Thursday, April 30, 2015
Baltimore is only about 40 miles from Washington, DC. For decades Baltimore was where we went to watch Major League Baseball. There was a stadium in the middle of a neighborhood on 33rdStreet.
We commiserated with the city when the owners of the Baltimore Colts NFL team snuck out of town, literally, in the dead of night and surfaced in Indianapolis.
The Inner Harbor has been a showplace for the revitalization of a downtown area since it was substantially completed in 1965. The Orioles and the Baltimore Ravens have stadiums that share a parking lot adjacent to the area.
That is the Baltimore visitors know.
The other Baltimore exploded on TV sets turned to news outlets earlier this week – riots blamed on the death of yet another Black man in the control of a police force. This time his name was Freddie Gray and, while we don’t want to belittle Mr. Gray’s memory, he could have been – and has been – too many names in too many places.
We have discussed before the notion that the veneer of civilization is very thin. We have societies that generally operate in relative peace only by a mutual compact that we will not shoot, stab or punch one another, nor will we use our vehicles as multi-ton weapons at busy intersections.
We have laws that enforce those understandings but, as we saw Monday in Baltimore, once the compact is broken there aren’t enough cops, state troopers, or national guard personnel to stop it while the madness is going on.
There is a fine line to be walked in assigning blame or making excuses for riots as we saw this week. The CVS (and the other 14 buildings) that burned down didn’t have anything to do with the Freddy Gray issue. Nor did the more than 140 cars and trucks that were torched.
As usual it was the mom-and-pop type stores and shops that will suffer the greatest losses. Many insurance policies specifically rule out being reimbursed by damaged caused by civil unrest which this certainly was.
They didn’t have anything to do with Freddie Gray, either.
Are we all responsible for the conditions in that part of Baltimore that resulted in wholesale rioting?
Nope. I’m not responsible for that. And neither, by the way, is President Obama.
If a lack of jobs is the problem, then create more jobs for young Black kids who have no way to make a buck except selling drugs to one another? Then utilize the tools that governments have available – including the tax code – to create an economy that is growing.
You may have missed the fact that the U.S. economy was just about flat for the first quarter. The Washington Post reported that “the gross domestic product grew between January and March at an annualized rate of 0.2 percent” based upon numbers released by the Department of Commerce.
That’s not my fault, either, but before our civic and political leaders step before microphones and cameras to wail about the lack of opportunities in places like Baltimore, they should come armed with a list of fixes.
But, somehow I don’t think opening up more job training centers is going to solve this.
I have heard a lot of descriptions and analyses of the problems, but precious few ideas on how to remedy them.
One answer is to rebuild families. We’ve all seen the video of Toya Graham slapping her son who was wearing a facemask and a hoodie and dragging him away from the rioting.
I hope that the media microscope under which she now finds herself doesn’t do her harm, but, as a metaphor, maybe Ms. Graham is where we can at least start looking for the answers.
A single mother of six who went out into the danger to rescue her kid. That’s what mothers have been doing for millions of evolutionary years.
This is a dangerous time in a dangerous world.
We need to help Toya Graham and all the Toya Grahams aim their kids in the right direction. Slapping them around is probably not the optimal approach, but as an act of getting him to move out of immediate peril, it worked.
So, if we want to help, let’s start a national – a worldwide – movement to create the tools and environment to help mothers like Toya Graham help their kids.
We can do that. And we can have an impact.
Even if it’s one mom at a time.
In watching Baltimore burn, "progressives" run out of scapegoats. Over a week ago, a black man named Freddie Gray died after being arrested by police. Videotape shows Gray being dragged into a police van. Within a less than half an hour, his spine was somehow severed and he died seven days later.
Did an officer or the officers intentionally or inadvertently cause the injury? Did the vehicle suddenly stop, causing a possibly untethered or poorly tethered suspect/passenger to break his neck? Why was Gray stopped in the first place? Given that he ran from the police, did this provide a basis for pursuit, search and arrest? Does this not underscore the importance of police body cams and car-dash cams?
These are, of course, legitimate questions. And, in addition to the Baltimore police investigation, the Department of Justice announced that it, too, would examine the circumstances surrounding Gray's death.
So, why riot? Unlike Ferguson, where riots also took place, black Baltimore residents do not lack political power and representation. The mayor is black. The police commissioner and deputy commissioner are black. The police department is approximately 40 percent black, in a city with a black population of 63 percent. The new head of the Department of Justice, Loretta Lynch, is a black female, the second consecutive black person to run the Department of Justice. And, of course, the president of United States is black.
There's every reason, therefore, to believe that the investigations will be full, complete and thorough. This does not mean that the results will please everyone, but that the examination will be fair and open. After all, if a wildly popular mayor who received 84 percent of the vote cannot be trusted, who can?
This isn't Mississippi in 1955, where Emmett Till, a 14-year-old boy, was brutally murdered, only to have the obviously guilty killers acquitted by an all-white jury. This is not the 60s of white-run cities, with nearly all-white police departments policing all-black communities. In New York City, for example, most officers are people of color. Los Angeles had back-to-back black police chiefs, and as with New York City, the majority of L.A.'s street cops are people of color or women.
And it is not true, as some protestors claim, that "it doesn't happen the other way around." In Mobile, Alabama, in 2012, a black police officer shot and killed a white teenager. The white teen, high on drugs, was completely nude, and still the officer -- fearing for his life -- shot and killed the suspect. An investigation cleared the cop and -- despite public pressure -- a grand jury refused to indict him. No cameras. No CNN.
Just two days after Ferguson police officer Darren Wilson shot and killed Michael Brown in Ferguson, Missouri, a "not white" cop in Salt Lake City, Utah, shot and killed an unarmed 20-year-old man whose race has been described as Hispanic. The family of the dead man believes that the cop is a murderer. No cameras. No CNN.
So, why riot in Baltimore? The answer is that for some people facts and reason don't matter. It's about anger, excitement, disruption. Some call it a "subculture." Others say these are "at-risk youth." Still others call it the "underclass." But the 800-pound elephant in the room is the absence of fathers -- responsible, involved fathers. Obama has said that a child growing up without a father is 20 times more likely to end up in jail. Today over 70 percent of black children are born to unwed mothers compared to 25 percent in the 1965.
To earn their near-monolithic 95-percent black vote, the Democratic Party repeatedly tells blacks of their continued oppression. During the 2012 election, Democratic National Committee chair, Debbie Wasserman Schultz, accused Republicans of seeking to "literally drag us all the way back to Jim Crow laws."
So, when a questionable white cop/black suspect takes place, some people, conditioned to react with anger and distrust, lash out. -- it's "us against them" and "they are trying to oppress us."
Come election time, Democrats fan and exploit this anger. Rep. Charlie Rangel, D-N.Y., for example, made this accusation in his last race: "Everything we believe in, everything we believe in (Republicans) hate. They don't disagree -- they hate. ... Some of them believe that slavery isn't over and that they won the Civil War." This is how Democrats get 95 percent of blacks to vote one way -? by telling them the other side is evil, that "the system" is corrupt and racist. So when a Freddy Gray, in police custody, turns up dead under suspicious circumstances, some will take to the streets to vent that "slavery isn't over."
Yes, Martin Luther King Jr. said, "A riot is the language of the unheard." When he said that, none of America's major cities had a black mayor. The country did not have back-to-back black attorneys general. The country did not have a black president elected -- and reelected.? Baltimore's riot is the tragic language of modern welfare state.
Wednesday, April 29, 2015
By Jeremy Warner
Here’s an astonishing statistic; more than 30pc of all government debt in the eurozone – around €2 trillion of securities in total – is trading on a negative interest rate.
With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them.
On a country by country basis, the statistics are even more startling. According to investment bank Jefferies, some 70pc of all German bunds now trade on a negative yield. In France, it's 50pc, and even in Spain, which was widely thought insolvent only a few years ago, it's 17pc.
Not only has this never happened before on such a scale, but it marks a scarcely believable turnaround on the situation at the height of the eurozone crisis just a little while back, when some European bond markets traded on yields that reflected the very real possibility of default. Yet far from being a welcome sign of returning economic confidence, this almost surreal state of affairs actually signals the very reverse. How did we get here, and what does it mean for the future? Whichever way you come at it, the answer to this second question is not good, not good at all.
What makes today’s negative interest rate environment so worrying is this; to the extent that demand is growing at all in the world economy, it seems again to be almost entirely dependent on rising levels of debt. The financial crisis was meant to have exploded the credit bubble once and for all, but there's very little sign of it. Rising public indebtedness has taken over where households and companies left off. And in terms of wider credit expansion, emerging markets have simply replaced Western ones. The wake-up call of the financial crisis has gone largely unheeded.
The combined public debt of the G7 economies alone has grown by close to 40 percentage points to around 120pc of GDP since the start of the crisis, while globally, the total debt of private non-financial sectors has risen by 30pc, far in advance of economic growth.
Public and private debt in advanced economies since 1970: Source Longview Economics
One by one, all the major central banks have joined the money printing party. First it was the US Federal Reserve. Then came the Bank of England and later the Bank of Japan. Just lately, it’s the European Central Bank. Now even thePeople’s Bank of China is considering the “unconventional” monetary support of bond buying. Anything to keep the show on the road. It’s what Chris Watling of the consultancy Longview Economics has termed the “philosophy of demand at any cost”. A crisis caused by too much debt has been fought with even more of the stuff.
Many would contend that it is central bank money printing itself which is the primary cause of today’s low interest rate environment. Up to a point, it’s a view that is hard to argue with, for that is indeed the whole purpose of QE – to depress the yield on government bonds to the point where investors are forced to seek higher risk alternatives.
Other contributory factors include “financial repression”, where ever more demanding solvency regulation forces banks and insurers to hold more bonds, whatever the price. Alternatively, some part of the explanation may be down to QE having starved the repo market of the bonds it needs as collateral, even if most central banks have arrangements to lend the stock back to markets for these purposes.
Distortions caused by the ECB’s €60bn-a-month of bond purchases have been particularly evident in German bunds, one of the most sought-after forms of collateral; the German government’s policy of running a budget surplus means that the size of the market is already shrinking, with net payback rather than net issuance. The Bundesbank president, Jens Weidmann, has been known privately to complain that the ECB’s bond-buying orders are, for Germany, a kind of Kafkaesque experience; it’s as if he’s awoken to discover he’s metamorphosed into a giant insect.
All this official interference has no doubt influenced negative yields. Yet it also raises a deeper question, which is whether central banks are the primary cause of the collapse in interest rates, or whether they are merely accommodating wider forces in the global economy that they are powerless to influence - persistent sluggishness in demand and productivity growth.
What’s cause, and what’s effect? In a speech last year, Ben Broadbent, deputy governor of the Bank of England, argued cogently that central banks are merely responding to these deeper forces. The natural, or equilibrium, rate of interest required to keep growth and inflation at a particular level is simply a lot lower than it used to be, he insisted. To judge by the markets, it may even have turned negative.
There is some support for this view in the way markets have responded to QE. Analysis by Longview Economics found that bond yields actually rose during periods of QE by the US Federal Reserve, and fell when it stopped, the reverse of what you might expect if you think it is the unlimited buying power of the central bank that is causing the interest rate to fall.
Rates would rise during periods of QE because investors expected it to have a positive impact on economic growth, and therefore the equilibrium rate of interest, and then fall once it stopped because the stimulus had been withdrawn. Call it “secular stagnation” - the idea popularised by former US Treasury Secretary Larry Summers - if you like, but whatever it is, it's a particularly unhappy place to be. For all kinds of reasons, advanced economies, and perhaps emerging ones too, seem to have run out of productivity-enhancing growth and therefore need constant infusions of financially destabilising debt to keep them going.
The flip side of the cheap money story is soaring asset prices. The bond market bubble is just the half of it; since most other assets are priced relative to bonds, just about everything else has been going up as well. Eventually, there will be a massive correction, in which creditors will suffer sickening losses.
Nobody can tell you when that moment will arrive. We live in an “extend and pretend” world in which economies pathetically fight between themselves for any scraps of demand. One burst of money printing is met by another in an ultimately futile, zero-sum game of competitive currency devaluation. As if on cue, along comes another soft patch in Britain’s economic recovery, with first-quarter growth quite a bit weaker than expected. Like a constantly receding horizon, the point at which UK interest rates begin to rise is pushed ever further into the future. It's like waiting for Godot. When Bank Rate was first cut to 0.5pc in response to the financial crisis, markets expected rates to start rising again in a year. Six years later, Bank Rate is still at 0.5pc and markets still expect them to rise in a year. In Europe it’s not for four years.
Both Keynsian and monetary economics seem to be in some kind of end game. What comes next is anyone’s guess.
By Dana Milbank
The Civil War era’s 14th Amendment, granting automatic citizenship to any baby born on American soil, is a proud achievement of the Party of Lincoln.
But now House Republicans are talking about abolishing birthright citizenship.
A House Judiciary subcommittee took up the question Wednesday afternoon, prompted by legislation sponsored by Rep. Steve King (R-Iowa) and 22 other lawmakers that, after nearly 150 years, would end automatic citizenship.
The 14th Amendment, King told the panel, “did not contemplate that anyone who would sneak into the United States and have a baby would have automatic citizenship conferred on them.” Added King, “I’d suggest it’s our job here in this Congress to decide who will be citizens, not someone in a foreign country that can sneak into the United States and have a baby and then go home with the birth certificate.”
It’s no small task to undo a principle, enshrined in the Constitution and upheld by the Supreme Court, that defines the United States as a nation of immigrants. It’s particularly audacious that House Republicans would undo a century and a half of precedent without amending the Constitution but merely by passing a law to reinterpret the 14th Amendment’s wording in a way that will stop the scourge of “anchor babies” and “birth tourism.”
Judiciary Committee Republicans brought in three experts to testify in support of this extraordinary maneuver (a lone Democratic witness was opposed), and they evidently had to search far and wide for people who would take this view, because they ended up with a bizarre witness: an octogenarian professor from the University of Texas named Lino Graglia.
This would be the Lino Graglia who caused a furor in 1997 when he said that Latinos and African Americans are “not academically competitive with whites” and come from a “culture that seems not to encourage achievement.” He also said at the time that “I don’t know that it’s good for whites to be with the lower classes.”
This is also the same Lino Graglia who said in a 2012 interview that black and Hispanic children are less “academically competent” than white children, and he attributed the academic gap to the “deleterious experience” of being reared by single mothers. When the interviewer, a black man, said he had a single mother, Graglia said that “my guess would be that you’re above usual smartness for whites, to say nothing of blacks.” And this is the very same Lino Graglia whose nomination for a federal judgeship in the 1980s fell apart amid allegations that he had urged Austin residents to defy a court-ordered busing plan and had used the racist word “pickaninny” in the classroom.
Abolishing automatic citizenship for babies born on American soil, and having Graglia make the case, probably won’t help Republicans overcome their problems with minorities, who are gradually becoming the majority. Democrats, by happenstance, presented a sharp contrast to the GOP effort Wednesday: Sens. Elizabeth Warren (Mass.) and Sherrod Brown (Ohio) and others met at Washington’s Carnegie Library with a coalition including immigration and civil rights advocates to launch a new jobs campaign, “Putting Families First.”
At the birthright hearing, King got things going by informing his colleagues that “birth tourism has grown substantially” and that it costs $48,000 for a Chinese national to fly to the United States, have her baby, get a birth certificate and take the child back to China. Though conservatives generally take a dim view of international law, King said the United States in this case should follow “almost every other industrialized country” in abolishing birthright citizenship.
Graglia dutifully informed the committee that “a law ending birthright citizenship should and likely would survive constitutional challenge.” But consider the source: a man who by his own account takes “a very limited view of the power of the Supreme Court” and breezily dismisses contrary precedents.
Rep. Zoe Lofgren (D-Calif) mentioned Graglia’s “pickaninny” comment and his position on busing. After Lofgren’s time expired, Graglia blurted out: “Your bringing up . . . this alleged statement of ‘pickaninny’ is in the nature of slur. I don’t know why you’re bringing up these insulting things that have nothing to do with” his testimony.
Minutes later, Rep. Luis Gutierrez (D-Ill.) read aloud some of Graglia’s other comments about minorities. “It seems some underhanded move is being made here,” the professor protested, saying he “never made a comment that in any way implied the inferiority of any group.” The congressman asked that Graglia’s past statements be entered into the record. But Rep. Lamar Smith (R-Tex.) complained that the line of inquiry was “a non-germane subject for this hearing.”
On the contrary, it gets right at the heart of the matter.