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Currency Manipulation and the Trans-Pacific Partnership: What Art Laffer, Fred Bergsten, and Other Hawks Get Wrong

January 26, 2015 in Economics

By Daniel J. Ikenson

Daniel J. Ikenson

U.S. Trade Representative Michael Froman is bullish on the trade agenda. But his estimate of completing the Trans-Pacific Partnership (TPP) negotiations in March discounts the possibility that Congress will issue any tough demands in its Trade Promotion Authority (TPA) legislation. A congressional mandate to include enforceable “currency manipulation” provisions in trade agreements, for example, would push completion of the TPP into the next administration or kill it altogether.

Just like green energy subsidies, “Buy American” laws, 25 percent pick-up truck tariffs, and industry bailouts, currency manipulation distorts markets. Global resources would be more efficiently allocated if currency values were market-determined. But does currency manipulation stand out among the hodgepodge of popular interventions as a big enough problem with a net beneficial solution to warrant delaying or killing TPP?

Some industries, led by the K Street-savvy Detroit automakers and U.S. steel producers, think so and have pledged to work against the agreement unless it includes tough provisions to deter a particular brand of currency manipulation. (Of course, Detroit has been opposed to the TPP from the outset and even more so since its attempt to block Japan from joining the talks failed, so the conditional threat of non-support rings a bit hollow.) Their position seems to be buttressed by the views of supply-side favorite Arthur Laffer, establishment economist Fred Bergsten, and some of his colleagues at the Peterson Institute, who argue that currency manipulation demands an aggressive U.S. policy response. But their arguments for enforceable currency provisions, whether inside or independent of trade agreements, are unconvincing.

Saddling the TPP, the TTIP, and other trade agreements with provocative and unnecessary currency provisions would be a grave mistake.”

The question of whether and how to respond to foreign currency manipulation has been vexing policymakers since 2003 when Sen. Chuck Schumer (D-NY) first introduced a bill calling for a 27.5 percent tariff on all imports from China to compel the Chinese government to permit the Yuan to appreciate. Currency manipulation — in this context — is said to occur when governments take actions to suppress the values of their currencies, effectively taxing imports and subsidizing exports, to give advantages to their country’s producers.

That may certainly seem unfair to U.S. producers, but Schumer’s idea was roundly rejected as a massive consumption tax on the American people — and World Trade Organization-illegal to boot. But that didn’t stop him from re-introducing the same …read more

Source: OP-EDS

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Sen. Paul Proposes an Audit of the Federal Reserve

January 26, 2015 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul today reintroduced the bipartisan Federal Reserve Transparency Act of 2015. Known widely as ‘Audit the Fed,’ the bill calls to eliminate restrictions on Government Accountability Office (GAO) audits of the Federal Reserve and mandate that the Federal Reserve’s credit facilities, securities purchases, and quantitative easing activities would be subject to Congressional oversight.

‘A complete and thorough audit of the Fed will finally allow the American people to know exactly how their money is being spent by Washington. The Fed’s currently operates under a cloak of secrecy and it has gone on for too long. The American people have a right to know what the Federal Reserve is doing with our nation’s money supply. The time to act is now,’ Sen. Paul said.

Click HERE to read the Federal Reserve Transparency Act of 2015 in its entirety.

### …read more

Source: RAND PAUL

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I Wish I Had Never Reported My Rape

January 26, 2015 in Blogs

By Kendall Anderson, Salon

A man held a pillow over my face and forcibly penetrated me. The police called me “the suspect.”


I sit in the windowless interrogation room, fingers brushing against the cool metal of handcuffs attached to the chair, and try to comprehend what the detective sitting across from me is asking.

 

“Were you a virgin?” he says, his lips curling slightly as he repeats the question. “Explain to me, how could you have been bleeding if you weren’t on your period? Have you had sex before?”

I feel my face flush with embarrassment as I think about how to respond. Before I can say anything, there’s a knock at the door and another officer walks in.

“The suspect’s attorney is here.”

Suspect? My stomach drops. Did he really just refer to me as a suspect?

The detective turns to his colleague.

“She agreed not to have the lawyer come in for this.”

I open my mouth to object. Our “agreement” consisted of the detective asking me why I needed a lawyer if I was innocent. Before I can speak, the other officer leaves, the door closes and it’s just me and the detective again, alone in the windowless room.

“Let me get this straight, you can’t remember how your clothes came off? Well, what were you wearing?”

Though I am in an interrogation room, and have just been referred to as a suspect, I have not committed a crime. It is October 2013, I am 19 years old, and I am in the middle of reporting that I was raped on my college campus.

It all began so innocently. My girlfriends and I went to a fraternity party at a neighboring college and I met a guy there. We started chatting as soon as he arrived at the party. I liked him. We exchanged cell phone numbers, and texted a few times over the next few weeks. When he texted that he wanted to visit me at my college, I invited him over.

It was a sunny Sunday afternoon when we met at the quad at the center of campus.  We hugged briefly, then walked around campus, chatting. He said …read more

Source: ALTERNET

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Snowpocalypse: How Global Warming Creates Gargantuan Blizzards

January 26, 2015 in Blogs

By Cliff Weathers, AlterNet

Climate scientists say extreme blizzards are the new normal.


Severe winter storm events often prompt naysayers to mock, “Where’s that global warming?” But while the concept may seem to conflict with rising global temperatures, these storms are actually of the most obvious evidence of man-made climate change.

Climate change, say scientists, fuels the increasing intensities of winter storms. Warmer temperatures allow the atmosphere to hold more moisture and create heavier than normal precipitation. Climatologists agree that global warming will continue to make these storms worse over time.

Weather is different from climate, scientists point out. Weather is what we experience on a day-to-day basis; climate — especially in regards to climate change — is more about long-term trends. While each describes environmental conditions, they’re on different scales of time and space. Climatologists are not in the business of watching daily and regional forecasts, they consider the larger context in which weather operates and describe long-term climate trends and how they relate to ongoing weather events.

In regard to winter weather, climatologists are looking at two different trends. First, global temperatures are 1.6 degrees Fahrenheit warmer than they were 135 years ago when measurements were first taken with accuracy. Second, what were once-in-a-lifetime snowfalls are now commonplace. There’s growing belief among climatologists that these two trends are closely related. Blizzards are generated from disturbances at the boundaries between Arctic and tropical air masses. When these fronts collide, and especially when the air mass temperatures are vastly different, it creates storms. The more divergent the air masses, the more likely the resulting storm will be large. So, as our air grows warmer and holds more moisture, the result is a lot more snow when weather fronts meet. And while you can’t attribute any one storm to the effects of climate change, a clear trend of more intense storms points in that direction.

“We're loading the dice or stacking the deck toward more intense blizzards,” research meteorologist Marshall Shepherd told CNN.

The science behind blizzards and their relationship to climate change is straightforward says Marlene Cimons of the National …read more

Source: ALTERNET

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WATCH: Chomsky Blasts 'American Sniper' and the Media that Glorifies It

January 26, 2015 in Blogs

By Janet Allon, AlterNet

The famed professor draws a disturbing parallel between “Sniper” and our “global assassination program.”


Noam Chomsky had some choice words about the popularity of “American Sniper,” its glowing New York Times review, and what the worship of a movie about a cold-blooded killer says about the American people.

It's not good.

During a Cambridge, Massachusetts event hosted by The Baffler, Chomsky first read the glowing recent review the New York Times gave the movie. That review begins inauspiciously by insulting, “America’s coastal intelligentsia, which has busied itself with chatter over little-seen art dramas while everyday Americans showed up en masse for a patriotic, pro-family picture which broke all attendance records in its opening days.” 

So, Chomsky wonders aloud: “What was the patriotic, pro-family film that so entranced everyday Americans? It’s about the most deadly sniper in American history, a guy named Chris Kyle, who claims to have used his skills to have killed several hundred people in Iraq.”

Kyle's first kill was a woman who apparently walked into the street with a grenade in her hand as the Marines attacked her village. Here's how Kyle describes killing her with a single shot:

“‘I hated the damn savages I’d been fighting,’” Chomsky said, quoting Kyle. “‘Savage, despicable, evil — that’s what we were fighting in Iraq. That’s why a lot of people, myself included, called the enemy savages. There was really no other way to describe what we encountered there.’”

Chomsky also pointed out that The New Yorker loved the film, saying, “it was great, kept to the cinematic values, said it was well done.” On the other hand, Newsweek's Jeff Stein, a former US intelligence officer, deferred, calling it appalling. In that review, Chomsky says, Stein remembered a visit he had made to a “clubhouse for snipers, where to quote him, ‘the barroom walls featured white-on-black Nazi SS insignia, and other Wehrmacht regalia. The Marine shooters clearly identified with the marksmen of the world’s most infamous killing machine, rather than regular troops.”

“Getting back to Chris Kyle,” Chomsky said, arriving at his larger point. “He regarded his first kill as a terrorist — this woman who walked in the street — …read more

Source: ALTERNET

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'Triggers Can't Be Unpulled': Black NYT Columnist Fumes When Yale Student Son Is Stopped by Cops at Gunpoint

January 26, 2015 in Blogs

By Terrell Jermaine Starr, AlterNet

The chemistry major was coming from the library while black.


Not even the Yale student son of an award-winning columnist is immune from the barrel of a police officer's gun.

Saturday night, Charles Blow of the New York Times took to Twitter to share the fact that his son was held at gunpoint by a campus police officer searching for a burglary suspect who “fit his description”:

The police eventually caught the man they were looking for, but Blow later wrote that he was was still upset at how the officer treated his son: 

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Paul Krugman: One of the World's Biggest Economic Nightmares Has Ended

January 26, 2015 in Blogs

By Janet Allon, AlterNet

Greece has a new leader who should completely ignore the fiscal scolds.


Fed up with suffering through ill-conceived austerity economics, Greece has overwhelmingly elected a leftist leader who has promised to end this particular brand of punitive, failed policy. His name is Alexis Tsipras; he's leader of the left-wing Syriza coalition, and, as Paul Krugman writes in Monday's column, he is already being warned by various fiscal scolds to behave “responsibly.”

“So how has that responsibility thing worked out so far?” Krugman asks.

Answer: By just about any measure, it's been a disaster and has resulted in a great deal of suffering. Per Krugman:

To understand the political earthquake in Greece, it helps to look at Greece’s May 2010 “standby arrangement” with the International Monetary Fund, under which the so-called troika — the I.M.F., the European Central Bank and the European Commission — extended loans to the country in return for a combination of austerity and reform. It’s a remarkable document, in the worst way. The troika, while pretending to be hardheaded and realistic, was peddling an economic fantasy. And the Greek people have been paying the price for those elite delusions.

You see, the economic projections that accompanied the standby arrangement assumed that Greece could impose harsh austerity with little effect on growth and employment. Greece was already in recession when the deal was reached, but the projections assumed that this downturn would end soon — that there would be only a small contraction in 2011, and that by 2012 Greece would be recovering. Unemployment, the projections conceded, would rise substantially, from 9.4 percent in 2009 to almost 15 percent in 2012, but would then begin coming down fairly quickly.

What actually transpired was an economic and human nightmare. Far from ending in 2011, the Greek recession gathered momentum. Greece didn’t hit the bottom until 2014, and by that point it had experienced a full-fledged depression, with overall unemployment rising to 28 percent and youth unemployment rising to almost 60 percent. And the recovery now underway, such as it is, is barely visible, offering no prospect of returning to precrisis living …read more

Source: ALTERNET

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The President's Fictional Record

January 26, 2015 in Economics

By Richard W. Rahn

Richard W. Rahn

If you were a librarian, would you put President Obama’s recently delivered State of the Union address in the fiction or nonfiction section? All presidents puff their accomplishments and gloss over their failures, but no previous president has been so blatant in just making up “facts” and numbers that are so disconnected from reality.

The Islamic State (which is also called ISIS or ISIL) is gaining territory, yet the president said we are “stopping ISIL’s advance.” He said, “We’re upholding the principle that bigger nations can’t bully the small — by opposing Russian aggression.” In the year since his last State of Union address, Russia has grabbed Crimea, taken control of part of Eastern Ukraine, and continues to take more territory in Ukraine. If this is success, what would failure look like?

The president’s description of the economy was also a trip through Fantasy Land. Real family incomes are still far below where they were when he took office, and labor force participation rates have not been this low in more than three decades — but never mind. His failure to understand failure leads him to propose policies that will only make things worse.

Many of Obama’s policies are unrealistic.”

He proposes certain tax credits for the middle class that he intends to “pay for” with an increase in the capital gains tax rate. Over the past 40 years, the capital gains tax rate has been lowered and raised many times, and there is extensive empirical evidence about both short-run and long-run revenue-maximizing rates. The president seems to forget that the capital gains tax is largely a discretionary tax because people can decide when to sell an asset to realize a capital gain, and higher rates greatly affect people’s willingness to realize capital gains. Also, the Internal Revenue Service insists on taxing the inflationary component of a capital gain — that is, the rise in the value of an asset due solely to a change in the price level, which is not simply income. In effect, the IRS, on its own, has imposed a wealth tax without constitutional authority.

The president’s proposed rate increase is most unlikely to provide any short-run revenue gain and will be a big revenue loser over the long run. The nonpartisan and highly competent Tax Foundation has calculated that the president’s proposed increase in the capital gains tax rate will reduce the nation’s capital stock (plants and equipment) by 2.29 percent, thus …read more

Source: OP-EDS

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How the GOP Wins in the Northeast

January 26, 2015 in Economics

By Walter Olson

Walter Olson

If the evening of Nov. 4 provided an electrifying moment for conservatives, it came when it emerged that Republicans were going to win tough races not just in states like Iowa and North Carolina — let’s face it, winning states like those is no big deal in a strong GOP year — but also in some of the most passionately Democratic corners of the Northeast. Massachusetts, home of Harvard liberalism, where the share of voters who are registered Republicans stands at a frankly pathetic 11 percent, chose as its governor Charlie Baker, a businessman whose resume includes a stint at Boston’s Pioneer Institute, a free-market think tank. Maryland, long known as a strongly Democratic state thanks in part to strong minority demographics and high rates of government employment, elected an unapologetic conservative of its own, businessman Larry Hogan.

This was a genuine feat for Republicans: With the possible exception of California, no major part of the country is as resistant to their message as the Northeast. Democratic White House candidates have swept the region’s 11 states for the past six elections in a row, the only exception being Al Gore’s narrow 2000 loss in New Hampshire. Only three of the region’s 22 senators are Republicans, not much higher than the number of declared socialists (one). Democrats control most of the local legislatures, sometimes by margins that are almost comical, as in Massachusetts where they outnumber Republicans 34-6 in the upper house and 125-35 in the lower. Not a single Republican currently serves as an elected attorney general in the Northeast. If Baker and Hogan can win here, the thought goes, maybe the right kind of Republicans can win anywhere.

At the same time, not a few conservatives around TV sets in Dallas, Phoenix and Chantilly, Va., were feeling perhaps a bit of dread at the thought: Here come more Northeastern Republicans. Every conservative seems to know two things about Northeastern Republicans. One is that no matter how tough or hardcore they may seem, you invariably find in them a spot that’s a bit … squishy. Maybe they’re tough as can be on tax cuts or crime; maybe there’s nothing Establishment about them. But there will be some streak of environmentalism or internationalism, some disinclination to get into big fights over social issues, something borne of compromising with Democrats or caring too much about their good opinion. And that’s squishy, right?

The other …read more

Source: OP-EDS