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How The Democrats Self-Destruct

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June 29, 2009

For the past few days, we have been inundated with news reports detailing the self-destructive behavior of the late singing sensation, Michael Jackson.  Perhaps it is this heightened awareness of self-destruction that is causing people to take a closer look at the self-destructive behavior taking place within the Democratic Party.

Most notable is the behavior of President Obama.  As his Inauguration approached, many people were surprised to learn that some principal players selected for Obama’s economic team were the same people responsible for creating this mess during the Clinton years.  The most prominent of these is Larry Summers, who is expected to replace Ben Bernanke as Chairman of the Federal Reserve in January.  On June 24, Robert Scheer, on his Truthdig website, bemoaned the fact that Obama is following the “trickle down” strategy of bailing out the big banks, while doing nothing to really solve the mortgage crisis:

It’s not working.  The Bush-Obama strategy of throwing trillions at the banks to solve the mortgage crisis is a huge bust.  The financial moguls, while tickled pink to have $1.25 trillion in toxic assets covered by the feds, along with hundreds of billions in direct handouts, are not using that money to turn around the free fall in housing foreclosures.

*    *    *

Here again the administration, continuing the Bush strategy, is working the wrong end of the problem.  Although President Obama was wise enough to at least launch a job stimulus program, a far greater amount of federal funding benefits Wall Street as opposed to Main Street.

*    *    *

Why was I so naive as to have expected this Democratic president to not do the bidding of the banks when the last president from that party joined the Republicans in giving the moguls everything they wanted?  Please, Obama, prove me wrong.

If President Obama doesn’t prove Robert Scheer wrong, Obama might find himself facing some hostile crowds at the “town hall” meetings as 2012 approaches.

The President might also be surprised to encounter large-scale Democratic grassroots disappointment over his proposed “overhaul” of the financial regulatory system.  As I pointed out on June 18, President Obama’s financial reform proposal, released on that date, drew immediate criticism for the expanded powers granted to the Federal Reserve.  On June 24, The Nation (which prides itself on having a liberal bias) ran a harshly critical piece by William Greider, entitled:  “Obama’s False Reform”.  In addition to criticizing the expanded powers granted to the Federal Reserve, Greider emphasized that the proposal did not contain any significant measures, or “hard rules”, to reform the financial system.  Beyond that, Greider took Obama to task for the false claim that the regulatory system was overwhelmed by “the speed, scope and sophistication of a 21st century global economy”.  The article emphasized the need to “slow down the rush to weak solutions” by taking the time to find out about the root causes of the breakdown and then to address those causes:

Give subpoena power to Elizabeth Warren the Congressional Oversight Board she chairs.  Hire some of those investigative reporters who have no political investment in digging deeper into the mulch.  What exactly went wrong?  Who has bloody hands?  Where are the fundamental reforms?  If the economy returns to “normal’ rather soon, the ardor for serious reform might dissipate with much left undone.  That is a small risk to take, especially if the alternative is enacting the bankers’ pallid version of reform.

President Obama is now taking pride for the passage in the House of Representatives of the “climate change bill” (H.R. 2454, the American Clean Energy and Security Act of 2009).  Despite the claim of House Majority Leader Steny H. Hoyer (D-Md.) that the bill’s passage in the House was “a transformative moment”, 44 Democrats voted against the bill.  One harsh critic of the bill is Democrat Dennis Kucinich.  Here’s some of what Mr. Kucinich had to say:

It won’t address the problem.  In fact, it might make the problem worse.  It sets targets that are too weak, especially in the short term, and sets about meeting those targets through Enron-style accounting methods.  It gives new life to one of the primary sources of the problem that should be on its way out — coal — by giving it record subsidies.  And it is rounded out with massive corporate giveaways at taxpayer expense.

*   *   *

.  .  .  the bill does not require any greenhouse gas reductions beyond current levels until 2030.

Worse yet is the Democrats’ fumbling and bumbling with their efforts at healthcare reform legislation.  Polling wiz Nate Silver of fivethirtyeight.com, did a meta-analysis of the polls conducted to assess public support for the so-called “public option”in healthcare coverage, wherein people have the option to buy health insurance from the government.  The insurance companies obviously aren’t interested in that sort of competition and they have launched advertising campaigns portraying it as controversial and flawed.  Nevertheless, Nate Silver’s report revealed that five of the six polls analyzed, demonstrated lopsided support for the public option, exceeding 60 percent.  Despite the strong popular support for the public option, Mr. Silver pointed out in another posting, how there is a great risk that Democrats might oppose the measure due to payoffs from lobbyists:

Lobbying contributions appear to have the largest marginal impact on middle-of-the-road Democrats.  Liberal Democrats are likely to hold firm to the public option unless they receive a lot of remuneration from healthcare PACs.  Conservative Democrats may not support the public option in the first place for ideological reasons, although money can certainly push them more firmly against it.  But the impact on mainline Democrats appears to be quite large:  if a mainline Democrat has received $60,000 from insurance PACs over the past six years, his likelihood of supporting the public option is cut roughly in half from 80 percent to 40 percent.

Awareness of this venality obviously has many commentators expressing outrage.  On June 23, Joe Conason wrote such an article for The New York Observer:

If Congress fails to enact health care reform this year –or if it enacts a sham reform designed to bail out corporate medicine while excluding the “public option” — then the public will rightly blame Democrats, who have no excuse for failure except their own cowardice and corruption.  The punishment inflicted by angry voters is likely to be reduced majorities in both the Senate and the House of Representatives — or even the restoration of Republican rule on Capitol Hill.

*  *  *

The excuses sound different, but all of these lawmakers have something in common — namely, their abject dependence on campaign contributions from the insurance and pharmaceutical corporations fighting against real reform.

*  *  *

Whenever Democratic politicians are confronted with this conflict between the public interest and their private fund-raising, they take offense at the implied insult.  They protest, as a spokesman for Senator Landrieu did, that they make policy decisions based on what is best for the people of their states, “not campaign contributions.”  But when health reform fails — or turns into a trough for their contributors, who will believe them?  And who will vote for them?

Those Democrats inclined to oppose the public option don’t appear to be too concerned about public indignation over their behavior.  Take California Senator Dianne Feinstein for example.  Do you really believe she gives a damn about voter outrage?  She was re-elected in 2006, despite criticism that as chair of the Senate Military Construction Appropriations subcommittee, she helped her husband, Iraq war profiteer Richard C. Blum, benefit from decisions she made as chair of that subcommittee.  So what if MoveOn.org is targeting her for ambivalence about the issue of healthcare reform?  MoveOn.org is also targeting other Democrats who are attempting to eliminate the public option.  If these officials have so much hubris as to believe that they can get away with scoffing at the public will, they had better start looking for new jobs now  . . . because the market isn’t very good.

Matt Taibbi Deserves An Award

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June 25, 2009

Like many people, I found out about Matt Taibbi as a result of his frequent appearances on HBO’s Real Time with Bill Maher.  Last spring, Matt appeared on Real Time to discuss his research into the global economic crisis and the resulting scheme of numerous bailouts engineered in response to each sub-crisis of this economic catastrophe.  My March 26 piece: “Understanding The Creepy Bailouts“, quoted from Matt’s fantastic article for Rolling Stone magazine, entitled: “The Big Takeover”.  (At that time, the “Big Takeover” link led to the complete article.  Rolling Stone now provides only abbreviated versions of its published articles on line.)  One important theme of Matt’s commentary was evident in this passage:

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class.  But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

Matt has a unique way of discussing the extremely complicated, technical issues involved in the financial crisis, by breaking them down into understandable, plain-language points.  Unfortunately, most mainstream journalists lack either the understanding or the courage (or both) to discuss our financial predicament in such a frank, informative manner.  Take for example:  Fareed Zakaria’s discussion of the economic catastrophe as it appeared in Newsweek under the title “The Capitalist Manifesto”.  Nobody could to a better job of ripping that thing to shreds than Matt Taibbi himself.  With his June 24 blog entry, he did just that:

Zakaria works hard to tell the crisis story minus these outrageous details.  Then he goes on to argue that, basically, nothing should be done.  We mostly just need a “gut check”; we, all of us, need to rediscover that little voice in all of us that says, “if it doesn’t feel right, we shouldn’t be doing it.”  I mean, that is actually what he wrote.  No one needs to go to jail, we don’t need to worry about who’s to blame, we just need, you know, do a better job using our trusty moral compasses to navigate the seas of life.  It’s classic Zakaria in the sense that he attacks ugly political phenomena with tired cliches and hack pablum until you’re almost too bored to keep your eyes open, then in the end reduces it all to a dumbed-down t-shirt that carries us forward to another cycle of political inaction: Laissez-faire capitalism doesn’t rip off people, people rip off people!

Matt’s previous blog entry on June 18, focused on one of my favorite subjects:  the hideous monster we have come to know as Goldman Sachs.  I had written a piece about that entity on May 21, discussing how Paul Farrell of MarketWatch and John Crudele of the New York Post had been voicing the same suspicions I had been harboring about Goldman.  After reading Matt Taibbi’s June 18 article, I enthusiastically sent the link to my friends.  This stuff was just too good!  Matt was laying it on the line in a way few others had the courage or the skill to do.  I doubt whether many in the mainstream media will follow his lead.  Here is one of the highlights from that piece:

Any way you slice it, Goldman was responsible for putting tens of billions of toxic mortgages on the market, resulting in mass foreclosures, mass depletion of retirement funds, and a monstrously over-leveraged financial system that we will now all be bailing out for the next half-century or so.  All of this so that Goldman could make a few billion bucks acting as the middleman in all of these deadly transactions.

If that weren’t enough, Matt pointed out that the upcoming issue of Rolling Stone would feature another of his reports  –  this one focused exclusively on Goldman Sachs.  That issue (#1082-83, with the Jonas Brothers on the cover) is now on the newsstands.  Matt’s article:  “The Wall Street Bubble Machine” is best explained in the subtitle:

From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression  — And they’re about to do it again.

In case you are wondering how they’re going to do it again  . . .  Matt reports that it will be by way of the “Cap and Trade” program.  Goldman has already positioned itself to serve as one of our government’s premier carbon credit pimps.  Matt offered this explanation:

Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot.  Will this market be bigger than the energy-futures market?

“Oh, it’ll dwarf it,” says a former staffer on the House energy committee.

Matt’s “bottom line” paragraph at the conclusion of the essay underscores what I believe are America’s biggest problems:  “lobbying” and “campaign contributions” (our tradition of legalized graft).  Our government is not just one of laws . . . it is one of loopholes, exemptions and waivers.  Those things cost money.  The people who have the money to “invest” in such machinations, usually find themselves rewarded handsomely  . . .  at the expense of the taxpayers.  Here’s how Matt wrapped it up:

But this is it.  This is the world we live in now.  And in this world, some of us have to play by the rules, while others get a note from the principal, excusing them from homework until the end of time, plus 10 billion free dollars in a paper bag to buy lunch.  It’s a gangster state, running on gangster economics, and even prices can’t be trusted anymore; there are hidden taxes in every buck you pay.  And maybe we can’t stop it, but we should at least know where it’s all going.

Amen.

I Have A PETA For You Right Here

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June 22, 2009

It was a tension-filled week, when it appeared as though the Islamic Republic of Iran was ready to self-destruct at any moment.  (It did.  Iran is now a police state.)  It was a week when the summer humidity caused the duct tape, holding up the equities markets, to start losing its grip.  It was a week when “Turbo” Tim Geithner and Larry Summers brought their Beavis and Butthead act to The Washington Post. It was also a week when the creators of the JibJab animations released a new cartoon, depicting Barack Obama as a superhero.  The stars were aligned.  It was during this week when The Obama Moment happened.  He killed that fly during the interview with John Harwood.  It was a moment made for Maureen Dowd, but God didn’t just leave it to her.   Stephen Colbert saw fit to do a piece with The Fly himself, Jeff Goldblum, entitled:  “Murder in The White House”.

The mainstream media obviously thought this story had “legs” (fly legs, unfortunately, but not wings).  The Obama sycophants saw this moment as proof that the man who sank the three-pointer on camera in Kuwait was indeed a Master,  …  a Jedi Knight, …  a Sensei.  Comparisons were made to The Karate Kid (probably because it was also the week of the disclosure that the star of television’s Kung Fu show from the seventies, David Caradine, died from auto-erotic asphyxiation, making The Karate Kid the de facto understudy for such circumstances).  In order to properly “work” the fly-swatting story from all angles, the media inevitably turned to the animal rights group, PETA, for their response to The Obama Moment.  To be fair, PETA did not seize upon The Obama Moment to promote the ethos of animal rights.  It was only when contacted for their reaction to the event by “multiple media outlets” when PETA responded to the “executive insect execution”.  Subsequently, Alisa Mullins of PETA explained:

When the media began contacting us in droves for a statement, we obliged, simply by saying that the president isn’t the Buddha and shouldn’t be expected to do everything right—if not for that, we would not have brought it up. It’s the media who are making a big deal about the fly swat—not PETA.

Once PETA bit on the bait by taking a stand on this issue, it put itself in the crosshairs for ridicule.  Ms. Mullins of PETA saw fit to use the opportunity for promotion of the “humane insect catcher” by actually sending one of these devices to The White House, as a suggested alternative to fly-swatting.  Ms. Mullins reported that she once used one of these devices to “capture and release” a palmetto bug.  I believe that these $8 devices are absurdly stupid and inefficient.  Look at their ad for the thing.  Do you really believe that it’s possible to catch a fly with one of these?  On more than one occasion, I was able to catch a palmetto bug by merely sliding a piece of paper under it.  I walked it to my porch and released it back into the wild, where it was likely eaten by a cat.  Palmetto bugs are slow, pathetic, helpless things.  The trap sold by PETA holds the palmetto bug in an oppressive Plexiglas prison until you bother to release it.  By using a single sheet of paper (costing $7.999 less) you can talk to the palmetto bug and nurture it as you return it to its natural habitat.

On the other hand, I don’t necessarily agree with all the people who are dumping on PETA.  Although it is true that Alisa Mullins of PETA referred to this event as “Flygate”, she is probably too young to remember that Bill Clinton already had such a scandal.  I agree with protecting animals to a reasonable extent.  I was a vegetarian for two years.  I also believe that PETA has had some nice advertising campaigns that they lacked the guts to stand behind.  Take for example their Super Bowl ad that was banned.  It showed some steamy-hot women getting erotic with vegetables, using the sloagan: “Studies show:  Vegetarians have better sex”.  Better yet, was their campaign for vegetarianism wherein two sexy women, dressed in lingerie, got cozy with each other on an air mattress, to demonstrate how vegetarians can be sexy people.  Do you really believe that I’m going to just tell you about this and not provide a link?  Guess again.  The link is here.  The mistake PETA made involved locating this event in El Paso, Texas.  Some citizens claimed that this demonstration was not “family friendly”.  PETA should have located this event on South Beach, where it belonged.  (If I may be so bold as to recommend a particular address for such a redo …)

As you can see, PETA has used some mighty-fine ideas in promoting its cause.  The only problem was that they caved in to intimidation.  As for The Obama Moment in fly-swatting, they may want to go back to the well if they want to capitalize on it.  Why not shoot a commercial in an apartment where two hot women live, with lots of Georgia O’Keeffe prints all over the walls?  They would have the place loaded with plants, some of which are called:  Venus Fly Traps.  Flies come in … and they get eaten by those plants.  Although some proponents of “flies’ rights” might complain that plants are being used to kill insects …  That is simply unfair.  Those plants have a right to defend themselves from unwanted invaders.  If the flies are so obnoxious as to get themselves killed in the process, that’s their problem.  Case (and Venus Fly Trap) closed.

Obama Unveils His Most Ambitious Plan

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June 18, 2009

On Wednesday, June 18, President Obama released his anxiously-awaited, 88-page proposal to reform the financial regulatory system.  An angry public, having seen its jobs and savings disappear as home values took a nosedive, has been ready to set upon the culprits responsible for the economic meltdown.  Nevertheless, the lynch mobs don’t seem too anxious to string up former Federal Reserve Chairman, Alan Greenspan.  Perhaps because he is so old, they might likely prefer to see him die a slow, painful death from some naturally-occurring degenerative disease.  Meanwhile, a website, Greenspan’s Body Count, has been keeping track of the number of suicides resulting from the recent financial collapse.  (The current total is 96.)  As usual, President Obama has been encouraging us all to “look forward”.  (Sound familiar?  . . . as in:   “Forget about war crimes prosecutions because some Democrats might also find themselves wearing orange jumpsuits.”)

In reacting to Obama’s new financial reform initiative, some critics have observed that the failure to oust those officials responsible for our current predicament, could set us up for a repeat experience.  For example, The Hill quoted the assessment of Dean Baker, Co-director of the Center for Economic Policy and Research:

However, the big downside to this reform proposal is the implication that the problem was the regulations and not the regulators.  The reality is that the Fed had all the power it needed to rein in the housing bubble, which is the cause of the current crisis.  However, they chose to ignore its growth, either not recognizing or not caring that its collapse would devastate the economy. If regulators are not held accountable for such a monumental failure (e.g., by getting fired), then they have no incentive to ever stand up to the financial industry.

The Wall Street Journal‘s Smart Money magazine provided some similarly-skeptical criticisms of this plan:

Influential bank analyst Richard Bove of Rochedale Securities believes the Obama rules will only add costs to the system and will not lead to more effective oversight.  After all, a regulatory framework is already in place, Bove says, but the political will to enforce it has been absent — and that’s just the way Washington wants it.  Indeed, the only truly aggressive SEC director since the Kennedy administration was Harvey Pitt, Bove says. “[And] when he got religion about regulation, he got removed.”

Dr. Walter Gerasimowicz of New York-based Meditron Asset Management is dubious about a number of proposals, especially that of expanding the Fed’s role.  “What I find to be very disconcerting is the fact that our Federal Reserve is going to have extensive power over much of the industry,” Gerasimowicz says.  “Why would we give the Fed such powers, especially when they’ve failed over the past 10 years to monitor, to warn, or to bring these types of speculative bubbles under control?”

Our government was kind enough to provide us with an Executive Summary of the financial reform proposal.  Here is how that summary explains the “five key objectives” of the plan, along with the general recommendations for achieving those objectives:

(1)  Promote robust supervision and regulation of financial firms.  Financial institutions that are critical to market functioning should be subject to strong oversight.  No financial firm that poses a significant risk to the financial system should be unregulated or weakly regulated.  We need clear accountability in financial oversight and supervision.  We propose:

  • A new Financial Services Oversight Council of financial regulators to identify emerging systemic risks and improve interagency cooperation.
  • New authority for the Federal Reserve to supervise all firms that could pose a threat to financial stability, even those that do not own banks.
  • Stronger capital and other prudential standards for all financial firms, and even higher standards for large, interconnected firms.
  • A new National Bank Supervisor to supervise all federally chartered banks.
  • Elimination of the federal thrift charter and other loopholes that allowed some depository institutions to avoid bank holding company regulation by the Federal Reserve.
  • The registration of advisers of hedge funds and other private pools of capital with the SEC.

(2)  Establish comprehensive supervision of financial markets. Our major financial markets must be strong enough to withstand both system-wide stress and the failure of one or more large institutions. We propose:

  • Enhanced regulation of securitization markets, including new requirements for market transparency, stronger regulation of credit rating agencies, and a requirement that issuers and originators retain a financial interest in securitized loans.
  • Comprehensive regulation of all over-the-counter derivatives.
  • New authority for the Federal Reserve to oversee payment, clearing, and settlement systems.

(3)  Protect consumers and investors from financial abuse.  To rebuild trust in our markets, we need strong and consistent regulation and supervision of consumer financial services and investment markets.  We should base this oversight not on speculation or abstract models, but on actual data about how people make financial decisions.  We must promote transparency, simplicity, fairness, accountability, and access. We propose:

  • A new Consumer Financial Protection Agency to protect consumers across the financial sector from unfair, deceptive, and abusive practices.
  • Stronger regulations to improve the transparency, fairness, and appropriateness of consumer and investor products and services.
  • A level playing field and higher standards for providers of consumer financial products and services, whether or not they are part of a bank.

(4)  Provide the government with the tools it needs to manage financial crises.  We need to be sure that the government has the tools it needs to manage crises, if and when they arise, so that we are not left with untenable choices between bailouts and financial collapse.  We propose:

  • A new regime to resolve nonbank financial institutions whose failure could have serious systemic effects.
  • Revisions to the Federal Reserve’s emergency lending authority to improve accountability.

(5)  Raise international regulatory standards and improve international cooperation.  The challenges we face are not just American challenges, they are global challenges.  So, as we work to set high regulatory standards here in the United States, we must ask the world to do the same.  We propose:

  • International reforms to support our efforts at home, including strengthening the capital framework; improving oversight of global financial markets; coordinating supervision of internationally active firms; and enhancing crisis management tools.

In addition to substantive reforms of the authorities and practices of regulation and supervision, the proposals contained in this report entail a significant restructuring of our regulatory system.  We propose the creation of a Financial Services Oversight Council, chaired by Treasury and including the heads of the principal federal financial regulators as members.  We also propose the creation of two new agencies. We propose the creation of the Consumer Financial Protection Agency, which will be an independent entity dedicated to consumer protection in credit, savings, and payments markets. We also propose the creation of the National Bank Supervisor, which will be a single agency with separate status in Treasury with responsibility for federally chartered depository institutions.  To promote national coordination in the insurance sector, we propose the creation of an Office of National Insurance within Treasury.

So there you have it.  Most commentators expect that the real fighting over this plan won’t begin until this fall, with healthcare reform taking center stage until that time.  Regardless of whatever form this financial reform initiative takes by the time it is enacted, it will ultimately be seen by history as Barack Obama’s brainchild.  If this plan turns out to be a disaster, it could overshadow whatever foreign policy accomplishments may lie ahead for this administration.

CNNFail

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June 15, 2009

Back on January 16, 1991, it seemed as though anyone with cable TV was glued to their set, watching the beginning of Operation Desert Storm.  As the coalition forces began their aerial assault on Baghdad, most American reporters were pinned down at the Al-Rashid Hotel.  As it turned out, CNN was the only news service able to communicate with the rest of the world during that time.  Bernard Shaw, John Holliman and Peter Arnett gained instant fame as CNN’s “Boys of Baghdad”, providing non-stop coverage of the invasion from Room 906 of the Al-Rashid.  The event helped establish CNN as a “top tier” news organization.  CNN’s coverage of this event became the subject of a documentary film by HBO, entitled Live From Baghdad.

On Friday June 12, many of the world’s news services focused their attention on Iran’s presidential election.  Incumbent President Mahmoud Ahmadinejad was being faced with a serious challenge by Mir Hussein Mousavi, one of three other contenders for the post.  Mousavi’s supporters were highly organized and energetic.  They adopted the color green as their symbol and they began calling for a “green revolution”.  Al Jazeera reported that Yadollah Javani, political chief of Iran’s Revolutionary Guard, had issued a warning from his website that any such revolution would be “nipped in the bud”.  This should have been a tip that the Revolutionary Guard had every intention of subverting the public will.

On Saturday, June 13, Iran’s state-owned news service, Fars, declared incumbent President Mahmoud Ahmadinejad the winner, with nearly two-thirds of the vote.  A landslide of such proportions was completely unexpected, given the large turnout at rallies in support of the leading challenger, Mir Hussein Mousavi, as well as the recent poll, indicating that Ahmadinejad was leading his three challengers with only 34 percent of the vote.  As a result, many expected that a runoff election between Ahmadinejad and Mousavi would have been necessary.  Because of this claimed “landslide” victory, it immediately became obvious that the election had been stolen.  Juan Cole, President of the Global Americana Institute, wrote the following on his blog, Informed Comment:

As the real numbers started coming into the Interior Ministry late on Friday, it became clear that Mousavi was winning.  Mousavi’s spokesman abroad, filmmaker Mohsen Makhbalbaf, alleges that the ministry even contacted Mousavi’s camp and said it would begin preparing the population for this victory.

The ministry must have informed Supreme Leader Ali Khamenei, who has had a feud with Mousavi for over 30 years, who found this outcome unsupportable.  And, apparently, he and other top leaders had been so confident of an Ahmadinejad win that they had made no contingency plans for what to do if he looked as though he would lose.

They therefore sent blanket instructions to the Electoral Commission to falsify the vote counts.

This clumsy cover-up then produced the incredible result of an Ahmadinejad landlside in Tabriz and Isfahan and Tehran.

The public reaction on the streets of Tehran was documented for Slate by Jason Rezaian:

A feeling of dejection hung in the air for most of Saturday. Spontaneous street demonstrations early in the day were small and were quickly broken up by riot police on motorcycles.

As reality set in, people began taking to the streets en masse. Around 5 p.m. on the approach to Fatemi Square, where the Interior Ministry is located, I could see that the entire traffic circle had been closed to car traffic. About 200 riot police waited in the middle of the square. I headed down an alley, just steps away, where protesters had created a blockade of flaming garbage cans.

The demonstrators pushed aside a garbage can, opening a path, and rushed forward. Simultaneously, baton-wielding police charged. The protesters hurled rocks, and the police responded by beating everyone who couldn’t escape into one of the connecting alleys.

Citizens, nearly all on the side of the protesters, left their front gates open just a little to offer those of us fleeing the police an escape route.

The ensuing riots resulted in phone cam videos posted to YouTube.  Messages were sent out over Twitter under the hashtags: #IranElection and #Iran Election.

Many mainstream media news outlets had reporters “on the ground” in Tehran.  ABC News had Jim Sciutto there.  Mr. Sciutto sent a message out over Twitter at 9:20 on Saturday morning:

police confiscated our camera and videotapes.  We are shooting protests and police violence on our cell phones

Sciutto and other reporters whose equipment had been confiscated, began shooting riot videos on their phone cams.  Many networks, including ABC, MSNBC and Fox News began to broadcast these  …  but not CNN.  Many Twitter users, following the Iranian violence became outraged over CNN’s failure to cover the rioting.  As a result, they started a new discussion thread, using the hashtag:  #CNNFail.  Many of these postings criticized the quality of CNN’s limited reporting on these events.

Here were some of the messages I found on CNNFail:

Shazzy919 — ChristianeAmanpour:  “No indication of curfew or further forceful action” really????

ahockley — There’s currently a story on CNN titled “Do journalists Twitter too much?”

charlieprofit –  CNN just ran the same report aired earlier where they call some Iranian protesters Vigilantes

Robot117 –  My animosity toward CNN for their utter incompetence in reporting this news is growing

georgedick — CNN still referring to “The landslide win of Iranian President Mahmoud Ahmadinejad”.   WTF.

In fact, ABC’s Jim Sciutto made the following comment on Twitter concerning CNN’s fiasco:

Did CNN Intl really just air pix of a water-skiing squirrel?  Anyone remember ‘Ron Burgundy’? 12:14 AM Jun 14th from web

A review of CNN’s website reveals that some of their coverage seemed like an attempt to legitimize Ahmadinejad’s “victory”:

The landslide defeat of Ahmadinejad’s leading opponent, Mir Hossein Moussavi, who some analysts predicted would win the election, triggered angry protests in Iran and other cities around the world.

*    *    *

Moussavi’s supporters say the election was rigged. But the huge turnout for Ahmadinejad’s victory speech Sunday leaves no doubt that the president carries plenty of support.

For all the ridicule directed against Twitter and its users, the CNNFail event will become an historical milestone for the moment when this communication medium finally earned some respect.

Iran Votes

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June 11, 2009

Friday, June 12, brings us the big election in Iran.  The infamous President Mahmoud Ahmadinejad is up for re-election.  He is running against Mir Hussein Mousavi, Mehdi Karroubi and Mohsen Rezai.  At a time like this, it’s nice to check in on Al Jazeera to see how things are going.  (I always have a link to Al Jazeera on the Blogroll to the left, for keeping up with reactions to world events from their unique perspective.)  From Tehran, Alireza Ronaghi informs us that Ahmadinejad has quite a fight on his hands to maintain power.  Here’s some of what Mr. Ronaghi had to say about the candidates:

Ahmadinejad’s reformist rivals are Mehdi Karroubi, the former parliament speaker who led a reformist-dominated parliament between 2000 and 2004, and Mir Hossein Mousavi, who was Iran’s prime minister during the eight-year war with Iraq until a constitutional amendment abolished that post in Iran’s political system.

Both Karroubi and Mousavi accuse Ahmadinejad of mismanagement, both in foreign policy and the domestic economy.

*    *    *

Mohsen Rezai is an ex-commander-in-chief of the Revolutionary Guards –  Iran’s elite armed forces.

Rezai has previously claimed — despite a presumed proximity between his and Ahmadinejad’s political views — that the latter’s policies “are driving the country over a precipice”.

Mr. Ronaghi’s article points out how Ahmadinejad’s questioning as to whether the Nazi Holocaust ever really happened, has been exploited by his reformist opponents, with some success:

Ahmadinejad has fired back by accusing his critics of being affiliated to the Zionist regime, the title with which Iranian officials refer to Israel.

“I asked that question to anger the Zionists, so why are you so angry?”  Ahmadinejad asked in a speech delivered to a gathering of his supporters in recent days.

From Mr. Ronaghi’s report, we also learn that Ahmadinejad has something in common with his good buddy in our hemisphere, Hugo Chavez of Venezuela.  As it turns out, Ahmadinejad introduced something called “justice stocks”:

As part of the “justice stocks” move, the government distributed billions of dollars worth of stocks in state-run companies and factories among Iran’s lower economic classes.

It was meant to re-distribute the country’s wealth in a fairer way.

Danesh Jafari also disagrees with the way this has been carried out.  He says that the main plan, as laid down under Article 44 of the constitution and decreed by Iran’s supreme leader, had been for recepient social groups to reimburse the price of the stock in installments over 10 years.

“The government only insists on distributing the dividend profit of the stocks,” Danesh Jafari says, “But as far as reimbursement is concerned, the government has only gathered some $200 million of the planned $2 billion first installment,” the former economy minister told Al Jazeera.

It should come as no surprise that this policy has negatively impacted Ahmadinejad’s popularity with the Iranian middle class.

Many of us outside of Iran are concerned about the reaction of Iran’s “supreme leader”, Ayatollah Ali Khamenei, to the election of a reformist as president.  After all, Iran’s president is ultimately subservient to the supreme leader.  If a reformist won the election, would Khamenei dispatch his henchmen, the Revolutionary Guard, to restore “order”?  Another article from Al Jazeera points out how these goons are already getting anxious:

The political chief of Iran’s Revolutionary Guard has warned reformists in the country against seeking what he called a “velvet revolution”, vowing that it would be “nipped in the bud”.

Yadollah Javani’s comments appeared aimed at Mir Hossein Mousavi, a reformist candidate in the country’s presidential elections and followed another day of bitter exchanges between Mousavi and his rival and current president, Mahmoud Ahmadinejad.

*    *    *

In a statement on its website, Javani drew parallels between Mousavi’s campaign and the “velvet revolution” that led to the 1989 overthrow of the communist government in then Czechoslovakia.

“There are many indications that some extremist [reformist] groups, have designed a colourful revolution … using a specific colour for the first time in an election,” the statement said.

Calling that a “sign of kicking off a velvet revolution project in the presidential elections”, Javani vowed that any “attempt for velvet revolution will be nipped in the bud”.

Meanwhile, Steve Clemons of The Washington Note, through his New America Foundation, in conjunction with Terror Free Tomorrow, conducted a poll of Iranian voters.  From the poll results, it appears as though a runoff election will be necessary, since no candidate will likely win 50 percent of the vote.  Here’s how it breaks down:

At the stage of the campaign for President when our poll was taken, 34 percent of Iranians surveyed said they will vote for incumbent President Ahmadinejad. Mr. Ahmadinejad’s closest rival, Mir Hussein Moussavi, was the choice of 14 percent, with 27 percent stating that they still do not know who they will vote for.  President Ahmadinejad’s other rivals, Mehdi Karroubi and Mohsen Rezai, were the choice of 2 percent and 1 percent, respectively.

A close examination of our survey results reveals that the race may actually be closer than a first look at the numbers would indicate. More than 60 percent of those who state they don’t know who they will vote for in the Presidential elections reflect individuals who favor political reform and change in the current system.

89 percent of Iranians say that they will cast a vote in the upcoming Presidential elections. The poll shows that 87 percent of Persians, 94 percent of Azeris and around 90 percent of all other ethnicities intend to vote in the upcoming elections.

About seven in ten Iranians think the elections will be free and fair, while only one in ten thinks they will not be free and fair.

The current mood indicates that none of the candidates will likely pass the 50 percent threshold needed to automatically win; meaning that a second round runoff between the two highest finishers, as things stand, Mr. Ahmadinejad and Mr. Moussavi, is likely.

So, if you bought any champagne to celebrate on Friday night, you may prefer to just hang onto it.  We would need to find out when the runoff election is going to take place.  That final election could be quite an exciting event.  In the mean time, take a look at the poll results discussed above.  They contain a good deal of other interesting information about what the Iranian citizens are thinking.

The C Word

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June 8, 2009

I always find it amusing when politicians adopt the catch phrases and other expressions, obviously created by their lobbyist/puppeteers.  One of my favorites is “foreign oil”, as in:  “We need to end our dependence on foreign oil”.  Do they expect people to believe that Jesus made our oil different from that “Muslim oil”, which causes air pollution?  The expression:  “foreign oil” is obviously being used to vilify Arab countries for last year’s inflated gasoline prices, caused by oil speculators and American oil companies.  (Let’s not forget the price gouging by gasoline retailers.)  Most Americans realize that we have a serious problem with our dependence on petroleum products and, more generally fossil fuels, including coal, as sources of energy.  According to a March, 2009 Gallup poll, 60 percent of Americans are “worried a great deal or fair amount” by global warming.  Although this is down from last year’s 66 percent, 76 percent of Americans are “worried a great deal or fair amount” by air pollution itself, independent of the global warming consequences (according to the same poll).

Attention is increasingly focused on the concept of “clean coal” as an energy source.  In his February 24 address to the Joint Session of Congress, President Obama made it clear that he supported Congressional financing of the development of “clean coal” as a viable energy source.  The timing seemed intended to coincide with the aggressive advertising campaign against “clean coal”.  In case you’re wondering just what “clean coal” is  .  .  .  Ben Elgin wrote an article for Business Week last year, entitled:  “The Dirty Truth About Clean Coal”.  Here’s some of what he had to say:

The catch is that for now — and for years to come — “clean coal” will remain more a catchphrase than a reality.  Despite the eagerness of the coal and power industries to sanitize their image and the desire of U.S. politicians to push a healthy-sounding alternative to expensive foreign oil and natural gas, clean coal is still a misnomer.

*    *    *

Corporations and the federal government have tried for years to accomplish “carbon capture and sequestration.”  So far they haven’t had much luck.  The method is widely viewed as being decades away from commercial viability.  Even then, the cost could be prohibitive:  by a conservative estimate, several trillion dollars to switch to clean coal in the U.S. alone.

Then there are the safety questions.  One large, coal-fired plant generates the equivalent of 3 billion barrels of CO2 over a 60-year lifetime.  That would require a space the size of a major oil field to contain.  The pressure could cause leaks or earthquakes, says Curt M. White, who ran the U.S. Energy Dept.’s carbon sequestration group until 2005 and served as an adviser until earlier this year.  “Red flags should be going up everywhere when you talk about this amount of liquid being put underground.”

*    *    *

Companies seeking to build dozens of coal-fueled power plants across the country use the term “clean coal” liberally in trying to persuade regulators and voters.

Needless to say, President Obama’s advocacy on behalf of the “clean coal” lobby has outraged more than a few people.  Will Harlan wrote an article for the March 20 edition of Blue Ridge Outdoors magazine, entitled:  “The Dirty Truth Behind Obama’s ‘Clean Coal’ Stimulus”.  In addition to addressing the problems yet to be overcome with carbon capture, as well as the problems associated with mountaintop removal mining, sludge spills, dam breaches, poisoned wells, skyrocketing cancer rates, childhood asthma, premature deaths, slurry ponds, coal ash waste and mercury emissions, Harlan pointed out that:

Obama has also committed to reviving a boondoggle coal facility that even the Bush Administration decided to kill:  the FutureGen Carbon Capture and Storage Plant, which just happens to be located in Obama’s home state of Illinois.  Even though the facility costs have soared well beyond budget, and it is nowhere close to developing cost-effective technologies to safely capture and store carbon, Obama continues to support it.

Why are we letting Obama get away with greenwashing coal by perpetuating the “clean coal” myth?  The Democrats received close to $1 million in “contributions” in 2008 from the coal mining industry.  And southern Illinois is part of the country’s coal belt.

Eugene Robinson deserves a hat tip for his June 5 Washington Post column, criticizing Obama’s stance on this issue.  The strongest point made by Robinson was the cost/benefit analysis:

The Obama administration is spending $2.4 billion from the stimulus package on carbon capture and storage projects — a mere down payment.  Imagine what that money could do if it were spent on solar, wind and other renewable energy sources.  Imagine if we actually tried to solve the problem rather than bury it.

It should come as no surprise that the Greenpeace website would feature an essay, critical of “clean coal” with the following conclusion:

“Clean coal” is an attempt by the coal industry to try and make itself relevant in the age of renewables.  Existing CCTs do nothing to mitigate the environmental effects of coal mining or the devastating effects of global warming.  Coal is the dirtiest fuel there is and belongs in the past.  Much higher emission cuts can be made using currently available natural gas, wind and modern biomass that are already in widespread use.  Clean, inexpensive.  This is where investment should be directed, rather than squandering valuable resources on a dirty dinosaur.

Nevertheless, what does come as a surprise is that the very same article quoted above appears on Barack Obama’s Campaign for America website.  In case you’re wondering how to reconcile that point of view with Obama’s enthusiasm for “clean coal”, you have to read the disclaimer appearing at the end of the article on the Campaign for America site:

Content on blogs in My.BarackObama represents the opinions of community members and in no way should be interpreted as endorsed or approved by the campaign.

In other words:  “Don’t be dumb enough to believe that President Obama is really going to support anything you read here”.

In his June 4 opinion piece for The Washington Post, E.J. Dionne observed how the media are:

… largely ignoring critiques of Obama that come from elected officials on the left.

This was brought home at this week’s annual conference of the Campaign for America’s Future, a progressive group that supports Obama but worries about how close his economic advisers are to Wall Street, how long our troops will have to stay in Afghanistan and how much he will be willing to compromise to secure health-care reform.

To the objective observer, it is becoming increasingly obvious that Barack Obama is as much of a hypocrite as any other politician who found his way to the White House.

Defending Reagan

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June 4, 2009

In case you’ve wondered whether Nobel laureates ever emit brain farts, Paul Krugman answered that question in the May 31 edition of The New York Times.  His column of that date targeted former President Ronald Reagan for causing our current economic crisis:

There’s plenty of blame to go around these days.  But the prime villains behind the mess we’re in were Reagan and his circle of advisers — men who forgot the lessons of America’s last great financial crisis, and condemned the rest of us to repeat it.

I was never a big fan of Ronald Reagan.  My reaction to his nomination as the Republican Presidential candidate in 1980, conjured up James Coburn’s sarcastic line from the movie In Like Flint:  “An actor for President!“  Reagan’s legacy was exaggerated — which is why the book, Tear Down This Myth by Will Bunch, is available on this site, under the “Featured Books” section on the left side of this page.  I never believed that Reagan deserved all the credit he was given for the collapse of the former Soviet Union.  In my opinion, that distinction belongs to Lech Walesa, leader of Solidarity (the former Soviet bloc’s first independent trade union) and his old buddy, Karol Wojtyla, who later became Pope John Paul II.  In fact, former Soviet leader Mikhail Gorbachev admitted that the demise of the Iron Curtain would have been impossible without John Paul II.

Another literary deflation of that aspect of the Reagan legend can be found in The Rebellion of Ronald Reagan:  A History of the End of the Cold War by James Mann.  In his review of that book for The Washington Post, Ronald Steel noted how James Mann addressed the claim that Reagan broke up the Soviet Union:

And in 1991 the Soviet Communist Party disintegrated and with it ultimately the Soviet Union itself.  Did Reagan make it happen?  This would be too strong, Mann insists.  The Cold War ended largely because Gorbachev “had abandoned the field.”

Despite my own feelings about the Reagan legacy, upon reading Paul Krugman’s attempt to blame Ronald Reagan for the economic meltdown, I immediately rejected that idea.  What became interesting was that in the aftermath of that article, commentators from “left-leaning” news sources voiced objections to the piece.  For example, William Greider is the national affairs correspondent for The Nation.  On his own blog, Greider wrote an essay entitled:  “Krugman Gets His History Wrong”.  While upbraiding Krugman, Mr. Greider took care to note the complicity of the Democrats in causing the current economic crisis:

What Krugman leaves out is that financial deregulation actually started two years earlier — before the Gipper got to Washington.  A Democratic Congress and Democratic president (Jimmy Carter) enacted the Monetary Control Act of 1980 which removed all remaining controls on interest rates and repealed the federal law prohibiting usury (note that sky-high interest rates and ruinous predatory lending have been with us ever since).  It was the 1980 legislation that took the lid off banking and doomed the savings and loan industry, the mainstay that used to provide housing loans and home mortgages.  The thrifts were able to raise capital because they were allowed to pay a half percent more in interest to depositors.  Bankers wanted them out of the way.  The Democratic party obliged.

Robert Scheer is the editor of Truthdig.  The columns he writes for Truthdig regularly appear in The Nation.  (He is famous for getting Jimmy Carter to admit for Playboy magazine, that Carter often “lusts in his heart for other women”.)  Mr. Scheer’s reaction to Krugman’s vilification of Reagan as the saboteur of the economy includes such words as “disingenuous” and “perverse”.  Beyond that, Sheer lays blame for this crisis where it properly belongs:

Reagan didn’t do it, but Clinton-era Treasury Secretaries Robert Rubin and Lawrence Summers, now a top economic adviser in the Obama White House, did.  They, along with then-Fed Chairman Alan Greenspan and Republican congressional leaders James Leach and Phil Gramm, blocked any effective regulation of the over-the-counter derivatives that turned into the toxic assets now being paid for with tax dollars.

*    *    *

How can Krugman ignore the wreckage wrought during the Clinton years by the gang of five?  Rubin, who convinced President Clinton to end the New Deal restrictions on the merger of financial entities, went on to help run the too-big-to-fail Citigroup into the ground.  Gramm became a top officer at the nefarious UBS bank.  Greenspan’s epitaph should be his statement to Congress in July 1998 that “regulation of derivatives transactions that are privately negotiated by professionals is unnecessary.”  That same week Summers assured banking lobbyists that the Clinton administration was committed to preventing government regulation of swaps and other derivatives trading.

Thank goodness Eliot “Socks” Spitzer is still around, writing for Slate.  His most recent article about the economy not only provides an accurate assessment of the cause of the problem  –  it also suggests some solutions:

We have had a fundamentally misguided industrial policy over the past decade.  Yes, industrial policy is a dirty phrase to many, some of whom would argue that we haven’t had one, and indeed shouldn’t.  But the truth is we did have one:  to leverage up and guarantee the bets of a financial services sector that has now collapsed and left nothing of value in its wake.

What would be a better approach?  A policy to support those sectors that actually create goods and value.  Investment in transformational technology and infrastructure are core national needs.  So why not start with a government order for 500,000 electric cars, subject to an RFP two years from now, by which time a true electric car prototype will have been developed?  It should be open to any manufacturer, as long as 75 percent of the value of the car is domestically produced.  I don’t care if the name on the plate is GM or Toyota, as long as the value added is here.  (I prefer a “Toyota” produced in Tennessee to a “GM” produced in China.  Why struggle to save the shell of a company –GM– that intends to ship jobs overseas anyway?)  Guaranteeing an order of 500,000 will give manufacturers the needed scale to generate profits and reassure private customers that service and support will be around for the long haul.  And the federal government could also issue an RFP for recharging stations, to be built by private companies, along the interstate highway system, wherever there is a traditional filling station, so that recharging will be possible.

(By the way:  An “RFP” is a Request for Proposals, or bids, on a government project — just in case you were thinking it might mean “request for prostitutes”.)

I have always been a fan of Socks Spitzer.  His personal story underscores the simple truth that all of us, regardless of our accomplishments, are only human and we all make mistakes  –  even Nobel Prize winners such as Paul Krugman.

Where The Money Is

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June 1, 2009

For the past few months we have been hearing TV “experts” tell us that “it’s almost over” when discussing the Great Recession.  Beyond that, many of the TV news-readers insist that the “bear market” is over and that we are now in a “bull market”.  In his new column for The Atlantic (named after his book A Failure of Capitalism) Judge Richard A. Posner is using the term “depression” rather than “recession” to describe the current state of the economy.  In other words, he’s being a little more blunt about the situation than most commentators would care to be.  Meanwhile, the “happy talk” people, who want everyone to throw what is left of their life savings back into the stock market, are saying that the recession is over.  If you look beyond the “good news” coming from the TV and pay attention to who the “financial experts” quoted in those stories are … you will find that they are salaried employees of such companies as Barclay’s Capital and Charles Schwab  … in other words:  the brokerages and asset managers who want your money.   A more sober report on the subject, prepared by the National Association for Business Economics (NABE) revealed that 74 percent of the economists it surveyed were of the opinion that the recession would end in the third quarter of this year.  Nineteen percent of the economists surveyed by the NABE predicted that the recession would end during the fourth quarter of 2009 and the remaining 7 percent opined that the recession would end during the first quarter of 2010.

Some investors, who would rather not wait for our recession to end before jumping back into the stock market, are rapidly flocking to what are called “emerging markets”.  To get a better understanding of what emerging markets are all about, read Chuan Li’s (mercifully short) paper on the subject for the University of Iowa Center for International Finance and Development.  The rising popularity of investing in emerging markets was evident in Fareed Zakaria’s article from the June 8 issue of Newsweek:

It is becoming increasingly clear that the story of the global economy is a tale of two worlds.  In one, there is only gloom and doom, and in the other there is light and hope.  In the traditional bastions of wealth and power — America, Europe and Japan — it is difficult to find much good news.  But there is a new world out there — China, India, Indonesia, Brazil — in which economic growth continues to power ahead, in which governments are not buried under a mountain of debt and in which citizens remain remarkably optimistic about their future.  This divergence, between the once rich and the once poor, might mark a turn in history.

*    *    *

Compare the two worlds.  On the one side is the West (plus Japan), with banks that are overleveraged and thus dysfunctional, governments groaning under debt, and consumers who are rebuilding their broken balance sheets. America is having trouble selling its IOUs at attractive prices (the last three Treasury auctions have gone badly); its largest state, California, is veering toward total fiscal collapse; and its budget deficit is going to surpass 13 percent of GDP –  a level last seen during World War II.  With all these burdens, even if there is a recovery, the United States might not return to fast-paced growth for a while.  And it’s probably more dynamic than Europe or Japan.

Meanwhile, emerging-market banks are largely healthy and profitable.  (Every Indian bank, government-owned and private, posted profits in the last quarter of 2008!)  The governments are in good fiscal shape.  China’s strengths are well known — $2 trillion in reserves, a budget deficit that is less than 3 percent of GDP — but consider Brazil, which is now posting a current account surplus.

On May 31, The Economic Times reported similarly good news for emerging markets:

Growth potential and a long-term outlook for emerging markets remain structurally intact despite cyclically declining exports and capital outflows, a research report released on Sunday said.

According to Credit Suisse Research’s latest edition of Global Investor, looking forward to an eventual recovery from the current crisis, growth led by domestic factors in emerging markets is set to succeed debt-fuelled US private consumption as the most important driver of global economic growth over coming years.

The Seeking Alpha website featured an article by David Hunkar, following a similar theme:

Emerging markets have easily outperformed the developed world markets since stocks rebounded from March this year. Emerging countries such as Brazil, India, China, etc. continue to attract capital and show strength relative to developed markets.

On May 29, The Wall Street Journal‘s Smart Money magazine ran a piece by Elizabeth O’Brien, featuring investment bargains in “re-emerging” markets:

As the U.S. struggles to reverse the economic slide, some emerging markets are ahead of the game.  The International Monetary Fund projects that while the world’s advanced economies will contract this year, emerging economies will expand by as much as 2.5 percent, and some countries will grow a lot faster.  Even better news:  Some pros are finding they don’t have to pay a lot to own profitable “foreign” stocks.  The valuations on foreign stocks have become “very, very attractive,” says Uri Landesman, chief equity strategist for asset manager ING Investment Management Americas.

As for The Wall Street Journal itself, the paper ran a June 1 article entitled: “New Driver for Stocks”, explaining that China and other emerging markets are responsible the rebound in the demand for oil:

International stock markets have long taken their cues from the U.S., but as it became clear that emerging-market economies would hold up best and rebound first from the downturn, the U.S. has in some ways moved over to the passenger seat.

Jim Lowell of MarketWatch wrote a June 1 commentary discussing some emerging market exchange-traded funds (ETFs), wherein he made note of his concern about the “socio-politico volatility” in some emerging market regions:

Daring to drink the water of the above funds could prove to be little more than a way to tap into Montezuma’s revenge.  But history tells us that investors who discount the rewards are as prone to disappointment as those who dismiss the risks.

On May 29, ETF Guide discussed some of the exchange-traded funds focused on emerging markets:

Don’t look now, but emerging markets have re-discovered their mojo.  After declining more than 50 percent last year and leading global stocks into a freefall, emerging markets stocks now find themselves with a 35 percent year-to-date gain on average.

A website focused solely on this area of investments is Emerging Index.

So if you have become too risk-averse to allow yourself to get hosed when this “bear market rally” ends, you may want to consider the advantages and disadvantages of investing in emerging markets.  Nevertheless, “emerging market” investments might seem problematic as a way of dodging whatever bullets come by, when American stock market indices sink.  The fact that the ETFs discussed in the above articles are traded on American exchanges raises a question in my mind as to whether they could be vulnerable to broad-market declines as they happen in this country.  That situation could be compounded by the fact that many of the underlying stocks for such funds are, themselves, traded on American exchanges, even though the stocks are for foreign corporations.  By way of disclosure, as of the time of writing this entry, I have no such investments myself, although by the time you read this  . . .   I just might.

Update: I subsequently “stuck my foot in the water” by investing in the iShares MSCI Brazil Index ETF (ticker symbol: EWZ).  Any guesses as to how long I stick with it?

June 3 Update: Today the S&P 500 dropped 1.37 percent and EWZ dropped 5.37 percent — similar to the losses posted by many American companies.   Suffice it to say:  I am not a happy camper!  I plan on unloading it.

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