Charles Krauthammer Redefines Honesty At The Washington Post

Charles Krauthammer is provided a platform by the Washington Post to report on politics and world affairs.  He is also a regular on TV news shows.  He is also completely dishonest.  This post provides a good example of his dishonesty.  In 2005 a Republican senator proposed a change to Senate rules that would prevent the Democrats from using the filibuster against judicial nominees proposed by the Bush Administration.  Krauthammer wrote a strong article in favor of the change.  In 2013, the same Charles Krauthammer, used some of the same rhetoric that he used in his 2005 article, to attack Democrats for making changes in Senate rules that would prevent Republicans from using the filibuster to block judicial nominees proposed by the Obama Administration.  In other words the filibuster is a good thing when it used by Republicans, but it is a bad thing when it used by Democrats.  Its understandable that the Washington Post employs conservatives like George Will, Robert Samuelson and Charles Krauthammer to provide a conservative perspective on the news.  It is not acceptable, however, for the Post to employ reporters who are completely dishonest in their reporting.  We don't need another Fox News in America. 

Restore The Draft To Save America?

Dana Milbank considers several of the steps that we might take to improve our government and our society.  Few of them are politically possible, so he turns to an alternative.  He explains why restoring the draft might be helpful.  The draft would require people, who seldom have an opportunity to meet and understand each other, to work together for a common purpose.  It would also make our leaders less likely to engage in wars without purpose if their own children and grandchildren would be put at risk. He used Switzerland as an example of a country whose citizens speak four languages, and is not at risk of attack, which uses mandatory service as a way to build a national identity in a diverse nation.  Richard Nixon ended the draft during the unpopular Vietnam war.  The war protest movement was led by college students who did not want to be forced into fighting a war in which they did not believe.  Many of their parents agreed with them.  Ending the draft took much of the energy out of the protest movement. 

I'm not sure that restoring the draft would save our country but its discouraging to have a veteran reporter from the Washington Post, who understands how Washington works, offer a restoration of the draft as a last resort to develop a sense of a common identity and a national purpose.  Reporting in Washington must be like reporting in a war zone.  The reporters are not at risk, but they sense the futility of the battles between the political parties that are seldom guided by a sense of national purpose.

Why This Recession Is Called The Great Recession

Mark Thoma posted two charts from the Dallas Fed which illustrate how the US economy recovered from other recessions in comparison with the Great Recession.  Our current recovery, after 5.7 years looks nothing like our recoveries from previous recessions.  This one has been really different in many ways.  Industrial production has hardly moved over this period and the other factors are related to weak industrial production.  I guess this is what a post-industrial society looks like.

The President Of The European Central Bank Calls For Greater Unity And Less Nationalism

The ECB has become the bank regulator for the EZ.  Its president defends the bank's interest rate cut by arguing that rates are low because the economy is slow.  The decision of the ECB to cut rates was criticized by leaders in Germany who claim that it was done to remedy problems for specific countries.  The ECB also needs to create a resolution trust that can deal with the problems that might arise from troubled banks in the EZ who may not have enough capital to deal with impaired loans.

Why Putin Discouraged Ukraine Treaty With The European Union

The Ukraine decided not to sign a trade agreement with the European Union that was opposed by Russia's President Putin.  This article describes some of the reasons for Putin's opposition to a Ukraine treaty with the EU.  It also suggests that it may have harmed Russia's position with its neighbors and with the EU.  Moreover, Russian trades more with the EU than it does with its more immediate neighbors which used to be part of the Soviet Union.  Russia exports four times as much to the EU than it does to its immediate neighbors and it imports three times as much.  This raises a question about Putin's motivations for opposing a Ukraine treaty with the EU.

One explanation offered is that Putin views foreign policy in terms of its relations with the US more than he does with Europe.  He may have been encouraged by President Obama efforts to develop his relationship with him by choosing not to intervene in his efforts to form a Customs Union as a trade bloc with its immediate neighbors.  It is also suggested that Putin suffers from the British Disease.  That is, he is struggling with the loss of empire that Britain endured as the British Empire dissolved over time. Nobody really knows what motivates foreign policy in Russia, or the Ukraine, but it is a very important part of the world that is struggling economically and politically.  We should be paying more attention to the economy of this region than we have in the past.  Leaders in the EU were certainly very interested in developing stronger relationships between the EU and the Ukraine.

Why The Ukraine Might Have Decided Against A Trade Agreement With The European Union

The media in the US devotes a lot of space to political struggles in the Mid East.  We are informed less about political problems in Eastern Europe.  The Ukraine is a large country with a population 46 million which finds itself in a pickle between Europe and Russia.  It recently decided against signing a trade agreement with the EU.  This article describes the decision in terms of the weapons available from the EU and those used by the Russian President V. Putin who opposed a Ukraine treaty with the EU. 

President Putin implemented a trade boycott against the Ukraine in August and he has hinted that he might lower gas prices to the Ukraine.  The EU did offer any carrots to the Ukraine and it did not use any sticks that might have influence the decision.  The IMF also refused to provide 160 billion euro loan to the Ukraine.  According to this article, the decision was determined by a motivated Russian president willing to coerce a negative decision and a EU that was not willing to offer any carrots to the Ukraine.  It also suggests that the decision was very unpopular in the Ukraine.  What this article does not discuss is that the Ukraine itself is a divided country.  Some parts of the country are ethnically and politically aligned with Russia, and other parts of the country see a better future in an alliance with the EU.

How A Central Bank Can Deflate A Housing Bubble Without Raising Interest Rates

Gavin Davies, writing in the Financial Times, explains how macro prudential regulation can enable the UK central bank to limit the rise in real estate prices and household debt in the UK.  Ordinarily, a central bank could raise interest rates to achieve that result;  however, that would also cause other asset prices to fall, since the present value of assets is a function of the discount rate.  The central bank does not want that to happen, and it also wants to encourage corporate investment and lending to small to medium enterprises, which has been the weak spot in the economy.  Therefore, it wants to maintain low short term interest rates.  The solution to this problem is to increase the underwriting standards on the issuance of mortgages.  That should discourage households and banks from inflating the real estate market, while maintaining the low interest rates that support asset prices and encourage corporate investment.

It is interesting to note that the Fed, under Alan Greenspan, chose not to use its authority to regulate mortgage underwriting standards in the US.  The decline in underwriting standards led to the issuance of mortgages that were likely to default.  Those mortgages were sold to investment banks which packaged them into securities that were sold to investors across the globe.  The global financial crisis may have been avoided if the Fed had used its authority to regulate mortgage origination practices in the US.