Monday, October 15, 2012

Today's links

1--Iraq slouches towards Moscow, antiwar

Moscow's arms market in Iraq was disrupted when the U.S. invasion overthrew Saddam. But now the current Iraqi government of Nuri al-Maliki has concluded a contract to buy Russian arms worth more than $4.2 billion, according to a joint statement issued after negotiations between Maliki and Russian prime minister Dmitri Medvedev. The deal features attack helicopters and surface-to-air missile systems. Further discussions under way between Russia and Iraq aim at additional arms sales that would include MiG-29 fighters, more helicopters and other heavy weaponry. The Russians of today, like the Soviets of yesteryear, do not seem to have any of the compunctions, which sometimes figure into American deliberations about arms exports, including to Iraq, about the recipient's human-rights record or other political conditions in the recipient country. It is not out of the question for Russia to replace the United States in the foreseeable future as Iraq's largest arms supplier.

We can draw several implications from this news. One is that it fills in further the picture of what legacy was left in Iraq by the U.S. war that ousted Saddam. The regime that emerged from the rubble is not only increasingly authoritarian and narrowly sectarian and not only chummy with Iran; it also is becoming a client of Moscow. A trifecta of failure.

2--We are not withdrawing from Afghanistan, antiwar

Clinton announced the appointment of Ambassador James Warlick, deputy special Representative for Afghanistan and Pakistan, to lead the negotiations for an agreement that would keep U.S. troops in Afghanistan for an undefined period of time. Reportedly, “Western officials have mentioned the residual American force as ranging from a few thousand to some 20,000.” In addition, some U.S. policymakers assume that Afghanistan will serve as hub for special operations raids and drone strikes into Pakistan.
Actually, a similar deceit is being peddled about Iraq. The Obama campaign constantly claims that they ended the Iraq war and brought all the troops home. In fact, they tried desperately to keep thousands of troops there, and simply got kicked out – only then deciding to pick up this narrative of ending the occupation.
But even that aside, the claim that “we left” is not true. As Zenko writes, “The United States currently has 225 troops, 530 security assistance team members, and over 4,000 contractors to equip and train Iraqi security forces.” And it’s worth remembering these Iraqi security forces we’re training have essentially been used as a secret police force for the increasingly authoritarian Maliki to attack, detain, and torture his political opponents and crack down harshly on public dissent.
In political campaigns, politicians can talk all they want about a full US withdrawal of Afghanistan. But technocrats have long admitted publicly that there will be no withdrawal

3--Iraq records huge rise in birth defects--New study links increase with military action by Western forces, Independent

4--Year over year hourly earnings increase smallest ever, zero hedge

5--IMF does a 180, macrobusiness

So has the IMF suddenly woken up the fact that demanding every government slash spending and raise taxes is, in many cases, counter productive because they have underestimated the fiscal multiplier in government spending ? No this isn’t new. As I noted back in August 2011, the IMF along with its new President have been well aware for some time that their theories on expansionary fiscal contraction have underestimated the negative effects of attempting government sector austerity at a time of private sector de-leveraging, specifically in a fixed currency environment.
Ms Lagarde is finally vocalising what many critics, such as myself, have been arguing since the crisis began. Tightening fiscal policy in the absence of increased private sector investment or external surpluses leads to weaker growth, which in turn worsens public finances further. Without external debt relief and/or the ability to externally devalue this becomes a spiral downwards as domestic retrenchment adds to this counter-productive dynamic. I discussed this in detail here.
 
 
7--Why Chavez won, counterpunch
 
The reasons for Chavez’s victory are not mysterious”, says Jeffrey Webber, a professor of politics and international relations at Queen Mary, University of London. “There have been important reductions in income poverty, and wide-scale improvements in access to health care, education, housing, and pensions through increases in social spending via the multiplicity of new social programs called missions.” Research shows that Venezuela cut poverty in half between 2003 and 2008, with extreme poverty falling by 72%.vii Inequality has also fallen dramatically. The BBC reports that Venezuela is now “the most equitable” country in the region.viii In addition to the material improvement felt by millions of Venezuelans, Chavez’s policies have produced a sense of dignity for the poor. According to Myriam Gimenez, the director of Mision Cultura in the Venezuelan state of Lara, “Life has changed substantially for our people because this process has given society a place to speak, to study, to work, to struggle. Now we know that we’re living, that we’re worth something, and that we can have hope of a dignified life and country”.
 
Venezuela’s impressive social programs were made possible by the country’s phenomenal economic growth between 2003 and 2008, when the economy grew at an annual rate of 13.5%, the highest in Latin America and one of the highest in the world.ix Critics are fond of pointing out that this growth spurt coincided with historically high oil prices, but ignore the key role that Chavez played in resurrecting OPEC in the late 1990s (which led to the rapid rise in the price of oil). Critics are also fond of pointing out that Venezuela’s economic performance plummeted in the wake of the 2008 global economic crisis. But the country has recently bounced back. “While entering into recession in 2009 as a result of the global crisis, the Venezuelan economy resumed growth over the last two-and-a-half years, reaching 5.6 percent in the first trimester of 2012,” says Webber. This is due to the type of deficit spending that, despite being maligned by The Economist, Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman argue the US (and Europe) should have pursued more vigorously over the last several years.

8--Home sales drop 15% in September as prices rise, CBC News

9--Canadian housing peers over the edge, Globe and Mail

10--George Osborne's austerity is costing UK an extra £76bn, says IMF
 
George Osborne's drastic deficit-cutting programme will have sucked £76bn more out of the economy than he expected by 2015, according to estimates from the International Monetary Fund of the price of austerity.

Christine Lagarde, the IMF's managing director, last week caused consternation among governments that have embarked on controversial spending cuts by arguing that the impact on economic growth may be greater than previously thought.

The independent Office for Budget Responsibility implicitly used a "fiscal multiplier" of 0.5 to estimate the impact of the coalition's tax rises and spending cuts on the economy. That meant each pound of cuts was expected to reduce economic output by 50p. However, after examining the records of many countries that have embraced austerity since the financial crisis, the IMF reckons the true multiplier is 0.9-1.7.

Calculations made for the Observer by the TUC reveal that if the real multiplier is 1.3 – the middle of the IMF's range – the OBR has underestimated the impact of the cuts by a cumulative £76bn, more than 8% of GDP, over five years. Instead of shaving less than 1% off economic growth during this financial year, austerity has depressed it by more than 2%, helping to explain why the economy has plunged into a double-dip recession.

Labour seized on the IMF's intervention as a vindication of shadow chancellor Ed Balls's argument that the cuts programme is self-defeating. "The IMF's analysis should be a wake-up call for David Cameron and George Osborne," said the shadow chief secretary to the treasury, Rachel Reeves. "It's time the prime minister and the chancellor listened to the evidence, accepted their plan isn't working and changed course."

11--Housing hampered by struggling job markets, Housingwire

Most key housing markets are in recovery mode, but industrialized areas plagued with falling employment numbers continue to deal with distressed assets, Realtor.com, the website run by Move Inc., said in a new September survey of U.S. housing markets.
List prices are still below 2007 peaks, but areas such as California, Seattle and Phoenix are experiencing a recovery while parts of the Midwest and Northeast deal with a lack of jobs and declining manufacturing sectors.
Housing inventory across the U.S. remained at historic lows with only 1.8 million units up for sale in September.
The median list price is slightly higher than a year ago, coming in at $191,500, and the median age of the inventory has fallen by 11.21%.
"Lower inventories, combined with somewhat higher median list prices, suggest that the housing market ending the 2012 home-buying season is in better shape than it was a year ago," Realtor.com said.
The total number of listings, which stands at 1.8 million, is now down 17.7% from last year and 2.19% from August. Today, inventory is staying on the market 95 days on average, which is up from August but down significantly from last year.
With areas such as the Midwest and industrialized cities remaining the hardest hit areas, the housing problem is beginning to look more like a jobs problem based on data released in the report.
"These patterns suggest that the underlying nature of the country's housing problems has changed," Realtor.com said. "What began as a collapse of a housing bubble fueled by poor underwriting and toxic mortgage products has evolved into a housing recession that primarily reflects continued weaknesses in local economies."
The report's findings suggest that as economists mull over the housing economy, the lackluster jobs recovery — or areas with drying economic activity — are what is driving the remaining depressed markets.

12--California leading U.S. out of housing bust it started, south coast today

13--Who was Leon Trotsky? , understanding society

14--US housing update: shrinking inventories, sober look

The median sale price has risen mainly for two reasons. First, higher demand, triggered largely by ultra-low mortgage rates, has coincided with a dwindling supply of homes for sale. Second, there’s been a big change in the types of homes selling this year. Far fewer are heavily discounted foreclosures, and many more are mid- to high-end move-up properties.

15--Cracks in the Profit Facade…., prag cap

16--MLS inventory is NOT coming as foreclosure filings dry up, OC Housing News

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