Pruning Shears

No Associated Press content was harmed in the writing of this post

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Our image in the Muslim world would probably improve if we stopped killing so many Muslims.

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Combat operations have concluded for:

1. Army 1st Lt. David A. Johnson, 24, of Horicon, WI.
2. Marine Cpl. Christopher G. Singer, 23, of Temecula, CA.

Via.

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Drones have started to bomb Somalia. PressTV report, with caveat. Maybe they were just early to the story.

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Chaos in Oakland. MSNBC botches report of it.

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Lots of reports on possible movement on Wall Street fraud. The new working group gets cautious approval from the normally skeptical David Dayen and Matt Taibbi. Stay tuned!

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More ex-Murdoch employees arrested. Via.

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Bruce Dixon on the industry we lionize and the slaves it employs. Built by the poor but designed by the smart.

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Yvette Carnell looks at a parallel with an earlier time.

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Leftover links. SOPA proponents have an irritating habit of insisting that all you need to do is read the legislation and you’ll see it’s all perfectly fine. There’s Richard Cotton’s “if you’ve read the legislation you know it applies only to foreign web sites” and Lamar Smith’s “It’s easy to engage in fear-mongering and it’s easy to raise straw men and red herrings, but if they read the bill they will be reassured.” One of the reasons for all the opposition is that it’s a terribly written law that leaves all kinds of room for interpretation. Another is that folks who are aware of the recent past and are capable of connecting dots, drawing clear inferences, and looking at context have arrived at the obvious conclusion that SOPA will almost immediately begin harming a whole range of sites not mentioned by the legislation. Those who want to quarantine discussion to only those sites mentioned in the bill are either willfully blind or have an ulterior motive.

At least one music blog took part in the protest:

If the Blogger fiasco from a few years back taught us anything, it’s that there really is no such thing as a legal mp3 blog. No matter how much permission you have or from whom it came from (including the bands themselves) all it takes is for one faction of the machine behind an artist to take qualm with an mp3 on your site and you’ll be getting a take down notice from your hosting company (if they’re nice enough to not just shut you down).

Includes a link to this article, which looks at the headaches and pitfalls of the existing system, forget about a draconian new one:

Take the case of Masala, co-founded by Guillaume Decouflet in mid-2005. Together with his partners, Decouflet has introduced hundreds of thousands of readers to underground genres such as kuduro and funk carioca. Masala’s writers weren’t typical music bloggers, waxing lyrical about Neon Indian and the new Phoenix remix: mostly DJs, they shared South African electronica, Japanese dancehall, UK funky and Senegalese hip-hop. “We haven’t been posting any Whitney Houston or anything,” Decouflet explained. He only recalls receiving one DMCA notice - ever - from Blogger. As this email did not name the offending song, he says he doesn’t know what caused the complaint. Masala’s bloggers responded to Google’s email, Decouflet insists, but never heard back. That is, until their entire site - and more than four years of archives - were deleted this week.

Sean Michaels posts at Said The Gramophone and is an occasional correspondent of mine on strictly music-related matters. I’m sure he agrees completely with all my political views though.

The anti-SOPA blackout should have been a teachable moment for Democrats, but probably will not be. If you want to know how Republicans ever get to successfully position themselves as populist champions against indifferent, out of touch elites, this is a handy example.

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Digby hasn’t lost anything off her fastball: “This has all the hallmarks of Mitt’s compassion chip misfiring.”

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ECONNED EXCERPT from pp. 217-8. After noting two weaknesses with the floating currency system Smith details the last one:

And the third is that “floating” rates can be influenced by central bank interest rate policies. For instance, the Bank of Japan kept dropping its call rate, its overnight interest rate, starting at the end of 1990. Although the relationship is loose, the yen did weaken considerably over the 1990s as interest rates fell, helping Japan have a robust export sector even though its domestic economy was a basket case. Conventional trade-oriented theories of exchange say that the currencies of countries running large trade surpluses ought to rise, thus making their exports more costly and reducing their competitiveness. However, these models ignore the role of the financial system. A country like Japan with low interest rates can see its currency become a funding vehicle (recall the discussion of the yen carry trade in chapter 7). Foreigners will gamble on exchange rates, borrowing in the low interest rates and investing at higher interest rates elsewhere. This activity suppresses the price of funding the currency because the speculators must sell the low interest rate currency to buy investments of the country offering higher returns, and the sales of the currency borrowed will keep its price down.

And Japan was soon to have company in the “cheap currency” club, albeit for different reasons.

China pegged its currency at 8.28 renminbi to the dollar in 1994. The initial motivation for setting a fixed rate was to give exporters greater predictability, and this is not a trivial issue. Volatile exchange rates can wreak havoc with planning and profits. Hedging costs money, and even sophisticated players can wind up worse off from trying to protect against exchange rate movements than if they had done nothing.

But as the Chinese economy performed well, China maintained its peg, which increasingly looked to be at an artificially low level (as economies become more successful, their currencies usually rise in value). Like the Japanese before them, China saw trade surpluses with the United States grow and started acquiring U.S. assets. But for many years, this pattern looked benign, since the Chinese surpluses, although sustained, were not large by global standards.

And then the Asian crisis hit. The causes are debated, but external debt has risen sharply in many Asian economies. Many had set interest rates high to attract foreign investors and had currency pegs. Unfortunately they were too successful. The influx of hot money stimulated their economies and produced trade deficits. High domestic interest rates and a fixed exchange rate made borrowing in foreign currencies like the dollar look like a smart move. Thailand in particular went on a debt binge. But that put borrowers at risk of much higher debt-servicing costs if the home currency fell versus the dollar.

Speculators, seeing Thailand’s precarious position, started to attack the currency. Thailand wound up depleting its foreign exchange in mounting a defense and was first to let its currency float in 1997. As the baht plunged, many banks and companies that had borrowed in foreign currencies suddenly saw the debt payments skyrocket, pushing them into insolvency.

Although the Asian countries wanted to organize a bailout, the move was beaten back aggressively by Treasury Secretary Robert Rubin, his deputy secretary, Larry Summers, and Timothy Geithner, then at the IMF but about to assume the role of assistant secretary for international affairs at the Treasury. The IMF provided a rescue package in August, using the same template it had in Mexico in 1995, requiring structural reforms, such as cutting entitlement spending, letting insolvent institutions fail, and raising interest rates. Note that this is almost the polar opposite of the approach advanced economies used to fight the current crisis.

So who knows, maybe we got lucky. For as right - and delicious - as it would have been to see Goldman Sachs, JP Morgan and others go belly up, the price might well have been the evisceration of Social Security and Medicare.