collector, that he can print money now and burn it later?

It does seem a little unlikely. But how do you double the currency in circulation without inflation ? You can not, it is inflation.

Those who hijack the system leverage interest for risk in the carriage of capital. The theory behind these massive capital injections into the US economy “to get capital markets working again” is a theory based on the simple idea that capital markets and interbank exchanges are vital to economic activity. The theory is based on years of experience of growth and the use of capital markets as the best way to pick and enable winners and let losers die off.

Capital markets work very well in a growth environment. But when there is a contraction, capital markets react with exaggerated fear. This provides a low price springboard that creates new wealth. The problem with spending tax payer dollars inflating the economy is that is undoes the illusion that capital markets trade for, the illusion that you can get something for nothing.

The continuous injection of funds into capital markets may provide a new blood supply but so long as the derivative threat remains unresolved any bank is going to wonder how it can do anything with a few billion dollars when faced with trillion dollar liabilities down stream. A primary rule of banking must be to hold on until the downturn stops and then buy like fury.
It must however look hopeless and instead of leaping out of buildings, they take a few million and run for the hills.

By continuing to honour these unproductive contracts inflation of the entire economy dilutes their effect and may confine them to the holders of them. A return to normal occurs when a dollar buys a future again.

If the savings of an entire generation is wiped out then perhaps that is Karma for having spent the savings of the next generation, that have not yet been saved, on a war nobody needed.

Perhaps it would be right to consider this a new start as well as a new deal. America has such a level of debt to the rest of the world and the US dollar is so everywhere that devaluation is inevitable, but the Americans can continue to print more currency without too much concern, until the capital injections heat up the American economy, then it is time to return to fiscal rectitude.

Much to the horror of the new New Zealand government, progress towards a free trade agreement has been postponed or maybe abandoned. Does this signal a return to protectionism? That would be sad for the world.

Open and free trade even things out, and prevents war.

Stimulate the economy by having free trade with the entire world.

The Zimbabawe PM Morgan Tsvangirai and his wife, Susan, travelling in a convoy of vehicles were struck by an articulated truck that has injured the PM and killed his wife.

In VOA news: “Sources within the party who declined to speak on the record expressed suspicions about the incident in which the articulated truck swerved from the oncoming lane into the three-car convoy in which the Tsvangirais were traveling, clipping their middle vehicle.”

The UK Guardian reported: The party said there was no immediate reason to believe the accident was suspicious, but it was awaiting full details. An MDC official said that from information at the scene it appeared the lorry driver fell asleep at the wheel.

and the NYTimes quotes a Zimbabwean official saying: “What he told me was that the truck went for his car,” said Dennis Murira, director of public affairs in the prime minister’s office. “That’s how he put it.”

Apparently the truck driver fell asleep at the wheel and then his truck left his side of the highway and ploughed into the PMs vehicle, picking it out from the convoy that surrounded it.

Although one must accept that it is a tragedy first, Mugabe must accept that it does look to the world that he engineered this. What is that monster is still doing in Government? By violating the will of his own people he exacts a reputation that this event can only cast a shadow upon him. It looks really bad.

Underneath it all, calling it terror or tragedy seems horribly insufficient.

It is a horror of the worst order as Susan Tsvangirai is respected by the Zimbabwean people, and worked with her husband who recently became the PM in a deal that also kept Mugabe in power as President. Mugabe seems to be in control of security police that acts against process to secure the jailing of political opponents, inflict beatings and violence upon political opponents and kill people.

There is no person more hated in this world than Robert Mugabe. He should have given up years and years ago.

Russia – it used to strike fear into the hearts of capitalists. Now it is an economic pipsqueak but according to the dean at the Foreign Ministry’s school for future diplomats and a regular on Russia’s state-guided TV channels, Igor Panarin, Russia along with China will become the guardians of the new world order from the ruins of the financial meltdown.

The fire and brimstone of his predictions belong in Disturbing Trends! America will fail! It will break into six substates! Alaska will revert to Russian control! America will declare martial law this year and will collapse by 2010! Such great headlines.

Putin seems to share this view, apparently he has has likened the US to Nazi Germany’s Third Reich and blames Washington for the global financial crisis. Disturbing Trends likened the Bush administration to Nero – not the real Nero whom we really do not know all that much about – but the image of a leader fiddling as his city burned. It is a potent image even if it did or did not reflect the 5th Roman Emperor in history – but what we remember is not necessarily what happened.

Are the Igor Panarin and Vladimir Putin views symptoms of a return to government by desperation and rumour? Both are ex-KGB – and their world view seems a little hyper-patriotic if not inflammatory, certainly imaginative, and without a touch of irony. The logic may go that Sarah Palin’s house can be seen from Siberia too, and she is far too attractive to not be from Russian stock – her house must therefore be a house of Russia. You can hear it in thick KGB accents, followed by long drawn down breathy sighs.

Meantime the Chinese Government is saving the economic world – I believe not so much because American financiers deserve to be dug out of the ditch they dug, but that humanity senses a gap between the discord – a place where American, Chinese and Russian governments see eye to eye – human rights and dignity are more important things to defend than “freedom” when that really means sending children to fight in wars so fat man can gamble on the share market.

The evolution of a workable financial system for 6 billion people who will be 7 billion soon enough is proving a very tricky process for humanity. Russia is evidence that communism is more sensitive to corruption than capitalism ever was. (Has China’s system of authoritative capitalism based on years of totalitarian communism created a more moral form of capitalism than the Western variety?)

One can view the current economic crisis – not so much as a collapse of the American Way but a correction that came about due to overreach. The Soviet project died because corruption became a significant proportion of GDP. The “world” (actually right wing media commentary) then could see the collapse of that huge corrupt overreaching system as a “collapse due to communism” and bolster confidence that the superior capitalist system would hide their funds from tax gathering governments. Both “systems” are distortions that create market tension; you got to switch between them – with democracy, it seems.

This is a crisis because the assumed wealth – based on a belief in the financial instruments being traded – the assumed wealth was inflated effectively by unclear ownership. Derivatives are fine in a limited sense, but the trading of these worthless scraps of hope for failure – is a bit like selling the organs of corpses as medical spare parts or investing in post atomic war world futures.

Although financial regulation is a fine road for the new US Administration – it is the fantasy of the Russian view – the fantastic nature of their aspirations to a return to the illusion of world power – that reeks of the disingenuous. It reminds me of Bush and his revelations about the nature of evil in the world. Hyperbole.

If the conflict between government and capital growth is resolved (taxes are effectively a reduction in private capital power) by making it economically efficient to pay ones domestic taxes instead of seeking financial devices to avoid fiscal responsibility – then Government of the people by the people again has meaning.

When the wealth of the top 5% is protected from tax by financial wizardry, it is evidence of a bubble and it will burst.

Simplistically, the bubble is not real wealth. In the same way that bluster is not real power.

Good news about the British withdrawal from Iraq…

A British general who has spearheaded Britain’s two longest and most controversial wars of the past 60 years claims today the army will leave Iraq with al-Qaida largely defeated and the roots of democracy firmly planted.

New article link