If one sees the current challenges facing President Obama one can’t but help feel empathetic for him. Only someone utterly insane or the greatest rogue practitioner of political antagonism would allude that Obama is not working for the interests of USA. As well, to any sane and impartial observer it would be apparent that Obama is bogged down in too many things at one time.
The major issues which he has to contend with currently can be grouped under following heads:
Mess left behind by George W. Bush administration – These include:
· The worst economic situation since the great depression of 1930s and hopeless action planning to deal with it in medium and long term;
· No clear cut politico-military strategy in Afghanistan;
· Confused policy vis-à-vis dealing with Pakistan, Taliban and the Af-Pak region;
· Highly strained relations (with a dash of mistrust) with Russia;
· One of the most inept, languid, direction-less handling of Middle-East ever seen;
· Convoluted one-step-forward-two-step-backward policy on Iran;
· Half-hearted policy endeavours with regard to dealing with North Korea;
· Disastrous policy stances on environment;
· Myopic goals clouding economic and strategic planning vis-à-vis China;
· Rushed through and muddled exit strategy from Iraq;
· Highly negative international image of USA.
Election campaign promises of President Obama – These include:
· Health care reform;
· Closure of Guantanamo Bay prison camps;
· Changes in environment policy of US;
· Reforming the way Wall Street operates and curbs on Wall Street fat cats;
· Reducing/neutralizing the stranglehold of lobbyists and power brokers in Washington.
Republican antagonism – These include:
· Obstruct any and every change that President Obama is trying to bring about (even if it means selling one’s soul to corporate business interests in order to thwart Obama);
· Criticize everything that Obama says nationally or internationally, including, his body language (his well-mannered gentle bow to Japan’s Emperor was foolishly criticized by the Republicans);
· Pray and hope that US lose where Obama makes some effort for the country (example: US effort to bring 2016 Summer Olympics to Chicago);
· Belittle a prize of the stature of Nobel Peace Prize;
· Pooh pooh due diligence performed by American President in arriving at some key policy decision (example: the thorough decision making process regarding troops surge in Afghanistan);
· Criticize rescinding of US decision to deploy anti-missile shield in Poland and Czech Republic.
It is so unfortunate that the list of mess (of major issues; minor issues are too numerous to be enumerated) left behind by Dubya and his cronies is so long. It certainly is not something to be proud of for any president (who has the slightest sense of self-esteem, shame and achievement).
The worst and the most damning legacy of Bush-era is the systemic and structural failure of the financial system of Wall Street which was presided over by (the obstinate pro-Republican) Alan Greenspan. Following the disastrous economic downturn the band-aid response that was crafted by Bush’s economic advisors was no less shameful and inadequate.
On top of Bush-era’s long list of mess, Obama is trying hard to implement his election campaign promises. Obviously, his plate gets crowded with too many items. Sensing this, the defeated and humbled Republicans are trying to pounce upon each and every opportunity regardless of whether or not it makes any sense.
Somehow surprisingly the brunt of Republican attacks is largely being borne by President Obama himself. The other Democrat personalities don’t seem to be getting involved or pitching in early enough in responding to and/or rebutting the Republican salvos. This is bringing additional pressure on the President.
Moreover, Obama was initially pushing for the best outcome of any policy change initiative brought about at Capitol Hill or at international stage. However, he is realizing that more often than not the politicians – be it Republicans or Blue Democrats – give a damn for the good of the masses or the country; their first priority is self-preservation and self-perpetuation, rest everything is secondary.
One hopes that the powers, which apparently subsist in and operate from levels beyond what human imagination can fathom, will provide the necessary force and support behind the well-meaning efforts of the current US president because it is unimaginable, to a sane and rational mind, that the US president is not acting for the best interests of United States. One will have to wait to see whether the good intentions won in the long run or the kitchen sink politics of Washington prevailed!
Showing posts with label US economic crisis. Show all posts
Showing posts with label US economic crisis. Show all posts
Saturday, January 2, 2010
Sunday, March 1, 2009
DOES AMERICAN FREE MARKET CONCEPT MEAN PROFIT BY HOOK OR CROOK, AND NO RESPONSIBILITY TOWARDS THE WORK FORCE?
Through this blog I want to raise a conceptual discussion amongst economists of all stripes as to how the markets should run or be made to run. Why can this world not have an economic model which is more inclusive of the frailties of human nature? The motive for this conceptual discussion came from reading Berkshire Hathaway Inc’s annual report of 2008, and an article on Bloomberg.
Warrant Buffet is one of the richest persons on this planet, and his perspective on money matters has always been very insightful. His narrative in Berkshire’s annual report is always a treat for its readers – its report for 2008 was no exception. But then, what has Oracle of Omaha’s document got to do with the heading of this blog? Plead read on, you will see the connection.
Let me quote Buffet from page 11 of the report which deals with home mortgages: “At that time (Y2008?, italics added), much of the industry employed sales practices that were atrocious. Writing about the period somewhat later, I described it as involving 'borrowers who shouldn’t have borrowed being financed by lenders who shouldn’t have lent'”.
He further states on same page: “To begin with, the need for meaningful down payments was frequently ignored. Sometimes fakery was involved……..The resulting mortgages were usually packaged (“securitized”) and sold by Wall Street firms to unsuspecting investors. This chain of folly had to end badly, and it did.”
Wait! What the hell was going on in the United States – lenders happily making out loans that borrowers couldn’t repay out of their incomes?! And, Wall Street selling mortgages to unsuspecting investors?! Is this what free market is supposed to be – that any organisation can do anything to rack up huge profits, at least in the short-term, and the top executives can fill their pockets with millions of ill-gotten bonuses?
Is free market concept supposed to have no oversight on the diabolical and self-serving CEOs who may be going berserk in the market tearing down ethics and honesty to shreds? Is this what economist Milton Friedman’s concept of free markets was or is? Is Friedman feeling happy in his grave watching what unbridled greed of human nature has done to the world?
Did it never occur to the ‘great’ Friedman that free market concept should also bequeath on the top executives (of organisations which deal with tonnes of money) some kind of responsibility towards the millions of people working in hundreds of thousands of organisations which could directly or indirectly get potentially exposed to risks and losses due to the shenanigans of the people who run the said (financial) organisations?!!
Today millions and millions of people have lost jobs because of an imploding market around the globe caused by the shameless, villainous ‘confidence tricksters’ of United States (and some of their ilk in Europe) who funnelled hundreds of billions of dollars in a housing bubble. Do these immoral wicked rotten executives of the mortgage lending companies and the various banks realise the pain, the tears and the suffering of the millions – the shattered dreams, disrupted future, lost opportunities of those hapless people?
Why did the policy makers in US in different periods of 1900s not pay heed to the sane concept of another top economist – James Tobin? It seems Tobin’s experience of the depression as a teenager in the 1930s gave him a lifelong loathing of unemployment.
The Bloomberg article, referred to above, writes: “As a young professor I did a paper where I analyzed the optimal unemployment rate,” said Joseph Stiglitz, a professor at Columbia University in New York, who knew Tobin at Yale. “Tobin went livid over the idea. To him the optimal unemployment rate was zero.”
The article mentions at another place: “Like Keynes, Tobin was an advocate for the role of government in maintaining full employment, said James Galbraith, an economist at the University of Texas in Austin. The current economic and financial crisis has validated that philosophy, said Galbraith, a former Tobin student and the son of the late John Kenneth Galbraith, who was a friend of Tobin.”
“It’s clear that the position that the federal government has a responsibility for the level of employment, for the economy, has prevailed,” Galbraith said. “The position that the Fed can walk away from the level of employment has completely collapsed….”
My question is: why couldn’t Friedman’s and Tobin’s ideas be married and a governing economic model more inclusive of the frailties of human nature be developed and implemented – in US and other economies? Has the current economic crisis not demonstrated that any economic model ignoring the role of frailties of human nature is incomplete and flawed, if I may?
The issue is not whether Friedman is great or Tobin is greater. The issue is there got to be a economic model that is practical in nature, and not one which is predicated on idealistic premises – idealistic premises, like, humans will always act responsibly, humans will never succumb to greed, self-aggrandisement etc.
Tobin (Nobel Prize winner in 1981) in an essay written for the Nobel committee mentioned, “The miserable failures of capitalist economies in the Great Depression were root causes of worldwide social and political disasters.” Economics “offered the hope, as it still does, that improved understanding could better the lot of mankind.”
Tobin’s friend and colleague William Brainard says, “He (Tobin) believed financial markets could serve a valuable service in diversifying risk and moving capital in efficient ways.” “But he was not someone who believed the market always got it right and that private incentives were always aligned with the public good.”
Almost a clairvoyant, Tobin seems to be now in hindsight. But what he said and believed in appears to be more prescriptive and applicable for the ways we humans behave. We must keep in mind that this world is still not made up of people like Mr. Spock of Star Trek who was paragon of logical mind.
After this massive economic bloodletting can we now decide to mend our thinking and redefine the way the markets ought to run so that people don't lose jobs again at such a massive scale? Or, will we again relapse in complacency once we are out of this horrible downturn?
Mistakes teach us to learn from it so that we don’t repeat them. Ideology of any political party or of an individual should not be allowed to cloud the objectivity of human thinking. The greater good of the society is supreme and should be so. Let the political leaders of the present realise this and lay the foundation for the future.
Warrant Buffet is one of the richest persons on this planet, and his perspective on money matters has always been very insightful. His narrative in Berkshire’s annual report is always a treat for its readers – its report for 2008 was no exception. But then, what has Oracle of Omaha’s document got to do with the heading of this blog? Plead read on, you will see the connection.
Let me quote Buffet from page 11 of the report which deals with home mortgages: “At that time (Y2008?, italics added), much of the industry employed sales practices that were atrocious. Writing about the period somewhat later, I described it as involving 'borrowers who shouldn’t have borrowed being financed by lenders who shouldn’t have lent'”.
He further states on same page: “To begin with, the need for meaningful down payments was frequently ignored. Sometimes fakery was involved……..The resulting mortgages were usually packaged (“securitized”) and sold by Wall Street firms to unsuspecting investors. This chain of folly had to end badly, and it did.”
Wait! What the hell was going on in the United States – lenders happily making out loans that borrowers couldn’t repay out of their incomes?! And, Wall Street selling mortgages to unsuspecting investors?! Is this what free market is supposed to be – that any organisation can do anything to rack up huge profits, at least in the short-term, and the top executives can fill their pockets with millions of ill-gotten bonuses?
Is free market concept supposed to have no oversight on the diabolical and self-serving CEOs who may be going berserk in the market tearing down ethics and honesty to shreds? Is this what economist Milton Friedman’s concept of free markets was or is? Is Friedman feeling happy in his grave watching what unbridled greed of human nature has done to the world?
Did it never occur to the ‘great’ Friedman that free market concept should also bequeath on the top executives (of organisations which deal with tonnes of money) some kind of responsibility towards the millions of people working in hundreds of thousands of organisations which could directly or indirectly get potentially exposed to risks and losses due to the shenanigans of the people who run the said (financial) organisations?!!
Today millions and millions of people have lost jobs because of an imploding market around the globe caused by the shameless, villainous ‘confidence tricksters’ of United States (and some of their ilk in Europe) who funnelled hundreds of billions of dollars in a housing bubble. Do these immoral wicked rotten executives of the mortgage lending companies and the various banks realise the pain, the tears and the suffering of the millions – the shattered dreams, disrupted future, lost opportunities of those hapless people?
Why did the policy makers in US in different periods of 1900s not pay heed to the sane concept of another top economist – James Tobin? It seems Tobin’s experience of the depression as a teenager in the 1930s gave him a lifelong loathing of unemployment.
The Bloomberg article, referred to above, writes: “As a young professor I did a paper where I analyzed the optimal unemployment rate,” said Joseph Stiglitz, a professor at Columbia University in New York, who knew Tobin at Yale. “Tobin went livid over the idea. To him the optimal unemployment rate was zero.”
The article mentions at another place: “Like Keynes, Tobin was an advocate for the role of government in maintaining full employment, said James Galbraith, an economist at the University of Texas in Austin. The current economic and financial crisis has validated that philosophy, said Galbraith, a former Tobin student and the son of the late John Kenneth Galbraith, who was a friend of Tobin.”
“It’s clear that the position that the federal government has a responsibility for the level of employment, for the economy, has prevailed,” Galbraith said. “The position that the Fed can walk away from the level of employment has completely collapsed….”
My question is: why couldn’t Friedman’s and Tobin’s ideas be married and a governing economic model more inclusive of the frailties of human nature be developed and implemented – in US and other economies? Has the current economic crisis not demonstrated that any economic model ignoring the role of frailties of human nature is incomplete and flawed, if I may?
The issue is not whether Friedman is great or Tobin is greater. The issue is there got to be a economic model that is practical in nature, and not one which is predicated on idealistic premises – idealistic premises, like, humans will always act responsibly, humans will never succumb to greed, self-aggrandisement etc.
Tobin (Nobel Prize winner in 1981) in an essay written for the Nobel committee mentioned, “The miserable failures of capitalist economies in the Great Depression were root causes of worldwide social and political disasters.” Economics “offered the hope, as it still does, that improved understanding could better the lot of mankind.”
Tobin’s friend and colleague William Brainard says, “He (Tobin) believed financial markets could serve a valuable service in diversifying risk and moving capital in efficient ways.” “But he was not someone who believed the market always got it right and that private incentives were always aligned with the public good.”
Almost a clairvoyant, Tobin seems to be now in hindsight. But what he said and believed in appears to be more prescriptive and applicable for the ways we humans behave. We must keep in mind that this world is still not made up of people like Mr. Spock of Star Trek who was paragon of logical mind.
After this massive economic bloodletting can we now decide to mend our thinking and redefine the way the markets ought to run so that people don't lose jobs again at such a massive scale? Or, will we again relapse in complacency once we are out of this horrible downturn?
Mistakes teach us to learn from it so that we don’t repeat them. Ideology of any political party or of an individual should not be allowed to cloud the objectivity of human thinking. The greater good of the society is supreme and should be so. Let the political leaders of the present realise this and lay the foundation for the future.
Saturday, October 25, 2008
WILL FREE-MARKET SUPPORTERS PLEASE SHUT UP!
John McCain, the Republican presidential candidate, is trying to paint his Democrat rival as a socialist by saying that Obama's so-called "spreading the wealth" phrase essentially aims to kill capitalism in US. What McCain is trying to do is to scare American voters in whose psyche 'capitalism' resides at a sub-conscious level.
Not that every American understands the nuances of capitalism, free market theories or what socialism actually means but probably every American equates uncontrolled free enterprise with capitalism and somehow thinks that it is synonymous of democracy. And, when the Arizona senator creates the sceptre of socialism in his speeches he is trying to touch that part of American psyche and create a fearful revulsion in the voters' minds.
It is a good tactic for McCain, and it may work to some extent. But if this guy really believes in "Country First", he should understand that the so-called free-market mechanism without any oversight has brought US to this economic cataclysmic state. First, let us quickly recap what one of the staunchest supporter of unregulated free-market said the other day.
Alan Greenspan, who was Fed Chairman from 1987-2006, while deposing in front of US House of Representative's Government Oversight committee on Oct 23 acknowledged under questioning that he had made a “mistake” in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions. Greenspan called that “a flaw in the model ... that defines how the world works.”
He went to admit that the "flaw" in the assumptions he used over the past 40 years were that banks and other financial institutions were best able to protect the interest of their shareholders.
The financial crisis even prompted the Republican Greenspan, a cheer leader for free markets, to propose that government consider tougher regulations, including requiring financial firms that package mortgages into securities to keep a portion as a check on quality. He said other regulatory changes should be considered, too, in such areas as fraud.
Now, let me mention some relevant excerpts of what the Prime Minister of India, Dr. Manmohan Singh, said at the Asian-European leaders' meet on Oct 23. Singh, a noted economist himself, stated:
"The international financial crisis has resulted from three failures:
(a) A regulatory and supervisory failure in major developed countries;
(b) A failure in risk management in private financial institutions;
(c) A failure in market discipline mechanism
These are not my views but those of the distinguished Managing Director of the IMF, with which I agree. We must analyse objectively how and why these failures have occurred with such ferocity. This is necessary to put in place a new set of rules which will prevent recurrence of such failures. The sad truth is that in this age of globalisation we have a global economy of sorts but it is not supported by a global polity to provide effective governance."
What the aforementioned people - Greenspan and Dr. Singh - are essentially trying to say is: stop the chest thumping stentorian pro-free market assertions; recognise the inherent greed in human psychology and put in place mechanisms that will prevent such financial melt-downs.
What is said above does NOT by any means usher in socialism, nor does it mean that capitalism is moving towards ultimate death, all this means is - for God's sakes don't remove the referees from the hockey game and allow the players to regulate themselves, the result will be chaos on the ice!
I am not sure McCain, who is intellectually challenged, will understand all that is stated above. On his part, the Republican candidate, who has his back to the walls, will clutch on to anything by which he can scare the voters away from the Democrat nominee. 'Scare the voters' tactics has been used by Republican in the past, they are trying this again.
Do the American voters see through the Republican tactics? I don't know for sure. But one hopes for America's sake that they do. Because, if they don't they will end up with a Prez and a Veep who are a disastrous combination of senility, dis-ingenuity, shamelessness, pathological abhorrence for truth, one-upmanship, utter lack of intellectual ability and gargantuan incompetence. God help America!
Not that every American understands the nuances of capitalism, free market theories or what socialism actually means but probably every American equates uncontrolled free enterprise with capitalism and somehow thinks that it is synonymous of democracy. And, when the Arizona senator creates the sceptre of socialism in his speeches he is trying to touch that part of American psyche and create a fearful revulsion in the voters' minds.
It is a good tactic for McCain, and it may work to some extent. But if this guy really believes in "Country First", he should understand that the so-called free-market mechanism without any oversight has brought US to this economic cataclysmic state. First, let us quickly recap what one of the staunchest supporter of unregulated free-market said the other day.
Alan Greenspan, who was Fed Chairman from 1987-2006, while deposing in front of US House of Representative's Government Oversight committee on Oct 23 acknowledged under questioning that he had made a “mistake” in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions. Greenspan called that “a flaw in the model ... that defines how the world works.”
He went to admit that the "flaw" in the assumptions he used over the past 40 years were that banks and other financial institutions were best able to protect the interest of their shareholders.
The financial crisis even prompted the Republican Greenspan, a cheer leader for free markets, to propose that government consider tougher regulations, including requiring financial firms that package mortgages into securities to keep a portion as a check on quality. He said other regulatory changes should be considered, too, in such areas as fraud.
Now, let me mention some relevant excerpts of what the Prime Minister of India, Dr. Manmohan Singh, said at the Asian-European leaders' meet on Oct 23. Singh, a noted economist himself, stated:
"The international financial crisis has resulted from three failures:
(a) A regulatory and supervisory failure in major developed countries;
(b) A failure in risk management in private financial institutions;
(c) A failure in market discipline mechanism
These are not my views but those of the distinguished Managing Director of the IMF, with which I agree. We must analyse objectively how and why these failures have occurred with such ferocity. This is necessary to put in place a new set of rules which will prevent recurrence of such failures. The sad truth is that in this age of globalisation we have a global economy of sorts but it is not supported by a global polity to provide effective governance."
What the aforementioned people - Greenspan and Dr. Singh - are essentially trying to say is: stop the chest thumping stentorian pro-free market assertions; recognise the inherent greed in human psychology and put in place mechanisms that will prevent such financial melt-downs.
What is said above does NOT by any means usher in socialism, nor does it mean that capitalism is moving towards ultimate death, all this means is - for God's sakes don't remove the referees from the hockey game and allow the players to regulate themselves, the result will be chaos on the ice!
I am not sure McCain, who is intellectually challenged, will understand all that is stated above. On his part, the Republican candidate, who has his back to the walls, will clutch on to anything by which he can scare the voters away from the Democrat nominee. 'Scare the voters' tactics has been used by Republican in the past, they are trying this again.
Do the American voters see through the Republican tactics? I don't know for sure. But one hopes for America's sake that they do. Because, if they don't they will end up with a Prez and a Veep who are a disastrous combination of senility, dis-ingenuity, shamelessness, pathological abhorrence for truth, one-upmanship, utter lack of intellectual ability and gargantuan incompetence. God help America!
Subscribe to:
Posts (Atom)