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Daesh – IS

I just don’t understand the whole Middle East.  And whenever I try to, it just seems to get more complex and more confusing.  From Al-Monitor (bolding is mine):

Lebanon’s Shiite movement Hezbollah is fighting the Islamic State group in Iraq, its chief Hassan Nasrallah revealed for the first time Monday in a speech beamed to supporters.

“We may not have spoken about Iraq before, but we have a limited presence because of the sensitive phase that Iraq is going through,” Nasrallah said, referring to ongoing clashes between Iraq’s army, militias and Kurdish forces against the IS jihadists.

Hezbollah is already fighting in Syria, alongside President Bashar al-Assad’s forces.

Nasrallah’s speech comes two days after his leading Lebanese opponent, former prime minister Saad Hariri, called on Hezbollah to withdraw from Syria.

“I say to those who call on us to withdraw from Syria, let’s go together to Syria,” said Nasrallah.

“I say, come with us to Iraq, and to any place where we can fight this threat that is threatening our (Muslim) nation and our region,” he added, referring to IS and the Al-Qaeda affiliated Al-Nusra Front.

Both Sunni jihadist movements control large swathes of Syria, while IS is also present in Libya, where on Monday it claimed the beheading of 21 Coptic Christian Egyptian hostages.

Nasrallah condemned the brutal killings as “an awful, heinous crime”, while branding the Al-Nusra Front and IS as having “the same essence, ideology, culture and methodology”.

“The only difference between them was over leadership, but they are essentially one and the same,” said Nasrallah.

“All the takfiri (extremist Sunni) currents must be fought, without distinction.” ‘More crises, more confrontations’ Nasrallah’s speech comes just over a week after Hezbollah, the Syrian army and pro-regime militias launched a major offensive against rebels and their Al-Nusra Front allies in southern Syria.

Nasrallah meanwhile said it made no sense for unnamed Gulf countries — in an apparent reference to Saudi Arabia and Qatar — as well as Jordan to fight IS, while allegedly supporting the Al-Nusra Front.

Hezbollah, like Assad’s regime, brands all those fighting Damascus as “terrorists”. Neither recognises the presence of non-jihadist groups seeking Assad’s ouster.

“How can some countries in the Gulf take part in the (US-led) international coalition against Daesh, while giving money and weapons to the Al-Nusra Front… How is that logical?” he said, using the pejorative Arabic acronym “Daesh” to refer to IS.

In August, a US-led coalition launched strikes against IS positions in Iraq. In September, the campaign was expanded to include targets in Syria.

Nasrallah went on to call on Gulf states that support the Syrian opposition to help pave the way for a political solution to a conflict that has claimed more than 210,000 lives since 2011.

“In Syria, the game is over,” said Nasrallah, in reference to the ongoing fighting.

“The gates to a political solution should be opened,” he said, “and the non-extremist opposition… must enter into a settlement with the regime, because the regime is ready for a settlement.” Nasrallah also warned that “the region is going in the direction of more crises, more confrontations, and new fronts are opening”.

Wasn’t Hezbollah the worst terrorist group on earth, once upon a time?  Are they good guys now, or just less bad? How is it possible to find good guys in this, and why do we need to?

Apparently I’m not the only one who finds this baffling.  All US warmaking in the region seems to backfire, sooner or later.  Glenn Greenwald reports:

When Saddam Hussein was captured in 2003 by U.S. forces, Iraq War advocates boastfully celebrated the event as proof that they were right and used it to mock war opponents (Joe Lieberman and John Kerry, for instance, gleefully exploited the event to demand that Howard Dean admit his war opposition was wrong). When Muammar Gaddafi was forced by NATO bombing in August 2011 to flee Tripoli, advocates of U.S. intervention played the same game (ThinkProgress gleefully exploited the occasion to try to shame those who objected to the illegality of Obama’s waging the war even after Congress voted against its authorization: as though Gadaffi’s fleeing could render legal Obama’s plainly illegal intervention).

Once Gadaffi was brutally killed by a mob, advocates of intervention threw a giddy party for themselves, celebrating their own rightness and righteousness and declaring Libya a model for future Western interventions. Upon Gadaffi’s fleeing, The New York Times, which editorially supported the war, published a front-page article declaring: “U.S. Tactics in Libya May be a Model for Other Efforts.” While acknowledging that “it would be premature to call the war in Libya a complete success for United States interests,” the paper noted that events had given “Obama’s senior advisers a chance to claim a key victory for an Obama doctrine for the Middle East that had been roundly criticized in recent months as leading from behind.”

Leading war advocates such as Anne-Marie Slaughter and Nick Kristof celebrated themselves as humanitarian visionaries and chided war opponents for being blinkered and overly cynical about the virtues of American force. British and French leaders descended upon Libya to strut around like some sort of conquering heroes, while American and Canadian officials held pompous war victory ceremonies. Hillary Clinton was downright sociopathic, gloating and cackling in an interview when told about Gadaffi’s death by mob: “We came, we saw, he died.” Democratic partisans were drowning in similar bravado (“Unlike the all-hat-no-cattle types we are increasingly seeing over there, [Obama] may take his time, but he does seem to get his man”).

From the start, it was glaringly obvious that all of this was, at best, wildly premature. As I wrote the day after Gadaffi fled, the Democratic claims of vindication were redolent in all sorts of ways of war hawk boasting after Saddam was captured, and were just as irrational: “the real toll of this war (including the number of civilian deaths that have occurred and will occur) is still almost entirely unknown, and none of the arguments against the war (least of all the legal ones) are remotely resolved by yesterday’s events.”

Since 2011, Libya has rapidly unraveled in much the way Iraq did following that invasion: swamped by militia rule, factional warfare, economic devastation, and complete lawlessness. And to their eternal shame, most self-proclaimed “humanitarians” who advocated the Libya intervention completely ignored the country once the fun parts — the war victory dances and mocking of war opponents — were over. The feel-good “humanitarianism” of war advocates, as usual, extended only to the cheering from a safe distance as bombs dropped.

The unraveling of Libya is now close to absolute. Yesterday, the same New York Times editorial page that supported the intervention quoted the U.N.’s Libya envoy Bernardino León as observing: “Libya is falling apart. Politically, financially, the economic situation is disastrous.” The NYT editors forgot to mention that they supported the intervention, but did note that “Libya’s unraveling has received comparatively little attention over the past few months.” In other words, the very same NATO countries that dropped bombs on Libya in order to remove its government collectively ignored the aftermath once their self-celebrations were over.

Into the void of Libya’s predictable disintegration has stepped ISIS, among other groups. ISIS yesterday released a new video showing the beheading of 21 Egyptian Coptic Christians, which they carried out in Libya. This, in turn, led to all sorts of dire warnings about how close ISIS now is to Europe — it “established a direct affiliate less than 500 miles (800 kilometers) from the southern tip of Italy,” warned AP — which in turn has produced calls for re-intervention in Libya.

Yesterday, the U.S.-supported Egyptian regime bombed targets in Libya. Meanwhile, “Italy warned that ISIS is at Europe’s doorstep as France and Egypt called for the United Nations Security Council to meet over the spiraling crisis in Libya.” It’s only a matter of time before another Western “intervention” in Libya becomes conventional wisdom, with those opposed being accused of harboring sympathy for ISIS (just as opponents of Libya intervention the first time around were accused of being indifferent to Gadaffi’s repression).

What we see here is what we’ve seen over and over: the West’s wars creating and empowering an endless supply of enemies, which in turn justify endless war by the West. It was the invasion of Iraq that ushered in “Al Qaeda in Iraq” and ultimately ISIS. It has been the brutal, civilian-slaughtering drone bombing of Yemen which spawned Al Qaeda in the Arabian Peninsula in that country. As Hillary Clinton herself acknowledged, the U.S. helped create Al Qaeda itself by arming, recruiting and funding foreign “Mujahideen” to fight the Soviet invasion of Afghanistan (“the people we are fighting today, we funded 20 years ago”). And now it is the NATO intervention in Libya which has laid the groundwork for further intervention.

That the U.S. would end up intervening in Libya again as a result of the first intervention was painfully obvious. A primary argument of intervention opponents was that the same destruction sown in Iraq from “regime change” would be sown in Libya, and that the U.S. would end up empowering factions that it would later claim it was “obligated” to fight. In October 2012, as Libya was disintegrating, I wrote:

Rather obviously, this was yet another example of the “Mission Accomplished” banner being waved quite prematurely. How many times does it need be proven that merely killing a dictator does not remotely guarantee an improvement from either the perspective of US interests or the people in the country being invaded? And how many more examples do we need where the US funds and arms a fighting force to do its bidding, only to turn around and find that it now must fight that same force?





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Krugman; on Virtue, and vs. Asness on Knaves, Fools, and Inflation

Paul Krugman recent wrote again about how austerity is bad (both lack of government spending and lack of debt forgiveness, which is just government spending directed at bad borrowers), or to flip it around, how virtue is killing the world economy.   And when he says “virtue,” what he means is, “Austerity when economies needed stimulus, paranoia about inflation when the real risk is deflation, and so on.”  In addition, he specified a need for debt forgiveness.  I agree with him on some of the basics:

A simplified but broadly correct account of what went wrong goes like this: In the years leading up to the Great Recession, we had an explosion of credit (mainly to the private sector). Old notions of prudence, for both lenders and borrowers, were cast aside; debt levels that would once have been considered deeply unsound became the norm.

Then the music stopped, the money stopped flowing, and everyone began trying to “deleverage,” to reduce the level of debt. For each individual, this was prudent. But my spending is your income and your spending is my income, so when everyone tries to pay down debt at the same time, you get a depressed economy.

This graph compares GDP to the total public plus private debt, starting in 1982:


It would appear that for the last 20 years or so, the rate of borrowing was increasing faster than the GDP was growing.  Or to put it another way, some part of GDP growth has been financed by borrowing.  I think that’s pretty widely recognized.

But then he adds:

So what can be done? Historically, the solution to high levels of debt has often involved writing off and forgiving much of that debt. Sometimes this happens explicitly: In the 1930s F.D.R. helped borrowers refinance with much cheaper mortgages, while in this crisis Iceland is outright canceling a significant part of the debt households ran up during the bubble years. More often, debt relief takes place implicitly, through “financial repression”: government policies hold interest rates down, while inflation erodes the real value of debt.

Well, that strikes me as just plain wrong.  I guess he’s forced to refer to those opposed to these tactics as being believers in virtue because, well, we are.  Savers are already feeling the brunt of the financial repression, which is certainly happening, just in slow motion.  That is, rates are 0, and inflation is 2%, instead of rates at 2% and inflation at 6%, which is probably more what the K man has in mind.  But hey, why not dig that knife in a little deeper to savers, by adding their neighbors’ bad loans to their overall government debt burden?  That really is infuriating.

And really, we already have done some debt forgiveness, but only for the banks through direclty through the bailouts and QE, as well as indirectly the accounting changes (FASB 157).  If Krugman wants to see bad debt written down, he should start with the owners of the bad debt acknowledging it as such.  But then the Fed would not be able to buy it at “full” value.  This makes QE a stealth debt forgiveness program, but only the inside big guys get the forgiveness.

One man’s debt is another man’s asset, so someone will have to take the loss.  God forbid that it should be a SI bank.  What should happen is rule of law.  If you don’t pay, you default.  You lose your credit rating and your collateral, and the bank loses whatever skin it had in the game.  If you are a bank and you become insolvent, then the FDIC does its thing.  Seems pretty straightforward.  But it is really not what happened at all, and it is still failing to happen.  The bad debt has not gone away.

As Krugman noted, borrowers have really not reduced their balance sheets by much.  He likes % of GDP measurements, but I prefer real dollars.  Here’s what private borrowing, government borrowing, and the sum of the two look like historically.  These are real 1982 dollars:


And here’s what they look like over just the past few years, again in 1982 dollars (to be consistent).  Sorry about the annual data on this, and thank you to Arthurian for helping direct me to the correct data series:


So public debt (people and corporations) has gone down about 15% but is flattening out now.  And as it went down, public debt went up to compensate, so that overall debt really didn’t change much.

Another reason that the debt load has not gone down more is that banks are simply not foreclosing.  Look at the overhang, shown on this chart from Calculated Risk:


It seems like what Krugman really wants is not so much for bad debt to be erased as private debt to be replaced by public debt.  That’s moral hazard, even more of it than we already have.  My vote for the cause of economic sluggishness still goes to moral hazard.  We all know that when it happens again, the same guys are still going to get paid.  Literally.  The same EXACT guys.

Well, this is a very poorly written post, but I don’t have time to work on it any more today.  Maybe I will edit it another day.

Right on time, as I was considering this post, Cliff Asness included this gem of a paragraph in his recent letter:

Focusing my attention, as was predestined, Paul Krugman lived up to his lifelong motto of “stay classy” with a piece on the subject entitled Knaves, Fools, and Quantitative Easing. Some lesser lights of the Keynesian firmament have also jumped in (collectivists, of course, excel at sharing a meme). Responding to Krugman is as productive as smacking a skunk with a tennis racket. But, sometimes, like many unpleasant tasks, it’s necessary. I will, at least partially, make that error here, while mostly trying to deal with the original issue separate from Paul’s screeds (though one wonders if CPI inflation had risen in the last four years if Paul would be admitting his entire economic framework was wrong – ok, one doesn’t really wonder – and those things never happen to Paul anyway, just ask him).

Asness then goes on to describe why he was wrong about inflation with regard to the obscene level of money printing (answer: he didn’t think velocity of money would disappear even more quickly than new money was printed), and what he thinks might happen next (not known, because the money is still out there).  Krugman fires right back, with a post that essentially says, “I’m right because I’m smart, you still don’t understand this stuff, and you should leave it to us smart guys.”  I’m sure Asness is flattered to get that personal attention from the Great and Powerful Paul.

Greg Mankiw does a much better job of explaining exactly why inflation didn’t occur, but, like Krugman, he still is not getting the point of those who feared inflation.  Mankiw writes:

…it is very clear to Paul Krugman and to his back-up singers that quantitative easing’s effects are small unless it is taken as a credible signal of a régime change and thus generates a significant shift in expectations of inflation. It wasn’t. So it didn’t. That it had at best small effects is an intellectual win for the Keynesian side here.

Everybody who has done their homework recognizes that.

Cliff Asness appears to believe that Paul Krugman’s beliefs are in some sense the flip side of his–that while Asness believed that QE would produce high inflation, instead Krugman believed that QE would produce a real economic boom: The Fed clearly wanted this money lent by banks and spent…. They didn’t get that, and we didn’t get the inflation we feared…. How this is a victory for one side of the debate or another is beyond me….

It is as if Asness never bothered to read things like this:

Paul Krugman:Not so easing (wonkish) – NYTimes.com: “Goldman Sachs report (no link) suggest[s] that the Fed’s policy of ‘unconventional easing’…

…isn’t very effective… that it would take between $1 trillion and $1.6 trillion of unconventional easing to accomplish as much as the Fed can achieve, in normal times, by cutting the Fed funds rate by 1 percentage point…. Bernanke and the Fed… have been gaming out what they would do if ‘it’ happened here for years. And a key element of the strategy was altering the composition of the Fed’s balance sheet–that is, unconventional easing. But that tool isn’t proving very potent.

This is an interesting argument, but it is not the one that Asness is making.  By the way, if they didn’t think that QE was going to lead to an improved economy, why did they do it?  Was it really just to make rich people richer, right on its face?  This seems to have been the only large measurable effect to this point.  I digress.  The point Asness makes, quite directly, is that inflation is certainly still possible.  All that new money is still out there, albeit parked in equities and real estate and excess reserves.  But until it gets bought back again by the Fed, the Keynesians really cannot honestly declare victory.  It will be great if that happens, and there is no horrible inflation, and we all get to keep on keeping on.  But we are not there yet.

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Corporate Personhood is Ridiculous

I think this guy is really looking for a big blowback and lots of clicks and reads.


But seriously, when he says “courts could have granted corporations all the same rights, abilities and duties without calling them persons. But this would have been merely a semantic difference,” he is just plain wrong.  That’s like saying a domestic partnership and marriage are the same thing.

The problem is that it is impossible to grant corporations personhood.  If a corporation has many of the rights of a person, fine.  Contracts, free speech, OK.  But when they hurt you, you can only sue them for money.  Individual human beings are what must be held accountable for wrongdoing.  Just look at BP, or any of the TBTF banks.  Without individuals being held accountable, it is obvious that corporations will not change their bad behavior.

You can’t put a corporation in jail!

Corporate Personhood: Why It’s Awesome

In my past life as an attorney, I worked at a firm specializing in election law. When I would tell people this, their typical reaction would be to say “ah, that’s nice. What is election law?” To which I would respond “You’ve heard of Citizens United? That was us.”

It’s true. My old firm represented Citizens United in the early stages of their legal challenge (at the Supreme Court they were represented by Ted Olson). I did zero work on the case personally, but perhaps because of my proximity to the center of the action I do have a perspective on the issues involved (or supposedly involved) in Citizens United that is a little atypical.

The Citizens United case has been, to put it mildly, controversial, with much of the controversy focusing on the notion that the Supreme Court have decreed that corporations were people. Polls show large majorities oppose legal personhood for corporations, and attempts to amend the constitution to deny corporations constitutional rights have sprung up across the nation. 

That’s unfortunate. Because behind an admittedly implausible-sounding slogan is a quite sensible idea. 

 Soylent Green is people, and so is Soylent Green, Inc.

Contrary to popular impression, corporate personhood did not start with Citizens United. In fact, corporate personhood dates back to the old English common law, where it was originally conceived as a consumer protection measure.

Suppose I buy meat from a butcher and it makes me sick. I might wish to sue the butcher for damages. But suppose that I bought the meat not from an individual butcher but from Acme Meat, Inc. It was a central doctrine of the common law that only persons could sue or be sued, own property, or make legally binding contracts. So if a corporation is not a person, I am out of luck. The response to this was to treat corporations as legal persons, who could sue or be sued, make and enforce contracts, buy, sell, and hold property, and so on.

Of course, courts could have granted corporations all the same rights, abilities and duties without calling them persons. But this would have been merely a semantic difference. Once a society decides to have corporations, it has to grant them something along the lines of legal personhood if for no other reason than to protect those who deal with it. 

Likewise, once a society decides to grant corporations the right to own property, it is absurd to deny them constitutional protections. The New York Times, the AFL-CIO, and the Sierra Club are all corporations. But it would be ridiculous if the government tried to use those organizations’ corporate status as a justification for regulating the editorial position of the New York Times, or controlling the advocacy position of the Sierra Club or the AFL-CIO. 

Consider the facts of Citizens United. The plaintiff in Citizens United was not Exxon, or GE or some other giant multinational business corporation. It was a small, nonprofit, political corporation that wanted to run a documentary critical of Hilary Clinton, during her presidential run. It was the equivalent of Michael Moore’s Fahrenheit 9/11 or Dinesh D’Souza’s Obama 2016. Yet according to the Federal Election Commission, Citizens United’s movie was not protected by the First Amendment because Citizens United had made its movie for political reasons, whereas the main purpose of Michael Moore’s movie was to make money. Needless to say, this is ironic on a number of levels.

During oral argument, the government claimed that if it wanted it could ban books that advocated the election or defeat of a candidate so long as the book was paid for partly using corporate money. Yet according to many, it was Citizens United who was advancing an extreme and dangerous position in the case. 

More than 150 years ago Alexis de Tocqueville noted in his Democracy in America that the genius of the American political tradition lay in what he called associations but what in today’s terminology we would call corporations. In Europe, to advance some political, social, or economic cause required some wealthy patron. In America, by contrary, groups of people who individually might not have had deep pockets could come together and pool their resources by founding an organization to advance the cause.

Far from being a tool of repression, corporations advanced the interests of democracy and equality by allowing the little guy to organize to accomplish what otherwise could only be achieved by the very rich. Ending corporate personhood would not stop billionaire individuals like the Koch brothers or George Soros from using their wealth to affect the political process, but it would hamper small grass roots organizations which choose to use the corporate form. Ultimately, the long tradition of corporate personhood represents not a threat to democracy, but a support of it.

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