Again, Keynes: "In the Long Run, We're All Dead"

Thu. June 7, 2012:        [PART TWO]

For busy 30-something two-job couples in Redondo or families nation-wide, yesterday's news has
2 items worth knowing.  The following may seem too long to read.  But actually, for your intellectual curiosities & convenience, it distills 42 pages of newspapers.  Today, no need to click on links.
To save time, the "greatest hits" from yesterday are right here.  NYT and WSJ covered both of these
2 items.  They are bipartisan items, offering bipartisan proposals.


Whether you are Republican or Democrat, these stories will concern your own children -- in economics & war -- and hence "the long run" about which famous British economist John Maynard Keynes was so flippant back in the 1920's & 1930's.  The serious angle is, How should we balance short-run urgent needs, with long-run consequences & safety?  Yesterday's 2 items raise dilemmas about presidential power in fighting foreign wars, and Congressional/Wall Street powers in steering our banking/fiscal futures.  Yo, busy 30-somethings, here's the skinny on behalf of your kids:
                                                        ___________________

                                                                Drone Over Pakistan

I.  The 1st item follows an expanding foreign policy story.  A NYT exclusive earlier this week divulged that President Obama was using his Commander-in-Chief powers to help target -- personally -- top-threat terrorist leaders in Pakistan & Yemen.  When the story first ran, its details were so sensitive, that bitesfromedwin suspected -- and said so -- someone in or around the White House had leaked them.
Now, yesterday's NYT has 3 pieces developing similar logic, and here they are,
for those who have time:

        A.  Thomas E. Ricks has given us one of the shrewdest NONPARTISAN book reviews seen in a long time.  It reviews a respected senior reporter's [David E. Sanger's] new study Confront and Conceal: Obama's Secret Wars and Surprising Use of American Power.  Whoever leaked the TWO stories this weak -- one about Obama's secret drone targeting, the second about Obama's personal hand in joining Israel to cyberfight Iran & its nuclear program -- it appears the 2 leaks went to David E. Sanger himself.
Reviewer Ricks says this astounding story, by itself, is worth the price of Sanger's new book.
But he also says Sanger made mistakes -- the most important of which was missing the same "dysfunctional" relationship between a president & the Pentagon that hurt JFK & LBJ so badly in Vietnam [and Ricks could have added: Cuba in 1961-2].

       B.  [BURIED ON PAGE A12]:  "Senators to Open Inquiry Into 'Kill List' and Iran Security Leaks" -- "The Senate will investigate recent national security leaks to the news media after articles in The NYT about a 'kill list' for terrorists and the use of cyberweapons against Iran . . . "
Senators Dianne Feinstein [D-CA], Carl Levin [D-MI], and John McCain [R-AZ] expressed concern.

       C.  Nothing less than NYT's "Quote of the Day" -- a big deal to its editors -- comes from another Drone Strike piece.  It quotes a skeptic of CIA & Obama drone tactics:  "Killing the top leadership harms Al Qaeda, but it won't defeat them . . . Al Qaeda has a far deeper bench than the administration gives it credit for . . . [While drone strikes offered an attractive "short-term tactic" against Qaeda militants], "Until we tackle Al Qaeda's ideology, state support and ability to exploit ungoverned space in countries like Pakistan, Somalia and Yemen, you're not going to defeat the organization."
                                                      ________________________

II.  Yesterday's 2nd crucial item comes from Edouardo Porter's "Economic Scene" column,

BURIED IN SECTION B [but at least on p. B1]:
"Obama's Fate Rests in Part On Europe" -- Porter's biggest contribution is to give us the Long Run polarizing effect of ALL economic/financial crises, not just the short-run polarization in 2012's Europe and the U.S.A.
Four Porter paragraphs will suffice:

          "[Obama's] attempts to convince voters as he stumps around the country that Europe's financial mess and Republican obstrction are largely to blame for the faltering economy only underscore how his destiny hinges on decisions by other people, notably the German chancellor, Angela Merkel, 
and the Republican speaker of the House, John A. Boehner.

          At home, the president's plans to stimulate the economy with [middle-class] tax cuts [NOT for the top 1%] and spending programs have invariably crashed against solid Republican opposition in Congress.  As a result the government is becoming a big drag on the economy, cutting more than half a million jobs at the federal, state and municipal level since national employment bottomed out in February 2010."


          "This kind of political polarization may be a standard feature of financial crises.  Economists have noted that such crises naturally widen the chasm between the interests of creditors [lenders]
-- like banks, investors and even governments -- and debtors [borrowers, e.g. the mortgaged], who are suddenly made insolvent by a crisis that takes away their jobs and destroys the value of their homes.

          Creditors push austerity as the best way for debtors to repay their debts.  They oppose efforts to write down or renegotiate loans, or to allow higher inflation to erode their value.  And creditors, better financed and organized, usually gain the upper hand.  Debtors, who are generally poorer, lose." 
                                                          ________________________
   
As if to dramatize Porter's long-run pattern of have/have-not polarization during economic crises, yesterday's other poignant news clips include:

1.  "House Bill Takes a Scythe to Spending":

"Financial regulators would lose hundreds of millions of dollars needed to implement the new Wall Street regulator law.  The IRS's budget would not be increased, with a prohibition of cash transfers to implement the health care law.  President Obama's energy-efficiency and renewable energy efforts
[embarrassed by the notorious collapse of federally aided green company Solyndra] would be gutted, along with international climate change programs.  And regulations to force new efficiency standards in federal buildings would be blocked."  [NYT June 6, 2012, p. A15]

2.  "The North Carolina Judicial Coalition is a new tax-exempt organization known as a super PAC, supported by wealthy conservative Republicans who are determined to make this year's race for a seat on the North Carolina Supreme Court ideological and expensive.

     This kind of influence in judicial elections is a direct result of the Citizens United decision, which allows corporations [booming] & unions [waning] to make unlimited so-called independent expenditures in campaigns.  In a dissent in that case, Justice John Paul Stevens

predicted that such spending would overwhelm state court races, which would be especially harmful since judges must not only be independent but be seen to be independent as well.  North Carolina is proving him right."

And in closing, international & Middle East columnist Tom Friedman

suggests a Long Term/Short Term way that USA's Obama should try to bridge Porter's long-run divide:

"If I were President Obama, I'd focus my entire campaign now on an effort to regorg a 'grand bargain' with Republicans based on a near-term infrastructure stimulus tied with a Simpson-Bowles long-term fiscal rebalancing.  At a minimum, it would show that Obama has a sensible plan to fix the
economy -- which is what people want most from the president -- and many in business would surely support it.  We cannot wait until January to do serious policy making again.  We, and the world, need America to be a rock of stability -- now."