political discussion

The Failure of the American Jewish Establishment,” Peter Beinart, 12 May 2010, New York Review of Books

Harold Meyerson – The collateral damage from Israel’s raid, 2 June 2010, Washington Post
Amos Oz – Israeli Force, Adrift on the Sea, 2 June 2010, NY Times

Dear Mr. Beinart,

I must thank you for writing your piece in the New York Review of Books. It’s striking coincidence that the article was published before the Gaza flotilla incident, but serves as a reminder of how American Jews are grappling with Israeli actions. As a late-20s American Jew myself, I can see my own connection to the new organized Jewish “establishment.”

Autobiographically speaking, I went to Israel in 1999 for my sister’s bat mitzvah. I moved to McGill in August 2000, weeks before the second Palestinian intifada. As an American Jew who was raised by parents who were much among the “old guard” you describe, I found the demonstrations for the Palestinian cause to be enlightening (and we all know what happened when Binyamin Netanyahu tried to speak at Concordia). Just before the American Thanksgiving break, I was accosted by a skinhead in the Montreal Metro, largely because I was wearing an IDF patch on my backpack (from my ’99 trip). I was told that the Jews were the Nazis of the 2000s; a terrifying experience for a young student in the big city.

Over those next few years, I took in my political science classes and Canadian media coverage and my own modes of thinking/ideological thought started to turn. Though I never became a Palestinian sympathizer, I did see myself becoming a Palestinian empathizer.  I became more pragmatic about the entire issue, noting that as a Jew and as a humanist, my emotional pendulum would swing, depending on circumstances.  The generational bifurcation you speak of demonizes the “new guard,” silently suggesting the new guard believes that Israel has to give up — surrender its existence in order to appease the Palestinians. I dont think that’s the case at all. Right now, my sister is in the middle of a five-month internship in Tel Aviv. I think that even there, the morality and philosophical questions are coming into play.

One of the things I wish your article emphasized more (perhaps an addendum article) was the growth of actual, organized American Jewish Establishments that promoted this new form of liberal Zionism. You vaguely alluded to the Peace Now movement, but that and J Street have seen definite growth, not only in scope, but in funding as well. In its two years of existence, J Street has rapidly become a counterpoint force to AIPAC; obviously, following your article, they quickly embraced your message.

The fundamental problem of humanity is the quest for absolute truth; we’re all shown the same videotapes and told a different story. To that extent, there is no right or wrong answer to any of this.  As is human nature, conflict erupts over an inability to reconciliate the differences.  However, I do feel that there is has to be a pragmatic solution to the entire conflict and I’d like to think that these new establishments are looking toward enabling or lending voices to pragmatic solutions. (This even applies to several domestic issues.) Regrettably to me, many do not share my pragmatism (but are, as such, entitled to their opinions) toward the conflict. It goes beyond a mere “we said, they said” tit-for-tat approach; as I’m sure many of Mr. Luntz’s respondents would agree, it’s only to the detriment of humanity if we can’t approach a common peace.

Thanks again,

A runaway deficit may soon test Obama’s luck

By Niall Ferguson
Published: August 10 2009 22:09 | Last updated: August 10 2009 22:09

A runaway deficit may soon test Obama’s luck - Ingram Pinn

Niall Ferguson wrote this book (http://is.gd/2ckAo), which I’ve gotten about halfway through and is an overall economic history, including how debt came to be and how it came to be a big business. He’s specialized in the Rothschilds (obvious capital market players, but also debt market players), written on the Tulip Mania (one of the first recorded asset bubbles in the 1600s), and this book (http://is.gd/2ckRD), which I’ve also gotten about halfway through (a page at bedtime puts me to sleep) and is about the economic construction and collapse of the British Empire.

In essence, debt goes back to nearly Roman times — it was the impetus for funding wars and the pay of soldiers. As I read more and more, the problem I’m seeing goes beyond debt but toward a thrust of consumerism. The irony of me researching marketing isn’t lost on me — I think it has something to do with wanting to understand my deep-seated dichotomy between being anti-consumerist, while simultaneously viewing consumption as a vehicle for improving the standard of living (even for me).

Debt is a bad thing because virtually no debt is interest-free. The Koran forbids usury, but even the Muslim world has found workarounds that test those spiritual waters. As a result, the issuance of debt virtually has to guarantee future revenues — a gamble, if you will — and then some, for one to break even on a loan. It’s a risk-reward tradeoff.

Expansion of the middle class — and thus, more credit — has created an environment of entitlement to goods and services that didn’t previously exist. It’s the same problem with easy-access student loans. While the idea of investing in education is good at best, it is nonetheless a gamble on a significant ROI. It should go without saying that the past year of students who have graduated from university could have barely lent to the ROI of the government and private lenders, given the relative unemployment rate for those already in the workforce, who were also trying to pay back student loans.

Sustainable repayment of debts — be they for goods like military weaponry or for services like health care — relies the sale of two things:

1) Knowledge – It is quite obvious that the U.S. has become a knowledge-based exporter. People from around the world are still attracted to the American university system and private funding has only intensified research. Patents and other copyright applications are still the driving competitive engine behind American businesses and the growth of American GDP. Knowledge is an intangible asset of great value, yet right now it is the primary driver of American output.

2) Production – Since economic theory has always touted the benefits of the outsourcing of labor and free trade, the fact that American politicians put it into place in the past 20 years has contributed to the lack of American surpluses. While there is an intrinsic value placed on knowledge, it only achieves its greatest value when it is complemented with production of tangible goods. Free trade agreements work in economic theory because of the bullshit economic concept of “ceterus paribus,” yet in reality, all other things are NOT equal (ref: Paul Krugman’s Nobel-winning work). By removing production and sourcing it to the cheapest labor, America has eliminated the tangible component to easing deficit-relief.

Tangibility consumption is the key to abating the pain of debt. A while back, I was reading a book called Cities, by John Reader. It basically was a social anthropological look at the evolution of cities. He writes:

“As one city grew [Constantinople] and the other [Rome] shrank in significance on the changing geopolitical stage, the grain from Egypt was allocated to Constantinople and Rome became entirely dependent on supplies from north Africa. But there were fewer people in the city now, its importance was diminishing, and the imperatives of a grain supply system which had fed the city for centuries was slipping away…”

That the Roman Empire fell because of internal politicking is a superficial way of looking at it; the Roman Empire fell because it literally had no food to give to the people; the bureaucracy of Rome controlled neither the means of distribution, NOR the means of production.

Debt is ruinous, regardless of whether it is “honest” or not. Debt is subversive, regardless of its practical merit. And yet centuries of civilization have nonetheless validated its worth (even despite religious inhibition). It is going to take more than luck for the Obama Administration to run forward with its massive deficits. After all, luck never provided Romans a means of replenishing Roman coffers via depleted grain supplies and it’s likely not to provide Americans a means of replenishing the U.S. Treasury coffers via outsourced manufacturing.

Would You Let This Girl Drown? 8 July 2009, p.A31
Why we’re so willing to try to assist a stranger before us, yet so unwilling to send donations to save strangers from malaria half a world away.

If that article was a reading passage from the GMATs, they’d have a field day with it. The analogy of the girl in the pond is riddled with logical inconsistencies. As a result, it overall fails (at least to me) to make an completely accurate, valid point. And as it’s the impetus of the article, it kind of shuts down half the remaining premises.

Kristof’s point about the one vs. the many is initially appealing, and here’s why. Look how many people donate to a “John Doe Cancer 10k Run” or a “Jane Doe Multiple Sclerosis 10k Walk.” It almost never fails that the aggregate amounts of monies poured into individual-benefit charities is larger than the amount donated to global charities. Like Kristof says, it’s easier to give to a charity that benefits one than one that benefits many.

As Kristof also shows, the personal appeal to emotion has a vast impact on charitable giving. It’s also easier to give the money than to work outside the scope of capabilities. But the lack of funds is why global charities are often understaffed and often unable to carry out their missions to “save the money,” at least without UN funding or MNC funding; those who are willing and able cannot sustain themselves to do the work of saving 25,000 lives.

So, for example, I look at my friend’s annual appeals to donate to the Terry Fox Run. People would be more likely to donate 1) because they know my friend had cancer (ie, the feel-good reward) and it’s an easily identifiable cause and 2) because the actual research of cancer is beyond their scopes of capabilities (ie, personal responsibility).

However, by addressing the logical flaw, the initial appeal of the “one vs. many” starts to fall apart; the G8 would not let the individual girl drown (nor would anyone else) primarily because of Premise 1. But, to say that the G8 would catch up on its commitments for the millions of lives relies on the assumption it must recognize both Premises 1 and 2 above. Quite frankly, that’s a rather emotional assumption to rely on, after all, the conclusion depends on an unwritten Premise 3: International altruism supersedes domestic economic interest (and certainly now, France and Italy not in positions to fulfill that premise). If you yourself are in a wheelchair, it is going to be very difficult to help the drowning girl in the pond — the best you’ll do is recognize the problem and try to get help from elsewhere. Making the leap from the “one” to the “many” paves the way for logical inconsistency in any argument.

The fact is, the global public needs to recognize that the commitments of the G8 members are essentially non-binding. They are a guide for the top global leaders to shrink the wealth gap and achieve that which is in the best global interests. The world has valid interest in where these actors are molding the the direction of the world is.

But because his inductive logic leaves out Premise 3, I disagree with Kristof’s main point of contention that humanitarians are “abjectively ineffective at selling their causes.” A customer’s inability to buy may not be defined the same as his lack of desire to buy. The G8 is a consumer of humanitarian causes, just like any other actor.

P.S. The saying “One death is a tragedy, a million deaths is a statistic” is often attributed to Joseph Stalin. How ironic to use that quote in a story about charitable donations.

Prediction: The day the bailout of the auto industry fails in the Senate, the DJIA drops more than 700 points.

Why do I suggest this?  It’s fairly simple.  Today, Congress has agreed a bipartisan plan, provided the industry can present a “viable” and compelling business plan by December 2 — 12 days away.  So if the Big Three can’t make their case, why such a big blow?  Afterall, there are many arguments, particularly from the conservatives, that make an equally compelling case: Chapter 11 bankruptcy would be a more draconian means of forcing these companies to abandon their pithy ways.  Even Michael Moore concedes that the although the ripple effect of letting the auto industry fail would be intensive, Americans are equally angry in their response to bailing out failed institutions.

There’s reasonable cause for concern for these bailouts and without presenting the viability, the sustainability, and some forecast of measurable success, bridge loans to nowhere are a waste of taxpayers’ dollars.  In the 1990s, the Japanese government spent billions of yen propping up corporations that were otherwise inevitably doomed to failure.  As a result, the “zombie corporations” took the Japanese economy more than a decade to start recovery.  At a certain point, there should be institutions that are too big to fail; what is the rationale behind the sacred cows (p.s., it is no longer what is good for GM is good for the US… it is what is good for Google is good for the US).

So why would the Dow drop more than 500 points if an entire industry is thrown into bankruptcy?  Simple.  The field of behavioural finance looks at the various human, social, and emotional factors that form the basis of investment decisions.  It is often this herd mentality that drives a flight, en masse, to quality.  Or the same mentality that drives speculators to raise the high point of oil to near $150.  Behavioral finance was what caught the attention of investors when Lehman Brothers failed, raising the prospect of the $700bn bailout.

These psychological lines in the sand are always being drawn and it’s my belief that as Lehman Brothers was the straw that broke the financial camel’s back, the automakers will be the straw that break the manufacturing camel’s back.  The rescue of the financial industry was not a panacea and in the short run, confidence in the American financial system has been shot.  I suspect the same will happen if there is no rescue of the auto industry.  Not only will consumer confidance start to collapse as a result of the ripple effect of involved counterparties (don’t forget, Detroit’s problems stem from poor financing of auto loans *ahem GMAC Financing* and the subsequent seizure of the credit markets, brought on by Bear Stearns and Lehman’s collapses), but also, investor confidence will start to shrink.  For whatever it’s worth, Detroit represents a significant amount of American R&D.  Without sufficent investment, that R&D will be lost to other countries.

The fact is, the American visa process for qualified individuals is already cumbersome.  Attracting qualified candidates is not the problem — getting expedited paperwork for them to research here is.  Yet without sufficent R&D to speed innovation and swing the economic downturn in reverse, America loses its final vestigages of greatness.

What’s a shame is that these events are unfolding so rapidly that there is almost no time to focus on macro-level solutions.   The seizure of credit markets means too much attention is paid to patchwork, micro-solutions-as-bailouts.  Yes, American taxpayers have a right to be upset about the bailouts.  But doing nothing is equally as extremely detrimental.  Finding the pragmatic solution is what will salve the healing until the housing and healthcare problems (which are the fundamental, root causes of any of the entire crisis) can be stablized.

Hillary Clinton a contender for secretary of state – FT.com

Around six months ago, when I was still supporting Hillary’s presidential bid, but conceding that it was falling short, I proposed that Obama would take the nomination.  Though many were riding high on the change they could believe in, my concession was based on the speculation that any presumptive Obama administration would likely not feature Ms. Clinton in the vice-presidency, but rather another high role.  Since she would not be vice-president, I envisioned her assuming one of two roles: 1) Secretary of State, or; 2) Senate Majority Leader.

Suffice to say, the emergence of Hillary as a contender for this position comes as little surprise to me, though I also see valid experience in gentlemen such as Bill Richardson and Chuck Hagel.  What I think I would find surprising, is the fact that nobody would have thought of Clinton as a potential pick for the position.  I mean, talk about rupture from current foreign policy; Ms. Clinton would make a phenomenal pick even just to engage in re-igniting the Israeli-Palestinian peace process (which, if moved forward, could put a fundamental crimp in Iranian nuclear ambitions).

But here on this small blog that is read by probably five people every two months, my words go unheeded.  These are the same words that, in August 2007, predicted the financial crisis to become a house of cards, waiting to fall in on itself.  Failure to acknowledge that asset-backed securities trading on non-existing liquidity would cause a ripple effect through the financial markets has caused the current economic crisis, and placed me back on the job market.  When the issue of the $700bn “bailout package” arose in September, many believed that “Wall Street and Main Street don’t cross paths” (further fodder for a discussion on a potential bailout of the American automotive industry).  Now, my former company has had nearly 20% of its assets under management wiped out in one quarter alone.  It is no surprise they had to eliminate positions.

Now, I’m no Nouriel Roubini, with the economic modeling to make these types of predictions.  However I’d consider myself well-read enough to start looking at the world in an interdisciplinary fashion and start piecing pieces of the puzzle together.  This hasn’t yet bottomed out and on a near daily basis, re-invents its black swan tendencies.  Whether I’m John Paulson (also, n.b.– exhibit 1D) or not, the models don’t always work right.

In my opinion,  the only country to correctly take action on the crisis is China; its stimulus package acknowledges the slowdown’s domestic impact, and re-invests in domestic infrastructure.  It is exactly what America needs and what types of steps the next president should take once in office.

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