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Saturday, June 9, 2012

Banking Regulator: Congress Sides with Banks

According to Gary Gensler, head of the Commodity Futures Trading Commission, Congress stands with the big banks in the struggle to shield Americans from the risks and excesses of Wall Street. He pointed in particular to a proposal from the U.S. House’s Appropriations Committee to cut his agency’s funding by 12 percent. It is no accident in terms of the targeting that the CFTC had been given expanded powers by the Dodd-Frank Act in 2010. In particular, the agency was tasked with regulating the problematic $700 trillion market on derivatives—a task that dwarfs the agency’s regulatory power over futures. The question of what counts as a derivative was a magnet for bank lobbyists, and cutting the agency’s budget was one way to get Gensler’s attention—only he was pushing back in accusing Congress itself of being in the bankers’ corner.


                                   CFTC Chairman Gary Gensler staring down the big banks  

That the banking deregulatory movement had any traction at all after the financial crisis of 2008 is amazing, as is the fact that the banking lobbyists could use the U.S. House to propose staving a relevant agency. That the industry with a vested interest in rolling back regulations could have any influence over elected representatives—as if banks were citizens without being able to vote—was at the time an assumption that was generally taken for granted in the United States. Given the scale of the campaign contributions that the banks could make to candidates as well as to “independent” groups, it is no accident that the assumption was kept from being debated on the public airwaves. For the system to be less rigged, ordinary people would somehow have to question the engrained assumption themselves. This in turn assumes that the people are sufficiently educated to question assumptions on their own, so it is no accident that the U.S. House was also proposing cuts in education spending.

Source:

Alexader Eichler, “CFTC Head Gary Gensler: Congress ‘Sides With Wall Street’,” The Huffington Post, June 8, 2012. 

Friday, June 8, 2012

CNN’s Hosts: Off with Their Heads!


Hitting record-low ratings among total viewers and in the 25-54 age demographic, CNN had its overall lowest-rated month in April 2012 since August 2001. In May 2012, the network hit a 20-year low for total viewers during primetime viewing. Something had gone seriously wrong. Perhaps the easiest move when a company takes a nose-dive is to fire the top. Accordingly, Time Warner executives were thinking of replacing the president of CNN Worldwide. While taking off the top might make sense in government because the entire administration is apt to change, business firms tend to be more entrenched even when under new management.

In the case of CNN, the culprit may have been bad hiring decisions. If so, the solution would lie in replacing the staff who made the hires as well as the “personalities” hired. In an age of “media personalities” wherein opinion typically accompanies journalistic interviewing, it is only natural to hire people who have strong personalities. It is far less common to witness interviewees going after hosts in terms of their personalities. In May 2012, Donald Trump laid into Wolf Blitzer during an interview. The real-estate magnet told the journalist that the introduction was inappropriate, but then added a personal insult in remarking, but “that’s okay, because I’ve gotten to know you over the years.” It would appear that Trump and others “in the loop” having had years of experience with Blitzer had come to the conclusion that he could not be trusted. The general public—meaning the viewers—could only surmise on the accusation, knowing only the “on-screen” media personality.

Years before Trump’s revelation, I had already glimpsed a bit of the man behind the curtain when Blitzer wished everyone “a happy holiday and happy New Year.” The meaning of this statement struck me as suggestive of a Jewish prejudice against Christmas, as if the U.S. holiday were only the religious holiday celebrated by Christians. I also saw footage of Blitzer at a Hollywood event as he was desperately trying to get interviewed by a journalist.

My sense that CNN “stars” might be too self-absorbed got a shot in the arm when Piers Morgan admitted on-camera while covering Queen Elizabeth II’s sixty years on the state’s throne that he really wanted to be king. That was too much even for one of Morgan’s co-host, who said in exasperation, “Oh, Piers!” Strangely, he had previously said that he was glad to be a subject (of the Queen).  Might it be that pride in being a subject is really a subterfuge for a desire to be king? Piers’ imagining of himself as king of the island (an interesting fantasy, given that he had been implicated in the Murdoch hacking scandal) was revealing. Two days before, his coverage had been reduced to drawing attention to the rain—a constant refrain during the parade of boats. He even pointed out that there was water on his seat (as if any of the viewers cared). Moreover, he was careful to stress everything that was distinctively British, while generalizing everything American across fifty republics (Britain is one republic). My instinctive reaction was to ask, well then why don’t you stay over there? 

I was not at all surprised to learn of CNN’s low ratings. I suspected that even if viewers had not been aware of it, they had probably reacted in reaction to the arrogance of the major hosts. People were voting with their remote controls even if they couldn’t put their finger on what was behind their decisions. Rather than limit the change to the top brass at CNN, Time Warner executives would have been wiser to demand that the major “stars” of CNN be replaced en masse. Owning a subsidiary does not mean that oversight is limited to the subsidiary’s executive suite, at least if the parent company is being capably run.

Sources:

Rebecca Shapiro, “CNNConsidering Leadership Change in Wake of Ratings Woes: Report,” The Huffington Post, June 8, 2012.


Wednesday, June 6, 2012

Pressuring E.U. States: Leverage of the Debt Crisis


By mid 2012, the verdict was in on the German-led recipe for restoring states overwhelmed by public- or private-sector debt: Austerity is counter-productive in reducing government deficits. On June 6, 2012, the New York Times reported, “Prolonged austerity is making it harder, not easier, for governments like Greece to become self-reliant again.” Salaries and pensions in the private and the public sectors in the state had been cut by up to 50 percent, leaving Greece 495 million euros short of its revenue targets in the four months ending the previous April, according to the Greek Finance Ministry. With less cash, consumers had to reduce spending, leading thousands of taxpaying businesses to fail. Income expected from a higher, 23 percent value-added tax required by the bailout agreement fell short by around 800 million euros in the first four months of 2012. That is partly because cash-short businesses that were once law-abiding started hiding money to stay afloat, tax officials said.

The complete essay is at Essays on Two Federal Empires.

Sunday, June 3, 2012

The Wisconsin Recall Election: A Predictor of the U.S. Presidential Election?


According to Paul Abowd of the Center for Public Integrity (presumably not located in Wisconsin), the election to fill the governor’s office in the wake of Scott Walker’s recall “has become a referendum on the future of public sector unions.” That the union of teaching-assistant students at the University of Wisconsin in Madison refused to endorse Barrett precisely because he was not making collective bargaining rights a salient part of his campaign would suggest that Abowd had it wrong. Moreover, it is a mistake to read the election results in Wisconsin as a harbinger of things to come in the U.S. presidential election five months later in November 2012.

During his campaign, Barrett downplayed the public-sector union issue because he figured he already had his base, which had detested Walker for more than a year. Barrett was going for the independents who saw the recall petition as sour-grapes by a vocal interest group (the student union validating this judgment). Most tellingly, the teaching-assistant student-union had even refused to endorse the unions’ own favorite for Democratic nominee, Kathleen Falk, who had lost to Barrett in the primary by twenty points. Falk had promised not to sign any legislation until a bill restoring the public-sector unions' collective-bargaining rights is presented. You cannot get much more pro-union than that, and yet even THAT was not good enough for the graduate students at the University of Wisconsin in Madison (not THE UW, as there are other campuses!). At the very least, it would appear that the graduate school's admissions committees at the university in Madison could have been doing better in their decisions, at least in regard to assessing maturity and judgment. 

I count it as a good thing that Barrett’s position on restoring the Wisconsin government workers’ bargaining right was less “my way or the highway” than was Falk’s position because Barrett was evincing a more mature or seasoned approach to governance. In contrast, the teaching-assistants’ union can be read as evincing the self-defeating and immature rigidity of “my way or the highway.” The contending camps in Wisconsin’s Democratic Party reflected this difference of political culture between Milwaukee and Madison. Hence, the dynamic cannot be assumed to operate at the U.S. level.

Furthermore, Mitchell, a young fireman whose involvement in his union probably won him the Democratic nomination for Vice (or lieutenant) Governor (as an after-thought by most voters), was at the time both too young and inexperienced in terms of public office to occupy the second-highest office in the land, not to mention the highest. At an outdoor rally in a street-alcove after a motley march that took place in downtown Madison the day after the primary, Mitchell easily stood out in video of the event because he was the only person in the warm weather wearing a grey suit. His political inexperience really stood out as he could be seen walking through the crowd, insisting on shaking hands with people even as they were trying to listen to the speakers. Perhaps most tellingly, he bumped into at least one person who preferred to keep listening to the speaker rather than turn around to shake hands. I suspect that Mitchell was trying to be a "professional" politician in a very atypical (and thus inappropriate) context (i.e., the recall). This itself essentially disqualified him from the office he was seeking, especially because it was possible that had he won along with Walker, the young fireman could have found himself assuming the office of governor.

The quality of the Democrats’ choice for vice governor mattered particularly because Walker was being investigated at the time by U.S. and Wisconsin law-enforcement agencies for corruption while he had been chief executive of the County of Milwaukee. In Illinois, Quinn had become the head of state and chief executive of the government when "Blago" was impeached and removed from office for trying to sell Barak Obama's vacated U.S. Senate seat. Were Mitchell to have won even as Bartlett lost, the novice could have found himself eventually taking over for Walker. It is not at all advisable to have a political novice in the highest office in the land. I suspect that this factor weighed on independent voters.

It would be perfectly understandable, therefore, for Wisconsinites in favor of Barrett to have skipped the lieutenant governor race based on principle (i.e., putting the interest of the public good over partisanship), even if that could have resulted in the governor and lieutenant governor being of different parties. Because the lieutenant governor office has some important powers when the governor is not in Wisconsin, such a scenario would certainly not be optimal for Barrett supporters. Therefore, I believe the Democrats in Wisconsin dropped the ball in voting in the primary for a nominee for lieutenant governor. To be sure, they made a good choice in picking Barrett’s mature approach to restoring union rights over Falk’s “my way of the highway” mentality on the "single issue" of a union's bargaining rights. The refusal of at least one union in Madison to back Barrett further compromised the Democrats’ strength in defeating Walker.  These are idiosyncratic elements in the Wisconsin “recall election” that don’t project onto the U.S. as a whole. 

Most obviously, going into the recall election, the sitting governor (or president) of Wisconsin was a Republican whereas the sitting U.S. president was a Democrat. Also, whereas Mitchell was a political novice at the time (being plucked out of a fire department union), Obama’s VP was an experienced former U.S. Senator and VP. In terms of the parties, Barrett was not associated with Obama's weaknesses (e.g., Obamacare), and Walker did not have Romney's problems with conservatives. Indeed, some Obama supporters crossed over to vote for Walker--a fact that Obama no doubt had foreseen as he was staying away from campaigning for Barrett.


Moreover, the United States is not a state with a very large back yard. Given the heterogeneous political, economic, religious and social cultures of the republics in the U.S., it is not a good idea to simply project the results in Wisconsin on the U.S. as a whole. Furthermore, there are issues that are only relevant at the U.S. level, such as foreign policy. I must conclude that the U.S.-based media was being much too simplistic in regarding the Wisconsin race as an indicator of the “upcoming” U.S. elections. Lest all politics is local, the results of a U.S.-wide election can be viewed as a quilt of various majorities rather than as one huge aggregate. Yet reductionism to U.S.-level politics seems a preoccupation or obsession, at least for the major American media companies, as if the American republics existed only in so far as they contribute to U.S. races. I suspect that the culprit is American business more generally, as large corporations have found it cheaper to have one set rather than fifty sets of government regulations. Reducing American politics to the U.S. stage serves this purpose.

Sources:

Paul Abowd, “CPI: Wisconsin Recall Battle Is State’s Most Expensive Election,”MSNBC.com, June 3, 2012. http://openchannel.msnbc.msn.com/_news/2012/06/03/12026389-cpi-wisconsin-recall-battle-is-states-most-expensive-election?lite

Amanda Terkel, “Wisconsin Recall: Election Law Quirk Could Throw Governance Into Disarray,” The Huffington Post, June 3, 2012. http://www.huffingtonpost.com/2012/06/03/wisconsin-recall-quirk-election-law_n_1566400.html?show_comment_id=158844292#comment_158844292



Mubarak Convicted in Egypt: A Precedent?


On June 2, 2012, an Egyptian court sentenced former President Hosni Mubarak to life in prison for being an accomplice in the killing of unarmed demonstrators during the protests in the “Arab Spring.” The significance of this verdict in terms of human rights from an international standpoint lies in the fact that the accountability on a ruler was accomplished by his own citizens—meaning the country’s own court. Lest the International Criminal Court be reckoned as coming up short in terms of being able to arrest and convict sitting or former rulers of states, the verdict from Egypt says, in effect, there is an alternative. Governments can fortify the independence of their respective judiciaries such that public officials can be held accountable domestically. Under this scenario, the ICC would be of value to the world particularly if it could be fortified to step in where states do not have court systems strong enough to arrest and try a current or former ruler. In other words, we ought not forget the alternative of national courts when we bemoan the weaknesses of the ICC.

All this is not to say that national judiciaries should necessarily be relied on—at least until they are strengthened in their capacity as a check on military, legislative, and executive officials and even heads of state. In the Egyptian verdict, for example, although Mubarak and his interior minister received life sentences, many officials more directly responsible for the police who killed the demonstrators were acquitted, as was Mubarak on corruption charges. Furthermore, many lawyers said his conviction could be reversed on appeal. Accordingly, a prosecutor in the case announced an appeal would be made with a particular interest in convicting Mubarak’s sons of corruption and several police commanders of murder. The want of convictions against them triggered popular protests across Egypt after the verdict. Those protests signify a popular will that even high officials be held accountable within the country rather than just at the ICC. A judiciary should not depend on grass roots sentiment, however, so more evidently is needed before Egypt (and many other similar countries, no doubt) can be relied on to police their own officials on human rights abuses.

                While hearing the life-sentence verdict against him, Mubarak shows no remorse.    Reuters TV

At the time of Mubarak’s conviction (and that of Charles Taylor by a Sierra Leon court at the Hague the week before), the world could be excused for having the false hope that dictators would thereafter finally be held accountable for violating the human rights of others. The hope in such a default-made-real can be funneled into a renewed effort to strength the ICC and the independence of governments’ own judiciaries. In other words, a better world wherein even the most powerful rulers and their subordinates are held accountable even for “giving the order” could finally be visualized, and out of this mere glimmer of sight could come the final push toward that better world.

Sources:

David Kirkpatrick, “New Turmoil in Egypt Greets Mixed Verdict for Mubarak,” The New York Times, June 2, 2012. 

Alana Horowitz, “Mubarak Verdict To Be Appealed By Top Prosecutor,” The Huffington Post, June 3, 2012.