Posts filed under ‘Current Affairs’
Special Contacts Aided Release
By Glenn Kessler
Washington Post Staff Writer
Thursday, August 6, 2009
Former president Bill Clinton’s central role in the return of two journalists detained by North Korea has once again cast a spotlight on his vast web of financial and political contacts, a network that troubled senators who weighed whether to confirm his wife as secretary of state.
In the case of the detainees, Clinton tapped wealthy business people to execute a mission that, without a special federal waiver for the aircraft to travel to North Korea, would have been illegal. A few weeks ago, one of his business contacts had the ear of Hillary Rodham Clinton in her role as secretary of state, an uncomfortable reminder of the former president’s far-flung interests and associates.
The intersection of power and connections blurred the exact nature of Bill Clinton’s trip to North Korea. He agreed to meet with leader Kim Jong Il two days after North Korea called his wife a “primary schoolgirl” because she had likened the country to an unruly child. The Obama administration took pains to distance itself from the mission, though officials conceded they had repeated contact with North Korean officials in the days leading up to the trip to confirm the journalists would be released if the former president traveled to Pyongyang.
Hillary Clinton, who was touring Africa while images of her husband meeting with Kim flashed on television sets around the world, felt compelled to address the conflicting messages when she spoke with NBC from Nairobi on Wednesday. “I want to be sure people don’t confuse what Bill did, which was a private humanitarian mission to bring these young women home, with our policy, which continues to be one that gives choices to North Korea,” she said. “Our policy remains the same.”
But, in a sign that diplomatic benefits may flow from her husband’s missions, she averred, saying: “Perhaps they will now be willing to start talking to us.”
No taxpayer money was used to fund the trip, with the exception of the salaries of the Secret Service agents traveling with Clinton. But the former president procured aircraft and crews by tapping companies and contacts that have previously underwritten his endeavors. With some assistance from the Obama administration, he handpicked the team that would accompany him, according to sources involved in the planning.
Dow Chemical, which has contributed as much as $50,000 to the William J. Clinton Foundation, provided the plane that ferried the former president from his home in Westchester County, N.Y., to Burbank, Calif. There, he boarded an all-business-class Boeing 737 jet provided by wealthy Hollywood producer Steve Bing. Clinton was accompanied by a team that included John D. Podesta, who was his White House chief of staff, and a former State Department expert on North Korea.
Bing, who is one of the biggest donors to the Clinton Foundation, with gifts totaling $10 million to $25 million, will foot an estimated $200,000 bill for the fuel, the crew and other incidental expenses for the trip, said Marc J. Foulkrod, chairman of Avjet in Burbank, which manages the plane for the executive. Bing, who is also a major donor to Democratic causes, declined to comment on his involvement in the Clinton trip, a spokesman said, saying Bing does not talk to the media.
Foulkrod said the trip was especially difficult to arrange because Federal Aviation Administration regulations prohibit U.S.-registered aircraft from landing in North Korea. He said that the company received a call from Bing about the flight either late last Thursday or early Friday, and that it took “an unprecedented level of cooperation” from the FAA and the State Department to secure the necessary legal and diplomatic approvals in time for Monday’s departure.
The administration had wanted to send former vice president Al Gore to North Korea instead of Clinton; Gore is a co-founder of Current TV, which employs the journalists who were detained. But North Korean officials hinted that they wanted an envoy of Clinton’s stature, sources said.
The breakthrough in the standoff over the journalists — who were sentenced in June to 12 months of hard labor after being seized near the Chinese border in March — came on July 18, when the women told their families in a phone call that North Korean officials had clearly stated that they would be released if Clinton came to Pyongyang.
U.S. officials immediately began to verify that statement with North Korean counterparts, and on July 24 national security adviser James L. Jones asked Clinton to consider making the trip. One senior administration official said full assurances from Pyongyang were not secured until Sunday, the day the former president left Burbank on Bing’s jet. At the time of departure, U.S. officials knew that Clinton was scheduled to have a rare meeting with Kim.
Gore praised Bing at a news conference after the plane landed. “To Steve Bing and all the folks who have made the flight possible, we say a word of thanks, deep thanks, as well,” he said. The journalists thanked Bing and also Dow and Andrew Liveris, the company’s chief executive — who also is a member of the Clinton Global Initiative, another one of the former president’s projects.
Bill Clinton’s Rolodex is so vast that Hillary Clinton cannot help but bump into members of his network.
On her trip to India last month, she sat next to another one of her husband’s donors, Mukesh Ambani, during a meeting in Mumbai with a group of Indian business tycoons. The European subsidiary of Ambani’s Reliance Holdings contributed as much as $250,000 to the Clinton Foundation.
During the meeting, Ambani called for the establishment of joint institutions between the United States and India to develop “clean technology.” As it happens, the Clinton Foundation is in talks in India with the provincial government of Gujarat to create the world’s largest single solar-power project — and Reliance is also lining up solar projects in the state. Complicating matters further, Reliance is one of the biggest suppliers of refined gasoline to Iran and could be targeted under congressional efforts to cut off Iran’s supply of gasoline.
Bill Clinton in the meantime is not resting on his laurels. His office has announced that he and “leading drug manufacturers” will make “a major announcement” in Harlem on Thursday.
August 6, 2009 at 3:40 am
Let us have no lies
Jun 11th 2009
(Original article: Europe.view: Let us have no lies | The Economist)
Using the law to salve a guilty national conscience
YOU automatically lose an argument if you call the other person a Nazi, states an adage coined by Mike Godwin, a writer about the internet, in 1990. With that in mind, it is wise to proceed with caution when discussing analogies between the Holocaust and anything else. Yet as Russia’s draft law on criminalising challenges to the Stalinist version of history comes closer to reality, it is worth looking at the successes and failures of other attempts to make certain views of history illegal.
Germany, Austria and more than a dozen other European countries have laws that more or less ban “denial” of the Holocaust. Sometimes these are part of general prohibitions of Nazi activity. Sometimes they are more generally framed as anti-hatred laws.AFP
The proud sorrow of victory
How far that is justifiable in theory is debatable. Every country curbs free speech to some extent (look at American companies’ use of corporate libel laws, for example). Whether one particular set of sensitivities deserves more protection than another is a matter for public debate: if voters mind enough one way or another, the politicians will pass or repeal the laws concerned.
From that point of view, it is hard to quibble with Russia’s desire to protect and sanctify the memory of its millions of soldiers who fell in the fight against Nazism. As the western wartime allies wallow in nostalgia, it is worth remembering that more than ten times as many “Soviet” (admittedly a loose term) soldiers died in combat than British and American troops combined.
But it is also worth noting that Holocaust-denial laws have done little to restrict the pernicious myths peddled by those who think the Jews were the victors, not the victims, in the second world war. In fact, a bit of legal persecution is just what those advocating fringe history most want. They can argue that the authorities are trying to suppress the “truth” because they have no other answer to it. What is in reality little more than a bunch of quibbles, anomalies, loose ends and historical puzzles becomes a grand scheme of events, and thus more potent in attracting the gullible or prejudiced.
The best antidote to Holocaust denial is truth, such as the excellent nizkor.org, which provides a painstaking refutation of the mythmongers’ cases, backed up with meticulous documentation. (An enterprising group of researchers ought to provide a similar dossier to rebut the equally absurd claims of the 9/11 conspiracy theorists).
Of course, questioning the Stalinist version of history is not directly comparable to Holocaust denial. If anything, the label should be on the other side. When a Russian defence-ministry website can argue straightfacedly that it was Poland that started the second world war, it is hard to accept that the authorities in Moscow are really interested in nailing falsehoods, rather than—as they seem to be—promoting them.
But Poland has not responded by banning the import of modern Russian textbooks, or passing a law making the denial of the Katyn massacre (which Stalin ordered and then blamed on the Nazis) into a criminal offence.
Banning a particular version of history is usually a sign of a guilty conscience. In the case of continental Europe, it is to make amends for collaboration and perpetration during the darkest years of the last century. In Russia’s case, what should be a source of proud sorrow—the heroism of those who fought and defeated Hitler—is being used to cover up Stalin’s behaviour: both his bungling of the Soviet defences against Hitler’s attack, and before that conspiring with the Nazis to carve up the Baltics, Balkans and central Europe.
June 12, 2009 at 10:00 am
WASHINGTON Barely six months ago, the International Monetary Fund emerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisis hit.
Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape.
The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.
Treasury Secretary Timothy F. Geithner, who once worked at the fund, has called for its financial resources to be expanded by $500 billion, effectively tripling its lending capacity to distressed countries and cementing its status as the lender of last resort for much of the world.
Japan and the European Union have each pledged $100 billion; the United States has signaled it will contribute a similar sum, though its money will take longer to arrive because of the need for Congressional approval. China, with its mammoth foreign exchange reserves, is the next obvious donor.
Yet officials of China and other developing countries have served notice that they are reluctant to make comparable pledges without getting a greater say in the operations of the fund, which is run by a Frenchman, Dominique Strauss-Kahn, and is heavily influenced by the United States and Western Europe.
A senior Chinese leader, Wang Qishan, said Friday that Beijing was willing to kick in some money, but he called for an overhaul of the way the fund is governed. China wants its quota which determines its financial contribution and voting power adjusted to reflect its economic weight better.
China’s contribution, Mr. Wang said, should not be based on the size of its reserves but on its economic output per person, which is still modest. Some American officials now expect a pledge on the order of $50 billion from China.
“Their arms may yet be twisted, but they simply do not want to pony up based on vague promises of governance reform,” said Eswar S. Prasad, a professor of economics at Cornell University who has discussed the matter in recent days with Chinese and Indian officials.
Given the inevitability that these countries will have a growing influence, the London summit meeting, which begins Thursday, is likely to be remembered “as the last hurrah for the U.S. and Europe rescuing the world economy,” said Simon Johnson, a professor at M.I.T. and a former chief economist of the fund.
One reason the I.M.F. has emerged as such a popular cause is that the United States has been unable to rally countries behind its other major priority: economic stimulus. The European Union opposes further stimulus packages in 2010, arguing that its social safety net makes an increase in government spending unnecessary.
European and American officials are also still divided, to a lesser degree, on how to rewrite international financial regulations. France and Germany are more receptive than the United States to giving regulators supranational authority to scrutinize global banks and other financial companies.
“The United States is desperately trying to assert leadership, as if it were 10 years ago, when the U.S. set the agenda,” said Kenneth S. Rogoff, an economist at Harvard and another former chief economist of the fund.
With more countries slipping into crisis by the week, there is general agreement that the fund needs additional resources. Since last year, the I.M.F. has made nearly $50 billion in loans to 13 countries. It is streamlining the process for making loans and loosening its strings, hoping to counter the resentment that built up against it during past crises because of its stringent demands.
At a preparatory meeting two weeks ago, finance ministers of the Group of 20 agreed to “very substantially” increase financing, though the Europeans favored an extra $250 billion, not $500 billion.
Whatever their reservations about financing, the Chinese have seized on the fund for another purpose: to tweak the United States. The governor of China’s central bank, Zhou Xiaochuan, recently proposed that the American dollar be phased out as the world’s default reserve currency. As a replacement, he suggested using special drawing rights, or S.D.R.’s, the synthetic currency created by the fund that is used for transactions between it and its 185 member countries.
Few economists view that idea as a realistic one, at least for years to come. But the mere assertion that the dollar’s pre-eminence is waning a theme picked up by Russian officials as well sends a message.
“I don’t think the Chinese or Russians really believe the S.D.R. is a viable currency,” said Mr. Prasad, the Cornell economist. “But they’re laying down a very clear marker that they’re going to be much more assertive about their role.”
Mr. Geithner took the remarks seriously enough that he publicly reaffirmed the primacy of the dollar.
The United States will address China’s status this week, when it announces details of a new high-level strategic and economic dialogue with Beijing, led by Mr. Geithner and Secretary of State Hillary Rodham Clinton, according to a senior administration official, who spoke anonymously because the information was not yet public. The announcement will come after the first meeting between President Obama and the Chinese president, Hu Jintao, in London.
The Obama administration has personal reasons to support the fund. Mr. Geithner was the I.M.F. director of policy planning from 2001 to 2003, after his first stint in the Treasury Department. He recruited Edwin M. Truman, another former Treasury official and a longtime advocate of the fund, as a temporary adviser to develop policies for the Group of 20 meeting.
Just before leaving his academic position at the Peterson Institute for International Economics, Mr. Truman proposed that the fund issue $250 billion in S.D.R.’s on a one-time basis to be allocated to all its members, as another way of increasing its resources. Western European countries, he said, could use their S.D.R.’s to lend money to their troubled Eastern neighbors.
That proposal is in a current draft of the statement to be issued at the Group of 20 meeting. If all the American proposals for the fund are adopted, its resources will approach $1 trillion a big number, even in these extraordinary times.
Yet for Mr. Johnson of M.I.T., it merely shows how difficult it is for the United States to marshal support for anything else.
“They can’t agree on fiscal policy; they can’t agree on regulations,” he said. “The only thing left is the I.M.F.”
March 30, 2009 at 6:47 am
Thursday, Mar. 26, 2009
By Massimo Calabresi / Washington
Since the first, dramatic interventions into the financial system by the Treasury Department and the Federal Reserve during the collapse of Bear Stearns a year ago, Timothy Geithner has based his approach on one underlying theory. The crisis, the former New York Fed president and now Treasury Secretary believes, is the result of the collapse of a shadow banking system that grew over the past 30 years to rival the traditional banking system in size but lacked all four of the safeguards that had been imposed after repeated collapses of the traditional system in the early part of the 20th century.
Geithner, his predecessor Hank Paulson, FDIC chief Sheila Bair and Fed Chairman Ben Bernanke have so far used ad hoc powers to erect two of those crucial four pillars. Last fall they introduced Fed-sponsored insurance for money-market deposits, the equivalent of the FDIC insurance that exists for regular bank accounts. At the same time, they opened Fed lending to financial-services companies, making the Fed the lender of last resort for those firms, just as it is for traditional banks. In the past two days, Geithner unveiled the final two safeguards that he, Bernanke and Bair believe will help to prevent a future widespread financial meltdown: the power to take control of collapsing companies to ensure their failure is orderly and not contagious, and a limit to the amount of risk and leverage that non-bank financial players can take on. (Read TIME’s Q&A with Sheila Bair.)
The power to seize financial firms that are on the verge of collapse is already the most controversial new provision. Under Geithner’s plan, the companies would have to be so big and in such bad shape that their insolvency could threaten the financial stability of the U.S.; if they are, the boards of the FDIC and the Federal Reserve, in consultation with the Treasury Secretary, could decide either to bolster them with financial assistance or to seize them and break them into parts.
“Do you realize how radical your proposal is?” Republican Congressman Donald Manzullo of Illinois asked Geithner during an appearance Thursday in front of the House Financial Services Committee. “You’re talking about seizing private businesses.”
Geithner argued that the power is needed to ensure that a floundering firm doesn’t start a domino collapse among other companies doing business with it, thereby posing what regulators call “systemic risk” to the whole economy. “This is a prudent, carefully designed proposal to protect our financial system,” Geithner said, arguing that if Treasury had had that power a year ago, it could have handled the collapses of Bear Stearns, Lehman and AIG very differently. Other Democrats said the power isn’t so radical at all; the FDIC already takes over traditional banks on the verge of collapse — when the agency decides a firm is on the brink, it steps in, cleans it up and then turns it loose. (Read about AIG’s deep impact.)
Though politicians on Capitol Hill have made less of it thus far, the other change that Geithner is seeking is even farther-reaching and arguably more controversial on Wall Street. As banks must do now, big hedge funds, private equity firms, insurance companies and others who play in the financial markets would have to open their books (on a confidential basis) regularly to government overseers. Hand in hand with that requirement would be much tougher limits on how much risk any financial firm could take, so that the days of making huge bets on the markets with relatively little in capital to back them up would be no more. And Geithner’s plan would also for the first time subject exotic financial-derivative products, like the credit-default swaps that took down AIG, to federal oversight and market transparency.
“Let me be clear,” Geithner told the committee. “The days when a major insurance company could bet the house on credit-default swaps with no one watching and no credible backing to protect the company or taxpayers must end.”
For all the complaining, Geithner is likely to get much of the authority he wants. The power he is asking for could be invoked only under explicitly prescribed circumstances, similar to those imposed by Republicans on the FDIC in the early ’90s, when it takes dramatic action in case of major banking crises. Though industry officials may gripe, Geithner’s fixes are little different from the rules that traditional banks already abide by (and make plenty of profits under). And even the GOP might not have as many philosphical objections as one would expect. On the same day that Geithner rolled out his proposals, House Republicans expressed support for a step the Obama Administration has so far resisted: turning to the FDIC, or an entity like the Resolution Trust Corporation used during the savings-and-loan crisis, to temporarily take over today’s failing big financial companies loaded down with toxic assets.
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March 27, 2009 at 4:09 am
Don’t Buy the Chirpy Forecasts
The history of banking crises indicates this one may be far from over.
From the magazine issue dated Mar 30, 2009
The good news from our historical study of eight centuries of international financial crises is that, so far, they have all ended. And we confidently predict this one will end, too. We are just not quite so sure it will be nearly as soon as the chirpy forecasts coming from policymakers around the globe. The U.S. administration, for example, is now predicting that growth will renew in the latter part of this year and continue at a brisk pace of 4 percent for several years thereafter. Is this a fact-based forecast or wishful thinking?
A careful look at the international evidence on severe banking crises suggests a far more cautious assessment. The recessions that follow in the wake of big financial crises tend to last far longer than normal downturns, and to cause considerably more damage. If the United States follows the norm of recent crises, as it has until now, output may take four years to return to its pre-crisis level. Unemployment will continue to rise for three more years, reaching 11–12 percent in 2011.
The news on housing prices and the stock market is arguably a little better, mainly because there has been so much damage already. The typical fall in inflation-adjusted stock prices is 55 percent, a benchmark the U.S. has more or less achieved. The typical decline in housing prices is 36 percent. According to some indicators, inflation-adjusted housing prices have already fallen roughly 30 percent. The bad news is that these down price cycles typically last for several years. So, even if the big hit on stocks and house prices has come already, the bottom might not be reached until the end of 2010.
These forecasts may seem somber, but so far the U.S. experience has mirrored past deep banking crises around the world to a remarkable extent. In our forthcoming book, “This Time Is Different: Eight Centuries of Financial Folly,” we compare the U.S. crisis with earlier banking-crisis episodes in Spain, Norway, Finland, Sweden, Japan, Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Thailand, Colombia and Argentina over the past three decades. It may seem like hyperbole to compare the United States with emerging markets, but hard evidence suggests it is not. True, rich countries are far less likely to face the prospect of sovereign default. (Why bother? Since rich countries can generally issue public debt in their own currency, they always have the option of reducing its value through inflation.) But, contrary to popular belief, banking crises tend to be far more of an equal opportunity menace. Indeed, a failure to recognize the historical vulnerability of rich countries to financial crises lies behind the incredible conceit of Anglo-American policymakers that their gold-plated financial systems were invulnerable.
British and U.S. financial regulatory frameworks did, in fact, have many strengths. But even a person who can handle a lot of stress will have a heart attack if she takes on too much. And that is exactly what happened under the weight of massive external borrowing. It is too bad, because had policymakers looked at standard warning signs of past financial crises, including the episodes we listed above, they would have realized the extent to which their economies were likely headed for a calamity.
Assuming the U.S. continues going down the tracks of past financial crises, perhaps the scariest prospect is the likely evolution of public debt, which tends to soar in the aftermath of a crisis. A base-line forecast, using the benchmark of recent past crises, suggests that U.S. national debt will rise by $8.5 trillion over the next three years. Debt rises for a variety of reasons, including bailout costs and fiscal stimulus. But the No. 1 factor is the collapse in tax revenues that inevitably accompanies a deep recession. Eight and a half trillion dollars may sound like a lot. It is more than 50 percent of U.S. national income. But if one looks at the Obama administration’s stunning budget-deficit projections, with exceedingly optimistic projections on growth and bank-bailout costs, we think the U.S. is right on track.
We have focused on the United States, because it is the epicenter of the crisis, and because the quantitative comparisons are so striking. But one could just as well have been looking at a host of other countries around the globe, most of which are swept up in the maelstrom.
Might things be better than our historical benchmark? Should we, like the group of 20 finance ministers meeting in London last weekend, keep believing in the possibility of sustained strong growth by the end of the year? Today’s fiscal and monetary policies are certainly a lot better than what the world saw in the Great Depression of the 1930s. On the other hand, the current crisis is far more global than any seen since the ’30s, when most countries took a decade to grow back to where they had started.
Financial crises don’t last forever. But this one could last a lot longer if policymakers don’t start basing their actions on more realistic assessments of where we are and what is likely still to come.
Reinhart is a professor of economics at the School of Public Policy at the University of Maryland. Rogoff is the Thomas D. Cabot professor of public policy and professor of economics at Harvard University.
March 23, 2009 at 8:55 am