Entangled Alliances

photo credit: db™

Ronald Reagan, that master of the quotable quip, once said that the nine most terrifying words in the English Language are “I’m from the government and I’m here to help”. But if the Gipper were alive today and in President Obama’s shoes he might well change his mind, since right now there’s only one phrase that should strike fear into the hearts of all, and this time it’s only eight words: “The bill will now move to the Senate”.

Last week America’s first real legislation aimed at tackling climate change – The American Clean Energy and Security Act, better known as the Waxman-Markey Bill – passed the House of Representatives by a razor thin margin of 219-212. It will now move on to the Senate, which is often said to be the place where good legislation is sent to die. Where the House of Representatives is full of progressive reformers, the Senate is full of cautious moderates. Where the House often sees bills passed largely to the whipping efforts of Speaker Pelosi, the Senate is full of obstinate minded grand-standers who won’t be corralled by their party leaders.

It’s no understatement to say that the final bill that lands on Obama’s desk could well determine the future success of world efforts to halt global warming. The problem is, not only is it at risk of being sautéed à la Senate, but it’s not exactly in the best of states after having been through the meat grinder of various House committees. Legislation is often said to be like a sausage – you don’t want to watch it getting made. True to form, the various special interests and lobbyists that virtually own many key committee members have managed to make a meaty mess of the bill as it made its torturous way through the House. And you know what? It wasn’t even the most ideal piece of work to begin with.

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It’s crunch time on capital hill as the Obama administration puts its political capital on the line for the House to pass the Waxman-Markey bill. For those of you who don’t know, the Waxman-Markey bill is the first Climate Change bill to be introduced in the US ( on a federal level).

So what does it promise? (See here for a more comprehensive overview)

• To reduce US emissions on 2005 levels by 17% by 2020
• To bring US emissions down by 80% by 2050
• 25% of US energy by 2025 must be renewable
• A Cap and Trade system, 85% of permits will be auctioned off
• 2 Billion tons worth of carbon offsets
• A whole host of other measures from building efficiency, fuel standards and even a new technology bank!

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photo credit: Mariano Kamp

Climate Change is buzzing across the US political sphere at the moment,  so are torture issues, the Afghanistan war is never too far from the media’s mind, the next Supreme Court nomination is doing the rounds and North Korea just exploded a nuclear bomb. But wait! Climate Change IS buzzing, not even a debate about its existence, at least not in the mainstream, nor its role as global conspiracy but actual Climate Change or related policy has landed.

For those of us who follow the environmental issue, the US has been a sore spot to say the least, and while Obama promised much and seemed to understand it, (by which I mean he did not flat out deny mountains of scientific evidence),  but with the global recession, “sceptical” Republicans in congress etc,  many of us had doubts that Obama would expend serious capital pushing it through. In some ways we were right, he hasn’t expended his capital per se, rather he has revealed his strategic cunning to begin pushing through legislation and shape the debate early on.

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THE WHITE HOUSE CORRESPONDENT’S DINNER!!

While few might live up to the notoriety of Colbert’s terrifying Satire (youtube it!) Obama was not found wanting on the jokes, with Limbaugh a recurrent theme throughout the night.

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18:45 BST: Well, the time has come for me to quit this epic live-blog, given that I’ll soon be entering my twelfth hour of continuous live-blogging.  I know; I know – Obama’s about to give his press conference. But I’m about to collapse; so that’s that. I hope you enjoyed the  random, disparate, often unhelpful observations from yours truly. I know I did – live-blogging’s great! There’ll be some more analysis tomorrow from Entangled Alliances, looking in more detail at the exact provisions of the groundbreaking G20 agreement: what they are, whether they’re good and whether they’ll actually change anything, as well as a look at how the G20 will benefit its main players. But for now, I’ll leave you with a fitting quote from BBC business correspondent Robert Peston:

There are no surprises in the deal announced today to reform the banking system, to prevent banks making the kind of risky loans and investments that precipitated the worst global economic crisis since the 1930s.

But it’s nonetheless a historic event that the world’s 20 most powerful economies have signed up for these reforms – because they represent the death knell for the Anglo-American doctrine that economies flourish when financial firms are left alone to do as they please.

Indeed.

18:32 BST: Buried under all the G20 news has been the potentially groundbreaking meeting between Barack Obama and Russian President Dmitry Medvedev, which resulted in an agreement to reduce the nuclear arms of both sides much further than the current agreement demands. This could be very important…

18:30 BST: A wise comment from the Guardian’s Andrew Sparrow (whose live-blog was probably better than mine but nowhere near as epic!):

I’ve been busy updating our main story, having sat through the opening of Brown’s statement. First reaction: I found myself sitting there thinking ‘David Cameron could not pull off an event like this’. That’s not because I think Cameron’s a lightweight. I don’t. It’s because the most important summit conclusions involve international finance, global trade and the inner workings of organisations like the IMF and there are probably very few prime ministers or presidents in the world who understand this stuff as well as Brown.

18:20 BST: Lest I be judged  by my comments below to have been a bit too harsh on the protests, I want to stress that I have great respect for most of them. I say most of them, because the anarchists were just so annoying. Proper anarchism is really cool. It’s an extremely sophisticated ideology . These guys, however, were just pathetic. Bad anarchists!  The majority of protests, however, made some good points.The fact remains, though, that they surely made no difference on the summit at all. If you want to get something changed, you focus on it like a laser and you don’t go off message. But the protests were never on message to begin with – from homelessness to climate change to ending the war to the death of capitalism; only a minority were  actually focused on the topics of the summit! The question becomes then – did they really want to influence the summit? Or did they just want to get their message out there in a sort of vague picture of defiance?  In their defence, however, you could respond that they never stood a chance anyway: governments don’t respond to the people anymore. No-one listened to Iraq protests, for example and they were very focused. So it’s an interesting debate. But I do think that they could have maybe stood a chance at getting some traction if they focused on one message and, you know, stuck to it.

18:13 BST: Here’s the full text of the communique, courtesy of the Guardian. There’s tonnes of details here…

18:10 BST: Oh and I forgot to add that hedge funds and other non-banking institutions will come under the aegis of this new Financial Stability board. Since the mysterious financing of hedge funds helped to exacerbate the mess, this is also good news; but again it all depends on how strong the regulation is…

18:05 BST: The headlines are focusing on the issues of tax havens and that $1 trillion figure, but there’s tonnes of other stuff that’s just as interesting. For example, there’s going to be a new Financial Stability Board that will work with the IMF to monitor the risk of banking transactions and impose limits on things like capital reserves and leverage requirements (not to mention executive bonuses.) This is absolutely crucial in getting the banks back on track and preventing such a crisis happening again, since it was an inherent failure in the banks’s ability to evaluate “systemic risk” that made the crisis so bad. This is pretty complicated and I’ll come back to this another time, but suffice to say it’s a good move – that is, as long as this new regulatory body actually has proper regulatory oversight.

17:54 BST: A timely article over at Foreign Policy discussing whether protests ever work. I agree with its basic conclusion: protests have to be unified and targeted; and focused on changing the system not overthrowing it. The G20 protests were none of these things and so I’m afraid that they’ve had absolutely no effect whatsoever.

17:46 BST: Did Sarkozy and Merkel get their victory? Or was there never any “victory” to begin with? Everyone was in agreement over the basic regulatory provisions. and had been for weeks. The real controversy-  over the possibility of national stimulus packages – was won by Merkel and Sarkozy weeks ago, and so it was no surprise to see no such provisions today. However, Sarkozy must be feeling pleased that the language on tax havens was quite fierce. In the big picture, it’s not really much of an issue, but he’ll make a big deal of it, which is fair enough…

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In 1996, Stryker McGuire launched the age of “Cool Britannia” with an ode to the city’s burgeoning chic in Newsweek magazine:

Right now, London is a hip compromise between the nonstop newness of Los Angeles and the aspic-pre-served beauty of Paris, sharpened to a New York edge. In short, this is the coolest city on the planet.

photo credit: *spud*

Thirteen years later, Stryker is back with an altogether more despondent vision.  Looking back over the Blair-Brown era, he casts back to the millennial optimism of the 1997 Labour victory and London’s world leadership in fashion, the arts and architecture.  The contrast, and it’s a stark one, is with a modern-day London heading into deep recession – the symbols of its former glory now insistent reminders of its current predicament:

Glitzy restaurants and cutting-edge fashion that used to be signs of welcome creativity reek of excess in a time of belt-tightening. Heavily mortgaged homes that looked like brilliant retirement nest eggs when property prices were soaring year after year now just look like basket cases. Construction sites and street works that once raised expectations of things to come now seem like major inconveniences. 

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When domestic politics is getting you down, the international stage can prove a welcome diversion.  Just ask Bill Clinton.  But here in Britain we’re talking plummeting poll numbers, not impeachment, and the diversion of international economic policy, not cruise missile strikes.  Yes, what a breath of fresh air the international stage has been for Gordon Brown.  Far away from a seemingly insurmountable deficit in the polls, and rumblings in the Labour ranks, Brown has been reveling in a reputation as a far-sighted guru of economic policy, feted by the likes of Paul Krugman and fulfilling a boyhood dream (I’m with you Gordo) of addressing a Joint Session of Congress.  Next month, however, these two worlds will collide in a bold all-or-nothing attempt by Brown to merge the two currents of his premiership; an attempt to rescue his domestic political prospects and cement his role as a world leader in one fell swoop.  In April, the G20 is coming to town, and for Gordon Brown the stakes could not be higher.

photo credit: World Economic Forum

The London Summit, which will be held on one fateful day, April 2nd, is a follow-up to a session held last November in Washington D.C. – a session in which rather little was decided, except vague assurances about cutting taxes and increasing government spending.  The Prime Minister’s zeal was already clear at this stage.  He declared that the summit  was “the road to the new Bretton Woods. It is absolutely clear that we are trying to build new institutions for the future.”  For him, London is where the deal will be sealed.   His agenda is extraordinarily ambitious.  As the Economist sardonically put the issue:

The summit should not only stimulate the economy and renounce protectionism, but also bolster the IMF and other international financial outfits, revamp regulation, create an early-warning system for crises, and save the poor. It was as if Mr Brown thought the ailing economy would yield to an act of governmental will, if only it were colossal enough.

The Economist, ever pragmatic, argues that such overreach risks undermining the immediate necessities of global government stimulus and a united front against protectionism.  This pessimism seems to be borne out by the unenthusiastic noises coming from G20 capitals and an emerging transatlantic gulf in attitudes.  Below the fold, I look at the opposition to Gordon Brown’s plan for new financial institutions, and the implications for his domestic political fortunes.

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photo credit: AComment

When Barack Obama’s economic stimulus package passed into law last month, it was mostly greeted by economists as a much needed influx of government spending that should help to get the economy back on track . But among the plaudits were concerns about the effectiveness of the stimulus: specifically, it should’ve been bigger.

Now you might well question whether an $800 billion package could be described as “not big enough”. But it’s important to remember that around $300 billion of it was in the form of tax cuts – helpful to the families they were aimed at, no doubt, but not particularly useful in terms of job creation. Therefore, only $500 billion was actually in the form of direct government spending, and so when considering how much is needed to create enough jobs to get the economy back on track, only two thirds of the stimulus is actually “stimulus”. But even so, surely $500 billion is enough to get the job done?

Well, uh, no actually. It isn’t. The inadequacy of the stimulus, however huge it was, is made clearer every week as increasingly disastrous figures about the economy continue to be released. In his Monday New York Times column, nobel-prize winning economist Paul Krugman, calling for a second stimulus, points out that:

The administration’s budget proposals, released less than two weeks ago, assumed an average unemployment rate of 8.1 percent for the whole of this year. In reality, unemployment hit that level in February — and it’s rising fast.

But isn’t Obama’s stimulus meant to make 3.5 million new jobs by the end of 2010?

3.5 million jobs almost two years from now isn’t enough in the face of an economy that has already lost 4.4 million jobs, and is losing 600,000 more each month.

Oh. Bummer. Okay, so the situation’s really bad, but do we really need another stimulus package? Martin Feldstein, professor of economics at Harvard, has looked at the numbers and concluded that yes, we do. His article’s worth a read but I am nothing if not a prolific summariser, so here’s the cliff notes version, which includes the “things Feldstein doesn’t say because he forgets we’re not all economists”:

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Check it out

Here’s a snippet:

According to White House security documents, Sasha told Secret Service agents that the ghostly twins spoke to her in unison and repeatedly beckoned her by chanting the phrases “come play with us,” “come play with us, forever,” and “Daddy’s making fajitas.”

That said, I can’t hide my disappointment that Cheney isn’t mentioned.

photo credit: CFAPAF

On Thursday night  U.S. Senate Majority Leader Harry Reid was forced to stall a vote on a $410 billion spending package needed to fund the federal government through to September, because he didn’t have enough votes for it in the Senate. It will now be delayed till later this week, to give enough time for Republicans to have their way with it. The reason for the delay? Reid did not have sixty votes. Sixty votes is, of course, the crucial number for any legislation in the Senate, because it prevents a Republican “filibustering” a bill and thus obstructing its passage . As such, it’s a number that could prove the downfall for Obama’s entire legislative agenda.

But it needn’t be like this.

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