Economic commentators tailor their comments to the expectations of their clients.  We all know that, right? So what? The what is that one of pro-pundits, Zachary Karabell, admits it in Newsweek.

The article is an odd mix of expose (all experts have agendas), advice column (decisive pundits get hired), and apology (the rise of certain pundits is market driven).  Karabell begins the article by describing the fickle, self-interest of financial analysis and ends it by telling not to worry – the market determines who we listen to.  Is this supposed to make us feel better?  Karabell ends the article telling us to question financial experts but his argument suggest that we should question the entire investment system.

1. He contradicts himself about experts skewing their opinions.   First, he says that all analyst “emphasis” perceptions that fit their niche. He worked for a company that focused on growth markets, so he depicted a half -full picture.  Pundits working for more bearish companies provide a half-empty image.  Fair enough, except he also claims that pundits don’t “skew their analysis to serve their own bottom line.”  Emphasizing sounds a lot like skewing to me. Karabell probably meant to say that most pundits don’t out right lie or purposely rig their options.  But we can rest assured that they skew their opinions, for he already told us so. We don’t have to back pedal – they do it.
2. Karabell does not seem worried about disclosure either.  Wouldn’t the public benefit from knowing professional stance of TV experts?  Wouldn’t this information help us decipher their opinion?  Isn’t this a very easy step that would help bring clarity and accuracy to professional economic reporting? Mr. Karabell evidently doesn’t think so, for his confessional article doesn’t even mention such simple adjustments.
3. The psychological basis of markets – the most important thing Karabell says is that investors choose experts based on how they are currently feeling.  When investors feel confident, bullish experts become popular and when worried, bear experts reap the rewards.  For all the fancy number talk and derivative parades, human emotion drives the market.  Could we have a better indictment of our insane wealth transfer system? Again, Mr. Karabell must not agree for he tells us not to worry – the markets drive us. NO, NO, NO – our emotions drive the markets and that is what your agruement suggets.

Karabell pulls a fast one on us but telling us a bit of truth but then pretends that it doesn’t really matter.  Human emotion and self interest drive our financial markets – take it from him, even as he refuses to admit what he said.

The questions is do we really want to continue handing over so much our national sovereignty to these small group of greedy, emotional men?

I don’t.

It is time to get the media to open up their source book and for us to put faith into smaller, local markets. Why give all the money to a few super rich owners who know little and care less about what a company actually does?

Let’s invest in worker ownership and share risks (and benefits) with the people who really work. This is one of the great possibilities of our day and one of the great opportunities of this crisis.

In an NYT article today, David Sanger wonders if the ‘Obama Factor’ is equal to the global economic ‘Meltdown Factor’.  I wonder if the US media is equal to the either?  The country can’t just rely on the President – any President – to solve our problems.

We all need to be involved, including our opinion makers. They should offer us fresh insight into – and directions out of – this mess. To be fair, Mr. Sanger does say that our economic need to borrow money will limit (and has been limiting) our political options.

But his thinking on Iran and Afghanistan follows the prevailing narratives:

• Iran is only about nuclear weapons and can be seen in isolation.
• Afghanistan is primarily about the number of troops.

Honestly, his argument about Afghanistan is more nuanced.  He rightly says that the US now (finally) admits that the border between Afghanistan and Northern Pakistan is meaningless and we are treating them as a single problem.  But of course, Europe prefers to avoid this politically sensitive mess.

Yet the obvious question never gets asked.  Can Iran help in Afghanistan?

Mr. Sanger analyzes problems in neighboring countries without putting them together. Iranians are culturally, linguistically and geographically close to both countries and have abiding interests in the region -  interests that line up well with ours.

Europe doesn’t really matter in Afghanistan.  We don’t want them opposing us and a few extra  troops would be nice. But their presence will never make much difference. They are both too weak and too smart to make a large investment in blowing up rocks so far from home.

Why are we doing it anyway?  The United States could truly expend its global leadership in power, money and political will in those mountains.  Are we really that afraid of a few radicals, when the fight itself could cost us so much?

If our effort collapses, who steps into the power vacuum? If our leadership collapses, who or what fills the void?  We may not be thinking about it, but the rest of the world is. Germany, for one, seems to understand. They work with Iran because they see Iran as a crucial buffer state between the -stans, Russia and ultimately China.

So why are we doing all the fighting in these rocks so far from home? It needs to be done, but do we have to do it all?  We should find real partners, but who?  Europe is not up to it.  India might but that would ignite Pakistan. Russia won’t go near it and China is waiting to for everyone else to kill each other off.

So again, who is close by, has motivation, speaks the language and knows the culture?

Iran.

Why are not at least talking about it?  Especially, when viewed from this angle, we may even want Iran to have the bomb. Iran has offered such partnerships in the past. Why the silence on this end?

Is Israel’s hold over us really that big? Israel has a right to exist and we should continue supporting them but shouldn’t that support provide us more political room, not less?

We are in trouble. There is a lot at stake and we have huge problem to solve, yet the NYT can’t even discuss the possible benefits of a new strategic, political alignment. This is why I wonder if the US media is up to the challenge of the global economic meltdown.

Most of our pros are just collecting paychecks at the moment. They take standard potshots at the guy in charge – and pretend the US will always chug along in charge.

But we may not. And probably will not without some fresh thinking.  It is time for the US media to step up and offer us something new.

The National Review said that Wall Street’s poor performance this week indicates that Obama’s recovery plan needs adjustment. With all due respect, no conclusion should be drawn from Wall Street’s performance until we know more about WHY the numbers dropped.  Unfortunately,  your article offers little insight on this why.

• Did Geithner’s lack of detail somehow weaken faith in the market?
• Geithner plan of a plan was really just a stall tactic. Is Wall Street that impatient?
• Was it because Geithner promised to keep bailing out the big boys?
• Or was it because he was not specific about how much?
• Was it that the increased reporting in the plan means it will be harder to hide?

We need to know what Wall Street didn’t like in order to evaluate the plan and its reaction.  Similarly, the success of the stimulus plan – any stimulus – depends on getting credit moving again. We were all right to questions the detail of the stimulus plan (although we could have been much more thorough and constructive).

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The media really doesn’t get America. Far too many journalists persist in thinking that we care about their partisan agendas. We want to solve the huge challenges that we face, yet most of the paid professionals spend their time promoting a preferred team in the next election.

Mona Charen’s post in the National Review yesterday is a case in point. She wrote that the Obama Administration’s diplomatic efforts with Iran will not do anything new.

Her evidence? The fact that the Bush Administration actually made many diplomatic efforts. She ignores that fact the Bush Administration placed such heavy preconditions on the talks that they KNEW the talks would be rejected.

Their efforts amounted to foolish posturing, yet Ms. Charen asks us  to believe that simply because the Bush Administration made them, Obama can’t possibly do anything different.

Her simplistic view offers no analysis of the strengths or weaknesses of either Administration’s approach. No discussion of what we need to accomplish or how to do it. No method for monitoring progress or changing tactics.

I wrote to her suggesting the following  short list of strategic mistakes that I think the Bush Administration made towards Iran. They form some of the standards against which I measure Obama’s actions.

The Bush Administration:

• treated Iraq, Afghanistan and nuclear weapons as separate issues and missed a great opportunity to devise a clear and consistent approach to both the country and the region
• kept the MEK running in Iraq, irritating Iran yet failing to make strategic use of them.
• listened to self-interested Iraqi ex-Pats who said Iran would not be a problem in post-invasion Iraq
• listened to self-interested Iranian ex-Pats who fed our false hopes for ‘regime change from the outside
• ignored Iran and its nuclear program for far too long making it very hard to play catch up.
• took far too long to acknowledge that Iran was both working against us and WITH us in Iraq
• mis-understood the changes taking place in Iran and true nature of its populist, ground up military threat.
• too often fell victim to Iran & Israel’s war of words and in the process extended to much influence to both countries.
• never got near playing Saudi Arabia and Iran off each other. A dangerous game for sure, but one that could remove the target off our back and create great room to maneuver.

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President Obama promised to conduct business in the “light of day” and yesterday and added that “transparency and rule of law will be the touchstones of this presidency.” This is a welcome break from the past 8 years in which President Bush operated in the dark.  The list of information kept from the people is ridiculous and even things President Bush promised to provide, like an open accounting of Iraqi oil sales, we never got.

We all know that knowledge is power and Presidents need to weild this power. But the President works for us.  All information he (or she) has is ours and each President must decide how much he can share with the people – how much he trusts the people. President Bush  didn’t trust us at all.  He didn’t involve us or even include us.  We were supposed to shop and leave everything to him.

No, thank you.  The people of the United States are ready, willing and able to play a more active role in our democracy. And we have the technology to do so.

Electing representatives still makes sense for we need professionals dedicating their full time efforts to the business of government, but that doesn’t mean the rest of us can’t be involved.  President Obama made great use of the Internet to get his message out and organize people during the campaign. My hope is that he goes further and has us help collect data and make the tough decisions.

Will Congress really vote with  insurance lobbyist when the President’s website has documented 2.8 million cases of insurance-company fraud in the last 12 months and 73% of the site’s 24 million contributors support the President’s bill?  I think not.  And if they do, we will know, remember and vote accordingly.  Not because some Fox-hard ranted about it but because we collected the data and contributed our voices.

Imagine a place where you could report on illegal dumping, find out how to conclusively measure it and then contribute the data?  Imagine a place where soldiers could report each time Halliburton burns another $80,000 tax-payer-bought semi-trailer because a tire went flat?  Or a place where a truck driver could log how many consecutive shifts his boss forced him to drive?

My hope is that Obama continues to experiment with the Internet as a way to involve citizens. We have just begun to realize how sharing information can affect our government. An open gathering and evaluation system would be the opposite of Big Brother. As long as we control it, such a system would put more and more control in our hands. Such a system would allow us to take the great American experiment to new levels.

And we need such growth for that only the people of the US have the guts to make the tough choices between profit and responsibility.  The process will be messy and faulty but together we can go places that the cash pushers and their Congressional customers will never dare.

President Obama, please trust us.  Please include us.  We are ready to grow with you.

The media discussion of the Clinton Confirmation hearings seems to focus on the Senator Luger’s request for more transparency surrounding Bill Clinton’s various endeavors. I agree with that we need more transparency but wish our national debate could go a bit further and consider how well Clinton and the Republicans got along.

The Real Story

I only watched the first half of each session (morning and afternoon) but Senator Clinton not only enjoys a strong rapport with many members, but they also share similar concerns. Like Luger, Clinton wants to focus on WMD and she seems quite willing to work closely with the Committee to make progress. Like Clinton (and Sec. Gates) Luger wants to re-invest in the State Department and sees an essential role for State in maintain our safety and security.

That is a significant change from the last eight years and although neither was specific about the size of the shift, the door seems open for the State Department to return to prominence and there seems to a corresponding likeliness that State and Congress will be able to work together.

This seems like the story we should be focusing on. First by celebrating the possible return of a working government and then begin to do our part by asking and all Senators to define specifics and how much investment and a list of priorities.

My Perspective on Bill Clinton Disclosure

I am concerned about Clinton’s dealings. The Republicans are right to push for transparency. We need more of it, all the time, for everybody. It is high time we deal with ex-President’s and their staff making bundles of cash by selling influence. James Baker III was still working for the Carlyle Group (investing in weapons and reconstruction companies) when he led the Iraq Study Group.

This doesn’t mean he did anything wrong, but shouldn’t we have cared what investments he was making in Iraq? Might they influenced his decisions or at least created that impression in interested parties? Do you think that he was approached by any such interested parties? Of course, he was – all the time and probably still is – just as Bill Clinton is and George Bush is about to be.

There is everything right with transparency as long as we apply it to everybody equally – and the more the better. This is a unique opportunity to create new expectations of ex-Presidents and White House staffers. They don’t retire anymore but often work for many long years. Ex-Pres’ stay on the payroll and we protect them, so we should know what they are up to.

The Iraqi government assumed jurisdiction over the  Mujahedeen-e Khalq (MEK) today.  The group is listed as a terrorists group by the US State Department and as the Kansas City reports:

The group has strong support among Republicans in Congress, and many neo-conservatives in the U.S. describe them as a democratic alternative to the Iranian theocratic regime.

“It just shows how feckless our list of terrorists is,” said Lawrence Wilkerson, who was former Secretary of State Colin Powell’s chief of staff and is an MEK critic.

“They’re terrorists only when we consider them terrorists. They might be terrorists in everybody else’s books. … It was a strange group of people and the leadership was extremely cruel and extremely vicious.”

Supporting this group for five years has undermined the US’s moral stance against terrorism.  The invasion of Iraq provided us a great opportunity to  increase the credibility of the War On Terrorism. If we broke up the MEK (a group fighting one of our ‘enemies) in an open process that determined the relative guilt and innocence of its members, we could have provided a model for other countries to follow.

Instead we made ourselves look like state sponsors of terrorism and for what?  Kissinger would have used the MEK as a bargaining chip to get Iran to back off its nukes.  But our present leaders didn’t even to that.  They protected these guys for some wild hope a group despised in Iran for fighting with Saddam at the end of the Iraq-Iran War could lead a revolution.

This is another example of fantasy foreign policy and should be roundly criticized.  But it is not too late to round these people up and start a process of trying them in an open fashion that allows all parties fair representation.  This is the best way to protect innocent MEK, punish the terrorists, prove our intentions and improve relations in the region.

A Wall Street Journal Opinion post criticized Germany yesterday for continuing economic relations with Iran. This seems like a strange position for a paper concerned with business interests. Shouldn’t they be the ones pointing out the positive role that business can play in building understanding and strengthen relationships? Does it really make sense for them to be supporting sanctioning and blocking trade? We have facing difficult economic times and they advocate stopping trade with a major oil producing country? It makes one wonder what sector of the economy WSJ is supporting?

Also, their premise that sanctions will work is flawed. As one reader commented, the editor seems to think

“that Iranian policy change is to be forced by economic pressure, and that if Germans would stop doing business with Iran, this would make the Supreme Leader in Iran more likely to back off on Iranian efforts to build nuclear power plants. These assumptions are dubious. Indeed, the economic isolation of Iran will only cement hard-line policies and attitudes into place, as has been the case with the economic isolation of Cuba and North Korea. Those who promote sanctions often draw analogies with South Africa, as if the Islamic Republic might fall in the manner of the Apartheid regime. However, in S. Africa there was an organized opposition to the regime backed by the majority; and the minority could not hold out against the international condemnation and support for the majority. These factors simply do not exist in the case of Iran. The only way Iranian policies may be expected to improve from a Western perspective is through increasing engagement over a long period of increasingly overlapping horizons of understanding. China provides a better model than S. Africa.

We need Iran to achieve our larger objectives in the region. We should look at the nuclear issue seen as one piece of a regional strategy that includes Iran as vital part. No one wants to see a nuclear arms race in the Middle East and the best way to stop it is to ensure Iran’s safety and the best way to do that is do work with them to stabilize the region.

We need to stop our piece meal approach to the Middle East. What are our objectives in the region? Are we there to spread US military-protected democracies? Or are we are trying to stem to the spread of the hatred and violence while keeping the oil flowing? If we want the later, we should consider how important Iran could be in creating a new Middle East and then we might begin to understand how positive and useful Germany’ strong relationship with Iran.

The Right continues to push an idea of a liberal bias in the American media and to some extent they have demonstrated that many media has a thin, insignificant bias on a few social issues. We are starting a multi-part series to discuss a much larger and more consequential bias – a pro-corporate bias.  The US media routinely takes so many pro-corporate stances that what should be obvious becomes impossible to see.

For instance, let’s take a quick look at Columbia.  The country is in the middle of a long civil war in which both the government and the rebels support by growing and selling cocaine.  But once President Clinton picked sides and began supplying money, weapons and advisors to the government, the US media only talks about the rebels as drug dealers.

The rebels are stuck in the mountainous jungles and the government owns hundreds of ships and planes, yet some how only the rebels get all the coke into the US.  Should fishy to you? Does anyone in the US media investigate? If the government is still dealing, where is that money going?

If the illicit drug trade really generates over $300 billion a year, where is all that money? It can’t be stuffed under mattresses.  Since President Bush took office, we are supposed to believe that there has been over $2 trillion in drug profits yet the money isn’t in our banks?  The US auto industry is $380 billion dollar market.  It makes no sense that there is that much money in drugs and that we are actually trying to stop it.

There are a whole host of questions to ask about the role of the government and our banks yet our media continues to feed us the same drug-banker friendly story.

The poor performance of the US media in the built up to the 2003 invasion of Iraq is well known. Well, they are up to it again. The Administration is pumping out distortions and exaggerations about Iran and the US media publish them without reflection. For example, Administration often state the Iran continues to support the insurgents in Iraq and the media repeats it with little to no context or any relevant questions.

The result is the people of the United States hear time and again that Iran is attacking our soldiers and nothing else. Simple story – good guys, bad guys – done. And the conclusion for must of us is clear – we have to do something about it. But the situation is much more complex than that and we cannot decide a what our real interests are and will end being lead in to a dangerous and ineffective war.

Every time a government official says that Iran supports the insurgents (and they are supporting the Shiite insurgents), the media should provide the simple context that we all know but conveniently forget. Iran is also supporting the government, police, army and prominent businesses in Iraq.

They are working both sides creating a simple question; Why is Iran supporting and subverting the stability of Iraq. Imagine where the debate might go with a rigorous pursuit of that simple question? We would need to know who is doing what in Iraq and why. And finding answers will lead us to imagine new ways to improve stability and lower tensions between the US and Iran.