Simon Johnson on Bill Daley's White House Appointment

From Baseline Scenario:

Bill Daley now controls how information is presented to and decisions are made by the president. Daley’s former boss, Jamie Dimon, is the most dangerous banker in America – presumably he now gets even greater access to the Oval Office. Daley is on the record as opposing strong consumer protection for financial products; Elizabeth Warren faces an even steeper uphill battle. Important regulatory appointments, such as the succession to Sheila Bair at the FDIC, are less likely to go to sensible people. And in all our interactions with other countries, for example around the G20 but also on a bilateral basis, we will pursue the resolutely pro-big finance views of the second Clinton administration.

Top executives at big U.S. banks want to be left alone during relatively good times – allowed to take whatever excessive risks they want, to juice their return on equity through massive leverage, to thus boost their pay and enhance their status around the world. But at a moment of severe financial crisis, they also want someone in the White House who will whisper at just the right moment: “Mr. President, if you let this bank fail, it will trigger a worldwide financial panic and another Great Depression. This will be worse than what happened after Lehman Brothers failed.”

Let’s be honest. With the appointment of Bill Daley, the big banks have won completely this round of boom-bust-bailout. The risk inherent to our financial system is now higher than it was in the early/mid-2000s. We are set up for another illusory financial expansion and another debilitating crisis.

Seeking Alpha: To Compete With China, Tax US Corporations

Marshall Auerback proposes an alternative to Tim Geithner's strong Yuan policy:

But the problem for U.S. industry is not just China. The country is now experiencing high wage inflation, and I think it is at the tipping point. Inflation erodes the real value of the currency, but this is not occurring with a sufficient degree of speed to reduce China’s massive trade surpluses, particularly with the U.S. It is possible, therefore, that Washington might ultimately contemplate the type of policy that it has hitherto not dared to consider ... namely, permanent taxes on corporations that produce abroad.

Outsourcing, after all, is the creeping source of unemployment and leads to the destruction of our industrial base. One policy response might be a substantial tariff on Chinese imports if Beijing refuses to contemplate a significant revaluation of the renminbi (RMB). (The RMB has actually been weakening again in the past few months, probably due to inflation problems.) The other possibility is a permanent tax on corporations that produce abroad. Since unemployment is the cause of the extended pay benefits provided by the government, it might consider permanently taxing the source of the unemployment: U.S. corporations producing abroad.

No Comment on President Obama's Tucson Speech

I didn't watch it.

I don't think it seems appropriate to exploit a tragedy for mere political advantage, while ignoring real problems posed by the dangerously mentally ill...

I believe Herbert Marcuse called this type of phenomenon "false consciousness."

Timothy Geithner, China, and Me...

This morning, thanks to a last-minute email invitation to Carey Business School faculty, I had the honor to listen to Secretary of the Treasury Timothy Geithner speak about China at the Johns Hopkins University Nitze School of Advanced International Studies auditorium.

He has the personality of a foundation executive, so far as I could tell, especially when he answered a question from the audience as to the respective importance of purely economic versus political decisions with this statement:

"All economics is politics."

Really?

If the Republicans were on the ball, they'd make this statement into Geithner's resignation letter. He confessed he has no faith in actual economic forces that are separate from political considerations, an ends justifies the means approach which spells more trouble to come. But I wouldn't count on them to pick up on it...

Geithner ended his event with a quick pitch for government service, as a SAIS alumnus, saying it's a "cool" thing to do. Not exactly, "Ask what you can do for your country." It was, though, the second most important statement of this morning--it revealed that America's future is going to be government jobs.

Unfortunately for Geithner, America isn't China, and I don't believe this is going to work.

Meanwhile the media insists the takeaway is that the Yuan must rise in value (Geithner mentioned a 20 percent figure from last decade in the Q &A). It seemed to me that he was saying Americans want China to follow the US economic policy of the past few years: increased domestic consumption and reduced exports. That led to the recession of 2009, as Geithner called it today. He claimed this is in China's interest, but it didn't convince me. Especially since Geithner wants the US to follow China's policy of increased exports and reduced consumption, with a greater role for government in the economy. I didn't see how that was in China's interest, either.

A reporter for China Radio International, with whom I spoke after the talk, thought it was aimed at a domestic American audience, to show that the Obama administration was getting tough on China. She said that President Hu Jintao's visit is about North Korea, since there has been no agreement--the US wants sanctions, while China wants 6-party talks.

The actual demands made on China--increased Yuan valuation, intellectual property protection, opening of markets and investments--were the same ones the US has been making for years. She said that Chinese would find that Geithner made a tough speech, which is not polite on the eve of a summit conference. If the US wishes to make China lose face, in the hopes that China will back down over Korea, currency, trade, or other issues, I wouldn't bet on it working.

I don't believe Geithner is the best man to lead a winning through intimidation strategy. He's just too small and unimpressive.

How tall did he look? Between 5'7" and 5'9" (though The Daily Beast says he's 5'5")--not the midget he appears to be on television, but not a very inspiring speaker. He has practically no gravitas. He admitted that he was not very good at economics (in a jokey way, but still...). He used stale sports metaphors about "first quarters," "second innings," and "game." When he answered questions, it looked like he was scanning talking points in his head.

Unfortunately, Geithner seemed incapable of original thought, bereft of new ideas, and no match for the leadership of the most dynamic economic country on the globe--one which certainly must believe that it now has the "mandate of Heaven" to pay back the West for "100 years of humiliation."

Let's hope the Obama administration has a Plan B.

Dr. E. Fuller Torrey: Arizona Killings Caused by Politics...of De-Institutionalization

Writing in today's Wall Street Journal, Dr. E. Fuller Torrey explains how the Tucson killings are a predicable result of a generation of politically inspired de-institutionalization of the mentally ill:

Mr. Loughner's delusions fixated on Arizona Congresswoman Gabrielle Giffords, one of 12 seriously injured in the shooting. Some have speculated on the possible relationship of our acrimonious political climate to the incident. It is, however, unlikely that there is any such relationship, since similar tragedies occur in politically harmonious times as well.

The motivation for such killings is usually based on psychotic thinking, not political thinking. Dennis Sweeney killed Allard Lowenstein because he believed that Lowenstein had implanted a transmitter in his teeth that was sending messages to him. Russell Weston stormed the Capitol because he believed the government had hidden a machine there that could reverse time.

The solution to this situation is obvious—make sure individuals with serious mental illnesses are receiving treatment. The mistake was not in emptying the nation's hospitals but rather in ignoring the treatment needs of the patients being released. Many such patients will take medication voluntarily if it is made available to them. Others are unaware they are sick and should be required by law to receive assisted outpatient treatment, including medication and counseling, as is the case in New York under Kendra's Law. If they do not comply with the court-ordered treatment plan, they can and should be involuntarily admitted to a hospital. Arizona has such a provision in its laws, but it is almost never used.

Ultimately, it is important to hold state officials responsible for not providing sufficient resources to treat those who suffer from serious mental illnesses. For almost two centuries, it has been an accepted function of state government to protect disabled persons and to protect the public from individuals who are potentially dangerous. State governments have been very effective in emptying the hospitals in an effort to save money but remarkably ineffective in providing treatment for seriously mentally ill individuals living in the community.

My own view is that Dr. Torrey is correct.

Yet, one must admit there has been too much ugly rhetoric from the Republicans. I heard it with my own ears. To wit, remarks about watering the tree of liberty with blood, taken from Jefferson, by a member of the audience at a book talk by Senator Jim DeMint (R-SC) at the National Press Club, a while back.

Of course, it should be toned down, but it was not related to this recent killing spree--which resulted in the death of federal judge John Roll (a Republican), the most serious crime committed that day--a murder which carries the death penalty upon conviction.

And it is no excuse for the even uglier rhetoric coming out of the mouths of Democrats, nor their dishonesty.

In fact, Judge Roll has become a non-person to the media, because he doesn't fit their political agenda items: Republican-bashing, Tea Party Bashing, Gun Control Advocacy, and Censorship. To use this tragedy for those purposes is beyond dishonest, and disgraceful--it is, as Sarah Palin charges, a "blood libel."

IMHO, Loughner's published statements about literacy and grammar as a motive for the armed attack (no matter how psychotic he may have been) are evidence that he's probably more of an intellectual disciple of Paulo Freire, than Rush Limbaugh...

If only John Boehner would quote Joseph Welch's question to Democrats and the media, next time they dare to make disgusting twisted charges against Republicans in this regard:

"Have you no decency?"

Ellen Weiss Controversy Exposes NPR Pay Scale

Conservative critic Tim Graham notes on the Media Research Center website that controversy over the firing of NPR executive Ellen Weiss has revealed some very high levels of compensation at "non-profit" NPR:

Who Knew NPR Execs Were So Well-Paid (Overpaid)?

Washington Post media reporter Paul Farhi was complete enough in his reporting on the internal NPR review of the Juan Williams firing on Saturday that he included financial numbers that NPR released on the bonuses of NPR CEO Vivian Schiller. The decision to cancel her bonus over that Fox-loathing fiasco was a six-figure decision:

According to tax records released by NPR on Friday, Schiller received a bonus of $112,500 in May 2010, about 17 months after she was hired by the Washington-based organization. This was in addition to a base salary of $450,000. The bonus was included in her hiring package, NPR said.

The preceding year, before Schiller's arrival, NPR paid out $1.22 million in salary, bonuses and deferred compensation to Schiller's predecessor, Kevin Klose, who retired that year. It paid another $1.22 million to Ken Stern, its president, who was forced out. Stern's compensation was swelled by a early buyout of his contract, according to NPR.

People at NPR said resigning may have preserved severance payments that [former senior VP Ellen] Weiss would have had to forgo had she been fired.

Farhi did not include an NPR critic from the left or right saying (as I would) "It's too bad NPR stations don't announce these salary and bonus figures when the less fortunate hand over 25 dollars to support their NPR station, only to give it to overcompensated executives the Democrats call 'the wealthy.'"

Washington Post: Turkish Intelligence Official Charges CIA Backs Fethullah Gulen Islamists

Why am I not surprised by this story in the Washington Post?

A memoir by a top former Turkish intelligence official claims that a worldwide moderate Islamic movement based in Pennsylvania has been providing cover for the CIA since the mid-1990s.

The memoir, roughly rendered in English as “Witness to Revolution and Near Anarchy,” by retired Turkish intelligence official Osman Nuri Gundes, says the religious-tolerance movement, led by an influential former Turkish imam by the name of Fethullah Gulen, has 600 schools and 4 million followers around the world.

In the 1990s, Gundes alleges, the movement "sheltered 130 CIA agents" at its schools in Kyrgyzstan and Uzbekistan alone, according to a report on his memoir Wednesday by the Paris-based Intelligence Online newsletter.

The book has caused a sensation in Turkey since it was published last month.

Someone in Congress should really look into these allegations of CIA support for Islamists. Obviously, it is not winning everyone's "hearts and minds" in Turkey.

IMHO, If it this program is still going on, it needs to be closed down immediately--if not sooner.

Document of the Week: Indictment of NY Times Reporter James Risen's CIA Source

The case is USA v. Jeffrey Alexander Sterling. (ht FAS Secrecy News) Secrecy News has published an interesting analysis of the document that points out that although not named in the indictment, it clearly alleges that Sterling was a source for New York Times reporter Risen. FAS Secrecy News also points out why Wikileaks is necessary (as were Jack Anderson, Drew Pearson, Woodward & Bernstein, Matt Drudge, Breitbart, Arianna Huffington, et al.):

“In or about early May 2003, senior management from Author A’s employer informed a senior United States government official that the newspaper article would not be published.” That is, the New York Times decided not to publish the classified information at issue after the U.S. government argued that its revelation would damage national security. But Mr. Risen reached a different conclusion and went on to write about the material in his 2006 book State of War. In a contest of this sort, the party that is willing to publish naturally determines the outcome.

Apparently Condoleeza Rice persuaded the NY Times to kill the story. Now Iran is on the verge of detonating its first A-Bomb. Who, exactly, harmed national security in this case? It would seem to me manifest that suppression of the original story helped enable Iran's A-Bomb program...

Where is the GAO's NPR Funding Audit?

Colorado Congressman Doug Lambron asked for the Government Accountability Office to audit NPR in December, 2010. So far, no results have been reported. I doubt any audit has taken place. Lamborn opposes federal funding for NPR, which may be why the GAO hasn't moved forward. However, given the recent resignation of Ellen Weiss, and disclosure of the $300,000 salary paid to NPR president Vivian Schiller (even without an unpaid bonus), clearly some sort of audit is needed, asap. NPR received $450 million dollars from the late Joan Kroc. It may not need federal money to keep going. And if it doesn't need it--why pay it?

The audit should also look into how much NPR paid its legal counsel for the recent report on the firing of Juan Williams--and whether severance may have been provided to Ellen Weiss as "hush money."

Meanwhile, here's Congressman Lamborn's press release from last year:

Lamborn Calls for Independent Audit of NPR Funds
12/08/10
Cites Concerns With 'Complicated Revenue Streams'

Congressman Doug Lamborn (CO-05) this week sent a letter to the Acting Comptroller General of the Government Accountability Office (GAO), Mr. Gene Dodaro, asking for a thorough audit of the Corporation for Public Broadcasting (CPB) and National Public Radio (NPR) so lawmakers can clearly identify NPR's use of federal dollars.

“In the era of trillion dollar annual deficits, we obviously must cut our federal spending. We no longer have the luxury of funding non-essential services, if we ever did. As we move forward with tough spending cuts, it is critical that we have the most accurate picture of government spending to ensure the cuts are made responsibly.”– Doug Lamborn (CO-05)

Below are excerpts from the letter:

“…it is imperative that an accurate and complete snapshot of CPB’s use of taxpayer funding be available to lawmakers and the public. Unfortunately, the charts, figures, statistics and documents posted on these entities’ websites—and often cited in the news media—do not sufficiently account for the complicated revenue streams between and within these entities. Efforts by Congressional staff, including the non-partisan Congressional Research Service, to contact CPB and NPR for clarification in this regard have been frustrating and limited in success.

“I ask that the GAO undertake an audit of CPB or otherwise conduct an investigation to assess its overall financial and fiduciary relationship with NPR and PBS, and present to Congress how all sources of federal funding are used within and among them. In regards to NPR specifically, I ask that GAO provide a breakdown of the following:

The originating governmental source and specific amount of federal funds given to the NPR organization
The originating governmental source and specific amount of federal funds given directly to local affiliate stations
The flow of these aforementioned federal funds from CPB to the NPR organization to local affiliate stations
The extent of the commercial relationship between the NPR organization and its local affiliate stations in the distribution and purchase of NPR programming, respectively
Whether any federal funding to NRP, either given directly or through CPB, is used for specific purposes beyond the development of content programming..."
Note:The last audit of the NPR spending by the GAO was in 1983.

Background

Lamborn's bill, H.R.6417, would prohibit federal dollars from going to NPR, through congressional appropriations and any of the various federal grants NPR now accesses. This is a more narrowly focused bill than H.R. 5538 that Lamborn introduced in June. H.R. 5538 would eliminate federal funding for NPR’s parent organization, the Corporation for Public Broadcasting. H.R. 6417 would effectively eliminate NPR’s ability to access any federal tax dollars (CPB requested $136 million for FY 2013 on behalf of all NPR entities) and apply it toward reducing the national debt (currently at $13.8 trillion).


NPR receives taxpayer funding in two different ways. First, they receive direct government grants from various federal agencies, including the Corporation for Public Broadcasting, the Department of Commerce, the Department of Education, and the National Endowment for the Arts. Over the past two years this direct funding has totaled approximately $9 million. Second, NPR also receives taxpayer funds indirectly through federal grants to local public radio stations. In 2010 those stations received a total of $65 million.

NPR claims that less than 2 percent of its total annual budget comes from the federal government. But when the indirect revenues NPR receives in licensing fees from the federally-funded local stations are included, that number jumps to an estimated 20 percent.

Flow of Federal Tax Dollars to National Public Radio:


NPR receives a significant amount of funding from private individuals and organizations through donations and sponsorships. For example in 2008, NPR listed over 32 separate private donors and sponsors who provided financial support in excess of half-a-million dollars that year. NPR officials have indicated that taxpayer funding makes up only a small portion of their overall budget. Therefore eliminating taxpayer support should not materially affect NPR’s ability to operate. It will, however, save taxpayers many millions of dollars each year.

###

Felix Salmon on Gene Sperling

From Seeking Alpha:

Finally there’s Sperling, who in some ways is the worst of the three [possible Summers replacements] when it comes to grubbing money from Wall Street. The other two have well-defined and easily-understood jobs; Sperling, by contrast, signed up with the Harry Walker Agency and started giving speeches to anybody with cash, including not only Citigroup (C) but even Allen Stanford. He also wrote a monthly 900-word column for Bloomberg for $137,500 a year, which works out to about $13 per word. Then he started “advising” Goldman Sachs (GS) on its charitable giving, which advice came very expensively indeed:

Goldman Sachs paid Sperling $887,727 for advice on its charitable giving. That made the bank his highest-paying employer. Even Geithner’s chief of staff Patterson, who was a full-time lobbyist at the firm, did not make as much as Sperling did on a part-time basis. Patterson reported earning $637,492 from Goldman Sachs [in 2008].

Sophie Silfen, 97

Just came back from Sophie Silfen's funeral this morning. She was not only a friend to me after my father died, she was a remarkable person. There were over 250 mourners, in addition to the 5 rabbis on the bimah. Her flag-draped coffin was taken to Arlington for military burial after the eulogies.

Born on the Lower East Side of New York, Sophie had been a career WAC who served Generals MacArthur, Westmoreland, and President Eisenhower before she started teaching Hebrew school at my synagogue after retirement some 30 years ago. She had reached the rank of Master Sargeant, and I sometimes called her "Sarge," which made her smile. I remember that she told me that she thought President Truman made a mistake when he fired MacArthur. Her oral history of World War II, Korea, and Vietnam has been recorded by the Veteran's History Project of the Library of Congress.

She never had a television, even in her nursing home room. She never owned a car, either, preferring public transportation.

Sophie will be missed by an awful lot of people. I was lucky to have known her. Here is her Washington Post obituary:

SOPHIE SILFEN

On Sunday, December 26, 2010, Sophie Silfen of Washington, DC. Beloved sister of Celia Silfen; also survived by her nieces, nephews, great nieces and great nephews. Funeral service will be held at Adas Israel Congregation, 2850 Quebec Street, NW, Washington, DC on Wednesday, January 5, 2011 at 10 am. Interment private in Arlington National Cemetery. Contributions may be made to Sophie Silfen Shalom Tinok Fund c/o Adas Israel Congregation. Arrangements by Hines-Rinaldi Funeral Home, Inc. under Jewish Funeral Practices Committee of Greater Washington Contract.

John Boehner's Facebook Page

Looks up to date...

John Boehner's Blog

The blog is called:GOP Leader.

Memo to John Boehner: Change it to "Speaker of the House" asap. Not only is it true, and traditional, it would boost your authority and credibility, as well...

Polly King Evans, 1957-2010

From the Washington Post, an obituary of our dear friend:

POLLY KING EVANS

Polly King Evans, 53, died December 28, 2010 after a short illness. She was the devoted mother of Isabella Wagley and the late Louisa Caroline Wagley and wife of the late Huw Evans. Her enthusiasms, wit, creativity and zest for life will be missed but also cherished by her family and all her friends, not least her former colleagues at the Lisner-Louise-Dickson-Hurt Home and at Dumbarton Oaks. Polly's involvement in the Resident Art Program at the Lisner Home resulted in the Program taking on a new dimension with the creation of contemporary canvases, of which a documentary is in the works. At Dumbarton Oaks, she became a vital member of the Byzantine Department. Her many talents were most recently displayed at an exhibition of her artworks at the Arts Club on I Street. A gathering to celebrate her life is pending. In lieu of flowers, contributions may be made to the Lisner-Louise-Dickson-Hurt Home, 5425 Western Ave., NW, Washington, DC 20015, attn: Ward Orem; www.lldhhome.org, in memory of Polly King Evans. Arrangements by DeVOL.

20001-2010: America's Decade of Defeat

I'm glad 2011 marks the start of a new decade.

The last ten years have been the worst in my adult memory. Military defeats after 9/11, on George W. Bush's own terms of Osama Bin Laden "Dead or Alive." Political defeat after democracy discredited at home and around the world. Economic defeat after Wall Street's collapse. Moral defeat after criminals got away with massive swindles. Cultural defeat when intellectual class spilled more ink on food than philosophy. (Talk about "let them eat cake...")

Americans voted for change in 2008 but didn't get it. Americans voted again for change in 2010.

I hope we actually get it, this time.

Happy New Year!

To all our readers...

Santa's On Break...

And so are we. Merry Christmas to all our readers!

Richard Branson on British Education v Entrepreneurship

From the Guardian (UK) Wikileaks website:

10. (C) Brown's party included 30 high-ranking business people, as well as 250-300 other representatives from British businesses, who met with Chinese counterparts. Approximately 30 Chinese and British entrepreneurs, including British billionaire Richard Branson met at a lunch devoted to "What Makes a Good Entrepreneur?" The Chinese participants criticized British entrepreneurs as being "overeducated, too conservative, lacking passion for entrepreneurship and too afraid of failure." Branson agreed that British entrepreneurs are overeducated and that schooling does not prepare one for entering the business world. The Chinese also criticized their own system as inadequate to prepare people for entrepreneurship.

With apologies to Nina Totenberg...

MERRY CHRISTMAS!

The King's Speech: G'day Bertie!

The theatre showing The King's Speech was packed for the 3:00 Saturday matinee in Bethesda, MD yesterday. Sold out. The crowd resembled the one at the Bob Dylan concert I attended a month ago. The film starred the Masterpiece Theatre stock company:  Colin Firth, Geoffrey Rush, Michael Gambon, Derek Jacobi, and Helena Bonham-Carter. The plot was a cross between The Queen, My Fair Lady, and Young Victoria. I had been told to see the film for the first time in an email from my UCLA Film/TV film structure professor, Dr. Howard Suber. Then, I read the rave reviews in the local press here in DC. So, it was a "must-see."

My verdict. It's OK. Not a great story, not a great script, nice production values, good acting--in sum: thoroughly enjoyable Anglophile porn. Now that Masterpiece Theatre has become hit-or-miss, and the rest of the movie industry makes super-big-screen video games, this is the best we can hope for. Solid Christmas entertainment, with emotional uplift, and ex-colonial solidarity.

Rupert Murdoch must have enjoyed watching this picture, since the moral seems to be that a despised Aussie speech therapist played by Geoffrey Rush saved the British throne from Hitler...