There's been some discussion over the last few days of what is going to happen if China starts reducing its position in US Treasuries. Seeking Alpha has a good summation of the problem:
In response, during a recent summit, the leaders of Brazil, Russia, India, China and South Africa (the BRICS) announced that they want to trade between themselves in their own currencies. This comes amid a growing chorus in China pushing for a limit of dollar reserves to $1.3 trillion. At present, China, whose economy the IMF says will outpace that of the US by 2016, has $3.04 trillion in dollar reserves. What's going to happen to the dollar when China sells off $1.74 trillion? And who, besides the Federal Reserve, is going to buy our bonds?
If anything, I think this understates the problem. The real issue starts, not when China starts selling our bonds, but when China stops buying our bonds. As soon as that happens, we're in big trouble.
Right now, when Treasury goes to sell new bonds, it enters a fairly robust market, with not just the Fed but a bunch of fairly price-inelastic Asian central banks who are willing to take on our bonds at whatever the market offers. If China exits the market, we will either need to borrow less, or attract new lenders by offering higher interest rates. Even a noticeable decrease in volume would force us to pay more for our deficits. We saw this on a personal level in 2009 when credit card companies reacted to the crisis by reducing credit limits, often to the outstanding balance. This was a big problem for households who were faced with sudden cutbacks, or higher interest rates, or even both.
In fact I made a similar point about interest rates the other day. A lot of people tend to assume that there will be warning signs telling us that we need to get our fiscal house in order: China will slow down its bond purchases, interest rates will gradually rise. But in fact, the lesson of fiscal crises is that the "warning signs" we're watching for often are the crisis. Unless interest rates increase (or debt buying decrease--which is really the same thing) in a very gradual, orderly fashion, then by the time your interest rates rise, it is already too late to do anything easy; your debt service burden forces you into dramatic fiscal measures, or default.
According to economist Carmen Reinhart, who has made an intensive study of crises, there's no reason to expect the change to be orderly and gradual. She says the lesson of history is pretty unequivocal: interest rates are not a good predictor of who is about to tip into a crisis. People are willing to lend at decent rates, until suddenly they're barely willing to lend at all.
When you look at how much of our debt comes due by the end of 2012, it's easy to see how fast higher interest rates could turn into a real problem for us. To be sure, we're no Japan--but that's not necessarily a happy thought, because Japan
finances something like 95% of its debt from its pool of thrifty (and nationalistic) savers. Their stock of lenders probably isn't going anywhere. Ours might.
California Representative Adam Schiff, the ranking Democrat on the House Intelligence Committee, has decided to come out in favor of the nuclear agreement.
Earlier this year, California Representative Adam Schiff, the ranking Democrat on the House Intelligence Committee, told me he had serious doubts about Iran’s intentions as it pursued a nuclear deal with the United States and five other world powers. He also said he was somewhat worried about the scale of possible American concessions during the talks. Schiff, who I described in a post at the time as a “moderate’s moderate,” suggested to me that he wanted to see President Obama achieve an important foreign-policy success, but as a Jew, he wanted to make sure that an anti-Semitic regime—both he and Obama agree that Iran is ruled by an anti-Semite—would not be allowed to become a nuclear-weapons state. At the time, he told me he was “uncommitted” and that he would “remain uncommitted” until he had time to review a final deal, should a final deal materialize.
Writing used to be a solitary profession. How did it become so interminably social?
Whether we’re behind the podium or awaiting our turn, numbing our bottoms on the chill of metal foldout chairs or trying to work some life into our terror-stricken tongues, we introverts feel the pain of the public performance. This is because there are requirements to being a writer. Other than being a writer, I mean. Firstly, there’s the need to become part of the writing “community”, which compels every writer who craves self respect and success to attend community events, help to organize them, buzz over them, and—despite blitzed nerves and staggering bowels—present and perform at them. We get through it. We bully ourselves into it. We dose ourselves with beta blockers. We drink. We become our own worst enemies for a night of validation and participation.
Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole.
And if thy brother, a Hebrew man, or a Hebrew woman, be sold unto thee, and serve thee six years; then in the seventh year thou shalt let him go free from thee. And when thou sendest him out free from thee, thou shalt not let him go away empty: thou shalt furnish him liberally out of thy flock, and out of thy floor, and out of thy winepress: of that wherewith the LORD thy God hath blessed thee thou shalt give unto him. And thou shalt remember that thou wast a bondman in the land of Egypt, and the LORD thy God redeemed thee: therefore I command thee this thing today.
— Deuteronomy 15: 12–15
Besides the crime which consists in violating the law, and varying from the right rule of reason, whereby a man so far becomes degenerate, and declares himself to quit the principles of human nature, and to be a noxious creature, there is commonly injury done to some person or other, and some other man receives damage by his transgression: in which case he who hath received any damage, has, besides the right of punishment common to him with other men, a particular right to seek reparation.
In departing from the religious rhetoric of hope and focusing on the “struggle,” Ta-Nehisi Coates retains the ability to relate to his multiple audiences.
When you review Ta-Nehisi Coates in The Atlantic lots of people email you to tell you what you should have said. In this final installment of the Between the World and Me Book Club, I’m exercising some privilege by responding to some of that feedback.
Many white readers seem confused about my interpretation of the book as two texts in the first of three essays. To put a finer point on that, this book’s primary audience is white people. That is not to say that the book doesn’t also appeal to other readers, but rather, that the literary device of a book written as an open letter describes a racial reality that would only surprise white readers. And Coates goes about filling in those holes with remarkable effect for all readers. For example, Coates’s parental anxieties translate into a brilliantly bracing critique of capitalism that deftly links the history of enslaved labor to everything from global inequality to climate change.
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
The Internet is awash with guides for finding success on the crowdfunding website Kickstarter. A quick search yields (in numerical order):
“6 Tips From Kickstarter on How to Run a Successful Crowdfunding Campaign”
“Crowdfunding Secrets: 7 Tips For Kickstarter Success”
“8 Things I Learned From My (Failed) Kickstarter Campaign”
“Kicking Ass & Taking Donations: 9 Tips on Funding Your Kickstarter Project”
“10 Tips I Wish I Knew Before I Launched My Kickstarter Campaign”
And so on.
But the best advice to those seeking money online might sound more like this: Be thin, fair-skinned, and attractive.
It is true that in many realms, crowdfunding has delivered on its democratic promise. Take female entrepreneurship: It’s been shown that professional investors have consistently view pitches from men more favorably than those from women, even when the content of those pitches was the same. Kickstarter has subverted that. On the site, projects launched by women are more likely to secure funding than those started by men.
Even when a dentist kills an adored lion, and everyone is furious, there’s loftier righteousness to be had.
Now is the point in the story of Cecil the lion—amid non-stop news coverage and passionate social-media advocacy—when people get tired of hearing about Cecil the lion. Even if they hesitate to say it.
But Cecil fatigue is only going to get worse. On Friday morning, Zimbabwe’s environment minister, Oppah Muchinguri, called for the extradition of the man who killed him, the Minnesota dentist Walter Palmer. Muchinguri would like Palmer to be “held accountable for his illegal action”—paying a reported $50,000 to kill Cecil with an arrow after luring him away from protected land. And she’s far from alone in demanding accountability. This week, the Internet has served as a bastion of judgment and vigilante justice—just like usual, except that this was a perfect storm directed at a single person. It might be called an outrage singularity.
The Wall Street Journal’s eyebrow-raising story of how the presidential candidate and her husband accepted cash from UBS without any regard for the appearance of impropriety that it created.
The Swiss bank UBS is one of the biggest, most powerful financial institutions in the world. As secretary of state, Hillary Clinton intervened to help it out with the IRS. And after that, the Swiss bank paid Bill Clinton $1.5 million for speaking gigs. TheWall Street Journal reported all that and more Thursday in an article that highlights huge conflicts of interest that the Clintons have created in the recent past.
The piece begins by detailing how Clinton helped the global bank.
“A few weeks after Hillary Clinton was sworn in as secretary of state in early 2009, she was summoned to Geneva by her Swiss counterpart to discuss an urgent matter. The Internal Revenue Service was suing UBS AG to get the identities of Americans with secret accounts,” the newspaper reports. “If the case proceeded, Switzerland’s largest bank would face an impossible choice: Violate Swiss secrecy laws by handing over the names, or refuse and face criminal charges in U.S. federal court. Within months, Mrs. Clinton announced a tentative legal settlement—an unusual intervention by the top U.S. diplomat. UBS ultimately turned over information on 4,450 accounts, a fraction of the 52,000 sought by the IRS.”
Bernie Sanders and Jeb Bush look abroad for inspiration, heralding the end of American exceptionalism.
This election cycle, two candidates have dared to touch a third rail in American politics.
Not Social Security reform. Not Medicare. Not ethanol subsidies. The shibboleth that politicians are suddenly willing to discuss is the idea that America might have something to learn from other countries.
The most notable example is Bernie Sanders, who renewed his praise for Western Europe in a recent interview with Ezra Klein. “Where is the UK? Where is France? Germany is the economic powerhouse in Europe,” Sanders said. “They provide health care to all of their people, they provide free college education to their kids.”
On ABC’s This Week in May, George Stephanopoulos asked Sanders about this sort of rhetoric. “I can hear the Republican attack ad right now: ‘He wants American to look more like Scandinavia,’” the host said. Sanders didn’t flinch:
Most of the big names in futurism are men. What does that mean for the direction we’re all headed?
In the future, everyone’s going to have a robot assistant. That’s the story, at least. And as part of that long-running narrative, Facebook just launched its virtual assistant. They’re calling it Moneypenny—the secretary from the James Bond Films. Which means the symbol of our march forward, once again, ends up being a nod back. In this case, Moneypenny is a send-up to an age when Bond’s womanizing was a symbol of manliness and many women were, no matter what they wanted to be doing, secretaries.
Why can’t people imagine a future without falling into the sexist past? Why does the road ahead keep leading us back to a place that looks like the Tomorrowland of the 1950s? Well, when it comes to Moneypenny, here’s a relevant datapoint: More than two thirds of Facebook employees are men. That’s a ratio reflected among another key group: futurists.