News Roundup: Taliban, Mandatory sentencing, Russian Economy

You can tell me that you are an agent of God. Okay, I will believe you, but I will also watch your actions. If you are killing children in the name of God, you are confused. The Taliban in Pakistan stormed a military school and killed over a hundred people in the name of God. They are sad and misguided.

A federal judge speaks out against mandatory sentences.

The Russian economy is imploding (more from Krugman):

It’s impressive just how quickly and convincingly the wheels have been coming off the Russian economy. Obviously the plunge in oil prices is the big driver, but the ruble has actually fallen more than Brent — oil is down 40 percent since the start of the year, but the ruble is down by half.

What’s going on? Well, it turns out that Putin managed to get himself into a confrontation with the West over Ukraine just as the bottom dropped out of his country’s main export, so that a financing shock was added to the terms of trade shock. But it’s also true that drastic effects of terms of trade shocks are a fairly common phenomenon in developing countries where the private sector has substantial foreign-currency debt: the initial effect of a drop in export prices is a fall in the currency, this creates balance sheet problems for private debtors whose debts suddenly grow in domestic value, this further weakens the economy and undermines confidence, and so on.

The central bank may (or may not, as seems to be true in Russia right now) be able to limit the currency plunge by raising interest rates (now above 13 percent on Russian 10-years), but only at the cost of deepening the recession. Eichengreen et al (pdf), in a good discussion of all this in the Latin American context, give the example of Chile, which was hit very hard by falling copper prices at the end of the 1990s despite a much more favorable institutional setup than Russia right now — and, of course, without having de facto invaded a neighboring country.

Continue reading

More corporate welfare

Our country has become a welfare state for the rich. Corporate welfare. More tax cuts for the rich. More taxpayers supporting the wild and crazy swaps market. We continue to give them more and more money.

From Robert Reich:

In Washington’s coming budget battles, sacred cows like the tax deductions for home mortgage interest and charitable donations are likely to be on the table along with potential cuts to Social Security and Medicare.

But no one on Capitol Hill believes Wall Street’s beloved carried-interest tax loophole will be touched.

Don’t blame the newly elected Republican Congress.

Democrats didn’t repeal the loophole when they ran both houses of Congress from January 2009 to January 2011. And the reason they didn’t has a direct bearing on the future of the party.

First, let me explain why this loophole is the most flagrant of all giveaways to the super-rich.

Continue reading