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The Two Ps

THE TWO Ps....Nicholas Burns makes the case for quiet, persistent diplomacy:Talking to our adversaries is no one's idea of fun, and it is not a sure prescription for success in every crisis. But it is crude, simplistic and wrong to...

| Mon Oct. 27, 2008 1:13 PM EDT

THE TWO Ps....Nicholas Burns makes the case for quiet, persistent diplomacy:

Talking to our adversaries is no one's idea of fun, and it is not a sure prescription for success in every crisis. But it is crude, simplistic and wrong to charge that negotiations reflect weakness or appeasement. More often than not, they are evidence of a strong and self-confident country. One of America's greatest but often neglected strengths is, in fact, our diplomatic power. Condoleezza Rice's visit to Libya in September—the first by a U.S. secretary of state in five decades—was the culmination of years of careful, deliberate diplomacy to maneuver the Libyan leadership to give up its weapons of mass destruction and renounce terrorism. She would not have achieved that victory had she refused to talk to the Libyans.

Burns, of course, has no time for campaign claptrap about "preconditions" being the same thing as "preparation." In fact, he doesn't even mention it, saying only this about Iran: "I'm not saying the next president should sit down immediately with Ahmadinejad. We should initiate contact at a lower level to investigate whether it's worth putting the president's prestige on the line."

Of course. That's preparation. A precondition, by contrast, would be a demand that Iran agree to halt its nuclear program before we even sit down to talk, even though their nuclear program is supposedly one of the very reasons for the talks in the first place. It's just a backhanded way of ensuring that no talks will ever take place.

Unlike John McCain, Barack Obama favors preparation but generally opposes preconditions. That's the right attitude.

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Digging Into the Meltdown

DIGGING INTO THE MELTDOWN....Tyler Cowen notes Europe's disastrous exposure to emerging market debt and says:By the way, this is further evidence that the driving force behind the earlier boom was the global savings glut, and sheer giddiness, not the excessively...

| Mon Oct. 27, 2008 12:54 PM EDT

DIGGING INTO THE MELTDOWN....Tyler Cowen notes Europe's disastrous exposure to emerging market debt and says:

By the way, this is further evidence that the driving force behind the earlier boom was the global savings glut, and sheer giddiness, not the excessively loose monetary policy of Greenspan's Fed.

But why not both? And a few other things as well, including the increasing concentration of income and wealth in the hands of the rich? Are they really all mutually exclusive?

A Wee Question

A WEE QUESTION....In 2004, John Kerry lost the popular vote by a couple of percentage points and the electoral vote by 120,000 votes in Ohio. Now, suppose Kerry were running this year and therefore had the following three advantages over...

| Mon Oct. 27, 2008 12:18 PM EDT

A WEE QUESTION....In 2004, John Kerry lost the popular vote by a couple of percentage points and the electoral vote by 120,000 votes in Ohio. Now, suppose Kerry were running this year and therefore had the following three advantages over his previous self: (a) he was running after eight years of Republican rule instead of four, (b) the economy sucked, and (c) he had a fantastic fundraising advantage over his Republican opponent.

Question 1: how well do you think Kerry would do? Question 2: how well do you think Obama is going to do this year? Question 3: how big is the difference between the answers to Q1 and Q2?

Meltdown Watch

MELTDOWN WATCH....The latest beacon of sunshine from the Wall Street Journal:A rash of new job data show the labor market is now the worst it's been since the two prior recessions in 2001 and the early 1990s. One of the...

| Mon Oct. 27, 2008 2:48 AM EDT

MELTDOWN WATCH....The latest beacon of sunshine from the Wall Street Journal:

A rash of new job data show the labor market is now the worst it's been since the two prior recessions in 2001 and the early 1990s. One of the starkest indicators is that the number of people who have been unemployed for 27 weeks or more reached two million in September. That's 21% of the total unemployed, and approaching the prior peaks of about 23% in 2003 and 1992. The prospects of these job seekers grow dimmer as layoffs spread beyond the financial, home-building and auto industries.

....What worries many economists is that labor markets usually reach their weakest point after a recession has ended. During the so-called "jobless recovery" following the 2001 recession, jobs continued to be shed after it was officially declared over. But the current weakness comes as the country heads into a recession that is now forecast to be deeper and longer than previously thought.

"No one thinks we are anywhere near the bottom of this, and we're already rivaling these other recessions," says Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think tank in Washington.

Elsewhere, we learn that U.S. retailers expect a lousy Christmas; the global slowdown has hit Poland hard; the IMF has just unveiled a rescue package for Ukraine; Asian economies are slowing sharply; and even oil-rich Middle Eastern countries are barely staving off bank failures. Meanwhile, Krugman's latest column ends on this cheery note: "Whatever the reasons for the continuing weakness of policy, the situation is manifestly not coming under control. Things continue to fall apart." Wonderful.

Did We Just Invade Syria?

Uh, it looks that way....

| Sun Oct. 26, 2008 5:48 PM EDT

California Propositions

CALIFORNIA PROPOSITIONS....This is a special post for California readers. The rest of you may safely go about your Sunday business normally. This year we have 12 initiatives on the California ballot. As longtime readers know, my default position is to...

| Sun Oct. 26, 2008 2:02 PM EDT

CALIFORNIA PROPOSITIONS....This is a special post for California readers. The rest of you may safely go about your Sunday business normally.

This year we have 12 initiatives on the California ballot. As longtime readers know, my default position is to very strongly oppose all initiatives. My reasons are here, but the nickel version is that (a) most initiatives these days are funded by corporate interests, not the grassroots, and corporate interests don't really need yet another avenue to work their will on the public, (b) generally speaking, laws should be laws, not constitutional amendments or initiative statutes, where they're essentially etched in stone forever, and (c) ballot box budgeting is a curse.

At the request of my wife, I'll add one other thing: I've routinely voted against not just initiatives, but also against virtually all bond measures for the past couple of decades. Here's why. In the distant past, bond measures were used for capital projects that needed a big dollop of funding right away even though their useful life was decades long. But that's barely ever the case anymore. Rather, they've become little more than ways to evade the normal budgeting process. Most of the time they fund projects that will take a long time to build and could just as easily (and more cheaply) be funded out of general revenues. What's more, the standard mantra that they "require no tax increase" is baloney: they allocate money and that money (plus interest) has to be paid back out of the general fund. This money comes from taxes, just like every other expenditure.

Obviously you might not share my generic distaste for both the initiative process and the abuse of bond funding. So take that into account as you read the rest of this post. And a note for my non-California readers, since I always get a few questions about this. Several of the initiatives on the ballot this year (4, 8, 9, and 11) are constitutional amendments, and yes, a simple majority vote is all it takes to amend the state constitution here. I know it seems weird, but that's the way it is.

  1. High-speed rail bond. NO. As I said above, I generally oppose bond measures. But high speed rail is a worthy long-term endeavor, so I should probably explain my opposition to this particular bond issue in some detail. Here it is: We. Don't. Have. Any. Money.

    I continue to be flabbergasted at the unwillingness of Californians to understand just how bad our fiscal situation is. It's mind boggling. We've been running huge deficits for the past six years even though the economy was booming. The coming recession is only going to make it worse. We just flatly can't afford this right now.

    On its merits, I'll confess to some skepticism too. Both the cost projections and the ridership projections for the planned 220 mph train from LA to San Francisco strike me as typically optimistic for these things (as does the 220 mph goal, frankly), and I really have to wonder if we don't have better ways to spend a billion or two a year on transit projects. But those are side issues that would only be worth discussing if we had the money to support this in the first place. We don't.

  2. Farm Animal Confinement. YES. This initiative requires that farm animals be penned in cages that allow them to lie down, stand up, fully extend their limbs, and turn around freely. In practice, it would affect only the egg industry, and it moves California very moderately in the direction of more humane treatment of farm animals. The factory farming industry is running the usual campaign claiming that it would put California farmers out of business entirely, but that dog just won't hunt anymore. That's what they always say. In reality, it will probably increase the cost of eggs a few pennies per dozen and nothing more.

    This initiative passes most of my smell tests too. It's a genuine grassroots initiative that would have a hard time getting past the legislature thanks to corporate agribusiness lobbying. It's a moderately written law that allows us to experiment a bit without going off a cliff. And it's not ballot box budgeting.

  3. Children's hospital bond act. NO. We. Don't. Have. Any. Money. Even for good causes, I'm afraid. This is an issue for the legislature, not for ballot box budgeting.

  4. Parental notification for teenage abortions. NO. I think we all know what this is about.

  5. Nonviolent drug offenses. NO. This is a followup to Prop 36, which was passed in 2000 and mandates treatment for many drug offenses instead of jail time. Unfortunately, as with many initiatives, Prop 5 is mostly well intentioned but poorly drafted. Thanks to fuzzy wording, it might allow violent criminals to evade jail time merely by claiming that their crimes were in the service of a drug habit, and it might cripple some of the state's most successful rehabilitation programs. These are risks that might be worth taking if this were merely a normal law, which could be modified if it didn't work out, but as an initiative statute it would be set in stone virtually forever no matter how well it worked. That's a bad deal.

  6. Police and law enforcement funding. NO. This is yet another "tough on crime" initiative, something that California is already overburdened with. It's also an egregious example of ballot box budgeting, in which law enforcement tries to mandate more funding for itself. Forget it.

  7. Renewable energy generation. NO. As near as I can tell, Prop 7 is genuinely well meaning. But as with Prop 5, it's badly drafted and would actually hurt many suppliers of alternative energy, which is why virtually every environmental organization opposes it.

  8. Bans same-sex marriage. NO. I think gay marriage is perfectly fine. If you do too, vote No on 8. Nuff said.

  9. "Marsy's law." NO. This is yet another pet project from a local zillionaire with a bee up his bonnet. But Prop 9 is mostly unnecessary, and to the extent it offers anything new it's just another generic "get tough" initiative that will cost a bucket of money, keep our prisons even more overcrowded, and prevent defense attorneys from doing legitimate parts of their job. What's more, even if you approve of this kind of thing, it certainly doesn't deserve to be engraved in stone and put in the constitution.

  10. T. Boone Pickens alternative energy bond. NO. This is basically just a stealth initiative to funnel some government cash into the hands of T. Boone Pickens. See here for more. Also: We. Don't. Have. Any. Money.

  11. Redistricting reform. YES. On the downside, this initiative is a little bit squirrelly, setting up an oddball "citizen commission" to perform redistricting every ten years. It's also not clear that it would have a huge impact. I used to be a big foe of gerrymandering, but I've read enough research over the past couple of years to convince me that its impact on the electoral process is actually fairly modest.

    Still, "modest" isn't zero. And while the citizen commission is a little odd, it's not outlandish and not obviously biased against either party. What's more, Prop 11 is a limited effort that affects only state districts, not congressional districts. Bottom line: Whether the effect is modest or not, allowing partisan legislatures to draw their own lines is crazy. We've missed a lot of chances to reform this in the past, and overall Prop 11 strikes me as a decent start on a difficult task.

  12. Cal-Vet bonds. YES. Huh? I'm recommending Yes on a bond? Yep. We've been issuing Cal-Vet home loan bonds for decades, they genuinely don't cost the taxpayers anything (the bonds are paid back by the vets who get the loans), and it's for a good cause.

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Palin-McCain: The Skirmishing Begins

PALIN-McCAIN: THE SKIRMISHING BEGINS....Yesterday I mentioned that I was looking forward to the (anonymous! on background!) war that was sure to erupt after the election between Sarah Palin and John McCain. Palin, after all, is not exactly famous for standing...

| Sat Oct. 25, 2008 2:32 PM EDT

PALIN-McCAIN: THE SKIRMISHING BEGINS....Yesterday I mentioned that I was looking forward to the (anonymous! on background!) war that was sure to erupt after the election between Sarah Palin and John McCain. Palin, after all, is not exactly famous for standing by her mentors in their hour of need. But guess what? I don't have to wait until after the election after all! Ben Smith reports:

Palin supporters, inside the campaign and out, said Palin blames her handlers for a botched rollout and a tarnished public image — even as others in McCain's camp blame the pick of the relatively inexperienced Alaska governor, and her public performance, for McCain's decline.

"She's lost confidence in most of the people on the plane," said a senior Republican who speaks to Palin, referring to her campaign jet. He said Palin had begun to "go rogue" in some of her public pronouncements and decisions. "I think she'd like to go more rogue," he said.

...."The campaign as a whole bought completely into what the Washington media said — that she's completely inexperienced," said a close Palin ally outside the campaign who speaks regularly to the candidate.

"Her strategy was to be trustworthy and a team player during the convention and thereafter, but she felt completely mismanaged and mishandled and ill advised," the person said. "Recently, she's gone from relying on McCain advisers who were assigned to her to relying on her own instincts."

Etc. etc.

Read the whole thing, which I take as just the barest teaser of the bloodshed that's gong to erupt between McCain and Palin loyalists after the election. My prediction: they're both going to come out of it with their careers in ruins. The only difference is that Palin probably won't realize it for a while.

UPDATE: More exciting skirmishing here! "She is a diva. She takes no advice from anyone," says a McCain adviser. "She does not have any relationships of trust with any of us, her family or anyone else. Also, she is playing for her own future and sees herself as the next leader of the party. Remember: Divas trust only unto themselves, as they see themselves as the beginning and end of all wisdom."

Financial Meltdown Watch

FINANCIAL MELTDOWN WATCH....A while back I was wondering who was left to bail out, now that we'd announced plans to take care of big banks, little banks, investment banks, and Fannie and Freddie. Insurance companies? Hedge funds? Today we learn...

| Sat Oct. 25, 2008 2:12 PM EDT

FINANCIAL MELTDOWN WATCH....A while back I was wondering who was left to bail out, now that we'd announced plans to take care of big banks, little banks, investment banks, and Fannie and Freddie. Insurance companies? Hedge funds? Today we learn the answer:

The Treasury Department is dramatically expanding the scope of its bailout of the financial system with a plan to take ownership stakes in the nation's insurance companies, signaling new concerns about a sector of the economy whose troubles until now have been overshadowed by the banking industry, government and industry sources said.

Anybody else?

The availability of U.S. government cash in the middle of a global credit squeeze is drawing requests from insurance firms, auto makers, state governments and transit agencies. While Treasury intended for the program to apply broadly, the growing requests could put a strain on the $700 billion, a sum that only last month stunned lawmakers.

Meanwhile, in the spirit of the world catching a cold when America sneezes, emerging markets, which had almost nothing to do with causing the financial crisis, are going to pay an even steeper price than us:

In Hong Kong, the Hang Seng fell 8.3 percent to 12,618. Markets in India, Thailand, Indonesia and the Philippines were also down sharply as investors bailed from emerging markets around the world to cut their exposure to risky assets and meet redemption needs at home. On Thursday, key indices in Russia, Brazil and Mexico also fell.

"Funds are pouring out of emerging markets," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "A lot of money that flowed into the region during the last five years from the U.S. and Europe is being cashed out. The global crisis has come to Asia."

It's sort of like global warming: we cause the problem, but poor countries suffer the brunt of the consequences.

'Yes on 8' Blackmail Won't Stop Corporate Opposition

In case you haven't heard, right-wingers and religious zealots have worked themselves into a tizzy supporting Proposition 8, which would...

| Fri Oct. 24, 2008 6:55 PM EDT

In case you haven't heard, right-wingers and religious zealots have worked themselves into a tizzy supporting Proposition 8, which would change the California constitution to say marriage is only between a man and a woman. There are even reports that Yes on 8 folks sent threatening letters to 30 companies who donated to No on 8. In the letter, Yes on 8 said that if the companies didn't give them the same amount of money, they would publish their names.

Obviously not fearing a large-scale boycott from the Mormon Church, Steve Jobs and company have spoken out against Proposition 8. From Apple's home page:

Apple is publicly opposing Proposition 8 and making a donation of $100,000 to the No on 8 campaign. Apple was among the first California companies to offer equal rights and benefits to our employees' same-sex partners, and we strongly believe that a person's fundamental rights — including the right to marry — should not be affected by their sexual orientation. Apple views this as a civil rights issue, rather than just a political issue, and is therefore speaking out publicly against Proposition 8.

Other major corporations who have publicly opposed Proposition 8 include Google, PG&E, Levi Strauss, and Clear Channel. If Yes on 8 folks want to organize a boycott, they'll have to do it without Google's search engine, Apple computers, or PG&E's electricity and phone services. The No on 8 have no similar technological limitations, and have even issued a cheeky set of "I'm a Mac; I'm a PC"-style commercials.

—Steve Aquino and Jen Phillips

eBay to Ban Sale of Ivory After Damning Report

eBay announced this week that it would ban all sales of elephant ivory on its site after the International Fund for Animal Welfare (IFAW) reported (.pdf) that eBay auctions account for nearly two-thirds of the global trade in endangered species. The animal-rights group tracked 7,000 online listings in 11 countries, cross-referencing the names of animals on endangered species lists with product keywords like trophy,...

| Fri Oct. 24, 2008 6:30 PM EDT

elephant.jpgeBay announced this week that it would ban all sales of elephant ivory on its site after the International Fund for Animal Welfare (IFAW) reported (.pdf) that eBay auctions account for nearly two-thirds of the global trade in endangered species.

The animal-rights group tracked 7,000 online listings in 11 countries, cross-referencing the names of animals on endangered species lists with product keywords like trophy, oil, claw, and rug. The amount of trade in the US, they said, was ten times higher than the next-highest countries, China and the UK. Nearly 75 percent of trades were in elephant ivory; another 20 percent were exotic birds. Primates, cats, and other animals made up the difference.

Part of what's so insidious about online trading is how difficult it is to police. The sheer volume of auctions on big sites like eBay, where close to $2,000 worth of goods changes hands every second, makes it hard to verify every seller's claims. So, for example, a seller who claims his ivory earrings are "pre-ban"—made from ivory obtained before the US banned such imports in 1989—covers his back legally, but may not have documentation to back up his claims.