Category Archives: Commentary

All written commentary.

What if the threat of debt is political, not fiscal?

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Arsenal Bolt: Quick updates on the news stories we’re following.

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“The Effort to Divert Class War Into Generational War: Lessons On Economics You Won’t Get from Jeff Bezos” – Center for Economic and Policy Research, Dean Baker on Friday:

Lesson Three: Our Children Will Only be Hurt by the Debt Because the Washington Post and Other Elite Types Will Use it As An Excuse to Cut Necessary Spending

Okay twenty somethings, how do you know about our massive debt? Yeah, it’s more than $18 trillion, can you feel it?

You surely can’t feel it from its economic impact. Interest rates in the economy are at their lowest level in more than half a century. Thirty year mortgage rates are hovering near four percent. They were generally in the six percent range back at the end of the 1990s when we were running budget surpluses and making plans to pay off the debt. Interest rates on car loans, student loan debt, and credit card debt are correspondingly lower today.

How about the raging inflation caused by the debt? Well, the Federal Reserve Board has been working hard to raise the inflation rate back towards its 2.0 percent target.

What about the enormous amount of money that has to be diverted from other spending to meet the interest burden? Current interest costs, net of payments from the Federal Reserve Board, come to less than one percent of GDP. By comparison, the interest burden was more than three percent of GDP in the early 1990s. (That’s what lower interest rates will do.) If a twenty something claims that they can feel the economic impact of the debt, it is time for some serious drug testing.

Now there is clearly a political impact. The Washington Post, and other Very Serious People, has hyped the debt endlessly. They have raised fears over the debt to prevent spending that would both help boost the economy back to full employment and meet our needs in areas like education, infrastructure, research and development, and addressing global warming. The damage done by the Very Serious People’s scare stories about the deficit is in fact a very big deal. But it is a bit over the top to blame this one on the older generation as an age group, even if most of the Very Serious People gang is older.

 

Bursting bubbles on the Syria war

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“Getting Real: Facing Necessary Facts in Syria and Iraq” by Michael J. Brenner for The Globalist:

Washington only compounds its culpability while simultaneously reducing the chances of finding a tolerable way out of the jam if it remains addicted to fanciful thinking.

And yet it remains wedded to a set of totally unrealistic propositions. This results in the creation of a make-believe world that bears no relation to reality.

Bursting bubbles

Here are some of the biggest fictions that must be abandoned:

  • Jihadist Syrian frontrunners al-Nusra/al-Qaeda can be transmogrified into mere expressions of genuine Sunni grievances.
  • Nusra jihadists can be converted into the instrument for militarily crushing ISIS just because there is nobody else willing or able to a job America won’t take on.
  • Saudi Arabia and the Gulfies will give priority to defeating the various Salafist groups rather than to the removal the Alawite regime in Damascus.
  • ISIS’s financial lifeline can be cut without destroying the infrastructure of its oil trade and without getting Turkey to cease and desist its complicity in sustaining the oil trade.
  • The Russians can be “isolated” and denied a major role in determining Syria’s future by calling Putin dirty names and reciting the number of worthless partners in Obama’s ersatz coalition.
  • Phantom Syrian rebel armies devoted to tolerance and democracy – that don’t exist except in the escapist visions of Washington’s strategic non-thinkers – can be relied upon to win battlefield victories.
  • Establishing a no-fly buffer zone in northern Syria would do something other than satisfy Erdogan’s ambition to keep open his supply line to al-Nusra and his lucrative commercial dealings with ISIS.
  • Such a no-fly buffer zone would not contradict our purposes in Syria and would be tolerated by Russia.
  • It is within the power of the United States to shape the Middle East to its own specifications while contesting a legitimate place for Iran, Russia, Yemenese Houthis and anyone else who doesn’t hew the Saudi-Israeli-Erdogan line Washington has endorsed.

 

Flag of the Syrian government.

Flag of the Syrian government.

Unusual punishment

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BBC News Magazine: “Why is one county handing down one in six US death sentences?”

Judged by the number of death sentences handed down, Riverside [County, California] has ranked no lower than third among the US’s more than 3,000 counties since 2012, and was first in 2015.

“The county is the most glaring example of a phenomenon that is being seen across the US, which is that even though the death penalty is in broad decline across most of America, there are individual pockets that continue to disproportionately use it,” says Robert Dunham, executive director of the Death Penalty Information Center.

He cites a 2013 report done by the centre which found that the majority of people on death row in the US were sentenced to death by fewer than 2% of the counties.

California had 746 people on death row in January 2015, far ahead of the state in second place – Florida, with 400.

 
Seems hard to square this with the Constitutional prohibition on “cruel and unusual punishment.”
death-penalty

Former peacekeeping role model tries to reject peacekeepers

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2015 Burundian Constitutional Crisis

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Burundi has consistently been one of the largest contributors to African Union peacekeeping forces for years, but when it comes time for an AU deployment in Burundi suddenly Burundi is a champion of national “sovereignty” and freedom from peacekeeper interference…

“Burundi lawmakers reject AU peacekeeping offer despite spiralling violence” – France24:

Burundi’s parliament on Monday criticised a proposed African Union peacekeeping mission already dismissed by the government as an “invasion force”.

 

Compaoré wanted for 1987 Sankara murder

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Burkina Faso’s former longtime dictator Blaise Compaoré, still in exile since his October 2014 ouster, now faces an international arrest warrant for his role in the bloody 1987 coup that brought him to power against his once-friend Captain Thomas Sankara. The body believed to be that of Sankara, while still not positively identified, is “riddled with bullets” according to an autopsy released in October 2015.

In mid-2015, 17% of student loans hadn’t been paid in a year

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Arsenal Bolt: Quick updates on the news stories we’re following.

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“School-Loan Reckoning: 7 Million Are in Default” – The Wall Street Journal, August 21, 2015:

Nearly 7 million Americans have gone at least a year without making a payment on their federal student loans, a high level of default that suggests a widening swath of households are unable or unwilling to pay back their school debt.

As of July, 6.9 million Americans with student loans hadn’t sent a payment to the government in at least 360 days, quarterly data from the Education Department showed this past week. That was up 6%, or 400,000 borrowers, from a year earlier.

That translates into about 17% of all borrowers with federal loans being severely delinquent, a share that would be even higher if borrowers currently in school who aren’t yet required to repay were excluded. Millions of other borrowers are months behind but haven’t hit the 360-day threshold that the government defines as a default.

 
There are 40 million Americans with some outstanding student debt.

Unlike credit card, auto, mortgage and other personal debts, student debts are rarely dischargeable in a personal bankruptcy.

This unusual exception to U.S. bankruptcy law was implemented as part of the so-called “Bankruptcy Abuse Prevention and Consumer Protection Act” passed in 2005. Lenders lobbied Congress heavily for the law’s passage.

In the 10 years since that law’s creation, the share of bachelor’s degree holders with student debt after graduation rose from 64% to 71%. This potentially exposes even more young people to personal debt crises they cannot discharge.

Another key issue in U.S. student debt is how much of it has come from “for-profit” colleges, diploma mills and shady online universities. In fact, 10 of the 20 institutions that generate the most student debt fall under one or more of those categories.

They represent about 19% of the total 2014 student debt load. That is all the more astounding as they account for only 9% of the total U.S. student body. Evidently, the cost of enrolling at these institutions is high, but the payoff for graduates is low or zero.

This post was produced in conjunction with The Globalist Research Center.