Friday, January 30, 2009


Last week, controversial US Treasury Secretary Timothy Geithner repeated Pres. Obama's campaign assertion that China is manipulating it's currency (which it is, but that's not the point). On Wednesday, China's Premier Wen Jiabao fired back, and Russia's Prime Minister Vladimir Putin piled on, for good measure, at the World Economic Forum in Davos, Switzerland. Here are some excerpts from the WSJ's coverage: (link)

Speaking on the opening day of the World Economic Forum in Davos, Switzerland, they both urged more international cooperation to escape the downturn. They also talked up the abilities of their own economies to ride out the recession. Mr. Wen said he was "confident" China would hit its 8% growth target for this year even though that was "a tall order." (See text PDF)

The Russian and Chinese leaders also called for cooperation with U.S. President Barack Obama, but it was a chilly reception for the new administration that reflected growing anger in economies that are now getting hit hard by a financial crisis that began with subprime mortgages sold in the U.S.

Mr. Putin was characteristically blunt. He called for the development of multiple, regional reserve currencies in addition to the dollar. "Excessive dependence on a single reserve currency is dangerous for the global economy," Mr. Putin said. (See full text)

The Russian leader mocked U.S. businessmen who he said had boasted at last year's Davos meeting of the U.S. economy's fundamental strength and "cloudless" prospects. "Today, investment banks, the pride of Wall Street, have virtually ceased to exist," he said.

Earlier, Mr. Wen called for an expansion of regulatory "coverage of the international financial system, with particular emphasis on strengthening the supervision on major reserve currencies."

While Mr. Wen never named the U.S., his critique of its failings was as sweeping as Mr. Putin's. The financial crisis, he said, was "attributable to inappropriate macroeconomic policies of some economies and their unsustainable model of development characterized by prolonged low savings and high consumption; excessive expansion of financial institutions in blind pursuit of profit" -- and other excesses.

"The entire economic growth system, where one regional center prints money without respite and consumes material wealth, while another regional centre manufactures inexpensive goods ... has suffered a major setback," Mr. Putin said.

(In response to Secretary Geithner), The Chinese premier gently, but firmly warned that if Washington and Beijing chose confrontation, both would be losers.

But the different tones of the two speeches, and the fact that Mr. Wen didn't call for replacing the dollar's role as the world's reserve currency but regulating it, reflect crucial differences in the important emerging economies.

A spokeswoman for the U.S. Treasury Department declined to comment on the remarks in the speeches. The White House did not respond to requests for comment.

...The rapid collapse of oil and commodities prices has hit Russia hard on top of the ripples of the financial crisis. The government now forecasts the economy will shrink for the first time in a decade this year, after growing 6% last year.

"In a very real sense Russia has been kicked to the margins, while China has become pivotal to any resolution of the financial crisis," says Bob Lo, Director of the Russia and China programs at the Center for European Reform in London.

...Russia also has negligible trade with the U.S., while Chinese exports are heavily dependent on U.S. consumers and Beijing holds $2 trillion in U.S. debt, prompting a much more cautious approach towards Washington and the dollar in Beijing.

The net effect of falling oil prices and the downturn, however, has been to make Russia more vulnerable and the Kremlin weaker, analysts say. Russian officials have begun to send out more conciliatory signals to the new U.S. administration.

"We wish the new team success," Mr Putin said Wednesday, calling on it to cooperate.

China, too, is suffering from the downturn. Many independent economists, including economists at the International Monetary Fund, question whether Beijing will be able to meet its 8% growth target this year.

...Some economists believe China could grow by as little as 5% this year, too little to provide jobs for the graduates flooding into the labor market from Chinese universities and schools each year and a further drag on the global economy.

Less noticed in Mr. Geithner's repetition of Mr. Obama's campaign-trail assertion that China "manipulates" its currency last week was his argument that the long U.S.-Chinese dispute over currency didn't matter as much as getting China to do more to boost its economic growth.

"Given the crisis the immediate focus needs to be on the broader issue of stabilizing domestic demand in China and the U.S.," Mr. Geithner said in his written response to questions during his Senate confirmation process. "A further slowdown in China would lead to a substantial fall in world growth (and demand for U.S. exports) and delay recovery from the crisis."

The US's dependency on China has come back to bite us in the ass. I am not an economist, but I commented somewhere that China's growth rate was unsustainable, at least a year ago. China sees it as our fault, for not buying enough of their products. What has happened is a global "shrinking" of the money supply, as the value of real estate plummets, worldwide. There are other factors than these, but it explains why Pres. Obama is encouraging "printing more money."

Maybe it also explains why NY Governor David Patterson was scheduled to attend this forum, until "domestic economic matters" took precedence (he was "shamed" out of attending by the NY Post). Obama doesn't need to hear this crap, but Geithner's comment was ill-timed. The fact is that China has as much responsibility for "buying into" capitalism as the US has for buying all those cheap Chinese products.

As for Russia, I would be more sympathetic to their plight if Putin didn't kill his political opponents, and journalists who are critical of their government. In a sign that "change" is coming to Russia, three Bolshevik protesters invaded an office of Putin's party: (link)

Two members of the banned National Bolshevik Party handcuffed themselves to a radiator while another set off fireworks, closing a United Russia office in Russia's second city for 30 minutes, a party official said.

The protesters demanded the government stop spending billions of dollars to bail out "banks and oligarchs" and instead freeze tariffs for electricity and public transport, National Bolshevik official Andrei Dmitriyev said.

...Police detained all three protesters.

OUCH! I hope they're not "mistreated," under Bolshevik standards. It's interesting that so many Americans also want fewer bailouts, and lower taxes. Maybe we should go protest in political offices, but without the fireworks, or we might get treated like the Bolsheviks. But I digress...

Secretary Geithner's comment about China wasn't wrong, and perhaps Russia and China would've blasted us anyway. The point is that he has become the "point man" of an aspect of US policy that is coming under harsh criticism by world leaders, in his first week in office. Don't feel sorry for him, though. As head of the NY Fed, he was probably more informed about the policies in effect before this recession than he was about how to use Turbotax.


Thursday, January 29, 2009


Watch the reporting of the House vote on the "stimulus" package, in the coming days. There will be much talk of Republican "partisanship," and how they're being "divisive" by their opposition. Little mention will be made of the eleven Democrats who sided with the GOP, making the opposition "bi-partisan." I hope the Senate, and Pres. Obama are paying attention, because there will be a signifigant backlash if this "package" doesn't undergo some serious revision before being forced on the country.

The president's Chief of Staff, Rahm Emmanuel, has close ties to Speaker Pelosi. He's expressed a desire to exploit a "crisis," or at least not "waste" one. Emmanuel's former colleagues in the House are using the cover of "stimulus" to shovel taxpayer dollars into a variety of wasteful, and often failing government programs. "Stimulating the economy" has become the "lipstick on the pig," as much as it was when Obama said it about the Bush economy, which was not known for it's spending restraint.

In the Senate, expectations are not high for the GOP opposition, but the House vote showed a more unified front than was expected. The Senate has a different process, and may come up with a very different bill. The problem is that the proposed bill is so huge, it has precious pork for every state. I look forward to seeing how my new junior senator from NY, Kirsten Gillebrand votes. Talk about being "thrown into the fire!" She can expect an email from this constituent.

The political situation here is interesting. Is the House plan the one Pres Obama favors? Why were the Republicans so unified, after meeting with the president days before the vote? What will the Senate pass, and how will it come out of the "conference" committee? I'll say this much: I haven't heard a "veto" threat yet, though public opinion is turning against the House version, as more details come out. Obama probably will be as compliant with the Democrat majority in Congress as Bush was with his party in control, so it's up to the Senate to at least mitigate this madness.

As for the media, they're feeding the "crisis" line, instead of putting this recession into context. This puts pressure for the rapid passage of the "stimulus," without thorough scrutinization. They also will continue to cast GOP opposition as "divisive," but they really can't call it "partisan" anymore, can they?

Friday, January 23, 2009


From The Tax Foundation:

The House of Representatives yesterday voted 289-139 to pass a 156% increase in the federal excise tax on cigarettes (taking it from 39 cents per pack to $1.00, not counting state taxes which average over $1 a pack). The estimated $33 billion tax hike (over 4-1/2 years) would be earmarked to expand the State Children's Health Insurance Program (S-CHIP). The bill is almost identical to a previous version that was vetoed in the summer of 2007, and it will soon go to the Senate.

Now, we all know that paying taxes is patriotic, and we all want to fund children's health care. This one is a no-brainer! START SMOKING, AMERICA! "The children are depending on you." If you still don't want to smoke, maybe you can buy cigs to give to poor people at election time, then bus them to the polls.

The Tax Foundation has a non-sarcastic criticism of this bill, which is worth a read. (link)

Thursday, January 15, 2009

U. of Colorado at Boulder "Visiting Chair in Conservative Thought" Doesn't Have to Be a Conservative!

I have to give some credit to the University of Colorado at Boulder. In 2007, they fired Ward Churchill, and now they want to create a Visiting Chair in Conservative Thought and Policy. Unfortunately, their motives are so transparent that they're being criticized by liberals and conservatives alike. Here are excerpts from the two places I saw this story today:

Brett Baier's Special Report: the Political Grapevine

The University of Colorado - which has a very liberal reputation - is still looking for a conservative professor to counterbalance the campus' leftist slant. A local TV station reports the university has raised only $575,000 of the $9 million needed to fund a "visiting chair in conservative thought and policy." The effort is taking hits from both sides. One Republican on the regents board says the professor would be a token.

The president of the school's College Democrats, Jesse Jensen, says, "The entire concept... politicizes academics in a way that is contrary to the university's mission... by endowing a chair in one specific political ideology, we are not promoting intellectual diversity."

But Ken Bickers, a political science professor, says, "I think the idea behind this chair is that this university has lots and lots of liberals and not a lot of conservatives."

The kicker was this one, which I actually read earlier in the day, from the NY Post's "Weird But True" section:

The University of Colorado in Boulder is trying to tip the scales back to "fair and balanced" by creating an endowment for a Visiting Chair in Conservative Thought and Policy.

The effort has raised more than a few wails of complaint from the liberal student body.

A school spokesman says the professor does not necessarily have to be a conservative.

"We have French teachers who aren't from France," he said.

There you have it, in a nutshell. The liberal administrators at Boulder see conservatism as something akin to a foreign language, or culture, that can be analyzed and taught by a sufficiently "open minded" liberal professor. It looks like there are no takers from the liberal ranks, either, at this point. Perhaps the spokesman was just "floating a trial balloon," to see how it goes over. So far, not so good.

Ward Churchill took his obsession with the plight of "Native Americans" (formerly known as "American Indians") to extremes that disgraced the UCB. Now, they're just making fools of themselves, which is why no-one wants to take this job. Maybe Prof. Churchill can come back, and share his insights into "conservative media attacks." Probably not.

Conservatives on college campuses are definitely an "oppressed minority," but they should have no interest in submitting to the "diversity spoils" system, which they have railed against for so long. Conversely, I can see this as using liberal policies against the liberal establishment, which might let conservative professors "come out of the closet," and encourage liberal students to take conservative opinions seriously. (Hope and change, folks!)

Stories like this remind me that conservatism still has some influence in America, even as liberals occupy all three the three most powerful positions in the US government (or will, next week). I look forward to being the "opposition" again. Of course, we've had a Democrat majority in Congress since '06, so I've had some practice. I take comfort knowing that somewhere, some liberal in Colorado is blaming all this all on Pres. Bush and Fox News.