Moronic Republicans And The Debt Ceiling

It provided me with great entertainment over the past couple of years to watch the rise of the Tea Party, a far-right, “small government” grouping that took off in protest against “Obamacare” (because after all, who would want guaranteed access to healthcare? Not morons, that’s for sure).

And then I was again amused to see a number of Tea Party-supporting morons elected to Congress last November, representing a swing to the right both within Congress and within the Republican Party, which saw (relatively) sane candidates swept away by morons. But nobody told me these lunatics could have the power to crash the world economy…

Republicans in Congress are blocking the requirement to raise the US debt ceiling; without this increase by early-August (at the latest), America will default on its debt, leading to an unprecedented disaster across the Western and global economy. The Republican demands seem to come in two flavours: very moronic and ultra-moronic:

  1. Those who are simply “very moronic” demand that Obama introduce huge spending cuts and no tax rises at all, even for the wealthy.
  2. The “ultra-morons” (including MoronWatch favourite Michele Bachmann) simply don’t want to increase the debt ceiling at all.

Note that Obama is offering heavy spending cuts (in line with initial Republican demands), but is also insistent that some tax rises are necessary.

This may seem a complex decision, but there are some clear-cut points here. Here’s a quick guide (with thanks to The Economist) to the US budget decisions.

  • Is this the right time to start heavy cuts? That’s debatable. Cutting while the economy is still weak will hurt the economy – how much it gets hurt is open to debate, but a recent study by IMF economists suggests that heavy cuts tend to do more harm than good. This implies that the Republicans and most Democrats (including President Obama) are wrong in introducing austerity at this stage.
  • Do there need to be tax rises? This is more clear-cut: the Economist, in an unusually outspoken editorial, recently referred to Republicans as “economically illiterate” for insisting on no tax rises.
  • Does bashing the poorest make sense? Republicans have suggested cuts to programmes such as food stamps. Ignoring the sheer callousness of this proposal (when these same people won’t support tax hikes for millionaires), this again is economically illiterate. Food stamps generate activity in the economy – $1.73 for each $1 spent. So the cuts would depress the economy by more than they save – and that doesn’t take into account the economic and social effects of having millions of people (half of them children) going hungry.

The result of not raising the debt ceiling would be so catastrophic that economists are barely even trying to predict what would happen, instead choosing (for now) to say “they wouldn’t let that happen, would they?”

So why are morons like Bachmann even contemplating it? I can think of three explanations:

  1. Somehow the US electoral system really did allow genuine, barely-literate morons to be elected. They simply don’t understand the implications of what they’re doing, and believe the “we don’t need government” nonsense that they spew out.
  2. Some of these people are religious nuts; they live for Armageddon, and have got themselves into a position to bring it forward by crashing the global economy. Think I’m joking? Sadly, no.
  3. This one is a guess on my part: The suicide-bomb theory. The US owes China vast amounts of money – that’s part of the source of China’s growing economic power. Perhaps the morons think that if the US defaults on its debts, China would suffer enormous damage too. Of course, the only problem with suicide bombing is that the US (and Europe) would go down along with China. Perhaps these crazies think the US could recover quicker, and postpone the day when China inevitably takes over as the world’s largest economy.

The only bright side to this is that hopefully, once this crisis is past, some of the smarter Republican voters will be so scared, so repulsed by these morons that the Republican Party will be punished for its lurch to craziness by being swept from power: in Congress and across the states for a generation to come. Are Americans well enough educated and informed to make that call? Let’s hope so. But there needs to be an earthquake in US politics. A vibrant democracy needs at least two viable alternatives – the US currently only has one.

Viva July 13th!

If you travel in many countries, you’ll often find streets, bridges and squares named after calendar dates. Countries that have been through revolutionary upheavals tend to have key dates in their histories when everything changed – July 4th probably being the most famous.

We British don’t have such key dates in our modern history. Britain is unusual in that our revolutionary changes tend to be consensual, non-violent and gradual. We’re a nation capable of compromise, which can be frustrating, but makes us one of the world’s most stable societies. Following World War 2, the Labour government introduced the national health service, the welfare state, and began dismantling the Empire, with little other than grumbling from the powers that be. In the 60s, 70s and late-80s, we underwent social revolutions where successive generations used music, sex and drugs to challenge the previous generations’ attitudes. Despite stuffy politicians and media, we are among the most libertarian societies when it comes to sexual attitudes and drug use.

While our revolutionary neighbour and old rival, France, has stagnated back into conservatism, racial segregation and authoritarianism, The British people have thrown off the religious establishment, broadened free speech, and integrated immigrants who have changed our society (and for the better, despite what some conservatives will claim).

So because of the remarkably consensual nature of our society, Britain doesn’t have a calendar date to remember any specific moment when we stepped forward. Perhaps yesterday changed that.

In the 1980s, Margaret Thatcher began courting the media mogul Rupert Murdoch. She began a trend; no leader of any major party has dared fear the wrath of Murdoch or his tabloid papers (specifically, The Sun and the News of the World) for over 20 years. In that time, Murdoch’s power has only grown – party leaders go to him on bended knee for his support at election time. When David Cameron became PM last year, Murdoch was the first visitor to Downing Street.

It turns out that the Metropolitan police have also been corrupted, with some/many working illegally for Murdoch’s interests.

Furthermore, our politicians and journalists have been painfully aware (as we now discover) of Murdoch’s ability to trash an individual’s reputation and career; so many have kept quiet for fear of retribution. When the Guardian began its brave investigation into phone hacking, it’s reported (audio link) that Rebekah Brooks (now CEO of News International) was asked how the story would end. She replied “With Alan Rusbridger [Guardian Editor] on his knees, begging for mercy”. This was more than a media empire – it was a power structure that could subvert both police and parliament. And yet we all watched as its tentacles began to spread everywhere, strangling our democracy and free speech.

And out of the blue, as a result of the phone-hacking investigation, last Thursday Rupert Murdoch announced the closure of the News of the World, one of Britain’s best-selling newspapers, in an attempt to stop the damage from spreading across his empire. Then yesterday, 13th July 2011 became a revolutionary moment: Labour’s newish leader, Ed Miliband tabled a parliamentary motion opposing Murdoch’s total takeover of BSkyB, Britain’s largest broadcaster. Amazingly, the Conservatives and other parties were forced to back the motion. And then Murdoch announced he’d be dropping his bid. By the afternoon, American politicians were calling for inquiries into the activities of NewsCorp, Murdoch’s US arm.

In the past day, I’ve heard Conservative politicians speak out for the first time against the way their party had become the political wing of Murdoch’s empire (one recent example: government attempts to cut prison populations were shelved after The Sun went on the attack against them). Of course we can be cynical; why didn’t anybody speak up before? The answer is often that our elected leaders are cowards, corrupt, or both – there are few we can be truly proud of. But cynicism can cloud the enormity of what just happened. Our elected parliament got off its knees and asserted itself. However little we like our elected leaders, they’re the best thing we have – certainly they represent us better than police chiefs and CEOs do. Parliamentary and police investigations are underway. Tectonic plates shifted yesterday, and only time will tell where that leads us – there are many revelations yet to come.

Difficult as it is, and however implicated some of our leaders are, this is a time to be non-partisan, at least for the moment. For the first time perhaps since the 1940s, our parliamentary democracy has flexed its muscles. Viva July 13! A very British revolution.

Morons and Banking Regulation

In 2008, the US banking system collapsed, dragging down much of Europe’s with it. The problem was allowed to occur because deregulation in the 80s and 90s had taken away many of the rules that would prevent high-risk lending for short-term profit.

This much is well known… except by morons. Barely had the public been forced to rescue the banks and save the economy from meltdown, before free-market fundamentalists were rewriting history. The problem (they said) wasn’t too little regulation, but too much.

A recent tweet from Sam Bowman of the Adam Smith Institute (a poorly-named organisation, given that Adam Smith himself believed markets needed regulating) showed that refusal to face facts is still alive and well:

Or to paraphrase – banks DON’T need to be regulated, silly!

This is a moron meme that I often see on Twitter, so here are some quick and easy answers to the above question (thanks to contributors on Twitter).

  1. If you think the US banks were over-regulated, you must have missed out on all the deregulation since Reagan was elected in 1980. I’d recommend reading The Big Short, a detailed account of how stupidity was allowed to rampage unchecked through the US financial system.
  2. In Sweden, a poorly-regulated banking system faced collapse in 1992. The Swedes fixed their regulation and so didn’t face the same problems as the US, UK and other less-regulated places.
  3. A similar collapse happened in Spain in the 1970s; in response, Spanish banking regulations were tightened up immensely. When the UK’s poorly-regulated banks began collapsing in 2008, Spain’s banks were far less exposed. Who came to buy distressed British banks? A Spanish bank called Santander. Santander now owns a number of previously British-owned banks. Regulation clearly beats non-regulation.
  4. And yet again… Canada came through the crisis relatively unscathed, because its regulation was biased against low-deposit house purchases.

The Adam Smith Institute claims to promote market ideas; but the market has spoken very clearly. Banks in those countries with strong regulation are clearly stronger than in those without, especially the US. The US and UK economies and banking sectors have shrunk more than those in other Western countries, losing global share. Well regulated banks have gobbled up poorly regulated ones. The market has spoken, and the market says: regulation beats deregulation.

Here’s a simple question for those claiming the 2008 collapse was the result of regulation: specifically which regulation(s) led to sub-prime lending, forced the securitisation of bad loans into investment instruments, or pushed the ratings agencies to decide that these poor investments were AAA-rated? Morons can never answer this – it’s easy to claim regulation is bad, but apparently impossible to provide details of which regulations caused the problem (largely because they don’t exist).

Market fundamentalists make the false assumption that a laissez faire approach to bank regulation would allow the “good” banks to thrive as the “bad” ones go under; but it’s not that simple. Capitalism encourages risk-taking. The fact that one bank takes a bad risk and fails doesn’t stop other banks from risk-taking – their spin of the roulette wheel will come sooner or later. Only regulation can stop stupid risks from building up in the system – there is no free market mechanism to prevent them.

Perhaps I’m being unfair in assuming Sam Bowman has no clue on this subject – after all, he is (I assume) paid to dish out his market-fundamentalist dogma. The morons who repeat it unpaid have less excuse.

Morons, War and Oil Reserves

Sometimes it’s hard to keep track of which countries the US is at war with, or to guess who might be next. Without understanding the global picture, morons often believe the justification for each war individually: Afghanistan was because of 9/11; Iraq was about WMD; Libya was about protecting civilians… and so on.

Last week’s Economist magazine (a great read if you haven’t tried it) included a handy little table showing known oil reserves by country. Surprisingly (for morons anyway), the table correlates tightly with US foreign policy. As well as the bar showing the absolute number of barrels, the number on the right shows how much longer the oil will last, based on current rates of extraction.

A key statistic here is the size of the US reserves: only 11.3 years of home-produced oil left. Given that the US is hopelessly addicted to oil, and is by far the world’s largest consumer, it becomes easily understandable why America spends so many dollars (and military lives) on securing those territories that have most of the remaining oil.

Let’s run through the top ten countries in the list:

  1. Saudi Arabia: the US maintains a conservative Islamic dictatorship with a terrible human rights record. The presence of 5,000 US troops in Saudi Arabia led to the 9/11 attacks (15 of the 19 hijackers were Saudi).
  2. Venezuela: as every moron knows, Hugo Chavez is an evil dictator. Except in reality he’s been elected repeatedly in free and fair elections. In 2002, the Bush Administration attempted (and failed) to have Chavez removed in a military coup. America can’t tolerate a democratic regime outside its control sitting on 200bn barrels of oil – watch this space.
  3. Iran: they’re trying to make nuclear weapons! And the free world can’t have that, can we? Iran’s last democratic government was toppled by a CIA-backed coup in 1953. Sorry Iran, we simply can’t afford to let you have democracy.
  4. Iraq: over 100,000 civilians and 4,780 US troops have been killed to secure these 100bn barrel reserves.
  5. Kuwait: a US “ally” like Saudi Arabia (meaning a dictatorship backed by US military). Iraq’s invasion of Kuwait in 1990 triggered the first US Gulf War).
  6. United Arab Emirates: another US “ally” (two of the 19 9/11 hijackers were from the UAE).
  7. Russia: these reserves are probably beyond US military reach. Sorry America!
  8. Libya: we’re only bombing to defend the poor civilians, honest! (On the other hand, civilians in Syria, Palestine, Sri Lanka, Bahrain and elsewhere will just have to look after themselves).
  9. Kazakhstan: borders both Russia and China. Perhaps this reserve partly explains the long-term US presence in nearby Afghanistan.
  10. Nigeria: a country corrupted almost beyond repair by its large oil reserves. Other West African countries such as Ghana are also finding large amounts of oil. Watch out Africa, China and the US like the look of your oil!

The British Government’s Moronic Oil Love

Last week’s budget by Chancellor George Osborne was unlikely to contain much good news, given the ongoing cuts; but right-wing newspapers did their best to find some anyway. The headline-grabber was an action to “help the motorist”, possibly not the constituency most in need of help, but certainly the moaniest. “TAX ON OIL FIRMS TO HELP DRIVERS” screamed the loyally Conservative London Evening Standard (full, grovelling story here), perhaps the publication most desperate to prop up Tory support, given the proximity of next year’s mayoral elections, and the apparently precarious position of London’s right-wing (and car-loving) Mayor, Boris Johnson.

The story was a gushing tribute to Osborne’s “massive tax raid” on oil companies (actually, the £2 billion is roughly one month’s profit for BP alone). But the key point is missed entirely – given that this money will be used to reduce petrol costs at the pump, it ends up being taken from the oil companies… and in large part fed straight back to them by subsidising their own product. Oh! The pain!

Hence a government subsidy to maintain the British addiction to oil is spun by the Conservatives (and more importantly their media friends) as a victory for the little man over the beastly oil giants. And yet the oil industry will have been cracking open vintage bubbly on the announcement: not only have train and bus fares continued to rise above inflation, bolstering car usage, but the government has proved itself hostile to oil alternatives such as solar, as I wrote here last month. Rocketing crude oil prices have pushed oil profits to record levels. And on top of all this, a 2p-per-litre government subsidy to petrol. This is a great time for the UK oil industry.

The rest of us should be more worried: peak oil warnings become ever louder (though apparently the cries haven’t yet reached the ears of George Osborne) and our military seems exclusively and expensively to be used for the protection of British energy supplies. The next great depression will dawn when oil production can no longer keep track of global demand, and those nations that have made a concerted investment in weaning themselves off the stuff have a chance of emerging as the next world leaders. The US is apparently intent on hitting the wall at full speed – and it seems, so is our own moron government.

Obama and Blair: Fallen Heroes

When Labour came to power in the UK in 1997, the left/centre majority heaved a sigh of relief after 18 years of Conservative rule. Britain had become a far more progressive place in those years, and the feeling that our leaders were finally in tune with us was elating. Anti-gay laws were repealed, police were subject to more control over their street behaviour, pay of teachers and nurses rose and massive investment was pumped into the crumbling education and health services. “Cool Britannia” was announced, and top music stars were seen rubbing shoulders with government ministers.

It was all so much fun that we chose to ignore the parts we didn’t want to see. Labour wasn’t going to re-nationalise any privatised industries, however messy or unwise the privatisations had been; most of the new schools and hospitals were built under a “Public-Private Partnership” regime that would work out more expensive in the long run; Blair and his top ministers seemed to love the company of Bankers and CEOs, and the rich-poor divide was allowed to widen even further.

I voted Labour in 1997 and again in 2001. And then came 9/11, and Blair’s fangs appeared. His religious mania started to be slowly unveiled (religion is a vote-loser rather than a winner in UK politics, and his spin-doctors played it down as best they could). Days after 9/11, it became obvious, to those who watched, that Iraq was in the cross-hairs of the neocons, and by mid-2002 there was no doubt that an attack on Iraq was in the planning stages (we later learned that Blair had already committed in early-2002). A large anti-war march was held in London in October 2002 (while Blair was still pretending that all options were on the table) and a huge march was held in February 2003, a month before the war. But Blair ignored the marchers, ignored the facts, ignored the majority within his own party, and took Britain to join one of the least justified, most brutal wars in modern history.

From that moment, he was widely hated by the British people, and the hatred steadily increased. When, in July 2005, terrorists killed 52 in London, and injured 700 more, most people held Blair’s Iraq adventure partly to blame, and his popularity fell further. It wasn’t just that he had carried out an unforgiveable act – it was that he had come to power as a progressive, and our eyes had finally been opened to reality. When Blair left power, exposed his deep Catholic fundamentalism, and began to profit from oil and other companies who had benefited from the Iraq war, the transformation was complete.

In the UK, we were as elated as American progressives by Obama’s election in 2008 – Bush had been hated here and worldwide for his moronic foreign policy, long before the majority of Americans turned against him. We knew, though we didn’t want to acknowledge it, that America is more than the President, and that Obama’s main reforms would be on domestic ground. Sure enough, America’s murderous behaviour towards Afghanistan and Pakistan was little changed – some things (such as drone attacks on civilians) became even worse. But we tried to ignore these, and enjoy the knowledge that Obama was more intelligent, more progressive than Bush could ever be.

So now we have a bombardment of Libya. We want to cling on to the idea that this is being done to protect civilians, but even as the bombing started, civilians were being shot dead in the streets of Yemen, Syria and Bahrain with barely a word of condemnation. It becomes increasingly clear that far from boosting the Arab revolutions, this attack on Libya will deliberately undermine them.

American progressives are going to increasingly feel about Obama the way we felt about Blair in 2003. It was easy to hate Bush – he gave us plenty of reason to, and he’d been elected by morons anyway, but Blair and Obama were ours. We can try to justify Obama’s capitulation – we already knew that America’s democracy is no longer strong enough to represent the will of the people over the interests of corporations and the military. But whichever way you look at it, betrayal hurts.

UK Government Sabotages Green Investment

This week, with almost no comment in the British press, an industry was killed off. This wasn’t just any industry, but one that has recently created 17,000 jobs, and is tipped to be one of the world’s fastest-growing: Solar Photovoltaic (PV) power generation.

In April 2010, the UK belatedly adopted the idea of FITs (Feed-In Tariffs), a form of subsidy that was already widespread in Germany and other countries. FITs are a cost-effective subsidy that guarantee a fixed amount for energy generated from renewable sources. The introduction of FITs allowed entrepreneurs to create business plans for the creation of Solar PV businesses; they then approached green energy investors to raise the capital required to build solar farms (typically in Cornwall and elsewhere in South-West England). Initial investments were injected by angel investors – typically individuals investing relatively small amounts of their own cash.

Yet suddenly, the UK Government has announced a review of FITs for Solar PV. The effect on the industry has been instant; investment in Solar PV has been frozen, companies have laid off staff, and investments made to date are rendered potentially worthless. Land already allocated for solar farms now sits idle. Not only solar is affected: the result of the announcement is to create uncertainty for all green energy investment: why take the risk of following the Solar industry into the same hole?

The action is moronic at many levels:

  • There is no risk for government in FITs – all risk is taken by private entrepreneurs and investors.
  • Germany and China have already stolen a march in the green energy sector. This may be the UK’s last chance to lead in a sector that’s growing at a huge rate.
  • Without investment in green energy now, we expose ourselves to ever higher oil prices, and make ourselves more reliant on Russia as a gas provider.
  • The loss of 17,000 private-sector jobs comes at the worst possible time, when unemployment is already rising due to government cuts.

Whether the review announcement was simply done through incompetence, or whether the power of the fossil fuel industry was involved remains to be seen. Regardless, I name government ministers Chris Huhne and Greg Barker as Morons Of The Week.

British readers may want to write to Huhne or their own MPs using this open letter.