The Political Junkies
archived: 15 - 21 Jun, 2008 Back Next
UPDATED: JUN 20, 2008ZOUNDS
One has to take notice of this advisory from The Royal Bank of Scotland:
The Royal Bank of Scotland
has advised clients to brace for a full-fledged crash in global stock and
credit markets over the next three months as inflation paralyses the major
central banks.
"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah,
the bank's credit strategist.
A report by the bank's research team warns that the S&P 500 index of Wall
Street equities is likely to fall by more than 300 points to around 1050 by
September as "all the chickens come home to roost" from the excesses of the
global boom, with contagion spreading across Europe and emerging markets. .
. .
"Globalisation was always going to risk putting G7 bankers into a dangerous
corner at some point. We have got to that point," he said.
US Federal Reserve and the European Central Bank both face a Hobson's choice
as workers start to lose their jobs in earnest and lenders cut off credit.
The authorities cannot respond with easy money because oil and food costs
continue to push headline inflation to levels that are unsettling the
markets. "The ugly spoiler is that we may need to see much lower global
growth in order to get lower inflation," he said.
The financial markets are reeling:
US stocks fell for a second session on Wednesday as oil prices surged in late trading while poor results from FedEx underscored the challenges of rising energy prices and crumbling profitability facing the broader economy and equity markets.
FedEx said it had lost $241m in the fourth quarter after rising fuel costs and a writedown on FedEx Kinko, its copy centre unit, took their toll. The company’s outlook statement for 2009 was also downbeat.
The results will further heighten fears about the impact of elevated oil prices on the wider economy. The parcel delivery firm is often seen as a bellwether because its business depends on the levels of activity in the economy.
Republican economic policy, that started crisis in the United States, is now roiling through international markets. America and the international community are entering dangerous financial waters --- America desperately needs a change of leadership.
NUCLEAR
Energy prices continue to surge. Bush calls for Congress to authorize offshore drilling and oil drilling in ANWAR. Sen. McCain, who was equivocal on the propriety of off-shore drilling, toes the Bush line.
Speaker Pelosi frames the facts:
It does not stop there. Sen. McCain calls for large scale construction of nuclear facilities:
Sen. John McCain called Wednesday for the construction of 45 new nuclear reactors by 2030 and pledged $2 billion a year in federal funds "to make clean coal a reality," measures designed to reduce dependence on foreign oil. . . .
McCain said the 104 nuclear reactors currently operating around the country produce about 20 percent of the nation's annual electricity needs.
"Every year, these reactors alone spare the atmosphere from the equivalent of nearly all auto emissions in America. Yet for all these benefits, we have not broken ground on a single nuclear plant in over thirty years," he said. "And our manufacturing base to even construct these plants is almost gone."
Even so, he said he would set the country on a course to build 45 new ones by 2030, with a longer-term goal of adding another 55 in the future.
"We will need to recover all the knowledge and skills that have been lost over three stagnant decades in a highly technical field," he conceded.
Later, at a news conference, McCain said he favors steps to reduce the time plant owners need to obtain the necessary permits. He suggested U.S. companies use common technology to shave the time in takes to bring a new nuclear facility on line. He also said a decision by President Carter three decades ago not to pursue fuel reprocessing technology should be reversed.
In an appearance before an audience at Missouri State University, McCain also said, "We will need to solve complex problems of moving and storing materials that will always need safeguarding."
This is “playbook,” Republican strategy. Their economic policy has helped create a crisis in energy prices and Republicans take advantage of the crisis to urge drastic actions that most Americans do not approve but favor Republican policy of deregulation.
Is this the course that Americans will choose?
_____________________________________________
UPDATED: JUN 15, 2008ONE STEP BACK
The United States Supreme Court takes one step back from the diminution of constitutional democracy in the United States. The Court ruled Guantánamo Bay detainees have a constitutional right to habeas corpus in US Federal Courts.
The Supreme Court’s decision is the third repudiation of Republican interpretation of the American Constitution. The Court affirmed the right of detainees to apply for habeas corpus in 2004. Congress responded with legislation that limited the right of habeas corpus so severely that the Supreme Court stuck the heart of the Act this week. In 2006, the Supreme Court repudiated Bush’s military commissions at Guantanamo.
The vote this week, as in so many other significant constitutional cases in recent years, was 5 to 4. Jeffrey Toobin, CNN’s Legal Analyst, lays out the stakes in the 2008 election:
When it comes to the core of the court's work, determining the contemporary meaning of the Constitution, it is ideology, not craft or skill, that controls the outcome of cases. As Richard A. Posner, the great conservative judge and law professor has written, "it is rarely possible to say with a straight face of a Supreme Court constitutional decision that it was decided correctly or incorrectly." Constitutional cases, Posner wrote, "can be decided only on the basis of a political judgment, and a political judgment cannot be called right or wrong by reference to legal norms."
When it comes to the incendiary political issues that end up in the Supreme Court, what matters is not the quality of the arguments but the identity of the justices. There is, for example, no meaningful difference between Scalia and Ruth Bader Ginsburg in intelligence, competence, or ethics. What separates them is judicial philosophy -- ideology -- and that means everything on the Supreme Court. Future justices will all likely be similarly qualified to meet the basic requirements of the job. It is their ideology that will shape the court and thus the nation.
So one factor -- and only one factor -- will determine the future of the Supreme Court: the outcome of presidential elections. Presidents pick justices to extend their legacies; by this standard, George W. Bush chose wisely.
McCain, who claims his presidency will not be Bush III, says he will pick Supreme Court justices modeled on those Bush appointed:
McCain has already emphasized that he will select judges modeled after the two men elevated to the High Court by President Bush, and he is shrewd to do so. No issue matters more to conservative Christians than the composition of the court, which often adjudicates the issues they care about most, from sexual behavior to religious expression.
Liberals care about the same issues, but they have a long list of additional concerns that could come before the court in the years ahead, from the rights of workers and prisoners to the rules on wiretapping.
The two Bush appointees have tilted the court to the right . . . Change is clearly coming (Justice John Paul Stevens is 88), and the new president could reshape the court for a generation.
Do Americans really want another generation of Bush Supreme Court role models?
NO BULLETS
Stagflation continues to metastasize throughout the American economy. The Consumer Price Index (CPI), measuring inflation, last year was 4.2%. Unemployment, one indicator of economic stagnation, is 5.5%. The Federal Reserve has been pumping money into the economy to fight economic stagnation. Even though the economy continues to sputter, inflation is sufficiently high that that interest rate increases may be indicated to cut the rising rate of inflation.
The Federal Reserve finds itself without bullets in the fight to keep the American economy righted and few win-win options. If the Fed raises interest rates to fight inflation, economic contraction may accelerate. If the Fed cuts interest rates to fight economic stagnation, inflation will go higher.
The Fed’s problems are multiplied by the source of inflation. Core inflation, which excludes inflation from food and energy, has hit 2.3% annualized, above the Federal Reserve’s upper inflation target of 2%. Adding food, the inflation rate rises to 2.7%. Adding energy, the inflation rate rises to 4%. Energy prices increases are approaching 28% and food prices are rising at some 14% annualized. Raising interest rates would have little impact on these costs.
Republican economic policy has failed. Andrew Leonard observes in Salon:
The upward and downward blips that Americans have experienced in the past quarter century, despite their considerable impact on the profits of big corporations and the lives of real working people, don't amount to all that much when measured on a scale that spans centuries, however. Not for nothing have the past few decades been dubbed by economists as the "Great Moderation." The rich have gotten richer, the poor poorer, and the middle class relentlessly squeezed, but there have been no society-wide economic dislocations in recent years that match the inflation-and-unemployment miseries of the late 1970s, much less the outright disaster of the Great Depression.
Until now? Consider the following extraordinary commentary: Alan Greenspan saying, "The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war." Former Reagan economic advisor Martin Feldstein saying, "Could this become the worst recession we have seen in the postwar period? I think the answer is yes." Paul Krugman writing that the current situation "looks increasingly like one of history's great financial crises."
The economic “dislocation” that is underway holds opportunities for the political Party that can act with vision. Leonard correctly outlines the political implications:
The New Deal didn't emerge of its own accord as some kind of organic reaction to the Great Depression. Leadership was required, and the political fights were brutal. The same will no doubt be true for any sustained effort to crack down on Wall Street shenanigans and redistribute wealth more equitably. Indeed, for most of the past 25 years just imagining such a thing would have seemed ludicrously out of touch with political reality. But that's what makes the current events so dramatic. The dangers -- of great economic distress and turmoil -- are clear and intimidating. But the opportunity for reform is fantastic.
Which Party is better able to seize upon the opportunity for reform? It is one of the fundamental questions that Americans will answer in November.
Last Update: 06/21/2008