Only a Revolutionary Government Will Give the American People Justice

From the NYT:

Mr. Jester, according to several people with knowledge of his financial holdings, still owned Goldman stock while overseeing Treasury’s response to the A.I.G. crisis

"A Cheap Agatha Christie Novel"

If anyone knows just what these guys were doing, I'd love to hear it. The Russians are predictably denying involvement, but in this case it rings true. The USG seem to have offended their sense of professionalism!


From the FT:


Mr Kovelav said the overall shoddiness of the operation indicated it had nothing to do with the Russian government. “Illegals who launder money, live on forged documents and get money from glass jars buried in the earth. These cannot be employees of a Russian intelligence service. That is totally ridiculous. It’s like a cheap Agatha Christie detective novel.”

But more importantly, said Mr Liubomov, it was unclear what the goal of such an operation was.

Chris Lydon Keeps on Doing the Now, Superbly

Hard to keep up with my friend Chris who is soon off to India.

His latest interview on radioopensource is with the wonderful jazz musician and composer Vijay Iyer.

A few years ago, Avram and I went out to the Queens Museum of Art one weekend for an India-America Cultural festival when I happened to be in the City.

Now I knew this would be a lot more hip than the immigrant kind of thing I went to growing up as a kid -- you know -- the amateur music and dance by little kids in front of gushing parents that made you wince. No, this was at a MUSEUM in NEW YORK -- and looking at the program listings of theater, multimedia art, and music one knew that it was going to be very contemporary.

Nevertheless, when we walked in to the concert by Vijay Iyer and Rudresh Mahanthappa... being the aging boomer exiled on the cultural island of Cape Cod (the mid cape, not P-town) .... I had no clue about Iyer. I really didn't know a thing about him. I found out later that he had been voted Rising Jazz Star of the Year in Downbeat two years running.

And of course, after hearing him play, I walked out in a trance. I felt healed knowing that a deep tradition was being upheld and reinvented at the same time..

The next time I was in the City I caught the operatic piece he did in Brooklyn and once again was transported to a place I had forgotten existed. As a teenager I used to long for the kind of global culture of music and literature that has now emerged, though I didn't have the wit or courage to create it at that time- After the show, Iyer was in the foyer and I went up to him and stammered something about how profound his work was, forgetting for that instant as I paid my homage that he is as old as a son of mine might be if my life had been only a little bit different. He just looked at me, perhaps a bit taken aback by the intensity of this greying guy, and said "thanks".

So this long interview Chris does with Iyer is a real treat, a wonderful stew of American cultural history, jazz music, Indian diaspora, globalism, improvisational elan, riffs on issues of colour, and much more.

A remarkable dude talking to a remarkable dude.

Listen to this podcast now!

Transition without crisis? Or re-appearance of the falling rate of profit?

In the coming era of a rising Asia, we in the West need to teach ourselves that facts on the ground far away are going to affect us deeply. This will be a hard lesson for many whose habits of thought are molded to the American imperium of the last 70 years.

Andy Xie has an important post about China's labour market.

His thesis is that China's economic transition has reached the point where wage inflation is desirable, indeed inevitable, and his recommendation is that policy lead this trend, not follow it.

And while he acknowledges that restraining Chinese inflation is going to be necessary to avoid a hard landing, he seems to be asserting that this can be done even while allowing wage inflation to rise significantly. Maybe.

But what caught my eye was this:

Export manufacturers based in China have long been terrified of big buyers from the West. China has a lot more factories than the West has buyers for its products, so exporters have generally assumed that their powerful clients would never accept higher prices.

But business costs have been rising in China, manufacturers are well-connected to markets and infrastructure, and buyers are realizing that their supply options are not unlimited. As a result, western buyers these days should be a lot more terrified than their Chinese suppliers.

It's quite plausible that China's superior infrastructure will make a migration of manufacturing to India, Vietnam, Bangladesh less attractive than is being suggested by some, and therefore the West's "China price" will rise. But for foreign capital manufacturing in China this will mean either raising their prices to their customers or accepting lower profits.

Given the deflationary winds blowing in Europe and the US and the lack of final demand, price rises are not realistic. After all, if Joe six pack hunkers down to spend only on food, transportation and necessary services, how's a price rise on iPhones gonna work?
(I note that Apple's stock took a hit when the yuan de-pegging was announced...)

So I suspect that profits will decline instead. Besides the fact that this reinforces my view that the S&P is overpriced, it also reflects a long held view of a particular school of marxism on falling rates of profit.

While I'm skeptical that there will be a return to marxist economics anytime soon, this article does a nice job of reviewing recent history with those interpretative glosses on. And it ends with a conceit I also formulated a year or so ago -- though my version was more extremely fantastic: It would be a real irony of history if a revolutionary american government repudiated its foreign debt while Chinese capitalism fumed and threatened intervention.. not sure what that says about me.

Eliot Spitzer: A Cut and Run Democrat

I take Eliot Spitzer to be one of those smart (except when he is thinking with his gonads) people who represent the possibilities of a renewal of an old, comforting America that many used to seek in Obama. But these comments from an "Advice to Barack" column in Slate show the cul-de-sac that American imperial policy has entered. If someone from his part of the political spectrum doesn't see the problem, he will never be given control of the steering wheel in the current system.



And finally, President Obama should acknowledge that the Afghan war is failing, that Hamid Karzai's loyalty is nonexistent, that the local warlords are simply using us for their own purposes, and that the true enemy may not even be there any longer. Terrorists have the clever habit of moving where our ground troops are not deployed. We should get our ground troops out of Afghanistan and take the war to the terrorists through covert operations and sophisticated strikes.

What I mean to say is that even though all that he says is true, an American withdrawal now will be a strategic disaster for the US as great or greater than Iraq. Pakistan will re-assert its attempt at hegemony in Kabul, with Chinese backing and India will not defend its position there, but instead be forced to seek a modus vivendi with rising China. Net result will be further erosion of the American grip on global petroleum reserves. (Yes, yes, Afghanistan doesn't have oil, but connect the dots....)

And yet I think an American withdrawal is inevitable.

So the US is caught in a no-win situation. Spitzer's blithe notion that the US could withdraw without serious repercussions for its global hegemony (or his indifference to that fact, take your pick) reminds me of Howard Dean's stump speech -- one which convinced me the Democrats were headed for political oblivion. It was, if you recall, organized around the theme of "I want my country back" -- a stirring (and delusional) call to baby boomers to recreate (in effect, though he didn't put it quite like this) the domestic division of output between labor and capital that existed artificially in the 1950's. Completely ignoring the required imperial hegemony which enabled it.

To me it seems clear that the new right will run the state and administer austerity, and progressives will need a new political party that actually understands what's goin on if they want any influence in the next historical period.

In other words, there is no going back.

What's needed: Bondage and discipline

I'm not the only one with this thought: the Gulf disaster and the banking disaster are really about the same thing: the grown ups have left the house. From a blog by Gonzalo Lira, a chilean writer (h/t Jesse):

Where was Authority? Where was Someone In Charge? The fact was, there was no one in charge. There was no one supervising—or at any rate, the ones who were supposed to be supervising had had their teeth yanked. And BP knew it—so they did whatever they wanted, regardless of the risks, or the costs

I didn't see his speech the other night, but judging from all the reaction, sadly, Obama had apparently driven the final nail in the coffin of his historical legacy. I, at least, have seen enough. To think that I hoped for an FDR of our generation.....

Just goes to show that it takes great movements to create a great leaders, "and thus we drift to unparalleled catastrophe".

Feels like October 2008, up late watching the Nikkei

Comments on Zero Hedge are cheap entertainment -- then occasionally someone hits the nail on the head:


Lets not forget who has been loading up on gold recently - the hedge funds. As they come off a horrible May and probably continue to bleed - getting blown out on all kinds of credit, equity and currency trades - they will have to liquidate - including gold. Then GLD will be forced to sell sell sell its huge hoard of gold cheap - to somebody ( China?).

So US happy - no more Euro - king of the hill. China gets a bit of action too - gets to buy gold cheap . Everybody happy.

Bobby Jindal Press Conference

Watching Jindal on Bloomberg, a few observations:

No atheists in foxholes, watching these laissez-faire guys get righteously indignant. Hypocritical, perhaps, but the youthful vigorous angry language is attractive in the context.

The detailed review of efforts at protection and cleanup underway is impressive.

Ironic (and dangerous, given what I think lies ahead for the US economy) that the bible-thumping repub right could capture the competency mantle.