Bush Doctrine of Preventive War is Immoral
By: Dr. J. P. Hubert
Once upon a time it was part of conventional wisdom--based as it was in the "golden rule ethic" that "picking a fight" was immoral--whether by nation states or individuals. This moral tenet flowed from the first and second principles (of right reason) of the Natural Law: 1) do good/avoid evil and 2) treat your neighbor fairly--summarized by "do unto others as you would have them do unto you."
When/where the golden rule ethic still reigned, it was understood that even though one could legitimately defend oneself against aggression, it was always and everywhere morally wrong to instigate hostilities. That is to say, it is always morally licit to defend against aggression but never to cause it.
Several fundamental underlying assumptions are basic to understanding the “golden rule” as it is applied to war.
First, in moral philosophy one must assume that human nature is fixed and not changing that is to say, all human beings are assumed to be of equal worth and their essence (nature or quiddity [what-ness]) is constant i.e. unchanging (This in no way means that all human beings have equal talents and abilities). It is important to note that there is no empirical (scientific) evidence that human nature is changing—cumulative evidence establishes the opposite and of course Divine Revelation calls for a fixed human nature as well (All the major Theistic belief systems ascribe to this view). Moreover, the empirical evidence which is available clearly demonstrates that human beings are the most highly developed and complex entities in material existence. There are no defensible bases on which to assert that all human beings are not of equal worth which do not reduce to vacuous claims of unwarranted entitlement.
While a “fixed human nature” may conflict with what radical Darwinists who embrace metaphysical naturalism may propound, such a view is a philosophical not scientific notion and an incoherent one at that. The very notion that it would be possible to determine right and wrong--if human nature is constantly changing—is pure fantasy. Only if human nature is fixed does it become possible to hold that right and wrong in the moral sense exists or is discernible. If human nature is evolving; then right and wrong is evolving as well—a situation which is unintelligible. Virtually any behavior can be justified since it can be effectively argued that some people are more evolved than others and therefore their behavior no matter how apparently objectionable is also acceptable. This leads to complete social Darwinism—survival of the fittest where “might” alone “makes right”—a prescription for total moral anarchy.
Second, any moral philosophy worthy of the name must include the notion of universality—that is, its moral tenets must be applicable to all human beings—a reality which flows from the existence of a fixed human nature (anthropology). If this is not the case, it becomes impossible to determine right and wrong at all. Identical behavior(s) can be considered morally acceptable by one person and not another or by one nation but not another simply by refusing to apply the relevant moral principles universally. What otherwise would always and everywhere be wrong for example might be right for some but wrong for others simply because of who it is that is performing the moral calculus in question. Under these circumstances, “intent” is allowed to become controlling since it can make behavior which is obviously wrong appear justifiable. Such a situation is very common in contemporary International Relations where the classical tripartite Aristotelian/Thomistic synthesis (means, ends, and circumstances) that is moral calculus has been abandoned for rank Utilitarianism—too often resulting in obvious moral injustices.
Beginning with the Bush administration in the wake of the September 11, 2001 attacks, the United States discarded a 2000+ year old golden rule ethical proscription against initiating wars of aggression in which only legitimate defense not offense was understood to be acceptable—i.e. defensive war as a last resort only! It is difficult to overestimate just how radical this notion is. Particularly troublesome is the fact that the attacks themselves--in the words of Osama bin Laden--were the result of perceived immoral behavior on our part (the unilateral support of Israel over the Palestinian Arabs including our dismissal of their terrible plight and our garrisoning of US forces in the Holy Lands of Mecca and Medina; apparently contrary to the teachings of the Prophet Mohammed among other things).
While the intentional killing of innocent human beings (as occurred on 9/11) can never be morally justified, it would be foolish of us not to recognize that our behavior abroad can have disastrous consequences when we fail to consider our actions in terms of the two principles outlined above. That is to say; Palestinian Arabs are unwilling to accept that their lives are not worth as much as are Israelis and rightfully so since all human beings by virtue of their fixed human nature are equally valuable-- if any are valuable at all. For Theists and particularly Christian Theists this is axiomatic of course by virtue or the fact that man is created in the image of God (imago Dei). Moreover, we would by the principle of universality detest the stationing of foreign troops on our land and thus the fact that Muslim Arabs do as well is completely understandable. To suggest otherwise is irrational and or dishonest in the extreme.
For anyone to allege that the use of nuclear weapons in an offensive manner could under any conceivable set of circumstances be morally licit (in the recent Presidential campaign Hillary Clinton, Barack Obama and John McCain all did so) is to completely depart from the golden rule ethic which has governed humanity for over 2 millennia. By their very nature, both strategic and tactical nuclear weapons intentionally kill innocent human beings. This is 100% certain from an objective perspective and therefore provides the moral certitude required in performing the relevant moral calculus. Under no circumstances can nuclear weapons be used offensively. Moreover, it is extremely doubtful that they could ever be utilized defensively either due to the fact that they invariably would be associated with the killing of innocent non-combatants (It is impossible for the author to see how such a use could avoid the mass intentional killing of innocent human beings. It is not legitimate to argue that such killing would represent so-called “collateral damage “since it would be completely foreseeable and thus avoidable). While conventional weapons are potentially usable in a morally licit way (for defensive purposes only), from a moral perspective, it is clear that the use of nuclear weapons under any set of circumstances is morally illicit due to the moral certitude that doing so always results in the intentional killing of innocent human beings and in tremendous numbers.
We have over the past 7+ years in a sense crossed the Rubicon where the waging of war is concerned, meaning we have stepped over the “red-line.” It has now become acceptable ala the “Bush Doctrine” to instigate offensive wars of aggression based on nothing more than a probability calculation that a given country might someday under certain imagined circumstances represent an actual or imminent threat to American national security or survival. This cannot be justified or accepted when subjected to rational/traditional (scholastic) moral philosophical precepts and must be rejected by all human beings of good will.
Unfortunately, there is no credible evidence available to establish that the Obama administration has repudiated the so-called "Bush Doctrine" of preventive war. Moreover, President Obama has demonstrated vis a vis the Charles Freeman affair that he is unwilling/unable to oppose the Israel (radical Zionist) Lobby. Americans should be especially concerned that Zionist hawk and new Israeli Prime Minister Benjamin Netanyahu will maneuver the President into a preventive attack on Iran--which would be catastrophic for the US and the world.
Friday, March 13, 2009
Thursday, March 12, 2009
The Tactics Of the Israel Lobby
NOTE:
The Zionist (referred to in this piece as the Israel Lobby) Lobby currently controls US foreign policy in a way which is not in the interest of the United States or modern Israel. It is aligned with the ultra right-wing of the Israeli political spectrum--in particular the Likud Party of Benjamin Netanyahu the new Prime Minister.
The fact that Charles Freeman--after a massive and disreputable attack by the Lobby--has been forced to withdraw as chair of the NIC is a very bad sign that the Obama administration will be unable/unwilling to serve as a fair, just and honest broker in furtherance of the Israeli/Palestinian peace process. This portends poorly for overall US foreign policy as well which presumably will remain overly militaristic, hegemonic and tied to Zionist aims to the detriment of our relations with the rest of the world, particularly Muslims.
Until the United States breaks free of Zionist control and influence in foreign relations, there will be no peace in the Middle East or anywhere else for that matter. As this episode indicates it is simply impossible to discuss the problem in public which indicates just how much power the Zionist Power Configuration has in controlling the US media and our overall political process. It is truly a sad day. Moreover, it is not an overstatement to say that radical Zionism and Zionist Lobby control of US foreign policy is the most important non-domestic problem currently facing our country. It must be effectively dealt with if we are to survive as a nation.
We cannot allow the US government to utilize our hard-earned tax money (in our names) for the continuation of Zionist policies. Americans citizens must adequately educate themselves on the Israeli/Palestinian issue and then begin to speak out--in good conscience. Not to do so is to fail not only in the cardinal virtue of justice but in courage (fortitude) as well.
--Dr. J. P. Hubert
By Charles Freeman
March 11, 2009 "WSJ" -- -To all who supported me or gave me words of encouragement during the controversy of the past two weeks, you have my gratitude and respect.
You will by now have seen the statement by Director of National Intelligence Dennis Blair reporting that I have withdrawn my previous acceptance of his invitation to chair the National Intelligence Council.
I have concluded that the barrage of libelous distortions of my record would not cease upon my entry into office. The effort to smear me and to destroy my credibility would instead continue. I do not believe the National Intelligence Council could function effectively while its chair was under constant attack by unscrupulous people with a passionate attachment to the views of a political faction in a foreign country. I agreed to chair the NIC to strengthen it and protect it against politicization, not to introduce it to efforts by a special interest group to assert control over it through a protracted political campaign.
As those who know me are well aware, I have greatly enjoyed life since retiring from government. Nothing was further from my mind than a return to public service. When Admiral Blair asked me to chair the NIC I responded that I understood he was "asking me to give my freedom of speech, my leisure, the greater part of my income, subject myself to the mental colonoscopy of a polygraph, and resume a daily commute to a job with long working hours and a daily ration of political abuse." I added that I wondered "whether there wasn't some sort of downside to this offer." I was mindful that no one is indispensable; I am not an exception. It took weeks of reflection for me to conclude that, given the unprecedentedly challenging circumstances in which our country now finds itself abroad and at home, I had no choice but accept the call to return to public service. I thereupon resigned from all positions that I had held and all activities in which I was engaged. I now look forward to returning to private life, freed of all previous obligations.
I am not so immodest as to believe that this controversy was about me rather than issues of public policy. These issues had little to do with the NIC and were not at the heart of what I hoped to contribute to the quality of analysis available to President Obama and his administration. Still, I am saddened by what the controversy and the manner in which the public vitriol of those who devoted themselves to sustaining it have revealed about the state of our civil society. It is apparent that we Americans cannot any longer conduct a serious public discussion or exercise independent judgment about matters of great importance to our country as well as to our allies and friends.
The libels on me and their easily traceable email trails show conclusively that there is a powerful lobby determined to prevent any view other than its own from being aired, still less to factor in American understanding of trends and events in the Middle East. The tactics of the Israel Lobby plumb the depths of dishonor and indecency and include character assassination, selective misquotation, the willful distortion of the record, the fabrication of falsehoods, and an utter disregard for the truth. The aim of this Lobby is control of the policy process through the exercise of a veto over the appointment of people who dispute the wisdom of its views, the substitution of political correctness for analysis, and the exclusion of any and all options for decision by Americans and our government other than those that it favors.
There is a special irony in having been accused of improper regard for the opinions of foreign governments and societies by a group so clearly intent on enforcing adherence to the policies of a foreign government – in this case, the government of Israel. I believe that the inability of the American public to discuss, or the government to consider, any option for US policies in the Middle East opposed by the ruling faction in Israeli politics has allowed that faction to adopt and sustain policies that ultimately threaten the existence of the state of Israel. It is not permitted for anyone in the United States to say so. This is not just a tragedy for Israelis and their neighbors in the Middle East; it is doing widening damage to the national security of the United States.
The outrageous agitation that followed the leak of my pending appointment will be seen by many to raise serious questions about whether the Obama administration will be able to make its own decisions about the Middle East and related issues. I regret that my willingness to serve the new administration has ended by casting doubt on its ability to consider, let alone decide what policies might best serve the interests of the United States rather than those of a Lobby intent on enforcing the will and interests of a foreign government.(Editor's emphasis throughout)
In the court of public opinion, unlike a court of law, one is guilty until proven innocent. The speeches from which quotations have been lifted from their context are available for anyone interested in the truth to read. The injustice of the accusations made against me has been obvious to those with open minds. Those who have sought to impugn my character are uninterested in any rebuttal that I or anyone else might make.
Still, for the record: I have never sought to be paid or accepted payment from any foreign government, including Saudi Arabia or China, for any service, nor have I ever spoken on behalf of a foreign government, its interests, or its policies. I have never lobbied any branch of our government for any cause, foreign or domestic. I am my own man, no one else's, and with my return to private life, I will once again – to my pleasure – serve no master other than myself. I will continue to speak out as I choose on issues of concern to me and other Americans.
I retain my respect and confidence in President Obama and DNI Blair. Our country now faces terrible challenges abroad as well as at home. Like all patriotic Americans, I continue to pray that our president can successfully lead us in surmounting them.
The Zionist (referred to in this piece as the Israel Lobby) Lobby currently controls US foreign policy in a way which is not in the interest of the United States or modern Israel. It is aligned with the ultra right-wing of the Israeli political spectrum--in particular the Likud Party of Benjamin Netanyahu the new Prime Minister.
The fact that Charles Freeman--after a massive and disreputable attack by the Lobby--has been forced to withdraw as chair of the NIC is a very bad sign that the Obama administration will be unable/unwilling to serve as a fair, just and honest broker in furtherance of the Israeli/Palestinian peace process. This portends poorly for overall US foreign policy as well which presumably will remain overly militaristic, hegemonic and tied to Zionist aims to the detriment of our relations with the rest of the world, particularly Muslims.
Until the United States breaks free of Zionist control and influence in foreign relations, there will be no peace in the Middle East or anywhere else for that matter. As this episode indicates it is simply impossible to discuss the problem in public which indicates just how much power the Zionist Power Configuration has in controlling the US media and our overall political process. It is truly a sad day. Moreover, it is not an overstatement to say that radical Zionism and Zionist Lobby control of US foreign policy is the most important non-domestic problem currently facing our country. It must be effectively dealt with if we are to survive as a nation.
We cannot allow the US government to utilize our hard-earned tax money (in our names) for the continuation of Zionist policies. Americans citizens must adequately educate themselves on the Israeli/Palestinian issue and then begin to speak out--in good conscience. Not to do so is to fail not only in the cardinal virtue of justice but in courage (fortitude) as well.
--Dr. J. P. Hubert
By Charles Freeman
March 11, 2009 "WSJ" -- -To all who supported me or gave me words of encouragement during the controversy of the past two weeks, you have my gratitude and respect.
You will by now have seen the statement by Director of National Intelligence Dennis Blair reporting that I have withdrawn my previous acceptance of his invitation to chair the National Intelligence Council.
I have concluded that the barrage of libelous distortions of my record would not cease upon my entry into office. The effort to smear me and to destroy my credibility would instead continue. I do not believe the National Intelligence Council could function effectively while its chair was under constant attack by unscrupulous people with a passionate attachment to the views of a political faction in a foreign country. I agreed to chair the NIC to strengthen it and protect it against politicization, not to introduce it to efforts by a special interest group to assert control over it through a protracted political campaign.
As those who know me are well aware, I have greatly enjoyed life since retiring from government. Nothing was further from my mind than a return to public service. When Admiral Blair asked me to chair the NIC I responded that I understood he was "asking me to give my freedom of speech, my leisure, the greater part of my income, subject myself to the mental colonoscopy of a polygraph, and resume a daily commute to a job with long working hours and a daily ration of political abuse." I added that I wondered "whether there wasn't some sort of downside to this offer." I was mindful that no one is indispensable; I am not an exception. It took weeks of reflection for me to conclude that, given the unprecedentedly challenging circumstances in which our country now finds itself abroad and at home, I had no choice but accept the call to return to public service. I thereupon resigned from all positions that I had held and all activities in which I was engaged. I now look forward to returning to private life, freed of all previous obligations.
I am not so immodest as to believe that this controversy was about me rather than issues of public policy. These issues had little to do with the NIC and were not at the heart of what I hoped to contribute to the quality of analysis available to President Obama and his administration. Still, I am saddened by what the controversy and the manner in which the public vitriol of those who devoted themselves to sustaining it have revealed about the state of our civil society. It is apparent that we Americans cannot any longer conduct a serious public discussion or exercise independent judgment about matters of great importance to our country as well as to our allies and friends.
The libels on me and their easily traceable email trails show conclusively that there is a powerful lobby determined to prevent any view other than its own from being aired, still less to factor in American understanding of trends and events in the Middle East. The tactics of the Israel Lobby plumb the depths of dishonor and indecency and include character assassination, selective misquotation, the willful distortion of the record, the fabrication of falsehoods, and an utter disregard for the truth. The aim of this Lobby is control of the policy process through the exercise of a veto over the appointment of people who dispute the wisdom of its views, the substitution of political correctness for analysis, and the exclusion of any and all options for decision by Americans and our government other than those that it favors.
There is a special irony in having been accused of improper regard for the opinions of foreign governments and societies by a group so clearly intent on enforcing adherence to the policies of a foreign government – in this case, the government of Israel. I believe that the inability of the American public to discuss, or the government to consider, any option for US policies in the Middle East opposed by the ruling faction in Israeli politics has allowed that faction to adopt and sustain policies that ultimately threaten the existence of the state of Israel. It is not permitted for anyone in the United States to say so. This is not just a tragedy for Israelis and their neighbors in the Middle East; it is doing widening damage to the national security of the United States.
The outrageous agitation that followed the leak of my pending appointment will be seen by many to raise serious questions about whether the Obama administration will be able to make its own decisions about the Middle East and related issues. I regret that my willingness to serve the new administration has ended by casting doubt on its ability to consider, let alone decide what policies might best serve the interests of the United States rather than those of a Lobby intent on enforcing the will and interests of a foreign government.(Editor's emphasis throughout)
In the court of public opinion, unlike a court of law, one is guilty until proven innocent. The speeches from which quotations have been lifted from their context are available for anyone interested in the truth to read. The injustice of the accusations made against me has been obvious to those with open minds. Those who have sought to impugn my character are uninterested in any rebuttal that I or anyone else might make.
Still, for the record: I have never sought to be paid or accepted payment from any foreign government, including Saudi Arabia or China, for any service, nor have I ever spoken on behalf of a foreign government, its interests, or its policies. I have never lobbied any branch of our government for any cause, foreign or domestic. I am my own man, no one else's, and with my return to private life, I will once again – to my pleasure – serve no master other than myself. I will continue to speak out as I choose on issues of concern to me and other Americans.
I retain my respect and confidence in President Obama and DNI Blair. Our country now faces terrible challenges abroad as well as at home. Like all patriotic Americans, I continue to pray that our president can successfully lead us in surmounting them.
Wednesday, March 11, 2009
Defending Human Embryonic Life - Essay
“Intermediate” or “Special Status” for the human embryo is invalid
By Dr. John P. Hubert MD, FACS
Advisor to Common Good
© CCWVA
Catholic Online
2/27/2006 - 8:15 AM PST
I. Introduction
This essay addresses the moral status of the human embryo. It asserts that on the basis of biology and metaphysics, the human embryo should be accorded full moral status, that is, inviolability. While this is also the position afforded it by the Catholic Church on the basis of divine revelation and elsewhere, the case will not be argued on that basis in this brief. Instead it will provide a critique of the so-called “intermediate” or “special status” which has been proposed by some ethicists including several of the members of the President’s Council on Bioethics. In so doing it will demonstrate why anything other than full moral status for the human embryo is biologically and philosophically untenable.
MORE...
By Dr. John P. Hubert MD, FACS
Advisor to Common Good
© CCWVA
Catholic Online
2/27/2006 - 8:15 AM PST
I. Introduction
This essay addresses the moral status of the human embryo. It asserts that on the basis of biology and metaphysics, the human embryo should be accorded full moral status, that is, inviolability. While this is also the position afforded it by the Catholic Church on the basis of divine revelation and elsewhere, the case will not be argued on that basis in this brief. Instead it will provide a critique of the so-called “intermediate” or “special status” which has been proposed by some ethicists including several of the members of the President’s Council on Bioethics. In so doing it will demonstrate why anything other than full moral status for the human embryo is biologically and philosophically untenable.
MORE...
Save the Embryonic Humans
By Deacon Keith Fournier
3/7/2009
Catholic Online, available HERE...
With the stroke off a Presidential pen human embryos will become property, capable of being “manufactured” like a commodity and available to be used as spare parts.
We must speak for human embryonic Life as we speak for all human life. We must expose and oppose this new form of genetic slavery wherein an entire class of human persons is being labeled as property to be used by those who are more powerful.
CHESAPEAKE, Va. (Catholic Online) - Two years before he would give his “Yes” to the invitation of the Holy Spirit to become the successor of Peter, Karol Cardinal Wotyla, spoke to the U.S. Bishops. His ominous observation was republished in the Wall Street Journal on November 9, 1978:
“We are now standing in the face of the greatest historical confrontation humanity has gone through. I do not think that wide circles of the American society or wide circles of the Christian community realize this fully. We are now facing the final confrontation between the Church and the anti-Church, of the Gospel and the anti-Gospel. This confrontation lies within the plans of divine providence. It is a trial which the whole Church… must take up.”
And take it up we must. The task is huge and the implications beyond what we can begin to expect. The challenges we face in undertaking this task include the insults, accusations and calumny of even our fellow citizens. We will, for example, be accused of being against progress and even “anti-science”, when nothing could be further from the truth. We are simply Pro-life and believe that science exists to serve the person, the family and the common good. Science, after all, can become a force for evil and our common history has shown how that can occur when the human heart and capacity for making the right choice has been so clearly corrupted.
On Monday, March 9, 2009, President Barrack Obama, whose election offered the promise of "hope and change", will hold a signing ceremony where he will sign one more Executive Order against life. This one is expected to remove all restraints from the use of the always deadly process of extracting stem cells from human embryonic life for experimentation. It will also open up the funding of such lethal efforts with Federal tax dollars. This is so even though research has clearly demonstrated that other types of stem cell research, for example the use of adult stem cells which can be extracted with the consent of the donor and which do not kill, have produced even greater promise and results. In addition, cells derived from fetal cord blood have shown significant promise but have received little or no attention or research support.
Recent reports have heralded the discovery of what may be an alternative to the deadly process of extracting embryonic stem cells and killing the embryonic human person in the process. They have led to hopes of using what are being called “induced pluripotent stem cells”, or iPS cells. These can now be produced by activating genes in adult cells which "reprogram" them and do not require the use of dangerous viruses or involve the taking of a human life. However, the signing of this Executive Order is expected to open the door not to the promotion of these life friendly alternatives but rather to the unlimited production of human embryonic life which could then be killed and used.
With the stroke of a Presidential pen human embryos will become property, capable of being “manufactured” like a commodity and available to be used as spare parts in experimentation which has produced no discernible scientific results. Make no mistake, every so called “extraction” of embryonic stem cells kills a living human embryo.
In 1987, the Congregation for the Doctrine of the Faith of the Holy See issued its important teaching entitled “Instruction on Respect for Human Life in its Origin and on the Dignity of Procreation”. Among the many questions it answered with absolute clarity was: “What Respect is due to the human embryo, taking into account his nature and identity?” The answer given by the Magisterium: “The human being must be respected - as a person - from the very first instant of his (her) existence.”
Unfortunately, the prevailing view of human rights entrenched in American judicial precedent and legislation denies the equal protection of the law to the human embryonic person. American law refuses to recognize that human embryos have a right to life and a right to a future. There are a number of differing philosophical arguments offered to promote the lie that these fundamental rights are conferred by positive civil law rather than by the Natural Law. Most of these arguments reserve the use of the concept of “person” to those humans who are deemed to somehow be “independent” and/or “autonomous”. They are also promoted by people who now call themselves “medical ethicists”. These folks have substantial academic degrees and professional pedigree and sit on Advisory Councils.
Some of these new “ethicists” try to make a distinction between “potential” and “actual” human persons and relegate the child in the womb to the category of being only a “potential” human person. Others view interdependency as a negative and insist on independence and “autonomy” as a criterion for any human rights to ever attach. Some equate the human embryo’s
dependency on the mother as a form of “non-personhood”. Still others propose a progressive notion of consciousness as indicative of a growing presence of “personhood”. A few concede that human embryos are human beings but deny they are persons. We find all of these ideas in the field sadly referred to these days as “Bio-Ethics” even though such positions are anything but ethical. We find them in textbooks being used to teach the subject to future medical practitioners. (See, e.g., Singer and Kuhse, “Bioethics”)
One of these “ethicists”, Michael Tooley denies the child in the womb should have any rights at all. His rationale evolved over time. In each version, as scientific research cast serious doubt on his claims, he conveniently shifted his ground to reach the same conclusion. Yet, human embryology and developmental biology affirm that a human embryo is not distinct in kind from a human being, but a human being at an early stage of development. Even prior to implantation, a human embryo is a unique living human being with the genetic constitution and epigenetic primordial that continues to develop throughout his or her life. However, the right not to be killed in the womb, the right to be born and the right to participate in human relationships are rejected for these little persons. Human embryonic lives are reduced to what one astute Catholic philosopher and lawyer, Robert George, called a “pre-personal way of being human”.
The idea that people can be less than persons is now being applied to other stages of human development outside of the womb. The disabled (physically and mentally), the aged and the infirmed are increasingly denied the protection of the law. There is an emphasis on individual rights over relation and autonomy over solidarity. The late Servant of God John Paul wrote in “The Gospel of Life” concerning what he called this “remarkable contradiction”. He further elaborated: “…the roots of the contradiction between the solemn affirmation of human rights and their tragic denial in practice lies in a notion of freedom which exalts the isolated individual in an absolute way, and gives no place to solidarity, to openness to others and service of them.”(Par. 19) This counterfeit notion of freedom also views comatose human beings as no longer worthy of being called “persons”. Their caregivers are encouraged to stop giving them food and water. Seriously ill children are viewed as interlopers who should not continue to use medical and social resources. Whether the criteria for being recognized as a human person is a satisfactory level of brain function, an agreed upon notion of self awareness, non-dependency, individual autonomy, or some similar “acceptable” level of physical or mental capacity, this reduces the human being to a human doing, valuable not simply because they are members of our human family and gifts to be received but based upon their functionality and subject to deadly treatment once they are no longer of economic value.
There can be do debate about this fact, we were all once human embryos. We all lived in the first home of the whole human race, our mothers womb. For the Christian, we further profess that the Son of God, the Incarnate Word, the Second Person of the Blessed Trinity, was a human being, who, in the embryonic stage, lived in his mother’s womb. At every age and stage of our “human-being- ness”, be it in the womb, as an infant, as a child, an adolescent, an adult, in our times of illness, in our old age, we have always been dependent on others and vulnerable. This is what it means to be a human being. The emphasis of the proponents of the culture of death on independence and autonomy informs a worldview that Pope John Paul II taught threatens the “…entire structure of human rights.” (Gospel of Life, Par. 19)
So, we must rise and suffer the indignities of being verbally pilloried, accused of being anti-science” or “impeding progress”. We must speak for human embryonic Life as we speak for all human life. We must expose and oppose this new form of genetic slavery wherein an entire class of human persons is being labeled as property to be used by those who are more powerful. In conclusion, I speak specifically to my fellow Catholics; we will be at the front line. Why? Because our Church has been absolutely clear in her unbroken teaching on the dignity of every human person, including what the Congregation for the Doctrine of the Faith recently called “embryonic persons”. Be ready to be called, as happened recently in response to our opposition to the appointment of dissident Catholic Kathleen Sebelius to the HHS, “Catholic Extremists”. The late beloved Servant of God John Paul II called it and he was indeed prophetic: “We are now facing the final confrontation between the Church and the anti-Church, of the Gospel and the anti-Gospel. This confrontation lies within the plans of divine providence. It is a trial which the whole Church… must take up.”
US Recession Could Last Up to 36 Months: Roubini
By Jane Wells
March 10, 2009 "CNBC" - -The man who predicted the current financial crisis said the US recession could drag on for years without drastic action.
Among his solutions: fix the housing market by breaking "every mortgage contract."
"We are in the 15th month of a recession," said Nouriel Roubini, a professor at New York University's Stern School of Business, told CNBC in a live interview. "Growth is going to be close to zero and unemployment rate well above 10 percent into next year."
Echoing a speech he made earlier in the day, Roubini said he sees "no hope for the recession ending in 2009 and will more than likely last into 2010."
Roubini, who is also known as "Dr. Doom," told CNBC that the risk of a total meltdown has been reversed for now but that the economy is going through "a death by a thousand cuts." He also said that "most of the U.S. financial institutions are entirely insolvent."
"The market friendly view for the banks is nationalization," said Roubini. "Temporarily take over the banks, clean them up and get them working again."
As for the claim that the Treasury Department can't legally take over the banks, Roubini said that most of the banks are already owned by the government and that the government could "put them in receivership" if it had to.
Earlier in the day, Roubini spoke to the CBOE Risk Management Conference and said he believes total losses could peak at $3.6 trillion in the financial system, with half of that being borne by banks and bank dealers and the other half borne by hedge funds and pension funds, among others.
He said that while U.S. GDP growth next year could be zero, global GDP could dip into negative territory.
"We could end up ... with a 36-month recession, that could be "L-shaped stagnation, or near depression," Roubini said. He puts the chance of a severe U-shaped recession at 66.7 percent, and a more severe L-shaped recession at 33.3 percent.
Roubini listed a litany of negative omens: Capex spending down 20-30 percent for investment grade companies, self-perpetuating deflation, all making a bad situation worse.
"If you expect prices to be lower tomorrow, why would you buy today?", asked Roubini. He says it's easier to break out of an inflationary cycle than a deflationary one, and while a year of deflation "is okay," longer would be "a disaster."
So what can the government do? The easy part is lowering interest rates and buying toxic assets. The hard part, he says, will be tackling housing. Roubini says that the housing market, like a company restructuring in bankruptcy, needs to have "face value reduction of the debt." Rather than go through mortgages one by one, he says reduction has to be "across the board...break every mortgage contract."
Roubini also took issue with the $800 billion stimulus package, saying it's not enough. For one thing, there's only $200 billion upfront, and half of that is a tax cut, which Roubini calls "a waste of money" that is not going to make a difference.
Finally, while he says there will be "a light at the end of the tunnel", it'll probably get worse before it gets better. Those who believe in a second half recovery this year "are delusional" he says.
In fact, based on Roubini's calculations, we could conceivably see the S&P 500 at 500, the Dow at 5000.
March 10, 2009 "CNBC" - -The man who predicted the current financial crisis said the US recession could drag on for years without drastic action.
Among his solutions: fix the housing market by breaking "every mortgage contract."
"We are in the 15th month of a recession," said Nouriel Roubini, a professor at New York University's Stern School of Business, told CNBC in a live interview. "Growth is going to be close to zero and unemployment rate well above 10 percent into next year."
Echoing a speech he made earlier in the day, Roubini said he sees "no hope for the recession ending in 2009 and will more than likely last into 2010."
Roubini, who is also known as "Dr. Doom," told CNBC that the risk of a total meltdown has been reversed for now but that the economy is going through "a death by a thousand cuts." He also said that "most of the U.S. financial institutions are entirely insolvent."
"The market friendly view for the banks is nationalization," said Roubini. "Temporarily take over the banks, clean them up and get them working again."
As for the claim that the Treasury Department can't legally take over the banks, Roubini said that most of the banks are already owned by the government and that the government could "put them in receivership" if it had to.
Earlier in the day, Roubini spoke to the CBOE Risk Management Conference and said he believes total losses could peak at $3.6 trillion in the financial system, with half of that being borne by banks and bank dealers and the other half borne by hedge funds and pension funds, among others.
He said that while U.S. GDP growth next year could be zero, global GDP could dip into negative territory.
"We could end up ... with a 36-month recession, that could be "L-shaped stagnation, or near depression," Roubini said. He puts the chance of a severe U-shaped recession at 66.7 percent, and a more severe L-shaped recession at 33.3 percent.
Roubini listed a litany of negative omens: Capex spending down 20-30 percent for investment grade companies, self-perpetuating deflation, all making a bad situation worse.
"If you expect prices to be lower tomorrow, why would you buy today?", asked Roubini. He says it's easier to break out of an inflationary cycle than a deflationary one, and while a year of deflation "is okay," longer would be "a disaster."
So what can the government do? The easy part is lowering interest rates and buying toxic assets. The hard part, he says, will be tackling housing. Roubini says that the housing market, like a company restructuring in bankruptcy, needs to have "face value reduction of the debt." Rather than go through mortgages one by one, he says reduction has to be "across the board...break every mortgage contract."
Roubini also took issue with the $800 billion stimulus package, saying it's not enough. For one thing, there's only $200 billion upfront, and half of that is a tax cut, which Roubini calls "a waste of money" that is not going to make a difference.
Finally, while he says there will be "a light at the end of the tunnel", it'll probably get worse before it gets better. Those who believe in a second half recovery this year "are delusional" he says.
In fact, based on Roubini's calculations, we could conceivably see the S&P 500 at 500, the Dow at 5000.
Tuesday, March 10, 2009
Debt Relief and Regulation
By Mike Whitney
"We've explained the difference between a recession and a depression before. But we'll do it again. A recession is a pause in an otherwise healthy, growing economy. A depression is when the economy drops dead." Bill Bonner, The Daily Reckoning
March 09, 2009 "Information Clearing House" -- There's good news and bad news. The good news is that Obama's economics team understands the fundamental problem with the banks and knows what needs to be done to fix it. The bad news is that Bernanke, Summers and Geithner all have close ties to the big banks and refuse to do what's necessary. Instead, they keep propping up failing institutions with capital injections while concocting elaborate strategies for purchasing the banks bad assets through backdoor transactions. It's all very opaque, despite the cheery public relations monikers they slap on their various "rescue" plans. This charade has gone on for more than a month while unemployment has continued to soar, the stock market has continued to plunge, and the country has slipped deeper into economic quicksand.
Paul Krugman summed up the administration's response in Friday's column, "The Biig Dither":
"There’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern....
Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets ... are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away. ...
What’s more, officials seem to believe that getting toxic waste properly priced would cure the ills of all our major financial institutions.(Paul Krugman, The Big Dither, New York Times)
Krugman is right about the "dithering" but wrong about the toxic waste. Geithner and Bernanke know exactly what these assets are worth--- just pennies on the dollar. That's why Geithner has avoided taking $5 or $10 billion of these mortgage-backed securities (MBS) and putting them up for public auction. That would be the reasonable thing to do and it would remove any doubt about their true value. But the Treasury Secretary won't do that because it would just draw attention to the fact that the banking system is insolvent; the vaults are full of nothing but garbage loans that are defaulting at a record pace. Instead, Geithner has cooked up a plan for a "public-private partnership" which will provide up to $1 trillion in funding for private equity and hedge funds to purchase toxic assets from the banks. The Treasury will offer low interest "non recourse" loans (with explicit government guarantees against any potential loss) to qualified investors. If the hedge funds or private equity firms don't turn a profit in three years, they simply return the assets to the Treasury and get their money back. In essence, Geithner's plan provides a lavish subsidy to private industry on a totally risk free investment. It's a sweetheart deal.
At the same time, the plan achieves Geithner's two main objectives; it gives the banks the chance to scrub their balance sheets of junk mortgages and it also allows them to keep the present management-structure in place. The $1 trillion taxpayer giveaway to the hedge funds is just another juicy bone tossed to Geithner's real constituents-- Wall Street speculators.
Unfortunately, markets don't like uncertainty, which is why Geithner's circuitous plan has put traders in a frenzy. Wall Street has gone from scratching its head in bewilderment, to a stampede for the exits. In the last month alone, the stock market has plummeted a whopping 18 percent, indicating ebbing confidence in the political leadership. Geithner is now seen as another glorified bank lobbyist like his predecessor, Paulson, who is in way over his head. His lack of clarity has only added to the widespread sense of malaise. Markets require transparency and details, not obfuscation, gibberish and Fed-speak. This is how Baseline Scenario blogger Simon Johnson summed it up:
"Confusion helps the powerful... When there are complicated government bailout schemes, multiple exchange rates, or high inflation, it is very hard to keep track of market prices and to protect the value of firms. The result, if taken to an extreme, is looting: the collapse of banks, industrial firms, and other entities because the insiders take the money (or other valuables) and run.
This is the prospect now faced by the United States.
Treasury has made it clear that they will proceed with a “mix-and-match” strategy, as advertised....The course of policy is set. For at least the next 18 months, we know what to expect on the banking front. Now Treasury is committed, the leadership in this area will not deviate from a pro-insider policy for large banks; they are not interested in alternative approaches (I’ve asked). The result will be further destruction of the private credit system and more recourse to relatively nontransparent actions by the Federal Reserve, with all the risks that entails.
"The road to economic hell is paved with good intentions and bad banks."(Simon Johnson Baseline Scenario)
This is unusually harsh criticism from a former head economist at the IMF, but Johnson's analysis is dead-on. Geithner is putting the interests of the banks before those of the country. The "public private partnership" is just a convoluted way of avoiding the heavy-lifting of rolling up the banks, wiping out shareholders, separating the bad assets, and replacing management. The same is true of Bernanke's Term Asset-Backed Securities Loan Facility (TALF) which is another futile attempt to restart Wall Street's failed credit-generating mechanism, securitization. It was securitization (which is the conversion of pools of mortgages into securities) which got us into this mess to begin with. It doesn't do any good to restore an inherently crisis-prone system that only works properly when the market is going up. There are more efficient ways to recapitalize the banks than the PPP, just as there are better ways to promote consumer spending than the TALF. Treasury should be looking into debt relief, jobs programs and higher wages, instead of barreling blindly down the same dead end. There are solutions that do not involve artificially low interest rates, government subsidies for toxic waste or lavish handouts to hedge funds. They simply require a commitment to rebuild the economy on sound principles of hard work, productivity and fair distribution of the the profits.
Even industry cheerleaders, like the Wall Street Journal, are skeptical of Bernanke's TALF and have denounced it as just another boondoggle.
Wall Street Journal: “If you missed the first hedge-fund boom, now may be the time to put up your shingle. Looking at the terms of the Federal Reserve’s new Term Asset-Backed Securities Loan Facility, investors using it should be able to generate hefty returns with little risk. The TALF effectively turns the Fed into a generous prime brokerage.”
Who needs a free market when Obama's Politburo is more than willing to prop up private industry with hundreds of billions of tax dollars?
There is another part of Geithner's plan that is even more troubling, that is, after the banks sell their dodgy assets to the hedge funds, what will they do with the money? Consumers are retrenching, so the pool of creditworthy customers will remain small. And businesses are trying to work off existing inventory, so they won't be borrowing to increase investment or retool anytime soon. If the opportunities for lending dry up, the banks will be forced to seek unconventional means for generating profits. My guess is the banks will put a large portion of their money into hedge funds for commodities speculation, which will push the price of oil, natural gas and other raw materials into the stratosphere just like they did last year when oil shot up to $147 bbl. The banks really have no choice; 65 percent of their business was securitized investments. That door has been slammed shut for good.
"TOO BIG TO FAIL"?
The Financial Times economics editor Martin Wolf warned in Friday's column of the dangers of our present course. He said:
"If large institutions are too big and interconnected to fail... then talk of maintaining them as “commercial” operations... is a sick joke. Such banks are not commercial operations; they are expensive wards of the state and must be treated as such.
The UK government has to make a decision. If it believes that costly bail-out must be piled upon ever more costly bail-out, then the banking system can never be treated as a commercial activity again: it is a regulated utility – end of story. If the government does want it to be a commercial activity, then defaults are necessary, as some now argue. Take your pick. But do not believe you can have both. (Martin Wolf, Big risks for the insurer of last resort, Financial Times)
Citigroup is now officially a "ward of the state" although CEO Pandit and his scurvy band of pirates are still allowed to collect their paychecks and hang out by the water cooler. Citi's survival depends on the reluctant generosity of the US taxpayer who is now its biggest shareholder. The mega-bank has slumped from $58 per share to $1 per share in less than 2 years. It's now more expensive to buy a grande latte at Starbucks than it is to buy three shares of Citi...and, at least with the Starbucks, the buyer gets a buzz on. There's no upside to the Citi deal. It's a dead-loss. The real question is, how long will Geithner let this joke continue before he does his job?
Wolf is correct to draw attention to the myth of "too big to fail". In fact, the Kansas Federal Reserve President, Thomas Hoenig made the same point in a PDF released this week:
"We have been slow to face up to the fundamental problems in our financial system and reluctant to take decisive action with respect to failing institutions. ... We have been quick to provide liquidity and public capital, but we have not defined a consistent plan and not addressed the basic shortcomings and, in some cases, the insolvent position of these institutions.
We understandably would prefer not to "nationalize" these businesses, but in reacting as we are, we nevertheless are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis." (Too Big has Failed, thanks to Calculated Risk)
Hoenig and Wolf are smart enough to know that the problem is not as simple as it sounds. They know that the largest financial institutions are lashed together in a net of complex counterparty contracts--mainly credit default swaps (CDS)--which run into tens of trillions of dollars, and, that if one player is allowed to default, it could pull all of the others down the elevator shaft along with it. The problem could be resolved with proper regulation which would force all CDS onto a regulated exchange so that government watchdogs could make sure that they are sufficiently capitalized to pay off whatever claims are levied against them. But, so far, no one in Congress has taken the initiative to propose the necessary regulation. Thus, the taxpayer continues to pay off hundreds of billions of dollars of insurance claims against AIG, which was so grossly under-capitalized, it couldn't meet its own obligations. The AIG fiasco provides a window into the real motivation behind financial engineering and the alphabet-soup of complex debt-instruments. (CDOs, MBSs, CDS) Wall Street knew that the fastest way to fatten the bottom line was to circumvent minimum capital requirements and expand leverage to unsustainable levels. In other words, a system of debt-fueled capitalism with only specks of capital. It worked beautifully, until it didn't.
Nobel prize-winning economist, Myron Scholes, who helped invent a model for pricing options, added his voice to the growing chorus of angry reformers who think the CDS market should be scrapped altogether. According to Bloomberg News: Scholes said "regulators need to ‘blow up or burn’ over-the-counter derivative trading markets to help solve the financial crisis. The markets have stopped functioning and are failing to provide pricing signals... The “solution is really to blow up or burn the OTC market, the CDSs and swaps and structured products, and let us start over.” (Bloomberg)
Treasury and the Fed have taken the position that they will not fix the system until they are forced at gunpoint. This is a prescription for disaster, not just because of growing public frustration or the free-falling stock markets, but because the banks are just the tip of the iceberg. The other non bank financial institutions are brimming with mortgage-backed sludge that will require emergency treatment, too. MarketWatch gives us a glimpse of the magnitude of the problem in last week's article "Banks fall out of bed, Citi shares under a buck":
"Market strategist Ed Yardeni's latest research shows that.....80.6%, or $7.4 trillion, of the assets held by the S&P financials companies were Level 2," he said in a research report. Level 2 assets are so-called mark-to-model, which are carried at a value based on assumptions, not true market prices."
What does "Level 2 assets" mean? It means that the financial giants are short on liquid assets--like cash or US Treasurys--and loaded with sketchy mortgage-backed paper to which they have arbitrarily assigned a value that no one in their right mind would ever pay. The entire US financial system, including the pension funds and insurance companies, is one humongous debt-bloated time bomb that is set to blow at any minute.
Surprisingly, Bernanke thinks he can simply wave his wand and restart the moribund credit markets. That's what the TALF is all about. The problem is that even if the Fed buys all of the AAA securities held by the respective financial institutions, (most of them are non banks) that still only accounts for 20 percent of the bad paper on the books. Here's what Tyler Durden said on Zero Hedge web site:
"Unfortunately for Geithner, who apparently did not read too deeply into the data, the bulk of the $1 trillion decline in securitizations came from home equity lending and non agency RMBS (Residential Mortgage Backed Securities), which reflect the "non-conforming" mortgage market, i.e. the subprime, alt-A and jumbo origination, loans which are the cause for the credit crisis, and which are rated far below the relevant AAA level. The truly unmet market, which the Treasury is addressing is at best 20% of the revised total amount." (Tyler Durden, Could TALF be the biggest disappointment yet?, Zero Hedge)
That leaves Geithner and Bernanke with few good choices. Either they expand TALF to include crappy AA (and lower) graded securities--putting the taxpayer at even greater risk--or they devise some totally new lending facility that will bypass the financial institutions altogether and issue credit directly to consumers and small businesses. There is no third option.
The problem with the TALF is that it ignores the new economic reality, that consumer demand has collapsed from the massive losses in home equity and retirement accounts. When credit markets froze last year, housing values dropped sharply raising havoc with household balance sheets and forcing a radical change in spending habits. That cutback in spending created a negative feedback loop to the financial sector which made it impossible to re-inflate the credit bubble. The ultimate size of the financial system will be determined, to large extent, by the capacity of people to borrow again which depends on many factors including job security, savings, and optimism about the future. Needless to say, the growing worry over a 1930s-type Depression will not help to lift spirits or improve the chances for a speedy recovery. That said, there are positive steps the administration can take now to restore confidence in the markets and put the ship o' state on even keel. These measures fall under three main headings; debt reduction (forgiveness), regulation and accountability. Confidence is not built on inspiring oratory or personal charisma, but concrete actions to reestablish a rules-based system that penalizes crooks and fraudsters. Recovery isn't possible without a strong commitment to these basic changes. (Editor's emphasis throughout)
"We've explained the difference between a recession and a depression before. But we'll do it again. A recession is a pause in an otherwise healthy, growing economy. A depression is when the economy drops dead." Bill Bonner, The Daily Reckoning
March 09, 2009 "Information Clearing House" -- There's good news and bad news. The good news is that Obama's economics team understands the fundamental problem with the banks and knows what needs to be done to fix it. The bad news is that Bernanke, Summers and Geithner all have close ties to the big banks and refuse to do what's necessary. Instead, they keep propping up failing institutions with capital injections while concocting elaborate strategies for purchasing the banks bad assets through backdoor transactions. It's all very opaque, despite the cheery public relations monikers they slap on their various "rescue" plans. This charade has gone on for more than a month while unemployment has continued to soar, the stock market has continued to plunge, and the country has slipped deeper into economic quicksand.
Paul Krugman summed up the administration's response in Friday's column, "The Biig Dither":
"There’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern....
Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets ... are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away. ...
What’s more, officials seem to believe that getting toxic waste properly priced would cure the ills of all our major financial institutions.(Paul Krugman, The Big Dither, New York Times)
Krugman is right about the "dithering" but wrong about the toxic waste. Geithner and Bernanke know exactly what these assets are worth--- just pennies on the dollar. That's why Geithner has avoided taking $5 or $10 billion of these mortgage-backed securities (MBS) and putting them up for public auction. That would be the reasonable thing to do and it would remove any doubt about their true value. But the Treasury Secretary won't do that because it would just draw attention to the fact that the banking system is insolvent; the vaults are full of nothing but garbage loans that are defaulting at a record pace. Instead, Geithner has cooked up a plan for a "public-private partnership" which will provide up to $1 trillion in funding for private equity and hedge funds to purchase toxic assets from the banks. The Treasury will offer low interest "non recourse" loans (with explicit government guarantees against any potential loss) to qualified investors. If the hedge funds or private equity firms don't turn a profit in three years, they simply return the assets to the Treasury and get their money back. In essence, Geithner's plan provides a lavish subsidy to private industry on a totally risk free investment. It's a sweetheart deal.
At the same time, the plan achieves Geithner's two main objectives; it gives the banks the chance to scrub their balance sheets of junk mortgages and it also allows them to keep the present management-structure in place. The $1 trillion taxpayer giveaway to the hedge funds is just another juicy bone tossed to Geithner's real constituents-- Wall Street speculators.
Unfortunately, markets don't like uncertainty, which is why Geithner's circuitous plan has put traders in a frenzy. Wall Street has gone from scratching its head in bewilderment, to a stampede for the exits. In the last month alone, the stock market has plummeted a whopping 18 percent, indicating ebbing confidence in the political leadership. Geithner is now seen as another glorified bank lobbyist like his predecessor, Paulson, who is in way over his head. His lack of clarity has only added to the widespread sense of malaise. Markets require transparency and details, not obfuscation, gibberish and Fed-speak. This is how Baseline Scenario blogger Simon Johnson summed it up:
"Confusion helps the powerful... When there are complicated government bailout schemes, multiple exchange rates, or high inflation, it is very hard to keep track of market prices and to protect the value of firms. The result, if taken to an extreme, is looting: the collapse of banks, industrial firms, and other entities because the insiders take the money (or other valuables) and run.
This is the prospect now faced by the United States.
Treasury has made it clear that they will proceed with a “mix-and-match” strategy, as advertised....The course of policy is set. For at least the next 18 months, we know what to expect on the banking front. Now Treasury is committed, the leadership in this area will not deviate from a pro-insider policy for large banks; they are not interested in alternative approaches (I’ve asked). The result will be further destruction of the private credit system and more recourse to relatively nontransparent actions by the Federal Reserve, with all the risks that entails.
"The road to economic hell is paved with good intentions and bad banks."(Simon Johnson Baseline Scenario)
This is unusually harsh criticism from a former head economist at the IMF, but Johnson's analysis is dead-on. Geithner is putting the interests of the banks before those of the country. The "public private partnership" is just a convoluted way of avoiding the heavy-lifting of rolling up the banks, wiping out shareholders, separating the bad assets, and replacing management. The same is true of Bernanke's Term Asset-Backed Securities Loan Facility (TALF) which is another futile attempt to restart Wall Street's failed credit-generating mechanism, securitization. It was securitization (which is the conversion of pools of mortgages into securities) which got us into this mess to begin with. It doesn't do any good to restore an inherently crisis-prone system that only works properly when the market is going up. There are more efficient ways to recapitalize the banks than the PPP, just as there are better ways to promote consumer spending than the TALF. Treasury should be looking into debt relief, jobs programs and higher wages, instead of barreling blindly down the same dead end. There are solutions that do not involve artificially low interest rates, government subsidies for toxic waste or lavish handouts to hedge funds. They simply require a commitment to rebuild the economy on sound principles of hard work, productivity and fair distribution of the the profits.
Even industry cheerleaders, like the Wall Street Journal, are skeptical of Bernanke's TALF and have denounced it as just another boondoggle.
Wall Street Journal: “If you missed the first hedge-fund boom, now may be the time to put up your shingle. Looking at the terms of the Federal Reserve’s new Term Asset-Backed Securities Loan Facility, investors using it should be able to generate hefty returns with little risk. The TALF effectively turns the Fed into a generous prime brokerage.”
Who needs a free market when Obama's Politburo is more than willing to prop up private industry with hundreds of billions of tax dollars?
There is another part of Geithner's plan that is even more troubling, that is, after the banks sell their dodgy assets to the hedge funds, what will they do with the money? Consumers are retrenching, so the pool of creditworthy customers will remain small. And businesses are trying to work off existing inventory, so they won't be borrowing to increase investment or retool anytime soon. If the opportunities for lending dry up, the banks will be forced to seek unconventional means for generating profits. My guess is the banks will put a large portion of their money into hedge funds for commodities speculation, which will push the price of oil, natural gas and other raw materials into the stratosphere just like they did last year when oil shot up to $147 bbl. The banks really have no choice; 65 percent of their business was securitized investments. That door has been slammed shut for good.
"TOO BIG TO FAIL"?
The Financial Times economics editor Martin Wolf warned in Friday's column of the dangers of our present course. He said:
"If large institutions are too big and interconnected to fail... then talk of maintaining them as “commercial” operations... is a sick joke. Such banks are not commercial operations; they are expensive wards of the state and must be treated as such.
The UK government has to make a decision. If it believes that costly bail-out must be piled upon ever more costly bail-out, then the banking system can never be treated as a commercial activity again: it is a regulated utility – end of story. If the government does want it to be a commercial activity, then defaults are necessary, as some now argue. Take your pick. But do not believe you can have both. (Martin Wolf, Big risks for the insurer of last resort, Financial Times)
Citigroup is now officially a "ward of the state" although CEO Pandit and his scurvy band of pirates are still allowed to collect their paychecks and hang out by the water cooler. Citi's survival depends on the reluctant generosity of the US taxpayer who is now its biggest shareholder. The mega-bank has slumped from $58 per share to $1 per share in less than 2 years. It's now more expensive to buy a grande latte at Starbucks than it is to buy three shares of Citi...and, at least with the Starbucks, the buyer gets a buzz on. There's no upside to the Citi deal. It's a dead-loss. The real question is, how long will Geithner let this joke continue before he does his job?
Wolf is correct to draw attention to the myth of "too big to fail". In fact, the Kansas Federal Reserve President, Thomas Hoenig made the same point in a PDF released this week:
"We have been slow to face up to the fundamental problems in our financial system and reluctant to take decisive action with respect to failing institutions. ... We have been quick to provide liquidity and public capital, but we have not defined a consistent plan and not addressed the basic shortcomings and, in some cases, the insolvent position of these institutions.
We understandably would prefer not to "nationalize" these businesses, but in reacting as we are, we nevertheless are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis." (Too Big has Failed, thanks to Calculated Risk)
Hoenig and Wolf are smart enough to know that the problem is not as simple as it sounds. They know that the largest financial institutions are lashed together in a net of complex counterparty contracts--mainly credit default swaps (CDS)--which run into tens of trillions of dollars, and, that if one player is allowed to default, it could pull all of the others down the elevator shaft along with it. The problem could be resolved with proper regulation which would force all CDS onto a regulated exchange so that government watchdogs could make sure that they are sufficiently capitalized to pay off whatever claims are levied against them. But, so far, no one in Congress has taken the initiative to propose the necessary regulation. Thus, the taxpayer continues to pay off hundreds of billions of dollars of insurance claims against AIG, which was so grossly under-capitalized, it couldn't meet its own obligations. The AIG fiasco provides a window into the real motivation behind financial engineering and the alphabet-soup of complex debt-instruments. (CDOs, MBSs, CDS) Wall Street knew that the fastest way to fatten the bottom line was to circumvent minimum capital requirements and expand leverage to unsustainable levels. In other words, a system of debt-fueled capitalism with only specks of capital. It worked beautifully, until it didn't.
Nobel prize-winning economist, Myron Scholes, who helped invent a model for pricing options, added his voice to the growing chorus of angry reformers who think the CDS market should be scrapped altogether. According to Bloomberg News: Scholes said "regulators need to ‘blow up or burn’ over-the-counter derivative trading markets to help solve the financial crisis. The markets have stopped functioning and are failing to provide pricing signals... The “solution is really to blow up or burn the OTC market, the CDSs and swaps and structured products, and let us start over.” (Bloomberg)
Treasury and the Fed have taken the position that they will not fix the system until they are forced at gunpoint. This is a prescription for disaster, not just because of growing public frustration or the free-falling stock markets, but because the banks are just the tip of the iceberg. The other non bank financial institutions are brimming with mortgage-backed sludge that will require emergency treatment, too. MarketWatch gives us a glimpse of the magnitude of the problem in last week's article "Banks fall out of bed, Citi shares under a buck":
"Market strategist Ed Yardeni's latest research shows that.....80.6%, or $7.4 trillion, of the assets held by the S&P financials companies were Level 2," he said in a research report. Level 2 assets are so-called mark-to-model, which are carried at a value based on assumptions, not true market prices."
What does "Level 2 assets" mean? It means that the financial giants are short on liquid assets--like cash or US Treasurys--and loaded with sketchy mortgage-backed paper to which they have arbitrarily assigned a value that no one in their right mind would ever pay. The entire US financial system, including the pension funds and insurance companies, is one humongous debt-bloated time bomb that is set to blow at any minute.
Surprisingly, Bernanke thinks he can simply wave his wand and restart the moribund credit markets. That's what the TALF is all about. The problem is that even if the Fed buys all of the AAA securities held by the respective financial institutions, (most of them are non banks) that still only accounts for 20 percent of the bad paper on the books. Here's what Tyler Durden said on Zero Hedge web site:
"Unfortunately for Geithner, who apparently did not read too deeply into the data, the bulk of the $1 trillion decline in securitizations came from home equity lending and non agency RMBS (Residential Mortgage Backed Securities), which reflect the "non-conforming" mortgage market, i.e. the subprime, alt-A and jumbo origination, loans which are the cause for the credit crisis, and which are rated far below the relevant AAA level. The truly unmet market, which the Treasury is addressing is at best 20% of the revised total amount." (Tyler Durden, Could TALF be the biggest disappointment yet?, Zero Hedge)
That leaves Geithner and Bernanke with few good choices. Either they expand TALF to include crappy AA (and lower) graded securities--putting the taxpayer at even greater risk--or they devise some totally new lending facility that will bypass the financial institutions altogether and issue credit directly to consumers and small businesses. There is no third option.
The problem with the TALF is that it ignores the new economic reality, that consumer demand has collapsed from the massive losses in home equity and retirement accounts. When credit markets froze last year, housing values dropped sharply raising havoc with household balance sheets and forcing a radical change in spending habits. That cutback in spending created a negative feedback loop to the financial sector which made it impossible to re-inflate the credit bubble. The ultimate size of the financial system will be determined, to large extent, by the capacity of people to borrow again which depends on many factors including job security, savings, and optimism about the future. Needless to say, the growing worry over a 1930s-type Depression will not help to lift spirits or improve the chances for a speedy recovery. That said, there are positive steps the administration can take now to restore confidence in the markets and put the ship o' state on even keel. These measures fall under three main headings; debt reduction (forgiveness), regulation and accountability. Confidence is not built on inspiring oratory or personal charisma, but concrete actions to reestablish a rules-based system that penalizes crooks and fraudsters. Recovery isn't possible without a strong commitment to these basic changes. (Editor's emphasis throughout)
Monday, March 9, 2009
President Obama Confuses Politics with Ethics
Editorial Comment
By: Dr. J. P. Hubert
In his White House announcement and executive order today reversing the ban on federal funding of embryonic stem cell research (ESCR) the President left the door open to possible federal funding of human cloning for biomedical research (CBR) while indicating that cloning to produce children (CPC also termed reproductive cloning) will remain unfunded and given the largely negative public reaction to the very idea--one presumes illegal.
Human Cloning Not Controllable:
President Obama speaks as though human reproductive cloning and cloning for biomedical research are completely different. However, the first step in human cloning (the creation of a blastocyst) is the same in either case. As a result, there is no practical way to prevent human reproductive cloning once widespread federally funded human cloning for biomedical research is underway despite President Obama’s claims to the contrary (policing the process of blastocyst creation would be virtually impossible).
Human Cloning for Biomedical Research is Legal Now:
At present, it is legal in the United States to create cloned human embryos for biomedical research. Moreover, there is at least one private company (Advanced Cell Technology, [ACT]) currently engaged in that endeavor albeit privately funded for-profit.
Utilitarian Calculus vs: Traditional Moral Analysis:
From a traditional moral perspective, human cloning for any purpose is immoral as is any kind of embryonic stem cell research (human embryo’s must be killed in order to obtain the ESC’s--given current technology). Should it ever be possible to do so without killing the embryos—it would be morally licit to remove their stem cells only if any potential benefit accrued to the embryo in question (the embryo from which the cells were taken) exceeded the risk. It would remain morally illicit to utilize them for other persons and or purposes.
Those who embrace Utilitarianism like President Obama and the other advocates of ESCR and cloning for biomedical research (CBR) find nothing inherently wrong with killing human embryos and therefore deem it completely acceptable (in fact extremely useful) to do so as a “means” to the end of promoting ESCR. Presumably they do so believing (incorrectly) that human embryos are not actually but only “potentially” human beings or because they believe that since embryos do not resemble post-natal human beings—they are not--inherently valuable/to be protected as are other human beings. The former represents an error in analysis of the relevant and undisputed biological data, the latter an error in (illogical) intellection (size, shape, etc are irrelevant to the issue as can be seen in the case of triple amputees and other seriously physically disabled persons).
Most advocates of ESCR and CBR are unwilling to engage in a discussion of either the biologically or philosophically relevant issues—presumably because they are aware that their position on these matters will fail to pass intellectual muster. Nevertheless many advocates who recognize this reality (one assumes that some have the requisite analytical ability) continue to advocate for ESCR and CBR. This would appear to represent a Utilitarian calculus in which for them, the “means” employed are simply not relevant to the “end” desired even if the “means” in question are clearly morally illicit (it is never morally licit to intentionally kill an innocent human being) by traditional moral standards. That however is the nature of Utilitarianism as a “philosophy” of right and wrong. It does not recognize the object rationally chosen, “means” or proximate end, only the effect desired. Given that a legitimate moral philosophy must come to grips with an honest analysis of "means" vs: "ends", Utilitarianism is not really a moral philosophy at all in the traditional sense. Rather it is a political philosophy in which a tyranny of the majority can be foisted on the minority. In Utilitarianism the “principle of utility” is purposely allowed to circumvent all other concerns. While it has been around for over a century, only recently has it become the clear reigning ethical (immoral) philosophy in the United States and much of the developed West.
False Arguments:
In listening to ESCR advocates and commentators who opined after the post-executive order signing ceremony--several vacuous arguments were advanced. One completely absurd example was proffered today by Congresswoman Diane DeGette of Colorado (who by the way refused to answer the question of whether human embryos should be considered actual or potential life), is that since the embryonic stem cells which are derived by killing embryos might someday be helpful in preventing or treating dreaded diseases, it is really "pro-life" to kill them for this purpose. From the perspective of the embryonic human being who is killed, nothing could be further from the truth not to mention that there is no evidence in humans whatsoever, that ESCR will ever produce a clinically relevant treatment for disease. Moreover, results in animal models have at best been inconclusive and fraught with untoward side-effects .
Integrity not Politics in Science:
President Obama is correct to insist that integrity in scientific research is paramount and that the results of same not be adulterated or otherwise “spun” in order to advance certain political goals. However, his administration’s claims about ESCR represent an unfortunate example of that very problem. The hype with which today’s announcement and executive order were made regarding the purported efficacy of ESCR was excessive in light of the actual data available. Moreover, the extremely important results which have been obtained with Adult Stem Cell Research (ASCR) to date were completely ignored. This appears to have been a carefully calibrated political calculation.
Traditional Morality Removed from Scientific Research/Utilitarian Calculus:
The President reasons that it is high time to remove politics from science while engaging in that very practice himself. More to the point, what he really advocates is the removal of all traditional moral precepts (as found in the Aristotelian/Thomistic synthesis also know as the golden-rule ethic or the equality of life ethic) from the practice of scientific research; replacing it with a Utilitarian calculus where expediency is allowed to trump all other considerations. In so doing he would effectively eliminate the possibility that desperately needed moral clarification will take place--despite claiming that his administration will be extremely careful to proceed in an ethical (read Utilitarian) manner. The point--one fears--is being missed by the vast majority of Americans who are unaware that Utilitarianism has replaced traditional morality as the reigning ethical (immoral/amoral) construct in the US. It is becoming more and more common-place to find examples of "exigent circumstances" (through the application of a Utilitarian ethic) whereby innocent human beings are being legally killed in the United States (particularly at both extremes of life). The President's executive order and request for Congress to pass legislation compatible with it represent a further descent down the slippery slope which began over 30 years ago in the United States. Whether we like it or not, as Americans, we're all Utilitarians now!
By: Dr. J. P. Hubert
In his White House announcement and executive order today reversing the ban on federal funding of embryonic stem cell research (ESCR) the President left the door open to possible federal funding of human cloning for biomedical research (CBR) while indicating that cloning to produce children (CPC also termed reproductive cloning) will remain unfunded and given the largely negative public reaction to the very idea--one presumes illegal.
Human Cloning Not Controllable:
President Obama speaks as though human reproductive cloning and cloning for biomedical research are completely different. However, the first step in human cloning (the creation of a blastocyst) is the same in either case. As a result, there is no practical way to prevent human reproductive cloning once widespread federally funded human cloning for biomedical research is underway despite President Obama’s claims to the contrary (policing the process of blastocyst creation would be virtually impossible).
Human Cloning for Biomedical Research is Legal Now:
At present, it is legal in the United States to create cloned human embryos for biomedical research. Moreover, there is at least one private company (Advanced Cell Technology, [ACT]) currently engaged in that endeavor albeit privately funded for-profit.
Utilitarian Calculus vs: Traditional Moral Analysis:
From a traditional moral perspective, human cloning for any purpose is immoral as is any kind of embryonic stem cell research (human embryo’s must be killed in order to obtain the ESC’s--given current technology). Should it ever be possible to do so without killing the embryos—it would be morally licit to remove their stem cells only if any potential benefit accrued to the embryo in question (the embryo from which the cells were taken) exceeded the risk. It would remain morally illicit to utilize them for other persons and or purposes.
Those who embrace Utilitarianism like President Obama and the other advocates of ESCR and cloning for biomedical research (CBR) find nothing inherently wrong with killing human embryos and therefore deem it completely acceptable (in fact extremely useful) to do so as a “means” to the end of promoting ESCR. Presumably they do so believing (incorrectly) that human embryos are not actually but only “potentially” human beings or because they believe that since embryos do not resemble post-natal human beings—they are not--inherently valuable/to be protected as are other human beings. The former represents an error in analysis of the relevant and undisputed biological data, the latter an error in (illogical) intellection (size, shape, etc are irrelevant to the issue as can be seen in the case of triple amputees and other seriously physically disabled persons).
Most advocates of ESCR and CBR are unwilling to engage in a discussion of either the biologically or philosophically relevant issues—presumably because they are aware that their position on these matters will fail to pass intellectual muster. Nevertheless many advocates who recognize this reality (one assumes that some have the requisite analytical ability) continue to advocate for ESCR and CBR. This would appear to represent a Utilitarian calculus in which for them, the “means” employed are simply not relevant to the “end” desired even if the “means” in question are clearly morally illicit (it is never morally licit to intentionally kill an innocent human being) by traditional moral standards. That however is the nature of Utilitarianism as a “philosophy” of right and wrong. It does not recognize the object rationally chosen, “means” or proximate end, only the effect desired. Given that a legitimate moral philosophy must come to grips with an honest analysis of "means" vs: "ends", Utilitarianism is not really a moral philosophy at all in the traditional sense. Rather it is a political philosophy in which a tyranny of the majority can be foisted on the minority. In Utilitarianism the “principle of utility” is purposely allowed to circumvent all other concerns. While it has been around for over a century, only recently has it become the clear reigning ethical (immoral) philosophy in the United States and much of the developed West.
False Arguments:
In listening to ESCR advocates and commentators who opined after the post-executive order signing ceremony--several vacuous arguments were advanced. One completely absurd example was proffered today by Congresswoman Diane DeGette of Colorado (who by the way refused to answer the question of whether human embryos should be considered actual or potential life), is that since the embryonic stem cells which are derived by killing embryos might someday be helpful in preventing or treating dreaded diseases, it is really "pro-life" to kill them for this purpose. From the perspective of the embryonic human being who is killed, nothing could be further from the truth not to mention that there is no evidence in humans whatsoever, that ESCR will ever produce a clinically relevant treatment for disease. Moreover, results in animal models have at best been inconclusive and fraught with untoward side-effects .
Integrity not Politics in Science:
President Obama is correct to insist that integrity in scientific research is paramount and that the results of same not be adulterated or otherwise “spun” in order to advance certain political goals. However, his administration’s claims about ESCR represent an unfortunate example of that very problem. The hype with which today’s announcement and executive order were made regarding the purported efficacy of ESCR was excessive in light of the actual data available. Moreover, the extremely important results which have been obtained with Adult Stem Cell Research (ASCR) to date were completely ignored. This appears to have been a carefully calibrated political calculation.
Traditional Morality Removed from Scientific Research/Utilitarian Calculus:
The President reasons that it is high time to remove politics from science while engaging in that very practice himself. More to the point, what he really advocates is the removal of all traditional moral precepts (as found in the Aristotelian/Thomistic synthesis also know as the golden-rule ethic or the equality of life ethic) from the practice of scientific research; replacing it with a Utilitarian calculus where expediency is allowed to trump all other considerations. In so doing he would effectively eliminate the possibility that desperately needed moral clarification will take place--despite claiming that his administration will be extremely careful to proceed in an ethical (read Utilitarian) manner. The point--one fears--is being missed by the vast majority of Americans who are unaware that Utilitarianism has replaced traditional morality as the reigning ethical (immoral/amoral) construct in the US. It is becoming more and more common-place to find examples of "exigent circumstances" (through the application of a Utilitarian ethic) whereby innocent human beings are being legally killed in the United States (particularly at both extremes of life). The President's executive order and request for Congress to pass legislation compatible with it represent a further descent down the slippery slope which began over 30 years ago in the United States. Whether we like it or not, as Americans, we're all Utilitarians now!
Subscribe to:
Posts (Atom)