Monday, November 10, 2014

Today's Links

Today's Quote:  "
As unequal as the US was before the Great Recession, the crisis, and the way it has been managed, has led to even greater income inequality, making recovery all the more difficult. The US is setting itself up for its own version of a Japanese-style malaise.


But there are ways out of this dilemma: strengthening collective bargaining, restructuring mortgages, using carrots and sticks to get banks to resume lending, restructuring tax and spending policies to stimulate the economy now through long-term investments, and implementing social policies that ensure opportunity for all. As it is, with almost one-quarter of all income and 40 per cent of US wealth going to the top one per cent of income earners, the US is now less a "land of opportunity" than even "old" Europe." Joseph Stiglitz


1---CIA "bumper Crop"; The Empire of Chaos and the War on Drugs, RIA Novosti


The Taliban had tried to eradicate opium cultivation and heroin trafficking. Following their overthrow, both resumed with a vengeance.  Western writers frequently lament the endemic criminality and corruption in present-day Afghanistan. The fact that this is the obvious consequence of US support for drug traffickers and criminals who are now in power is never mentioned.....


Many people are vaguely aware that cocaine production and trafficking took off in Columbia in the 1970s and 1980s at a time when the right-wing pro-US Columbian government was fighting a counterinsurgency war against a left-wing guerrilla movement known as the FARC and that this war continues to this day. Some people also know that the government in this war is supported by right-wing paramilitaries. Very few, however, know that the Colombian drugs cartels and the right-wing paramilitaries are the same people.  ....


What even fewer people know is that, repeating the pattern of what happened in southeast Asia in the 1960s and in Afghanistan in the 1980s, what caused the Latin American cocaine trade to explode was the CIA’s involvement in it.  In the 1980s the CIA formed an alliance with the Colombian drugs lords to support the Contras, the right-wing insurgency the CIA supported to overthrow the left wing Sandinista government in Nicaragua.  With CIA encouragement, the Contras themselves became heavily involved in the cocaine trade, as did the various right-wing paramilitary groups the CIA was simultaneously supporting in El Salvador during the civil war there.  The key transit corridor of these Colombian drugs was Mexico, where the individual who controlled the cocaine trade was Miguel Gallardo, a gangster who is now acknowledged to have been a CIA asset.  Gallardo is the acknowledged godfather of all the various vicious Mexican drug cartels that have proliferated in Mexico ever since, which have reduced parts of the country to a state of virtual war....


The CIA’s admission of its role in creating the modern cocaine trade is little known and barely acknowledged in the US.  A look at the present state of the heroin trade makes it grimly obvious that nothing has changed and that no lesson has been learned. Few people know that the major transit route for Afghan heroin to Europe is through the Balkans and specifically through Albania and Kosovo, Fewer people still know that this route is largely controlled by various gangsters and criminals, many of whom were involved in the Kosovo Liberation Army or KLA, which the US supported in the war against the Serbs in 1999.  Repeating what has happened in Afghanistan, following the war, some of these people under US protection are in power in Kosovo now.  Again paralleling Afghanistan, many western commentators lament the rampant corruption and criminality in Kosovo without ever mentioning the reason for it.


In the meantime, the latest reports say that the opium harvest in Afghanistan has broken all records. Given recent history, it is easy to see why this happened and why the US seems so insouciant about it.


2---Did Dominique Strauss-Kahn's attack on the dollar bring him to ruin?


Strauss-Kahn the IMF's pursuit of financial stability has included calls for a possible replacement of the dollar as the world's reserve currency. An IMF report from January 2011[26] called for a stronger role for special drawing rights (SDR) in order to stabilize the global financial system. According to the report, an expanded role for SDRs could help to stabilize the international monetary system. Furthermore, for most countries (except for those using the US dollar as their currency) there would be several advantages in switching the pricing of certain assets, such as oil and gold, from dollars to SDRs. For some commentators that amounts to a call for a "new world currency that would challenge the dominance of the dollar"...


Strauss-Kahn made comments that could be perceived as critical of global financial actors, in an interview for a documentary about the late-2000s financial crisis, Inside Job (2010). He said he had attended a dinner organised by former Treasury Secretary Henry Paulson in which several CEOs of 'the biggest banks in the U.S' had admitted they (or perhaps bankers in general) were 'too greedy' and bore part of the responsibility for the crisis. They said the government "'should regulate more, because we are too greedy, we can't avoid it.'" Strauss-Kahn said he warned the officials of a number of departments of the U.S. government of an impending crisis. He also said: "At the end of the day, the poorest – as always – pay the most."[33]


Referring to his diplomatic efforts to secure IMF aid for Europe following the 2010 sovereign debt crisis, economist Simon Johnson described Strauss-Kahn as "Metternich with a BlackBerry".[34][35] In May 2011, referring to the IMF's change of heart in favour of progressive rather than neoliberal values, Joseph Stiglitz wrote that Strauss-Kahn had proved himself to be a "sagacious leader" of the institution.[36] Following Strauss-Kahn's arrest for sexual assault in New York, economist Eswar Prasad said that should he be forced to step down, the IMF "will find it hard to find as effective and skilful an advocate for keeping the institution central to the global monetary system".[34]...


On 14 May 2011, a 32-year-old maid, Nafissatou Diallo,[61][62] at the Sofitel New York Hotel alleged that Strauss-Kahn had sexually assaulted her after she entered his suite.[63]
Strauss-Kahn was formally indicted on 18 May and granted US$1 million bail, plus a US$5 million bond, the following day. He was ordered to remain confined to a New York apartment under guard.[64] A semen sample was found on the maid's shirt, and on May 24 it was reported that DNA tests showed a match to a DNA sample submitted by Strauss-Kahn.[65] He was arraigned on June 6, 2011, and pled not guilty.[66] On June 30, 2011, the New York Times reported that the case was on the verge of collapse because of problems with the credibility of the alleged victim, who had, according to sources within the NYPD, repeatedly lied since making her first statement.[67] According to prosecutors, the accuser admitted that she lied to a grand jury about the events surrounding the alleged attack.[68] Diallo said that the translator misunderstood her words.[69][70] Strauss-Kahn was released from house arrest on 1 July.[71]



3--Krugman: Wages flat along with consumption, NYT
No pressure to raise rates

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4---More part time workers since 2008, and they are making less, Wage Growth of Part-Time versus Full-Time Workers Atlanta Fed

One of the defining features of the recovery from the Great Recession has been the rise in the number of people employed part-time. As reported by the U.S. Bureau of Labor Statistics, roughly 10 percent more people are working part-time in September 2014 than before the recession. Part-time workers generally earn less per hour than full-time workers, so lower hours and lower per-hour earnings both contribute to their lower incomes.

Macroblog_2014-11-07_chart1
Overall, we find that part-time workers as a group appear to experiencing a lower average wage growth rate than full-time workers during the recovery from the Great Recession. Education matters for wage growth, but the pattern of lower wage growth for part-time workers persists for people with broadly similar educational attainment. 

5---Housing Market Headwinds, SF Fed

Lending standards for subprime and nontraditional mortgages, however, have not eased to the same extent and had actually tightened again until recently.

Figure 1 Funding sources for new mortgages
Funding sources for new mortgages
Sources: Black Knight Data & Analytics and authors’ calculations
(The banks are taking the best customers for themselves)
The bottom blue-shaded section represents the percentage of privately funded loans with no government guarantee, including those from banks and private-label securitizations, that is, pools of mortgage loans that are not owned or guaranteed by government-sponsored enterprises like Fannie Mae or Freddie Mac. This group of mortgages currently makes up just under 20% of total loans. Although this is low by historical standards, the share has been growing since early 2013. Most of this increase stems not from a revival in the private-label mortgage-backed security market, but rather from an increased share of new jumbo loans that banks have retained on their balance sheets. Jumbo mortgage borrowers typically have strong credit histories, so this development is consistent with the survey result that suggests credit access has improved for prime borrowers....


Conclusion
In this Economic Letter we have described how constrained access to credit has been a lingering obstacle to the housing recovery. The signs of progress remain uneven. On one hand, banks appear more willing to hold a larger share of jumbo mortgages on their balance sheets than they were following the housing bust. However, we find little evidence that credit access has improved much for borrowers with lower credit scores. This uneven access to credit appears even in markets where economic conditions are relatively favorable to increased housing activity.


6--Republicans "Extremely Concerned" At Mel Watt's Taxpayer-Backed Risky-Home-Loan Reforms, zero hedge


When we commented on Mel Watt's Einsteinianly-insane plans to reform FHFA, allowing bad creditors to buy houses (again) with only 3% down-payments (again), we expected nothing but echoes as the "it's everyone's 'right' to own a home"-meme gets played out for all to see in this goldfish-like societal memory that has entirely lobotomized the actions (and impact) of when this idiocy was trued before. However, a funny thing happened this week... called an 'election'. And The Republicans have been quick to take note of Obama-appointee Mel Watt's (replacing acting director Ed Demarco - who had some less-politik plans for real reform) plans with House Financial Services Committee Chairman Jeb Hensarling exclaiming he was "extremely concerned," about Watt's "efforts to force taxpayers to back high-risk mortgages with ultra-low down payments," concluding this plan "must be rejected."...


Mel Watt: "the fact that home prices are still low in many locations, and the fact that interest rates are low, now is a great time for realtors to be actively encouraging their customers who can afford it to become homeowners.

I also announced recently that the Enterprises are working to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95 and 97 percent.  As I said earlier, there are creditworthy borrowers in today’s market who have the income to afford monthly mortgage payments but do not have the money to make a large down payment and pay closing costs.  Purchase guidelines that allow for 3 percent down payments will provide an opportunity for access to credit for some of these borrowers.
...


Jeff Hensarling says: " Watt said Fannie Mae and Freddie Mac will seek to back loans with down payments as low as 3%.

"I am extremely concerned about Director Watt's efforts to force taxpayers to back high-risk mortgages with ultra-low down payments as little as 3%," Hensarling said in a statement.

"Such loans are inherently risky because the borrower has almost no financial cushion against a personal or economic downturn, vastly increasing the likelihood they will walk away from the loan once it gets significantly underwater," he added.

Hensarling continued to assail Fannie Mae and Freddie Mac as poorly functioning relics of an earlier age in mortgage finance.

"Since their spectacular collapse in 2008, Fannie Mae and Freddie Mac have continued to exist only through the massive financial support of taxpayers and a strict focus on sound underwriting. To abandon that focus now is an invitation by government for industry to return slipshod and dangerous practices that caused the mortgage meltdown in the first place and wrecked our economy," he said.

Hensarling said the chief statutory obligation of the FHFA is to ensure the safety and soundness of the Fannie Mae and Freddie Mac.

"Clearly, this initiative is directly contrary to that mission, and must be rejected," Hensarling said.


7---The 6 most unusual and bearish features of the housing recovery, oc housing
 
8--Cost cutting and share buybacks drive stocks higher, but revenues flag, WSJ


Investors note that much of the growth in earnings since the financial crisis has come from deep expense cuts, leaving companies with stronger balance sheets and hoards of cash....


Another cause for worry has been the explosion in share buybacks. These purchases goose earnings per share by reducing the total amount of shares on the market. Critics say buybacks consume cash that could be invested in future growth opportunities.
In the third quarter, buybacks have boosted earnings per share at S&P 500 companies by 2.35%, the highest level in more than two years, according to Barclays.
“Companies to some extent are running out of tricks,” said Jack Rivkin, chief investment officer at Altegris Advisors LLC, which manages $2.39 billion.
....
“The easy cost cutting that has been done over the last five plus years is done,” said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management, which oversees about $25 billion. Mr. Donabedian said he is aiming to buy shares of companies with steady revenue streams, growing dividends and plenty of cash.


Though stocks remain far from bubble territory, they are expensive relative to historical levels. The S&P 500 is trading at 15.8 times analysts’ expected earnings for the next 12 months, versus the average of 14.1 over the last 10 years and the 13.5 of the last five.
The last time stocks were pricier than today, revenue growth was 7%, according to Jonathan Glionna, head of U.S. equity strategy at Barclays PLC, suggesting a period of more muted returns are likely on the horizon.
Meanwhile, companies are contending with a stronger dollar and the slowdown in Europe and in once-booming economies like China and Brazil.


The French Connection was set up after the Second World War by a group of French Corsican gangsters who during the war had served in the Carlingue, the French auxiliary arm of the Nazi German Gestapo.


9--Keynes derangement syndrome, Paul Krugman


One of my favorite quotes in economics comes from Frank Graham, who wrote that disorder is the sole substitute in social science for the controlled experiments of the natural sciences. What he meant was that drastic events, outside the normal run of experience, offer a much better way to test competing theories than day-to-day events, which aren’t too hard to shoehorn into various dogmas.
So it was with the global economic crisis, and especially the monetary policy response. Broadly speaking there were two views about what would happen when central banks hugely expanded the monetary base. On one side, those with a more or less Keynesian viewpoint saw this action as harmless at worst, possibly somewhat helpful, because they expected most of the new bank reserves to just sit there given near-zero interest rates. After all, that is what happened during Japan’s attempt at quantitative easing after 2001:
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On the other side, many people were quite sure that explosive inflation was just around the corner.




10--The IMFs evaluation of 2010 austerity , mainly macro


The Independent Evaluation Office of the IMF has recently published its assessment of the IMF’s Response to the Financial and Economic Crisis. In many ways the IMF’s advice at the time mirrored the way the policy response to the crisis actually evolved. In 2008 and 2009 it recommended fiscal stimulus, and that is exactly what some countries, notably the UK and US, did. In 2010 it dramatically reversed its advice, and recommended austerity. At the same time the UK, US and Eurozone switched to austerity.

This independent evaluation argues the 2010 switch was a mistake. Here are some key quotes from the report (paras 32-34):

“The IMF’s call for fiscal expansion and accommodative monetary policies in 2008–09, particularly for large advanced economies and others that had the fiscal space, was appropriate and timely.”

“IMF advocacy of fiscal consolidation proved to be premature for major advanced economies, as growth projections turned out to be optimistic. Moreover, the policy mix of fiscal consolidation coupled with monetary expansion that the IMF advocated for advanced economies since 2010 appears to be at odds with longstanding assessments of the relative effectiveness of these policies in the conditions prevailing after a financial crisis characterized by private debt overhang. In particular, efforts by the private sector to deleverage rendered credit demand less sensitive to expansionary monetary policy, irrespective of its ability to maintain low interest rates or raise asset prices. Meanwhile, a large body of analysis, including from the IMF itself, indicated that fiscal multipliers would be elevated following the crisis, pointing to the enhanced power relative to the pre-crisis environment of expansionary fiscal policy to stimulate demand.”

“Many analysts and policymakers have argued that expansionary monetary and fiscal policies working together would have been a more effective way to stimulate demand and reduce unemployment—which in turn could have reduced adverse spillovers. Waiting longer to shift to fiscal consolidation might also have allowed for less aggressive monetary expansion, with less negative side effects...

But at least we can be thankful that this IMF evaluation, untainted by political face saving or ideology, has given a clear verdict. The 2010 switch to austerity was a mistake. The conclusion is not qualified: it was a mistake in the UK, the US, and in the Eurozone as a whole


11--CIA "bumper Crop"; The Empire of Chaos and the War on Drugs, RIA Novosti


The Taliban had tried to eradicate opium cultivation and heroin trafficking. Following their overthrow, both resumed with a vengeance.  Western writers frequently lament the endemic criminality and corruption in present-day Afghanistan. The fact that this is the obvious consequence of US support for drug traffickers and criminals who are now in power is never mentioned.....


It is now generally acknowledged that these criminals used funds originally stolen by the Carlingue to set up the French Connection and did so with help from the CIA and the French secret service (the SDECE), which used them to fight the French Communist party, which during the Second World War had gained strong influence along the French Mediterranean coast, especially in Marseille.


Subsequently, during the French war in Indochina, the SDECE also turned to the French Connection to organise the heroin traffic, partly in order to fund its own operations against the Vietnamese Communists.  After the French left, this operation was taken over by the CIA, with opium poppies grown and processed in the area now known as the Golden Triangle by CIA-backed Chinese drug lords associated with the anti-Communist Kuomintang movement, which had ruled China before the 1949 Communist takeover.  The extent of collaboration between the US and the drug traffickers was so great that in the 1960s, the CIA was actually arranging flights to ship heroin from southeast Asia to the US.


The extent of CIA and SDECE collusion with the French Connection and with the Chinese drugs lords of southeast Asia was exposed in 1972 by the US historian Alfred W. McCoy in a seminal book The Politics of Heroin: CIA involvement in the Global Drug Trade (first edition 1973 and third edition 2003).


At the time of its initial publication, McCoy’s book was vigorously criticised by the CIA, which the publisher provided with the right to respond to the allegations.  These criticisms of the book were acknowledged to be weak and unconvincing and McCoy’s thesis is now accepted as true among mainstream scholars who are versed in the subject.




12--Ukrainian army bombing Malaysian MH17 crash site, ria novosti


The constant shelling by Ukrainian forces of the crash site of the fatal Malaysian MH17 Boeing plane in eastern Ukraine is hampering investigation into the crash, Russian President Vladimir Putin said Monday.
“Because it’s not [pro-independent supporters] but the opposite side that’s constantly shelling this territory and that is not allowing a full volume of work at the crash site,” Putin said during a meeting with Malaysian Prime Minister Najib Razak during the Asia-Pacific Economic Cooperation (APEC) summit in China.
“But in any case we welcome the fact that Malaysian experts have finally been allowed [into the crash site] for full participation in the investigation, and not just working with a so-called technical commission. I’m sure that our specialists can present their needed contribution into a full-fledged investigation into this tragedy,” Putin added.




13--A 3-Star General Explains 'Why We Lost' In Iraq, Afghanistan, NPR


14--What could go right: Iraq 3.0, NC


Though Prime Minister Haider al-Abadi chose a Sunni to head the country’s Defense Ministry and direct a collapsed Iraqi army, his far more-telling choice was for Interior Minister. He picked Mohammed Ghabban, a little-known Shia politician who just happens to be allied with the Badr Organization.
Even if few in the U.S. remember the Badr folks, every Sunni in Iraq does. During the American occupation, the Badr militia ran notorious death squads, after infiltrating the same Interior Ministry they basically now head. The elevation of a Badr leader to — for Sunnis — perhaps the most significant cabinet position of all represents several nails in the coffin of Iraqi unity. It is also in line with the increasing influence of the Shia militias the Baghdad government has called on to defend the capital at a time when the Iraqi Army is incapable of doing the job....


Washington clings to the most deceptive trope of Iraq War 2.0: the claim that the Anbar Awakening — the U.S. military’s strategy to arm Sunni tribes and bring them into the new Iraq while chasing out al-Qaeda-in-Iraq (the “old” IS) — really worked on the ground. By now, this is a bedrock truth of American politics. The failure that followed was, of course, the fault of those darned Iraqis, specifically a Shia government in Baghdad that messed up all the good the U.S. military had done. Having deluded itself into believing this myth, Washington now hopes to recreate the Anbar Awakening and bring the same old Sunnis into the new, new Iraq while chasing out IS (the “new” al-Qaeda)....


Understanding that Sunnis may not be fooled twice by the same con, the State Department is now playing up the idea of creating a whole new military force, a Sunni “national guard.” Think of this as the backup plan from hell. These units would, after all, be nothing more than renamed Sunni militias and would in no way be integrated into the Iraqi Army. Instead, they would remain in Sunni territory under the command of local leaders. So much for unity....


Meanwhile, despite the White House’s priority on training a new Syrian moderate force of 5,000 fighters, senior military leaders have yet to even select an officer to head up the vetting process that’s supposed to weed out less than moderate insurgents




15--The IMF's change of heart , Joseph Stiglitz
                            
The International Monetary Fund has realised that a nation's economic well-being depends on social equality and justice.

The annual spring meeting of the International Monetary Fund was notable in marking the Fund's effort to distance itself from its own long-standing tenets on capital controls and labour-market flexibility. It appears that a new IMF has gradually, and cautiously, emerged under the leadership of Dominique Strauss-Kahn...

Iceland showed that responding to the crisis by imposing capital controls could help small countries manage its impact. And the US Federal Reserve's "quantitative easing" (QEII) made the demise of the ideology of unfettered markets inevitable: money goes to where markets think returns are highest. With emerging markets booming, and the US and Europe in the doldrums, it was clear that much of the new liquidity being created would find its way to emerging markets. This was especially true given that America's credit pipeline remained clogged, with many community and regional banks still in a precarious position.


The resulting surge of money into emerging markets has meant that even finance ministers and central bank governors - who are ideologically opposed to intervening - believe that they have no choice but to do so. Indeed, country after country has now chosen to intervene one way or another to prevent their currencies from skyrocketing in value.


Now the IMF has blessed such interventions - but, as a sop to those who are still not convinced, it suggests that they should be used only as a last resort. On the contrary, we should have learned from the crisis that financial markets need regulation, and that cross-border capital flows are particularly dangerous. Such regulations should be a key part of any system to ensure financial stability; resorting to them only as a last resort is a recipe for continued instability.


There is a wide range of available capital-account management tools, and it is best if countries use a portfolio of them. Even if they are not fully effective, they are typically far better than nothing.
But an even more important change is the link that the IMF has finally drawn between inequality and instability. This crisis was largely a result of the efforts of the US to bolster an economy weakened by vastly increased inequality, through low interest rates and lax regulation - both of which resulted in many people borrowing far beyond their means. The consequences of this excessive indebtedness will take years to undo. But, as another IMF study reminds us, this is not a new pattern...


For progressives, these abysmal facts are part of the standard litany of frustration and justified outrage. What is new is that the IMF has joined the chorus. As Strauss-Kahn concluded in his speech to the Brookings Institution shortly before the Fund's recent meeting: "Ultimately, employment and equity are building blocks of economic stability and prosperity, of political stability and peace. This goes to the heart of the IMF's mandate. It must be placed at the heart of the policy agenda."


16---What Strauss Kahn said at Brookings and why he was destroyed, you tube
see: minute 3:50


17--More Strauss Kahn, global research


The IMF is not the main architect of these devastating economic reforms which have served to impoverish millions of people, while creating a “favorable environment” for foreign investors in Third World  low wage economies.


The creditor banks call the shots. The IMF is a bureaucratic entity. Its role is to implement and enforce those economic policies on behalf of dominant economic interests.
Strauss Kahn’s proposed reforms while providing a “human face” to the IMF did not constitute a shift in direction. They were formulated within the realm of neoliberalism. They modified but they did not undermine the central role of IMF “economic medicine”. The socially devastating impacts of IMF “shock treatment” under Strauss-Kahn’s leadership have largely prevailed...


Nicolas Sarkozy’s step father Frank G. Wisner II, a prominent CIA official who married his step mother Christine de Ganay in 1977 served as Deputy Executive Secretary of State under the helm of Cyrus Vance Senior, father of District Attorney Cyrus Vance Junior.
Is it relevant?


The Vance and Wisner families had close personal ties. In turn Nicolas Sarkozy had close family ties with his step father Frank Wisner (and his half brothers and sisters in the US and one member of the Wisner family was involved in Sarkozy’s election campaign).
It is also worth noting that Frank G. Wisner II was the son of one of America’s most notorious spies, the late Frank Gardiner Wisner (1909- 1965), the mastermind behind the CIA sponsored coup which toppled the government of Mohammed Mossadegh in Iran in 1953. Wisner Jr. is also trustee of the Rockefeller Brothers Trust.
While these various personal ties do not prove that Strauss-Kahn was the object of a set-up, the matter of Sarkozy’s ties to the CIA via his step father, not to mention the ties of Frank G. Wisner II to the Cyrus Vance family are certainly worth investigating. Frank G, Wisner also played a key role as Obama’s special intelligence envoy to Egypt at the height of the January 2011 protest movement.


18--Broken US promises lead to crisis in Ukraine, Eric Margolis


In secret, Gorbachev and Shevardnadze agreed to a deal with US President George H.W. Bush and his senior strategy officials: the Soviet Union would pull out of Eastern Europe and the Baltic. In exchange, the US vowed not to advance NATO into Eastern Europe or anywhere near Russia’s borders.


Equally important, Gorbachev refused to use force to keep the USSR together.
The Soviet leaders believed they had an ironclad deal. They did not.
The next three US administrations – Clinton, Bush II, and Obama – violated the original sphere of influence accord and began advancing US power east towards Russia’s borders. The most recent NATO foray was the overthrow of Ukraine’s pro-Russian government, a ham-handed act that nearly sparked World War III.


For imperial-minded Washington, the temptation to kick Russia while it was down and gobble up its former dominion was irresistible. Gorbachev was mocked in western power circles – and by many angry Russians – as a foolish idealist: “the Soviet Jimmy Carter.”
Today, 25 years after the fall of the Soviet imperium, US promises have been revoked. Washington appears determined to undermine the Russian Federation and further dismantle it. Washington sees Russia as a has-been, a minor power unworthy of respect or amity.


The Russians have actually be told to stop complaining because the Gorbachev-Bush deal was not put in writing, only oral. A naïve oversight by the Russians?
From retirement, Gorbachev bitterly watches all he strove for turns to ashes as his countrymen blame him for destroying the Soviet Union. Shevardnadze died in Georgia last July. The Cold War is back, to the joy of the triumphant Republicans in Washington.


Soon after the wall fell, I recall writing that unless the western allies and the Soviets came to a firm agreement of spheres of influence and a neutral zone in Middle Europe and the Baltic that a dangerous series of clashes was inevitable. We are now there.


19--A Marked Man: The speech that sealed Strauss Kahn's fate, IMF


At the end of his magnum opus, The General Theory, Keynes stated the following: “The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes”.
Not everyone will agree with the entirety of this statement. But what we have learnt over time is that unemployment and inequality can undermine the very achievements of the market economy, by sowing the seeds of instability. In too many countries, the lack of economic opportunity can lead to unproductive activities, political instability, and even conflict. ...


Because growth beset by social tensions is not conducive to economic and financial stability, the IMF cannot be indifferent to distribution issues. And when I look around today, I am concerned in this regard. For while recovery is here, growth—at least in the advanced economies—is not creating jobs and is not being shared broadly. Many people in many countries are facing a social crisis that is every bit as serious as the financial crisis.


Unemployment is at record levels. The crisis threw 30 million people out of work. And over 200 million people are looking for jobs all across the world today.
The jobs crisis is hitting the young especially hard. And what should have been a brief spell in unemployment is turning into a life sentence, possibly for a whole lost generation.
In too many countries, inequality is at record highs.


As we face these challenges, remember what we have accomplished. Under the umbrella of the G20, policymakers came together to avoid a financial freefall and probably a second Great Depression.
Today, we need a similar full force forward response in ensuring that we get the recovery we need. And that means not only a recovery that is sustainable and balanced among countries, but also one that brings employment and fair distribution.....


What must be done? First off, we need financial sector reform and repair, to put the banks back in the service of the real economy, and direct credit to small and medium-term enterprises—key drivers of employment and indeed of growth.
Obviously, a nurturing demand environment is a precondition for growth and jobs. While unemployment is so high, and with few signs of underlying inflationary pressures, monetary policy can be supportive.
What about fiscal policy? Advanced countries need to put fiscal positions on sustainable medium-term paths, to pave the way for future growth and employment. But fiscal tightening can lower growth in the short term, and this can even increase long-term unemployment, turning a cyclical into a structural problem. The bottom line is that fiscal adjustment must be done with an eye kept keenly on growth....


Countries need to work together on a host of issues, including financial sector regulation and cross-border resolution. They must cooperate on global rebalancing, where many emerging markets need to shift toward domestic demand, underpinned by a vibrant middle class. Without this, global growth will be lacking.

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