Arms Merchant U.S.

What is the U.S. doing supplying Israel with white phosphorous?

A recent Amnesty International report states that both the Israeli government and Hamas are employing arms from foreign sources. It is no surprise that the U.S. is supplying Israel with most of its weaponry. However, the report also tabulates, citing Janes Defence Weekly, the use of Russian, Iranian, and Chinese rockets by Hamas. It does point out that it is unlikely that these rockets are being imported directly from the countries of origin. Rather they are being smuggled in from neighboring countries sympathetic to the Palestinian cause, such as Egypt or Lebanon.

Although I have relatives in Israel, I find it repugnant that the U.S. government is supplying Israel with a substance that is banned for anti-personnel use, but that nevertheless is not being controlled effectively to prevent such use. The Amnesty report states:

Amnesty International found that the Israeli army used white phosphorus, a weapon with a highly incendiary effect, in densely-populated civilian residential areas in and around Gaza City, and in the north and south of the Gaza Strip.

I have no direct way to influence Hamas. But I feel I must at least speak out against the irresponsible actions of my own country’s government. In this respect, I support Amnesty’s recommendation for a multi-lateral embargo on foreign arms sales to both Israel and Hamas.

Support for Stimulus Now

Republican Senators are apparently unaware that the last election repudiated Reagan-Bush macro-economic theory and are still desperately and pathetically attempting to implement trickle-down policies and impede speedy implementation of the Administration’s stimulus package.

While browsing in the stacks at the university library where my daughter studies, I came across an article in the March 2007 issue of the Journal of Macroeconomics by Keiichiro Kobayashi.

Forbearance impedes confidence recovery

Many countries have experienced financial crises. Recent research indicates that a quick policy response (e.g., resolving nonperforming loans, recapitalizing the banking sector, reorganizing failed firms) will be followed by quick recovery of economic growth. Countries that take a slow approach to reform [i.e., forbearance] during a financial crisis run into problems of persistent stagnation . . . Forbearance impedes the recovery of confidence that is lost during a financial crisis.

There is, according to the author, an abundance of historical evidence supporting the idea that the last thing you want to do in financial crisis is take a cautious, wait-and-see approach toward resolving questions about how bankruptcies will be handled.

For example, Bergoeing et al. (2002) compare the quick and sustained recovery of Chile with the long stagnation of Mexico after the external debt crises at the beginning of the 1980s. . . Other episodes of financial crisis include the bursting of asset-price bubbles in Sweden and Japan in the early 1990s. Both Sweden and Japan experienced price declines in their real estate markets at the beginning of the 1990s. Sweden quickly disposed of nonperforming loans and recapitalized the banking sector from 1992 to 1994, while Japan delayed the resolution of nonperforming loans until 1997. Asset prices in Sweden picked up in 1994 and have continued to rise, while asset prices in Japan have
continued to fall for more than a decade.

In their continuing effort to live in an alternate reality from the vast majority of working people, Republican Senators in particular are either ignorant of these and countless other historical examples that could be cited, deliberately ignoring them, or are having a psychotic episode characterized by delusional thinking and irrational behavior.

Your call. . .

More on Financial Crisis

Found this alternative view on the financial crisis at Hassanmarghub’s Blog on WordPress.com.

What Really Lies Behind the Financial Crisis?

What was the true cause of the worst financial crisis the world has seen since the Great Depression? Was it excessive greed on Wall Street? Was it mark-to-market accounting?

The answer is none of the above, says Jeremy Siegel, a professor of finance at Wharton. While these factors contributed to the crisis, they do not represent its most significant cause.

Here is the real reason, according to Siegel: Financial firms bought, held and insured large quantities of risky, mortgage-related assets on borrowed money.

The irony is that these financial giants had little need to hold these securities; they were already making enormous profits simply from creating, bundling and selling them. “During dot-com IPOs of the early 1990s, the firms that underwrote the stock offerings did not hold on to those stocks,” Siegel says. “They flipped them. But in the case of mortgage-backed securities, the financial firms decided these were good assets to hold. That was their fatal flaw.”

So, the whole meltdown comes down to a simple simultaneous misjudgment by every investment banker of note in the world.

Well, we can all breathe a sigh of relief now that Siegel has taken the burden of causal analysis for the crash off our shoulders with this sweeping bit of reductionism. But shouldn’t any true explanation of a catastrophe contain within it a clue to preventing its repetition? Siegel’s begs the question, “why” did the bankers decide to hold on to these “assets”?