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Janet Yellin for FED chair

Personally, I think that if you have proven that you have fumbled the ball in critical situations, you probably shouldn’t get the ball in critical situations. This concept works in football and it should work in government. Larry Summers was a big cheerleader for deregulation. He squashed the regulation of derivatives, which would’ve prevented the meltdown of Long-Term Capital Management in the ’90s and would’ve prevented the great recession. All we needed to do was regulate derivatives. (Let us not forget that this month marks the 10th anniversary of the meltdown of Lehman Brothers.)

Economist Joseph Stiglitz has more:

The controversy over the choice of the next head of the Federal Reserve has become unusually heated. The country is fortunate to have an enormously qualified candidate: the Fed’s current vice chairwoman, Janet L. Yellen. There is concern that the president might turn to another candidate, Lawrence H. Summers. Since I have worked closely with both of these individuals for more than three decades, both inside and outside of government, I have perhaps a distinct perspective.

But why, one might ask, is this a matter for a column usually devoted to understanding the growing divide between rich and poor in the United States and around the world? The reason is simple: What the Fed does has as much to do with the growth of inequality as virtually anything else. The good news is that both of the leading candidates talk as if they care about inequality. The bad news is that the policies that have been pushed by one of the candidates, Mr. Summers, have much to do with the woes faced by the middle and the bottom.

The Fed has responsibilities both in regulation and macroeconomic management. Regulatory failures were at the core of America’s crisis. As a Treasury Department official during the Clinton administration, Mr. Summers supported banking deregulation, including the repeal of the Glass-Steagall Act, which was pivotal in America’s financial crisis. His great “achievement” as secretary of the Treasury, from 1999 to 2001, was passage of the law that ensured that derivatives would not be regulated — a decision that helped blow up the financial markets. (Warren E. Buffett was right to call these derivatives “financial weapons of mass financial destruction.” Some of those who were responsible for these key policy mistakes have admitted the fundamental “flaws” in their analyses. Mr. Summers, to my knowledge, has not.) (more…)

By |2013-09-10T20:58:48-04:00September 10th, 2013|Economy|Comments Off on Janet Yellin for FED chair

The United States and North Korea — part two (the Bush years)

A few years ago, I wrote this post on North Korea. I was trying to understand what was going on in North Korea and how our response was causing a negative or positive feedback. Because North Korea has strategically jumped back into the limelight, I thought was worth reviewing what I knew or at least what I thought I knew about North Korea. It looks like I hit the nail on the head.

north koreans marching

North Korea

I highly recommend that you read yesterday’s post on North Korea. I looked at North Korea’s history of nuclear interest dating back to late 1950s and early 1960s.

To use a football metaphor, I’m not going to tell you that the Clinton administration had taken a football (North Korea’s nuclear issues) down to the two-yard line and all the Bush administration had to do was to carry the ball over the goal line. President George Bush, Vice President Cheney and Secretary Colin Powell needed to do much more than that. In retrospect, Bush was ill-prepared for North Korea. I have no idea how much he was briefed. I have no idea if alternative viewpoints (outside of the neoconservative line of thinking) were presented to the president. (Here’s a North Korean timeline.)

In my opinion, foreign policy is like three-dimensional chess. There are lots of moving pieces. You need to be very smart and very prepared in order to anticipate your opponent’s move. In foreign policy you are playing multiple opponents at the same time.

As far as I know, there were no high-level discussions about how to approach the North Koreans when President Bush announced to the South Korean president that he was unclear if North Korea was holding up their end of the bargain (the Agreed Framework). He basically stated that North Koreans were liars and cheats and could not be trusted. “We’re not certain as to whether or not they’re keeping all the terms of all agreements.” (NYT) While such a provocative statement would not get a second look in downtown Baltimore, in the world of diplomacy it was a slap in the face. The big question is, if the United States were to break off discussions with North Korea, which was a basic tenet of the “Agreed Framework,” then what? What leverage did we have against a country that is already isolated? Was it possible that we could squeeze China or Russia in order to use their leverage against North Korea? None of this had been discussed prior to Bush’s statement. At least, not to the best of my knowledge. This all happened in early March of 2001. By September of 2001, we were focused on Afghanistan and some in the Bush administration had already begun to focus on Iraq. (more…)

By |2013-04-04T19:01:08-04:00April 3rd, 2013|North Korea, Pakistan|Comments Off on The United States and North Korea — part two (the Bush years)

The United States and North Korea

I originally published this post approximately three years ago. With North Korea in the news again concerning its nuclear ambitions, I think it is important to understand the background.

As soon as President George W. Bush took office in 2001, Secretary of State Colin Powell stated that he was going to continue the actions of the Clinton administration. Quickly, Vice President Dick Cheney and other neo-cons in the Bush White House worked to silence Powell and reverse the steps that the Clinton Administration took to freeze nuclear weapons production in North Korea.

I believe the way that the US-North Korea relationship has been played out in the media has been ridiculously superficial. Secondly, the American public has been led to believe that everything started with President Clinton. He is portrayed as a hero or a villain, depending upon your point of view. As usual, I think that the real picture is far more complex.

It appears that North Korea’s nuclear plans date back to the late fifties and early ’60s. Being a very small and somewhat paranoid country, North Korea began to send scientists to the Soviet Union right at the end of the Korean War. They did not believe that when push came to shove the Soviet Union would stand up for them. The Cuban Missile Crisis reinforced that belief. The Soviet Union, their ally, backed down when the US show of force and imposed a blockade around Cuba. North Korea thought that Russia would do the same if squeezed by the US. Also, in 1965, the US, Japan and South Korean signed a diplomacy agreement. This served to further isolate the paranoid country. North Korea fired up the first of its two nuclear reactors in 1967. (more…)

By |2013-04-02T21:00:05-04:00April 2nd, 2013|Bush Administration, North Korea|4 Comments
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