2011 - %3, July

Time to Chill on Default Fever

| Wed Jul. 27, 2011 9:32 AM PDT

I know I'm beating a dead horse here, but this morning I opened my LA Times and found this:

Wall Street has tried to ignore the threat posed by Washington failing to raise the debt ceiling. No more.....Without a deal, the most feared scenario is that the U.S. will miss payments on its bonds and default — which financial experts say would be disastrous. While still considered unlikely, the prospect is popping up more in conversations.

I just don't get this. Short of a meteor strike or an alien invasion, there is zero chance that the United States will miss any bond payments. Let me repeat that: zero. Bond payments over the next few months total about $50 billion or so and can be made easily regardless of what Congress does. Other programs may suffer, but treasury bills will continue to be solid gold. Based on current bond yields, the market clearly understands this, and surely "Wall Street" understands it too.

So what are they really afraid of? Continuing directly:

The more likely scenario that investors are preparing for is that a temporary deal is struck to lift the debt ceiling. But such a makeshift plan is unlikely to allow the U.S. to maintain its AAA grade with bond rating companies. Citigroup analysts say the odds are 50-50 that the U.S. will be demoted to an AA rating for the first time ever.

Such a downgrade could lead to a temporary market panic. In the longer term it could push interest rates up for everyone from bankers down to ordinary people taking out car loans, and weaken the dollar's position as the world's reserve currency.

It makes more sense to be afraid of this, but does it make any sense for the rating agencies to be threatening a downgrade in the first place? I still don't see it. Their concern should solely be over the likelihood of bonds being defaulted, and that likelihood remains essentially zero. As bad as the debt ceiling stalemate is, it flatly does nothing to imperil the possibility of the United States making good on its debt.

There's something deeply weird going on here. Wall Street is allegedly worried over a default that's not going to happen, or else it's worried about the fiscal opinions of some rating agency analysts who don't know anything more about the financial future of the United States than anyone else. And those opinions don't even make much sense. The United States remains highly productive; the deficit of the past three years is completely justifiable; our long-term healthcare problems are exactly the same as every other advanced country in the world and exactly the same as they've been for years; and the current stalemate in Congress is — what? Six months old? They're talking about a downgrade of 30-year sovereign debt from the safest, most powerful country in the world based on a political spat that's been going on for less than a year?

This is crazy. I'm worried about who's going to suffer if the federal government closes agencies and stops cutting checks temporarily. I'm worried about stubbornly high unemployment. I'm worried about the prospect of Michele Bachmann occupying the Oval Office. But the chances of the U.S. Treasury defaulting on its bonds? Why would I be worried about that?

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Should the US Work With Al-Shabaab?

| Wed Jul. 27, 2011 9:24 AM PDT
A woman, her children, and an armed policeman in central Somalia.

Should the United States coordinate with members of a known Al Qaeda-affiliated group in order to help ameliorate one of the world's worst humanitarian catastrophes?

That's the question the US government and other Western powers face, especially since the UN declared a famine in two southern regions of Somalia last week.

The worst drought the region has experienced in nearly 60 years has severely impacted several East African nations such as Ethiopia and Kenya, but Somalia—a failed state plagued by a decades-long civil war—is strapped with the toughest conditions, with millions in need of emergency aid.

The World Bank released this statement on Monday:

On the eve of the international emergency summit on the unfolding tragedy in the Horn of Africa, the World Bank today announced it is providing more than $500 million to assist drought victims, in addition to $12 million in immediate assistance to help those worst hit by the crisis…

"The recurring nature of drought and growing risk it poses to social and economic gains in this region calls not only for immediate relief from the current situation, but also for building long term drought resilience," said Obiageli Ezekwesili, World Bank Vice President for the Africa Region.

PBS Frontline Investigates the "Pot Republic"

| Wed Jul. 27, 2011 8:50 AM PDT

Last night, PBS Frontline and the Center for Investigative Reporting aired "Pot Republic," a great documentary on the marijuana business in California. It kicked off with a scene from a party at WeGrow, the so-called Walmart of Weed, and a screen shot of my cover story, "Weedmart." True to Frontline's form, the segment turned up some dirt on how medical marijuana is providing a cover for drug smugglers who resell California pot for three times its local value in places like Dallas, Texas. The Mexican cartels are also getting in on the game. At 2:30 EST today Frontline will host an online chat with "Pot Republic" correspondent Michael Montgomery, WeGrow co-founder Derek Peterson, and law enforcement officials. You can watch the Frontline segment here:

Watch the full episode. See more FRONTLINE.

Bachmann Anti-Gay Ally Sues Rachel Maddow For $50 Million (Updated)

| Wed Jul. 27, 2011 8:32 AM PDT

Bradlee Dean, a longtime ally of GOP presidential candidate Rep. Michele Bachmann, runs a heavy-metal ministry in her Minnesota district that travels to public schools on the taxpayers' dime to push students to find Christ. He has performed at fundraisers for Bachmann, and Bachmann has done the same for Dean's ministry, You Can Run But You Cannot Hide International. Long a target of local bloggers in his home state, Dean has become increasingly defensive over the last few months as national organizations have taken note of his ties to Bachmann, and he strongly hinted that he was about to push back against the criticism in a big way. And now he has. On Tuesday, Dean announced he was filing a defamation suit against MSNBC host Rachel Maddow (and the network) for $50 million.

Specifically, Dean is upset that Maddow—quoting heavily from Dean—accused him of supporting the execution of gay people. Here's his press release:

Despite the very clear disclaimer by Bradlee Dean on his ministry's website and elsewhere regarding the false accusation that he was calling for the execution of homosexuals, MSNBC's Rachel Maddow and others seized on and accused Dean on her show of supporting the killing of homosexuals, as is the practice in some radical Islamic countries. This seriously has harmed Dean and the ministry, who pride themselves on respect and love for all people...

The lawsuit is filed by attorney Larry Klayman, the founder of Judicial Watch and Freedom Watch, in DC Superior Court and seeks in excess of $50 million in damages. However, money is not the issue. "This case is filed as a matter of principle," stated Klayman. "We need more Bradlee Deans in the world and hateful left wing television commentators must be made to respect not only his mission but the law," he added.

Dean and his lawyer should get along well. Klayman recently wrote an op-ed warning that the United States was being crippled by "political heterophobia" (he also noted that he had gay friends). Anyway, what set Dean off is Maddow's citation in May of this quote, from a 2010 episode of Dean's radio show:

Bachmann Vows to Ban Teleprompters From White House

| Wed Jul. 27, 2011 8:14 AM PDT

Economists disagree on many things, but one thing you'll find a near-consensus on is the idea that President Obama's frequent use of a teleprompter is slowly destroying the American economy. Because of President Obama's frequent reliance on the teleprompter, credit agencies have warned that the United States' AAA credit rating could soon be downgraded, causing Americans' interest rates to soar. Unemployment, meanwhile, is stuck at upwards of 9 percent—again, because of President Obama's repeated use of the teleprompter.

There are few issues more critical to the nation's well-being, which is why we're happy to report that Rep. Michele Bachmann (R-Minn.) has promised to ban teleprompters from the Whiten House if she's elected president. Via Gregory Pratt:

"I know you're not used to seeing a president without Teleprompters," she told an Iowa crowd. "But I'm just here to tell you President O'Bach — President Bachmann will not have teleprompters in the White House."

Oof. Maybe those teleprompters wouldn't be such a bad investment after all.

WATCH:

Al-Qaeda is Dead, Long Live al-Qaeda

| Wed Jul. 27, 2011 8:11 AM PDT

The original core al-Qaeda group is on the ropes:

U.S. counterterrorism officials are increasingly convinced that the killing of Osama bin Laden and the toll of seven years of CIA drone strikes have pushed al-Qaeda to the brink of collapse.

The assessment reflects a widespread view at the CIA and other agencies that a relatively small number of additional blows could effectively extinguish the Pakistan-based organization that carried out the Sept. 11, 2001, terrorist attacks — an outcome that was seen as a distant prospect for much of the past decade.

....Defense Secretary Leon E. Panetta declared during a recent visit to Afghanistan that “we’re within reach of strategically defeating al-Qaeda.”....Senior U.S. officials from the CIA, the National Counterterrorism Center and other agencies have expressed similar views in classified intelligence reports and closed-door briefings on Capitol Hill, officials said.

Something tells me that this is a bit like Zeno's Paradox: we're going to keep getting closer and closer, but we'll never quite get to the finish line and no one will ever quite be willing to say we've won and can remove our troops from the fight.

Then again, maybe that's too cynical. Lately we've been taking a tougher line toward Pakistan, almost as if we don't care very much anymore if they kick us out of the country. Well, maybe we don't. And if we don't need Pakistan for much anymore, that's a pretty strong sign that we really do increasingly believe that al-Qaeda Central is nearly done for. Time to move on to Yemen and Somalia.

(What's that? No, I didn't say al-Qaeda was finished. Just Osama's original group in Pakistan. Don't worry, there will always be terrorists named "al-Qaeda" to fight.)

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House GOP: Grand Canyon Should Be a Uranium Mine

| Wed Jul. 27, 2011 4:00 AM PDT

Last month, Secretary of Interior Ken Salazar cheered environmentalists and fans of the great outdoors with his extension of a moratorium on uranium mining near the Grand Canyon for another six months. But now House Republicans are aiming to use the Interior Department appropriations bill to try to reopen the areas around the park to mining interests.

Salazar announced in June that he was extending the prohibition on mining on roughly 1 million acres of land near the canyon through the end of the year, a moratorium he put in place in 2009. Salazar said he prefers to set a 20-year moratorium—the longest allowable under the current hard rock mining law—but will await the outcome of an environmental analysis to make a decision on that.

The appropriations measure, from Arizona Republican Jeff Flake, would reverse Salazar's decision and again make it possible to mine near the park. It's one of dozens of anti-environmental riders tacked onto the Environment and Interior appropriations bill that the House is debating this week.

In years before the moratorium, mining interests staked more than 10,000 claims near the park. Those would still be allowed to go forward, as the moratorium only applies to new claims.  But uranium mining in the region raises concerns not just about damage to an iconic national park, but risks to water resources and health in the region, too. It's also an economic concern. As Jessica Goad, manager of research and outreach with the public lands project at the Center for American Progress Action Fund recently pointed out, the Grand Canyon is an economically valuable resource:

The Grand Canyon provides an incredible place for recreation, and the Colorado River that runs through the national park provides drinking water to 25 million Americans. It is estimated by Headwaters Economics that in 2009, Grand Canyon National Park created $411 million and over 6,000 jobs in the region.

Democratic representatives from Arizona and environmental groups held a press conference on the Hill on Tuesday denouncing Flake's measure. "For a few jobs we would screw up the Grand Canyon, the natural wonder of the world that people travel from all over the world to come see," said Rep. Ed Pastor (D-Ariz.).

"The Grand Canyon, the crown jewel of the national park system, deserves a lot more than a rider being snuck in through the back door of an appropriations bill," said Rep. Raul Grijalva, also of Arizona. Pastor and Grijalva intend to introduce an amendment that would reinstate the protections in the course of debate this week.

Both the Pew Environment Group and Environment America joined the lawmakers in the press conference, criticizing Republicans for going after the park that President Teddy Roosevelt once called "a natural wonder which is in kind absolutely unparalleled throughout the rest of the world."

"If Congress isn't going to protect the Grand Canyon, then what on earth is it going to save?" asked Jane Danowitz, director of the public lands program at Pew.

Syngenta Makes a Killing on Pesticides While Feds Snooze

| Wed Jul. 27, 2011 3:06 AM PDT

The pesticide atrazine is vile stuff. A "potent endocrine disruptor," it causes a range of reproductive problems at extremely low doses; and it commonly leaches out of farm fields and into people's drinking water. Unfortunately, it's quite popular with industrial-scale corn growers, who apply about 70 million pounds of it per year to kill weeds.

Just this month, USDA researchers released a study finding that atrazine is even more volatile than they previously expected: It's highly prone to evaporate after it's applied, entering the air and eventually groundwater. That might explain why in towns throughout the Corn Belt, atrazine levels in drinking water tend to "spike" during the spring application season, as a 2009 New York Times investigation found.

A wise society might be expected to ban it. Citing its tendency to taint water, the European Union did just that in 2003. But that same year, atrazine's maker, the Swiss chemical giant Syngenta, convinced our own EPA to maintain approval for it. To make its case, the company presented a bunch of studies it had funded that that have since been discredited. The EPA changed course in 2009, announcing it formally would review its decision to green light the toxic chemical. The review was initially slated to take a year; so far, nothing has come of it. An EPA press officer told me via email that the agency's scientific-advisory panel charged with scrutinizing atrazine will meet this week. But it will be "upwards of 90 days" before any report is issued.

While the EPA undertakes its leisurely reconsideration, atrazine use is booming. It remains "one of the most widely used agricultural pesticides in the US" by the EPA's own reckoning. And Syngenta recently reported a 14 percent jump in profits for the first half of 2011, based in part on "strong sales of atrazine" in North America.

We're Still at War: Photo of the Day for July 27, 2011

Wed Jul. 27, 2011 3:00 AM PDT

Sgt. Normand Gagnon, team leader attached to Laghman Provincial Reconstruction Team, scans the mountainside for enemy activity while on a patrol in Alingar district July 13. Laghman PRT's mission was to meet with the Alingar district leaders then perform a final inspection on two construction projects in the area. (U.S. Air Force photo/Staff Sgt. Ryan Crane)

How Default Threatens National Security

| Wed Jul. 27, 2011 3:00 AM PDT

Last August, the chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, shocked plenty of people when he declared that "the single biggest threat to national security is the debt." As zero hour approaches for the government to default on its debt, experts from both sides of the aisle are echoing Mullen's warning that fiscal matters pose a more immediate threat to national security than terrorism, rogue nations, or foreign wars.

By refusing to raise the debt ceiling, argues Bruce Bartlett, an economist who worked in George H.W. Bush's White House, conservative members of the House are undermining the country's ability to defend itself. In a post in a post titled "The Constitution and National Security Trump the Debt Limit," he writes, "Republicans are playing not just with fire, but the financial equivalent of nuclear weapons." That's not an idle metaphor. Politicians and economists can debate the effects a debt default would have on credit and stock markets, but there's little doubt that any default would make a mess of military operations. Something similar already happened in 1995, when the federal government shut down during Bill Clinton's budget battle with then-House Speaker Newt Gingrich.