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The Russian Ruble Is Now Entering Free Fall

| Mon Dec. 15, 2014 12:52 PM EST

Speaking of a possible economic crisis in Russia, it looks like the ruble is now entering free fall:

For months, Russia’s ruble has been falling in line with a decline in oil. But now, the selloff has stepped up a gear amid a broad rout in emerging-market currencies. Monday, the dollar shot above 63 against the battered Russian currency....“There’s no relief in sight, the mood on the market is pessimistic. Any recovery in the ruble is used to buy into foreign currencies,” said Igor Akinshin, a trader at Alfa Bank.

....The country’s bond markets are also under strain. Russia’s dollar bond maturing in Sept. 2023 is yielding 7.102%, up from 6.633% on Friday.

It's above my pay grade to speculate on how this ends. But it's worth keeping an eye on.

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No, the Tea Party Is Never Going to Join Up With Anti-Corporate Liberals

| Mon Dec. 15, 2014 12:17 PM EST

This really can't be said often enough:

I'm afraid we need to call B.S. on this idea of Elizabeth Warren (or any other "populist") becoming a pied piper to the Tea Folk, pulling them across the barricades to support The Good Fight against "crony capitalism." Yes, many "constitutional conservatives" opposecorporate bailouts. But they also typically support eliminating not just subsidies but regulation of big banks and other corporations.

That's from Ed Kilgore, and he's responding to the suggestion that the real divide in American politics isn't between left and right, it's between pro-corporate and anti-corporate. Spare me. Sure, the tea partiers opposed TARP and were hazily in favor of just letting all the banks collapse in 2008, but that was little more than a fleeting morsel of emotional outrage. As Kilgore says, tea partiers may say they oppose corporate power, but when it comes time to vote, they can be counted on to support the folks who oppose any and all regulations that might actually rein in the power of corporations generally and Wall Street in particular.

But every once in a while they'll get themselves exercised over some trivial issue of "crony capitalism" like reauthorizing the Export-Import bank, and suddenly pundits will rediscover the supposedly populist right. Give it a rest, folks. The tea partiers will no sooner find common cause with Elizabeth Warren than they will with Mother Jones. In reality, they couldn't care less about ExIm or the swaps pushout or any of the other shiny objects that right-wing fundraisers occasionally find useful for replenishing their coffers. On the economic side of things, what they care about are low taxes and slashing welfare. On the social side of things, they care about abortion, guns, gays, and the moral decay of everyone else. The rest is just fluff.

Here's Why Banks Care About Gutting Dodd-Frank

| Mon Dec. 15, 2014 11:05 AM EST

Elizabeth Warren got a lot of attention last week for rallying liberals against a provision of the cromnibus spending bill that repealed a portion of the Dodd-Frank financial reform bill. This particular bit of the law had required FDIC-insured banks to get out of the custom swaps business. If they wanted to buy and sell risky derivatives, the parent company needed to do it at a separate entity outside the bank, not with government-insured cash.

But why did Wall Street actually care about this? Even if the swaps are "pushed out" to a subsidiary outside the FDIC umbrella, they're still part of the bank holding company. If the swaps are profitable, the holding company makes money either way. Ditto if they lose money. So who cares? Via Matt Yglesias, here is John Carney of the Wall Street Journal to explain why this was so important:

The advantage: [The bank depository units], with implicit government backing, are considered less risky than parent holding companies....Citigroup’s insured depository unit is rated A2 by Moody’s; the parent company is a far lower Baa2. So a bank buying a derivative contract from the parent would receive a higher capital charge than if it bought it from the depository unit. So the price Citi could fetch for it would be lower. The same divergence exists at the other banks, though to a lesser degree.

The result: Each would suffer from having to push derivatives out of their depository units. In effect, they would lose the advantage of the higher rating and perception of government support.

FDIC-insured depository units have higher credit ratings thanks to their government guarantee. Because of this, swaps sold under the depository umbrella also have a higher rating, and can be sold at a higher price. Outside this umbrella, with its lower parent company rating, the price would have to be discounted. That makes the swaps business less profitable.

As Matt points out, this is an indication that Dodd-Frank is actually doing its job: "Investors aren't confident that Citi is 'too big to fail' and likely to get future bailouts. That's why Citi wants to get as much business as possible done under the shield of the FDIC."

I guess, in a way, this is a small bit of solace to take from last week's sordid episode of congressional capitulation to Wall Street: it only mattered because financial reform seems to be working. A little bit, anyway. If it were really working, of course, bank parent companies would be so well capitalized that their credit ratings would be nearly as good as their FDIC-insured subsidiaries. Obviously we're not quite there yet.

#IllRideWithYou Tweeters Lend Support to Muslims as Sydney Siege Comes to an End

| Mon Dec. 15, 2014 9:45 AM EST
A hostage runs to armed tactical response police officers for safety after she escaped from a cafe under siege at Martin Place in the central business district of Sydney, Australia.

Tweeters offering to escort Australian Muslims who fear racially or religiously motivated attacks in response to a hostage situation in Sydney have adopted the hashtag #illridewithyou, which has quickly spread across social media. This support for Australian Muslims comes after a black flag with Arabic writing on it was seen displayed on the cafe window where the siege continues to unfold.

The Guardian reports that Tessa Kum started the hashtag after she saw this story on Twitter:

The idea quickly caught on, and Sydney residents have been using #illridewithyou to publicly reach out to anyone who may want a partner to travel with as authorities work to put an end to the standoff:

As of 9:05 AM EST, five hostages have either escaped or been released. Muslim leaders, who condemned the "criminal act," are urging residents stay calm.

We're Still at War: Photo of the Day for December 15, 2014

Mon Dec. 15, 2014 9:39 AM EST

US Marines conduct a static-line jump to prepare for upcoming deployment. (US Marine Corps photo by Cpl. Anna Albrecht)

The 10 Best Albums of 2014

| Mon Dec. 15, 2014 6:00 AM EST

Each year, Mother Jones music critic Jon Young browses through hundreds of new albums and pulls out 75 to 100 to review for the magazine and website. Some of those make the final cut, but there are some wildcards, too. Below, in no particular order, are Jon's super-duper-abbreviated write-ups of his cream of the crop—the Top 10 albums of 2014. Feel free to tell us your own Top 10 in the comments.

Lee Bains III & The Glory Fires
Dereconstructed
Sub Pop

Blazing, populist old-school rock and roll with a chip on its shoulder.
 

 

 

The "5" Royales
Soul & Swagger: The Complete "5" Royales 1951-1967

Rockbeat

Raucous, timeless R&B powered by Lowman Pauling's blistering guitar licks.
 

 

 

Various Artists
I'm Just Like You: Sly's Stone Flower 1969-70

Light in the Attic

Mind-blowing funky archaeology, this collection of little-known Sly productions from his golden era, many previously unreleased.

 

 

Speedy Ortiz
Real Hair

Carpark

Four lyrically dense, guitar-heavy songs from Sadie DuPuis and company.
(Full review here.)

 

 

White Lung
Deep Fantasy

Domino

Singer Mish Way's furious punk-rock update is guaranteed to sear.
 

 

 

Beverly
Careers

Kanine

Dream pop gets a jolt of energy, with thrilling results.
(Full review here.)

 

 

Survival Knife
Loose Power

Glacial Pace

Unwound alum Brandt Sandeno forges a two-fisted fusion of punk, metal, and hard rock.
(Full review here.)

 

 

Scraps
Electric Ocean

Fire

Moving thrift-shop electronica, courtesy of Australia's Laura Hill.
(Full review here.)

 

 

Joan as Police Woman
The Classic

Play It Again Sam

Brooding gives way to hope, with old-fashioned soul and doo-wop grooves setting the pace.
(Full review here.)
 

 

Sharon Van Etten
Are We There

Jagjaguar

A good artist reaches greatness with starkly devastating songs.
(Full review here.)

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Here's a List of People to Follow on Twitter for the Latest on the Australian Hostage Crisis

| Sun Dec. 14, 2014 11:06 PM EST
Armed police close to a cafe under siege at Martin Place, in the central business district of Sydney, Australia, Monday, Dec. 15, 2014.

An armed assailant is holding an unconfirmed number of hostages in a cafe in downtown Sydney. Police have evacuated the area and are locking down a pedestrian thoroughfare, Martin Place. Here is a partial list of people and organizations you can follow on Twitter to stay up-to-date on the ongoing hostage crisis:

  • Buzzfeed Australia's breaking news reporter Mark Di Stefano is on the scene.
  • Channel 9 journalist Caroline Marcus is doing a great job covering the unfolding events.
  • Guardian Australia's Bridie Jabour has been running that site's live blog and beta-testing the facts as they emerge.
  • Sydney police reporter for the Australian Broadcasting Corporation, Lucy Carter, is also on the scene and tweeting.
  • Jess Hill is also doing a great job fact-checking the news as it breaks.
  • Cath Turner, a reporter for Seven News, a television company with studios within walking distance of the cafe.
  • You should already be following the Australian Broadcasting Corporation's Mark Colvin for everything Australia-related.
  • For political ramifications, Fairfax reporter Latika Bourke is a great go-to.
  • The Sydney Morning Herald
  • The ABC
  • The Australian Newspaper
  • The New South Wales police, who are taking the lead on operations

Krugman: "Russia Keeps Looking More Vulnerable to Crisis"

| Sun Dec. 14, 2014 11:31 AM EST

Paul Krugman just left a conference in Dubai, and decided to write a bit about oil prices because all the geopolitical stuff he heard was pretty grim. But the oil stuff wasn't that interesting. His one paragraph about geopolitics is:

My other thought is that Venezuela-with-nukes (Russia) keeps looking more vulnerable to crisis. Long-term interest rates at almost 13 percent, a plunging currency, and a lot of private-sector institutions with large foreign-currency debts. You might imagine that large foreign exchange reserves would allow the government to bail out those in trouble, but the markets evidently don’t think so. This is starting to look very serious.

Yes it is, and the reference to Venezuela-with-nukes is telling. A Russian economic crash could just be a crash. That would be bad for Russia, bad for Europe, and bad for the world. But it would hardly be the first time a midsize economy crashed. It would be bad but manageable.

Except that Russia has Vladimir Putin, Russia has a pretty sizeable and fairly competent military, and Russia has nukes. Putin has spent his entire career building his domestic popularity partly by blaming the West for every setback suffered by the Russian people, and that anti-Western campaign has reached virulent proportions over the past year or two. If the Russian economy does crash, and Putin decides that the best way to ride it out is to demagogue Europe and the West as a way of deflecting popular anger away from his own ruinous policies, it's hard to say what the consequences would be. When Argentina pursues a game plan like that, you end up with a messy court case and lots of diplomatic grandstanding. When Russia does it, things could go a lot further.

I have precious little sympathy for Putin, whose success—such as it is—is based on a toxic stew of insecurities and quixotic appetites that have expressed themselves in a destructive brand of crude nativism; reactionary bigotry; disdain for the rule of law, both domestic and international; narrow and myopic economic vision; and dependence on an outdated and illiberal oligarchy to retain power. Nonetheless, there are kernels of legitimate grievance buried in many of these impulses, as well as kernels of necessity given both Russia's culture and the post-Cold War collapse of its economy that has left it perilously dependent on extractive industries.

I don't know if it's too late to use the kernels as building blocks to improve, if not actually repair, Western relations with Putin's Russia. But it's still worth trying. A Russian crash may or may not come, but it's hardly out of the realm of possibility. And if it happens, even a modest rapprochement between East and West could help avoid a disastrous outcome.

Ted Cruz Shoots Self in Foot, Declares Victory

| Sat Dec. 13, 2014 8:29 PM EST

File this under "with friends like this, who needs enemies?"

Republican senators fumed as a strategy developed by Sen. Ted Cruz (R-Texas) intended to undercut President Obama’s immigration action seemed to backfire, giving Democrats a chance to move a batch of controversial Obama administration appointments.

....Saturday’s session was required after conservative Sen. Mike Lee (R-Utah) objected to an effort by Senate Majority Leader Harry Reid (D-Nev.) late Friday to adjourn the Senate for the weekend....He and Cruz had sought to force a vote to strip out funding that would be used to implement Obama’s plan to halt deportations for as many as 5 million immigrants.

Without the ability to leave for the weekend, Reid instead began the process of bringing 20 long-stalled nominations to a vote, including Obama’s nominee for surgeon general, Vivek Murthy, who was a target of groups like the powerful National Rifle Assn. over his advocacy for stricter gun laws. Shortly after noon the Senate began the first of what could be 40 procedural votes that could lead to confirming all the nominees by the end of the week.

The Cruz/Lee proposal was entirely symbolic in not just one, but two separate ways:

  • It was merely a "point of order" to express opposition to funding President Obama's executive order on immigration. It would have accomplished nothing.
  • It had little chance of passing anyway.

So now everyone has to spin their wheels on the Senate floor over the weekend instead of seeing their families or watching the Army-Navy game. By itself, that might deserve only the world's tiniest violin. But as long as they're there and have some extra time, Harry Reid decided to start the process of approving a whole bunch of Obama nominations that otherwise might have dropped off the calendar later in the week as senators began pressing to start the holiday recess. That meant Obama's nominees would have had to face a Republican Senate in January, but now, thanks to Cruz and Lee, they'll all be safely in office by then.

I'm sure the NRA is thrilled. Ditto for all the Republicans who were apoplectic over the nomination of Tony Blinken as deputy secretary of state. And megadittoes—with a megadose of irony—for Cruz, Lee, and all their tea party buddies who objected to confirming Sarah Saldaña to head Immigration and Customs Enforcement. Their objection, of course, was meant as a protest against Obama's executive order on immigration. Now, thanks to a dumb little stunt that was pathetic even as an empty protest against Obama's immigration plan, they're going to lose an actual, substantive protest against an Obama immigration nominee. Nice work, guys.

But I guess it's a nice big platter of red meat that plays well with the rubes. With Cruz, that's all that counts.

UPDATE: You gotta love this:

Only the Democrats seemed able to wrest a modicum of enjoyment from the day’s proceedings. Senator Benjamin L. Cardin, Democrat of Maryland, said that it was “inconvenient to be here voting around the clock” but that he was “kind of pleased at how it’s working out.” Mr. Cardin said, “We will get these confirmations done, and we may not have gotten them done otherwise.” And as Senator John Cornyn of Texas, the No. 2 Senate Republican, struggled to explain to a group of reporters just what Mr. Cruz was trying to achieve, Senator Cory Booker, Democrat of New Jersey, loped by and clapped him on the shoulder.

“Let me know if you need backup,” Mr. Booker said with a grin.

James Risen Will Not Be Required to Reveal His Sources for "State of War"

| Sat Dec. 13, 2014 2:35 PM EST

From the New York Times:

[Preet Bharara, the United States attorney in Manhattan] wants to force Richard Bonin, a longtime producer for “60 Minutes,” to testify next month at a terrorism trial over bombings by Al Qaeda in 1998. One of the two defendants, Khaled al-Fawwaz, is accused of running Al Qaeda’s media office in London. Prosecutors want Mr. Bonin to discuss his dealings with the group’s media office in an unsuccessful effort to interview Osama bin Laden in 1998, officials and others briefed on the case said.

Wait. What? Al Qaeda had a media office?

In other, better news, Eric Holder has decided not to subpoena New York Times reporter James Risen in an effort to force him to reveal the sources for his book, State of War. "If the government subpoenas Risen to require any of his testimony," a Justice Department official said, "it would be to confirm that he had an agreement with a confidential source, and that he did write the book." I don't know how Risen feels about that, but it's obviously much less pernicious than threatening jail time for refusing to identify a source.

This comes via Doug Mataconis, who argues persuasively that the arbitrary nature of federal prosecutions against reporters for refusing to reveal a source is exactly why we need to pass some kind of federal shield law for reporters. Even if it turned out to be weaker than many of us would like—pretty much a dead certainty, I'd say—at the very least it would provide some consistent guidance for both judges and media members.