The Wilding of Sarah Palin
By Robin of BerkeleyWhen I was in college, I read a book that changed my life. It was Susan Brownmiller's tome, Against Our Will: Men, Women, and Rape, which explained rape as an act of power instead of just lust. What I found particularly chilling was the chapter on war -- how rape is used to terrorize a population and destroy the enemy's spirit.
Hatred paralyzes life; love releases it. Hatred confuses life; love harmonizes it. Hatred darkens life; love illuminates it.
Free Speech Silenced at Columbia and Princeton
By Pamela GellerNonie Darwish, the executive director of Former Muslims United and author of Cruel And Usual Punishment: The Terrifying Global Implications of Islamic Law, was scheduled to speak at Columbia and Princeton Universities last week, but both events were canceled under pressure from Muslim groups on campus.
Remember, we are talking about Columbia University, where Ahmadinejad was welcomed like a returning king.
On Tuesday evening Tigers for Israel and Whig-Clio rescinded our cosponsorship of today's Nonie Darwish Lecture. Tigers for Israel accepted the opportunity for her to speak based on a misconception about what she actually believes. After her anti-Islam position was brought to my attention on Tuesday afternoon by the Center for Jewish Life director Rabbi Julie Roth and the Muslim Chaplain Imam Sohaib Sultan, I conducted extensive research and discussed the issue with TFI and Whig-Clio leadership, and we decided to rescind our cosponsorship after concluding that Tigers for Israel disagrees with and does not condone Ms. Darwish and her beliefs on Islam. ... As President of TFI I take full responsibility for not vetting Ms. Darwish from the beginning, and I sincerely apologize for offending any person or group on campus, especially the Muslim community. Tigers for Israel deeply regrets the initial sponsorship and we do not in any way endorse her views.
Approval not post-racial
Poll: Obama faces white flight
Just 39 percent of white Americans now approve of President Obama's job performance, a steep drop-off of support since he was inaugurated in January, according to the latest Gallup Poll.
In his first full week in office, starting Jan. 26, just over six in 10 white people gave him their approval. Now that number is down to under four in 10, indicating a net drop of 22 points.
Black voters, meanwhile, have continued to support Obama to the tune of approximately 90 percent. And Democrats and liberals give Obama approval ratings of above 80 percent.
"Though he maintains widespread loyalty among Democrats, the small loss in support he has seen from his fellow partisans seems to be exclusively from white Democrats," Gallup's finding says.
The most recent survey of 3,611 adults has a 2 percent margin of error.
Obama says he wants to 'finish the job' in Afghanistan
Barack Obama: "We are going to dismantle and degrade" al-Qaeda's capabilities
US President Barack Obama has said it is his intention to "finish the job" in Afghanistan after eight years of conflict there.
Mr Obama said he would announce a long-awaited decision over sending more troops to Afghanistan "shortly".
Some US media reports have suggested that the US president is intending to send 34,000 more troops.
He has been considering a request from his top commander in Afghanistan for 40,000 more US troops.
Mr Obama said a continuing review of US policy in Afghanistan had been "extremely useful", stressing that it was in the US strategic interest to make sure al-Qaeda and its allies could not operate in the area.
'Clear rationale'
"We are going to dismantle and degrade their capabilities and ultimately dismantle and destroy their networks," he said.
"After eight years, some of those years in which we did not have, I think, either the resources or the strategy to get the job done, it is my intention to finish the job."
 | MARK MARDELL   If he does decide to increase troop numbers, the reaction from his own party will be all important  Mark Mardell, BBC North America editor  |
Speaking at a press conference with Indian Prime Minister Manmohan Singh, he added that the Afghan people were "going to have to provide ultimately for their own security".
Mr Obama is widely expected to announce his decision on US troop reinforcements in Afghanistan in a prime-time TV address next Tuesday.
"I feel confident that when the American people hear a clear rationale for what we're doing there and how we intend to achieve our goals, that they will be supportive," he said.
BBC North America editor Mark Mardell says that some within the president's own party will not be happy if he does announce a substantial increase in troop numbers.
But there is every sign he will put a great deal of effort into also explaining how and when the Afghan mission will end, he says.
The president has been saying with increasing frequency that a key part of the rethinking of the US Afghanistan strategy involves building an exit strategy into the announcement.
In his comments on Tuesday, Mr Obama said "the whole world" should help with the US-led Afghan mission, and that he would speak in his announcement of "the obligations of our international partners in this process".
The US currently has about 68,000 troops in Afghanistan, which contribute to total foreign forces of more than 100,000.
In Britain, Defence Secretary Bob Ainsworth said President Obama's lengthy deliberations over whether or not to send more troops had contributed to falling public support in Britain for the Afghan mission.
The British government later denied that Mr Ainsworth was blaming American delays over sending more troops to Afghanistan for any decline in public support.
U.S. Economy: Less Consumer Spending Reduces Growth
By Timothy R. Homan
Nov. 24 (Bloomberg) -- The U.S. economy expanded less than initially estimated last quarter as consumer spending trailed forecasts, raising concerns about the strength of the recovery.
Gross domestic product grew at a 2.8 percent annual pace, the Commerce Department said today in Washington, compared with its prior estimate of 3.5 percent. Consumers surveyed by the New-York based Conference Board were more pessimistic about the outlook for jobs in November and scaled back their buying plans, even as the group’s overall gauge of confidence rose.
Stocks declined around the world on indications that an unemployment rate projected to stay above 10 percent through the middle of next year will curb spending, which makes up 70 percent of the economy, as the holiday shopping season begins. Labor-market weakness is one reason why the Federal Reserve under Chairman Ben S. Bernanke this month repeated its promise to keep interest rates near zero for an “extended period.”
“I would expect consumer spending growth to be relatively limited in the coming quarters,” said Guy LeBas, chief fixed- income strategist at Janney Montgomery Scott LLC in Philadelphia, who accurately forecast the GDP figure. “The recovery’s not going to be quick, and it’s not going to be painless.”
The Dow Jones Industrial Average retreated from a 13-month high, falling 0.2 percent to close at 10,433.71.
The pace of economic growth matched the median forecast of 78 economists in a Bloomberg survey. Consumer spending rose at a 2.9 percent pace, compared with the 3.2 percent rate forecast by economists and a 0.9 percent decline in the prior quarter.
Home Prices Rise
A separate report today showed home prices in 20 U.S. cities rose in September for a fourth straight month. The S&P/Case-Shiller home-price index increased 0.27 percent from the prior month on a seasonally adjusted basis, after a 1.13 percent rise in August. The gauge fell 9.36 percent from September 2008, the smallest year-over-year decline since the end of 2007.
The Conference Board’s confidence index increased to 49.5 from 48.7 in October. The share of consumers who said jobs are plentiful fell to 3.2 percent from 3.5 percent. The proportion who said jobs are hard to get increased to 49.8 percent from 49.4 percent.
Among the retailers expressing concern about the outlook for holiday sales is Minneapolis, Minnesota-based Target Corp., the second-largest U.S. discount chain.
‘Highly Promotional’
Target expects a “highly promotional” holiday season, Chairman and Chief Executive Officer Gregg Steinhafel said on a Nov. 17 conference call. November sales “provide additional justification for being cautious in this uncertain environment,” he said.
Buying plans for automobiles and real estate dropped this month, the Conference Board report showed. Home-buying expectations decreased to the lowest level since 1982.
The economy has lost 7.3 million jobs since the recession began in December 2007. The unemployment rate last month reached a 26-year high of 10.2 percent, up from 7.6 percent from when President Barack Obama took office in January.
Economists surveyed by Bloomberg this month forecast the jobless rate will remain above 10 percent through the first half of next year.
Growth in corporate profits and investment may make up for some of the weakness in consumer spending, today’s Commerce Department report indicated.
Equipment Purchases
Third-quarter corporate profits increased 11 percent, the biggest gain since the first three months of 2004. Purchases of equipment and software increased at a 2.3 percent pace, more than the Commerce Department estimated last month.
“Over the next couple of quarters, it won’t be the consumer that will be driving GDP higher, it’ll be corporate spending,” John Ryding, chief economist at RDQ Economics in New York, said in an interview on Bloomberg Radio today.
Verizon Communications Inc., the second-largest U.S. phone company, committed $23 billion to a six-year build out of its high-definition Web and TV service ending next year. Verizon last month reported third-quarter profits that topped analysts’ estimates.
Much of the boost last quarter was provided by the administration’s auto-incentive program known as “cash for clunkers,” which offered buyers payments of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The plan ended in August.
Productivity Gains
Productivity, a measure of employee output per hour, surged 9.5 percent in the third quarter, the fastest pace in six years, as companies fired workers.
Higher productivity has helped companies including Campbell Soup Co. turn a profit. The world’s largest soup-maker said yesterday that first-quarter profit climbed 17 percent.
“Increased productivity in our supply chain” contributed to profits, Douglas R. Conant, president and chief executive officer of Campbell, said in a statement.
The Fed’s preferred inflation gauge increased less than forecast. The measure, which is tied to consumer spending and strips out food and energy costs, rose at a 1.3 percent annual pace following a 2 percent increase in the prior quarter, today’s GDP report showed.
Trade subtracted 0.8 percentage point from third-quarter GDP. The gap between exports and imports climbed to $358 billion at an annual pace.
Leaner Inventories
Inventories dropped at a $133.4 billion annual pace, more than first estimated. The decrease was still smaller than the record $160.2 billion decrease in the second quarter. Leaner stockpiles set the stage for recovery in production.
The GDP report is the second for the quarter and will be revised in December as more information becomes available.
The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades. The four consecutive decreases through the second quarter marks the longest stretch of declines since quarterly records began in 1947.
The economy will likely expand at a 3 percent annual rate from October through December, the median forecast in a survey earlier this month showed.
Fed Officials Said Low Rates May Fuel Speculation
By Craig Torres
Nov. 24 (Bloomberg) -- Federal Reserve officials said record-low interest rates might fuel “excessive” speculation in financial markets and possibly dislodge expectations for low inflation, according to minutes of their meeting released today.
“Members noted the possibility that some negative side effects might result from the maintenance of very low short-term interest rates for an extended period,” minutes of the Nov. 3-4 meeting said, “including the possibility that such a policy stance could lead to excessive risk-taking in financial markets or an unanchoring of inflation expectations.”
While policy makers agreed that the chances of such effects were “relatively low, they would remain alert to these risks,” the minutes showed. Fed officials at their meeting indicated the benchmark lending rate would remain near zero “for an extended period” as long as inflation expectations are stable and unemployment fails to decline.
Gold prices touched an all-time high of $1,174 an ounce in New York yesterday as a slumping dollar boosted the appeal of alternative assets. The Standard & Poor’s 500 index has jumped 63 percent since its 2009 low on March 9, and the U.S. auctioned $44 billion of two-year debt yesterday at a yield of 0.802 percent, the lowest ever.
“They are walking the fine line,” said Alan Levenson, chief economist at T. Rowe Price Group Inc., in a Bloomberg Television interview. “They like the asset inflation now for what it does for consumers’ pocket books and ability to spend.” They need to prevent higher spending from fueling a rise in prices, he said.
Speculative Capital
Financial officials in Japan and China, Asia’s two largest economies, said last week that the Fed’s interest-rate policy risks spurring speculative capital that may inflate asset prices and derail the global economic recovery.
“Participants noted that the recent fall in the foreign exchange value of the dollar had been orderly and appeared to reflect an unwinding of safe-haven demand in light of the recovery in financial market conditions this year,” the minutes said. “Any tendency for dollar depreciation to intensify or to put significant upward pressure on inflation would bear close watching.”
The dollar weakened to the lowest level versus the yen in a month after the minutes were released. The dollar fell 0.5 percent to 88.56 yen at 3:21 p.m. in New York from 88.97 yesterday, after touching 88.36, the lowest level since Oct. 9.
Less Than Estimated
A report today showed the U.S. economy grew less than initially estimated last quarter as consumer spending trailed forecasts. The economy expanded at a 2.8 percent annual rate in the third quarter, less than the initial estimate of a 3.5 percent pace of expansion, the Commerce Department report showed.
“Most members projected that over the next couple of years, the unemployment rate would remain quite elevated and the level of inflation would remain below rates consistent over the longer run with the Federal Reserve’s objectives,” the minutes said.
Policy makers debated the usefulness of selling assets as part of the so-called exit strategy from the unprecedented expansion of credit to help reduce the central bank’s balance sheet and reserves held by commercial banks.
Several officials said asset sales “could be a useful tool” and “reinforce the effectiveness” of paying interest on reserves held at the Fed by commercial banks. Other policy makers “had reservations about asset sales,” especially before any decision to raise interest rates, and said such sales may increase longer-term rates, the minutes said.
Trimmed Forecasts
Fed officials trimmed their forecasts for the U.S. jobless rate in 2010 and 2011, the minutes showed. Fed governors and regional bank presidents predicted the jobless rate will range from 9.3 percent to 9.7 percent in next year’s fourth quarter, down from their June projection of 9.5 percent to 9.8 percent.
The financial crisis has eased in recent months for banks and large corporations, which have issued a record $1.171 trillion in bonds this year, according to Bloomberg data. The cost of three month loans in dollars between banks was 0.261 percent today, according to the British Bankers Association. That’s down from 1.41 percent at the start of the year.
While large companies are taking advantage of the Fed’s low interest-rate policy in capital markets, consumers face tighter terms and less available credit. Consumer loans held by commercial banks in the U.S. fell to $846.7 billion in October, down 0.7 percent from the same month a year earlier.
‘Tight Conditions’
“Participants noted that the dichotomy between significant easing of conditions in capital markets and continuing tight conditions in the banking sector implied that financing conditions differed for large and small firms,” the minutes said.
The Fed’s mandate for “maximum employment” remains challenged as businesses continue to reorganize and fire staff.
The U.S. economy has lost 7.3 million jobs since the recession began in December 2007. The unemployment rate last month rose to a 26-year high of 10.2 percent. U.S. payrolls shrank by 190,000 jobs last month, and the average workweek held at a record low.
Where the Consumer Is King
In praise of mail-order catalogs
Thousands of hands have been wrung over the death of newspapers and the threat to democracy that poses. A smaller number of people are no doubt worrying about the death of magazines and the shaky future of perfume strips. No one seems all that concerned that at some point during the next 10 or 20 years, Pottery Barn is going to stop sending us its unsolicited but incredibly informative guides to contemporary middle-class decorating trends. Can America survive without systematic, lavishly illustrated coverage of artisanal wall lanterns and fringed hand-loom rugs?
The 2010 edition of the National Directory of Mail-Order Catalogs is 1900 pages long, and features more than 13,000 consumer and business-to-business catalogs. IKEA is printing 198 million copies of its 2010 catalog. According to a recent Wall Street Journal article, 17 billion catalogs were mailed in 2008, and for companies that rely on direct sales, catalogs still drive more business than the web does. “There will be some paper version for as long as I'm in the business,” Steve Fuller, chief marketing officer for L.L. Bean, told the Journal.
Others, however, are already cutting back. Earlier this year, Macys, Inc. stopped sending out its Bloomingdale’s By Mail catalog in order to concentrate resources on the Bloomingdales.com website. Williams-Sonoma, Inc., which also owns Pottery Barn and West Elm in addition to its own eponymous chain, is reducing its total catalog pages by half in 2011. J. Crew is sending out its catalog to 27 percent fewer households. Over the long term, paper costs and postal rates are only going to increase. A growing number of consumers are choosing to opt out of mailings via services like Catalog Choice.
Certainly online shopping is more efficient. But that’s the problem. Shopping at Amazon is a largely functional experience. You go there to buy stuff, or to check prices, or to learn more about products from other customers rather than copywriters. Leafing through a good print catalog is aspirational. In the final decades of the 19th century, the Sears, Roebuck and Co. catalog helped reinforce the notion that America was moving from an age of scarcity to one of abundance and prosperity. The Fall 1900 edition was 1120 dense pages long. It contained more than a hundred makes of shotguns, rifles, and revolvers, the bulk of which were “new” or “improved” or “celebrated.” Clearly it was a great time to be alive, with so many wonderful inventions and contrivances at hand to make your life easier, more interesting, more fun.
Throughout the 20th century, catalogs continued to be the material life’s most engaging ambassadors. TV commercials were noisy and insistent. Magazines like Cosmopolitan and Playboy did a pretty good job of showing their readers how they could create identities, lifestyles, and meaning for themselves largely through the purchase of consumer goods, but they diluted their messages with sex quizzes, short stories, and photographs of naked women.
Catalogs, on the other hand, stay focused. Every inch of every page is devoted to selling a vision of an idealized life where whatever you happen to want—coziness, elegance, quality, tradition, value, usefulness, whatever—can be shipped to you overnight. They present us with an improbable world of cashmere baseball hats and monogrammable doormats, where the spoons are “tarnish-resistant” and “designed by noted Italian architects” and the bomber jackets are “named for the indigenous people of Seattle.” In the catalog world, no shoe is merely lined in leather; it’s “fully lined in soft glove leather.” And even something as mundane and easily attainable as a piece of fruit somehow acquires the aura of a wondrously decadent indulgence.
Critics might claim that catalogs inspire a kind of frantic, mindless hyper-consumerism, but really what they do—the effective ones, anyway—is teach a kind of mindfulness. They encourage us to pay attention, close attention, with no stinting on the adjectives, to the stuff we furnish our lives with. When we need a winter boot, are we willing to settle for whatever the sales guy at Shoe Barn wants to sell us, or are we going to hold out for a “uniquely insulated boot” that features a layer of “durable 24-oz Mackinaw Wool [sandwiched] between an outer layer of rugged oil-tanned leather and a full inner layer of soft water-repellant leather”?
The beauty of the catalog is that while its sales pitch is relentless, it’s a quiet, meditative kind of relentlessness. It’s hard to drift off into reveries about how much better the perfect overnight bag could make your life while shopping at Amazon or Zappos. There’s too much filtering to do, too much waiting for the screen to refresh, too many tiny product shots fighting for your attention at once. Slowly making one’s way through the serene, uncluttered pages of the latest Design Within Reach catalog, however, it’s easy to start thinking that all that really stands between you and true happiness is a sofa that takes advantage of “recent technical advances” and yet nonetheless evokes the “soft, less machined brand of modernism [that] first arose in the United States in the 1930s.” Or hell, maybe even a $60 stainless steel tape dispenser that functions like “desktop architecture” would do the trick. More than any other advertising medium, a catalog enlists you to sell yourself.
At this point, catalogs are also one of the last forms of truly mass media. Outside of the Google home page and maybe a handful of the most frequently broadcast TV commercials, what else reaches as many households as the IKEA catalog does? What else unites us like our shared knowledge of the Pottery Barn catalog which, while bands break up, TV shows get cancelled, and magazine subscriptions lapse, just keeps showing up in our mailboxes, year after year, with the same jute rugs and Manhattan armchairs that were there nearly two decades ago, a beacon of barely noticed familiarity in an ever-changing world? For the last ten years, it went straight into the recycling bin, but I'm pretty sure I'm going to miss it when it's gone.
Reason.tv: UPS vs. FEDEX—Ultimate Whiteboard Remix
You may have heard the UPS is in quite the fight with FEDEX. Though both are package-delivery companies, they're governed by totally different federal labor rules. As a result, UPS's workforce is much more heavily unionized than FEDEX's—and more than twice as expensive.
So now UPS is trying to get FEDEX reclassified under federal law as a way of screwing a competitor. That's horrendous, but it also makes a sick kind of business sense. And it also reveals the real villain: A government that is big enough to absolutely, positively guarantee it can screw any business. Overnight.
Salvia and Salivation
Is this trip worth a warm mouthful of spit?
These would be pretty cool Salvia divinorum visions, but they’re actually wooden Indonesian masks that I bought at World Market. This is my second experiment with Daniel Siebert’s Sage Goddess Emerald Essence ($65 for half an ounce), and the effects are once again a little too subtle for my taste. There is a definite sense that things are different, but exactly how isn’t clear. The most articulable effect is a distortion of time, with an hour flying by in what seems like a few minutes.
The experience is especially disappointing because getting there is so unpleasant. The alcohol-based tincture tastes awful, like chlorophyll mixed with gasoline, and it stings, even when diluted (per the instructions) with a bit of water. Your first impulse upon squirting it into your mouth with the dropper is to spit it out. That is also your second and third impulse. But instead you’re supposed to swish it around to thoroughly coat the inside of your mouth, then let it pool under your tongue for 15 minutes. Unfortunately, this is before the time distortion kicks in.
The “staggered dose method” is slightly less arduous. It involves holding one-third of the dose at a time, four minutes each. That way your mouth gets a brief break before the torture resumes. The directions warn that you don’t want to dilute the tincture too much with your spit, but salivation seems to be an involuntary response to having something this disgusting in your mouth, so you end up with a mouthful of green fluid by the end. “If you prefer,” the instructions say, “you can spit out the tincture, rather than swallowing it.” I prefer.
The smoked method is much easier, especially with a water pipe, and more rewarding. Within a few seconds the world is vibrating, reverberating, echoing. Familiar objects are transformed. Looking down at my bent leg, I see a stoop on a city block lined with brownstones. Beyond the cityscape, the shoes sitting on the floor of my office resemble comical cartoon characters. Looking out the window, I stare at the knot on an oak tree, where I see the head of a human-sized cat wearing a knight’s helmet, a wizard with a flowing beard, and a wolf with glowing eyes. I can make the images shift at will.
On another occasion, I return from a salvia trip with two firm convictions. One is that my bong glows in the dark, which does not seem to be true. The other, which I wrote down immediately afterward so I would not forget it, is this: “Arthbayim roomshalook.” I can’t vouch for the spelling.
I am using Siebert’s “regular strength enhanced leaf” ($65 per gram), which is supposed to be about six times as strong as the natural plant, and I am aware that the visions are drug effects. But it is not hard to see how someone using the “20x,” “40x,” or “60x” leaf sold by Siebert’s competitors (at much lower prices) might lose sight of that fact, especially if he didn’t adjust his dose accordingly.
Even at 6x, the effects are interesting enough that I would try it again, although I’d prefer mushrooms or LSD if they were easier to get. I tend to agree with Rick Doblin, president of the Multidisciplinary Association for Psychedelic Studies, who says salvia can trigger “a peacefulness and an expansiveness,” but the experience is not “as profound or deep” as those offered by other psychedelics. “Its popularity has been increasing because so many other things were banned,” he says. “Very few people would be going to salvia if they had alternatives.”
Jacob Sullum is a senior editor at Reason magazine.
Men's Rights
Men's Rights
Feminism should be about equality for males, too.
Joyce's indictment is directed at a loose network of activists seeking to raise awareness and change policy on such issues as false accusations of domestic violence, the plight of divorced fathers denied access to children, and domestic abuse of men. In her view, groups such as RADAR (Respecting Accuracy in Domestic Abuse Reporting) and individuals like columnist and radio talk show host Glenn Sacks are merely "respectable" and "savvy" faces for what is actually an anti-female backlash from "angry white men."
As proof of this underlying misogyny, Joyce asserts that men who commit "acts of violence perceived to be in opposition to a feminist status quo" are routinely lionized in the men's movement. This claim is purportedly backed up with a reference that, in fact, does not in any way support it: an article in Foreign Policy about the decline of male dominance around the globe. Joyce's one specific example is that the diary of George Sodini, a Pittsburgh man who opened fire on women in a gym in retaliation for feeling rejected by women, was reposted online by the blogger "Angry Harry" as a wake-up call to the Western world that "it cannot continue to treat men so appallingly and get away with it." But does this have anything to do with more mainstream men's rights groups? The original version of the article claimed that Sacks, who called "Harry" an "idiot" in his interview with Joyce, nonetheless "cautiously defends" the blogger; DoubleX later ran a correction on this point.
Sacks himself admits to Joyce that the men's movement has a "not-insubstantial lunatic fringe." Yet in her eyes, even the mainstream men's groups are promoting a dangerous agenda, above all infiltrating mainstream opinion with the view that reports of domestic violence are exaggerated and that a lot of spousal abuse is female-perpetrated. The latter claim, Joyce asserts, comes from "a small group of social scientists" led by "sociologist Murray Straus of the University of New Hampshire, who has written extensively on female violence." (In fact, Straus, founder of the renowned Family Research Laboratory at the University of New Hampshire, is a pre-eminent scholar on family violence in general and was the first to conduct national surveys on the prevalence of wife-beating.)
Joyce repeats common critiques of Straus' research: For instance, he equates "a woman pushing a man in self-defense to a man pushing a woman down the stairs" or "a single act of female violence with years of male abuse." Yet these charges have been long refuted: Straus' studies measure the frequency of violence and specifically inquire about which partner initiated the physical violence. Furthermore, Joyce fails to mention that virtually all social scientists studying domestic violence, including self-identified feminists such as University of Pittsburgh psychologist Irene Frieze, find high rates of mutual aggression.
Reviews of hundreds of existing studies, such as one conducted by University of Central Lancashire psychologist John Archer in a 2000 article in Psychological Bulletin, have found that at least in Western countries, women are as likely to initiate partner violence as men. While the consequences to women are more severe—they are twice as likely to report injuries and about three times more likely to fear an abusive spouse—these findings also show that men hardly escape unscathed. Joyce claims that "Straus' research is starting to move public opinion," but in fact, some of the strongest recent challenges to the conventional feminist view of domestic violence—as almost invariably involving female victims and male batterers—come from female scholars like New York University psychologist Linda Mills.
Contrary to Joyce's claims, these challenges, so far, have made very limited inroads into public opinion. One of her examples of the scary power of men's rights groups is that "a Los Angeles conference this July dedicated to discussing male victims of domestic violence, 'From Ideology to Inclusion 2009: New Directions in Domestic Violence Research and Intervention,' received positive mainstream press for its 'inclusive' efforts.'" In fact, the conference—which featured leading researchers on domestic violence from several countries, half of them women, and focused on much more than just male victims—received virtually no mainstream press coverage. One of the very few exceptions was a column I wrote for The Boston Globe, also reprinted in the Pittsburgh Post-Gazette.
Whatever minor successes men's groups may have achieved, the reality is that public policy on domestic violence in the U.S. is heavily dominated by feminist advocacy groups. For the most part, these groups embrace a rigid orthodoxy that treats domestic violence as male terrorism against women, rooted in patriarchal power and intended to enforce it. They also have a record of making grotesquely exaggerated, thoroughly debunked claims about an epidemic of violence against women—for instance, that battering causes more hospital visits by women every year than car accidents, muggings, and cancer combined.
These advocacy groups practically designed the Violence Against Women Act of 1994, and they dominate the state coalitions against domestic violence to which local domestic violence programs must belong in order to qualify for federal funds. As a result of the advocates' influence, federal assistance is denied to programs that offer joint counseling to couples in which there is domestic violence, and court-mandated treatment for violent men downplays drug and alcohol abuse (since it's all about the patriarchy).
Against the backdrop of this enforced party line, Joyce is alarmed by the smallest signs that men's rights groups may be gaining even a modest voice in framing domestic violence policy. She points out that in a few states, men's rights activists have succeeded in "criminalizing false claims of domestic violence in custody cases" (this is apparently meant to be a bad thing) and "winning rulings that women-only shelters are discriminatory" (in fact, the California Court of Appeals ruled last year that state-funded domestic violence programs that refuse to provide service to abused men violate constitutional guarantees of equal protection, but also emphasized that the services need not be identical and coed shelters are not required).
To bolster her case, Joyce consistently quotes advocates—or scholars explicitly allied with the advocacy movement, such as Edward Gondolf of the Mid-Atlantic Addiction Research and Training Institute—to discredit the claims of the men's movement. She also repeats uncorroborated allegations that many leaders of the movement are themselves abusers, but offers only one specific example: eccentric British activist Jason Hatch, who once scaled Buckingham Palace in a Batman costume to protest injustices against fathers, and who was taken to court for allegedly threatening one of his ex-wives during a custody dispute.
The article is laced with the presumption that, with regard to both general data and individual cases, any charge of domestic violence made by a woman against a man must be true.
One case Joyce uses to illustrate her thesis is that of Genia Shockome, who claimed to have been severely battered by her ex-husband Tim and lost custody of her two children after being accused of intentionally alienating them from their father. Yet Joyce never mentions that Shockome's claims of violent abuse were unsupported by any evidence, that she herself did not mention any abuse in her initial divorce complaint, or that three custody evaluators—including a feminist psychologist who had worked with the Battered Women's Justice Center at Pace University—sided with the father.
More than a quarter-century ago, British feminist philosopher Janet Radcliffe Richards wrote, "No feminist whose concern for women stems from a concern for justice in general can ever legitimately allow her only interest to be the advantage of women." Joyce's article is a stark example of feminism as exclusive concern with women and their perceived advantage, rather than justice or truth.
Cathy Young is a contributing editor at Reason magazine and a columnist for RealClearPolitics.com. She is the author of Ceasefire: Why Women and Men Must Join Forces to Achieve True Equality. This article originally appeared at Forbes.Lula treads a fine line with Iran
Luiz Inácio Lula da Silva has come a long way since his days as a factory worker. The former union leader, who spent his youth churning out sheet metal, has enjoyed more popularity in office than many politicians experience in a lifetime. Since winning the presidency seven years ago, he has lifted a large portion of Brazil’s poor out of poverty, shrunk the country’s income gap more than any other South American country in a decade, and presided over one of the fastest growing economies in the world.
But as he nears the end of his presidency, many wonder what Lula, long known as the man of the people, seeks to gain by entering the minefield that is Middle East politics, and particularly through his support of Mahmoud Ahmadinejad.
The president of the Islamic Republic arrived in Brazil yesterday on a trip that was postponed in May because of protests; Lula called the much-anticipated meeting “an honour”, drawing ire from the United States and its allies.
It is only right that Brazil’s increasing global economic presence should be matched by a diplomatic one, as a South American regional leader. In a sign of this growing influence, Shimon Peres paid a visit to Brazil last week, signing a raft of business agreements. And no sooner had the Israeli president departed than the Palestinian president Mahmoud Abbas arrived, to engage Lula’s support in defence of his people.
Specifically with regard to Iran, Brazil may have a role to play in encouraging that country’s engagement in the global community as an alternative to its isolationist policies. Building bilateral relations is just one way in which Iran could positively de-escalate its growing tensions with the West. But it hardly needs saying that this is also a time for caution. Entertaining the machinations of Iran’s embattled figurehead and legitimising the current Iranian regime could prove disastrous for Brazil’s credibility, particularly since Mr Ahmedinejad has called for a “new world order” comprising Brazil, Venezuela and Iran.
Engaging Iran is a complex matter; more than just a good reputation is required to get it right.
Dispatch From Israel: Obama and Netanyahu
Dispatch From Israel: Obama and Netanyahu
by Benjamin Kerstein
Probably the oddest rivalry in international politics today is that between President Barack Obama and Israeli Prime Minister Benjamin Netanyahu. This is not because of any excess of personal animosity between the two; at worst, there seems to be a cold indifference to each other at work in their relationship; but rather because of how extraordinarily similar the two men actually are.
Obviously, they are not similar in terms of their beliefs or backgrounds. Netanyahu is a scion of the closest thing Israel has to the Kennedy family (unless one counts Moshe Dayan’s profoundly dysfunctional brood). His father, Ben-Zion Netanyahu, besides being one of the most influential historians of Jewish history in the twentieth century, was one of the founding fathers of the rightwing Revisionist faction of Zionism, which later became the opposition Herut Party and then the largest faction of the Likud. (Well into his nineties, the old man is still very much alive, and while I was living in Jerusalem we coincidentally shared a barber. Encounters with history indeed.) Netanyahu’s older brother, Yonatan, was a veteran of two wars and a decorated commander in the Israeli special forces who became a national hero after he was killed in the 1976 raid on Entebbe. Shortly after Yonatan’s death, a series of letters he wrote to family and friends were published in book form, becoming a touchstone for a generation of Israelis.
Obama, on the other hand, was the son of a brief marriage between two college students, one American and one Kenyan. He never really knew his Kenyan father, who rose to small prominence in his native land before disintegrating in a haze of alcohol. His mother took to globetrotting, sometimes with and sometimes without him, and he was raised mostly by his suburban, middle-
In terms of politics and ideology as well, the two men could not be further apart. Netanyahu is a dedicated neoliberal, a believer in military strength and the necessity of the use of force, and thinks that peace can only be attained when there is a balance of force and a balance of fear between nations. Obama is a lifelong social democrat; a skeptic of the free market; a believer in the power of dialogue, disarmament, and good will to achieve peace between nations; and thinks that military force is just as often the problem as it is the solution.
On the surface then, the two men could not seem more different. One is rightwing; born into, if not wealth, at least privilege; and convinced that the world is a dangerous place in which force is usually the only language anyone understands. The other is leftwing, from modest circumstances, and convinced that the world can not only be improved but perhaps perfected by human effort.
On second look, however, there is a surprising kinship between the two men. Both are articulate, intelligent, charismatic, and most of all telegenic politicians. Gifted rhetoricians, both are known for their speechmaking abilities and gift for appearing effortlessly smooth in high-pressure campaign situations. In the case of Obama, this is well-known, as the man’s entire career has been largely based on image and rhetoric; but in the case of Netanyahu it is equally striking. Indeed, in the era before television came to Israel (only about twenty-five years ago) a politician like Netanyahu would not have been possible. For most of its history, Israel’s leaders have been aggressively uncharismatic, plain spoken party officials or military men. Netanyahu is a product of the new, more globalized, Americanized, prosperous, and media-driven Israel; one in which image is just as important as reality, if not more so.
Just as they have enjoyed the benefits of their media-friendly images, however, both Obama and Netanyahu are well acquainted with its drawbacks. Put simply, both men often appear to be decidedly vacuous, empty, and sometimes inept once the cameras are turned off. Netanyahu’s first term as prime minister, back in the late ‘90s, was such a disaster that it took him a decade to crawl back to the office, and even then he achieved it only by the skin of his teeth; losing the election to Tzipi Livni and the Kadima party but gaining the prime ministership through the quirks of Israel’s proportional election system. As for Obama’s drawbacks, they have been the primary topic of American political discussion for months, and need not be recounted here.
More significant than this is the kinship between the two men’s relationship to the past. Both of them are deeply influenced by being part of minority groups with long histories of suffering and oppression. Netanyahu’s Judaism is decisive in his view of himself and of history, so much so that it sometimes arouses the ire of those Israelis who think that Zionism’s success ought to have mitigated at least some of this lachrymose attitude toward the past. At least one Israeli columnist recently accused Netanyahu of speaking “like a Jew and not an Israeli,” a dichotomy that those unacquainted with the history of Zionism and Zionist thought may find confusing, but which is unquestionably a part of the current debate over Israeli identity.
Obama’s relationship to his African-American ancestry is just as decisive. Indeed, judging by the frequency with which he invokes it, even on somewhat inappropriate occasions such as the anniversary of the fall of the Berlin Wall, his status as the first black president of the United States is something that he does not only consider a personal accomplishment but a transformative moment in human history. Certainly, it is exactly that for his supporters, who see him as the consummation of the struggles of the civil rights movement and, for those with a particularly long view of history, abolitionism and the Civil War itself.
And yet, Obama and Netanyahu share another, paradoxical quality in this regard. The groups to which they belong have had a decisive influence on their identity, and yet neither of the two men are completely of these groups. Indeed, they have both spent large portions of their lives outside them. As mentioned above, Obama was not raised in a black community, but for the most part by white, middle-class suburbanites. It was not until his college years that he began to identity with the black community and eventually chose to become a part of it. In the same way, while Netanyahu’s familial and ideological ties to Israel are profound, he has lived large portions of his life—especially during his childhood—in the United States, and the influence of Anglo-American culture on him is unmistakable. There is no doubt that he is more like an American than an Israeli politician; something that has caused him some serious problems during his political career, with rumors flying that he was born in America (he wasn’t) and a certain derisory attitude toward his excellent English, which strikes some Israelis as irritatingly foreign.
The most important connection between the two men, however, and perhaps the source of the tension between them, is that they are both messianic politicians. In the case of Obama, with his various apocalyptic invocations of waters receding, ridding the world of nuclear weapons, and humanity entering upon a “new world,” this is obvious. Netanyahu’s messianism is more subtle, but no less intense. It appears most prominently in his book A Durable Peace, but it is invoked implicitly and explicitly in his speeches as well. Put simply, beneath his veneer of realism Netanyahu is a believer in the Democratic Peace, the idea that eventually all the nations of the world will become democracies and this will end war and conflict forever. And like Obama, he believes that this can be accomplished by conscious human action, including military force.
In this sense, both Obama and Netanyahu are tragic figures. Neither Obama’s new world nor Netanyahu’s democratic peace are ever going to actually happen; and what the fallout may be from this disillusionment is impossible to predict. In all likelihood, it will go harder for Netanyahu. America likes its leaders to have a bit of tragic messianism to them, but Israelis tend to be more skeptical (or cynical, depending on your point of view) about such things. What is certain, however, is that the current impasse between the two men is less about practical politics or diplomacy and much more about two competing and incompatible messianic visions — both of which, unfortunately, are doomed to failure.
Benjamin Kerstein is Senior Writer for The New Ledger.
Obama’s Foreign Policy: Shakedown 1979
Obama’s Foreign Policy: Shakedown 1979
by Christopher Badeaux
With President Obama having concluded his trip through one of the fastest-dying regions of the planet, complete with literal prostrations to a symbolic Emperor and metaphorical prostrations to an Emperor in all but name, this is as good a time as any to ask whether his Administration has developed a coherent foreign policy grand strategy yet. The evidence, to date, suggests that Obama foreign policy is like Obama campaign promises: destined to be realized in some shadowy future likely – but not certain – to come, yet already awarded rich accolades merely for promise.
The usual people who don’t understand foreign policy – which is to say, the sorts of people who are well-received, if not employed, by the State Department (which hasn’t understood foreign policy since Kissinger, or perhaps Dulles) – are of course charmed by the President’s playacting on the global stage. This is probably because the kabuki-dance of Metternichian diplomacy, though likely to allow untold millions to die of starvation, rape, genocide, torture, ethnic cleansing, and imprisonment, is more visually appealing than war and open conflict – not least because all of that starvation, rape, genocide, torture, ethnic cleansing, and imprisonment tends to happen in countries that don’t allow cameras near the atrocities.
This terrible conflation of form over substance elides the fact that Baron von Metternich developed the balance of power system he did to avoid a repeat of the devastation of Napoleon, and that ultimately, that very system of diplomatic communiqués, bows, negotiations, dinners, and playacting not only failed to avert the First World War, it positively accelerated and worsened the Second. In other words, the modern system is a shell of a remnant of a means of preventing a disaster that has long-since passed, and that failed miserably both times it was really well-tested. It is, in short, a system intended to devolve larger conflicts into smaller, more manageable ones, and is instead a method for preventing small conflicts by accumulating them into larger ones. Perversely, the whole, nominal point of the modern system of international diplomacy is to provide channels through which substantive foreign policy – that is, the real goals and desires of nations and nation-states – can flow without having more wars than necessary. Its loveliness should be secondary to its effectiveness. Applauding what President Obama has delivered – a foreign policy with better aesthetics than President Bush’s, without President Bush’s substance – is like wanting a faster car always stuck in the driveway: There’s no point if it’s not going anywhere.
This inability to separate substance and appearance – oddly appropriate for a President who has never shown much of an ability to do so since he began putting the finishing touch on his resume in 2004 – is nowhere better on display than in his dealings with China.
One would be hard-pressed to identify anyone who is neither a member of the Administration, a member of the American press corps (insofar as that isn’t the same thing), one of the aforementioned lovers of Metternichian avoidance, or a member of the government of the People’s Republic of China who thinks President Obama’s strolling photo-shoot through Asia was a success. The heretofore-unbroken foreign policy consensus of three decades has been that America wants to control a rising China to bring it into the community of nations – as a free and open society, trading freely with the world and keeping its torture to the bare minimum a quasi-fascist regime can accept as it transitions into something vaguely resembling a democratic empire. Because this requires a delicate dance of threats, cajolings, ingratiations, brute shows of force, and speeches about strategic partnerships while everyone clenches their teeth; and because that sort of thing is beyond the ability of any elected American President since Reagan if not Washington; Sino-American relations tend to look like a bizarrely schizophrenic bumble that extends the length of an Administration.
This is why President Clinton – in that way that only Bubba could – alternated between overlooking Chinese espionage at Los Alamos and sending a carrier battle group to the Taiwan Straits; why President Bush thanked China for capturing an American plane in international airspace on the one hand and met early and often with the Dalai Lama and made clear that America’s future strategic partnership lay with India, as an explicit counterweight to China.
The critical feature to all of this, however ineptly done, is that the carrot and the stick are closely joined. American Presidents praise a free, prosperous China. They speak of strategic partnerships while directing carrier battle groups in the Pacific. They talk about One China while approving arms shipments to Taiwan and hugging the Dalai Lama. They let China know that it faces no threat from the United States, but that it could.
Yet President Obama is home today with nothing to show for it other than some non-committal statements on the importance of an uncensored internet (which statements were largely censored) and a great deal of commentary about a failed trip. He put off any meeting with the Dalai Lama before traveling to China; he spoke not a word about human rights; he let himself be used as a prop at a press conference in which no questions were allowed. In return, he got, perhaps, a lovely set of lacquered chopsticks.
President Obama has been called our first foreign President – a title in which he seems to bask abroad – and though there may be something to that (he came from a corrupt political machine, he seems incapable of connecting with most of his constituents and appears not to care, his wife benefited from targeted government funds, and so on), it is also insulting to any American President, including this one. It is more that he had so little grounding in everyday America before coming to the mainland to attend college that he acquired only half of an American personality: He got that inordinate desire to please others without the attendant refusal to budge when pushed that even Midwesterners display when lectured. The one, without the other, is simply incapable of using the Metternichian system for more than symbolism, because there must always be the threat of force to go with the tea service. The absence of that complete, American personality was fully on display from ASEAN through Korea: Amid all of the ultimately pointless genuflection, there was no demand for anything, of any kind, or even substantive movement, on any goal to advance American interests abroad.
The Asia trip is merely indicative of the norm. I defy anyone reading this to tell me what goals the Obama Administration actually has. An end to the Israeli-Arab conflict? Surely not, for if there is anywhere this team has truly failed, it is in that tiny corner of the world: Israel has told America to pound sand more thoroughly than in decades, and there’s no sign of sanity breaking out in the Palestinians or indeed, any of the neighboring Arab countries. Triumph in Afghanistan? As we sit here, President Obama has promised to move past his initial premise on Afghanistan – that we should focus our efforts on winning that war – and past his subsequent, slightly modified position – that we should focus our efforts on that war – to some indeterminate position (complete with “exit ramps”), to be disclosed soon, though when is a bit up in the air at the moment. Win concessions from Iran to avoid nuclearization? I believe the current status of that effort is pending resolution, although Iran has informed us that if we turn our backs on Israel and side with Iran, it may hold the football still for us to kick, this time. (Doubtless, abandoning Israel to cozy up with Iran will poll well in the heartland.) Get Russia to side with us on anything at all? Concededly, months of reassuring a country dying faster than Japan, South Korea, or China – no mean feat – that it still counts for something hasn’t accomplished much, but surely that’s coming along any day now. Convince Kim Jong Il to … do something, presumably? While I yield to my colleague Josh Stanton on the Hermit Kingdom and its schizophrenic, baby-free neighbor to the South, I’m not certain as we sit here that the President has even identified what he wants from the DPRK, let alone accomplished a first step. Convince China to keep buying our currency so we can run even bigger deficits and debts? What are they going to do, stop?
Perhaps, some might say, President Obama is banking goodwill for future foreign policy endeavors. Certainly, one would only have had to pay attention to Presidents Reagan, Bush, Clinton, and Bush on the campaign trail to have some idea about their preferred foreign policy outcomes, while President Obama remains a cipher; but I’m game: What are they? Perhaps something from the American Left’s hobbyhorse closet: Ending carbon dioxide emissions? I’m sure all of the self-important folks gathering in Copenhagen next month will laugh at that. Get China to lower its greenhouse emissions? More laughter. End a genocide? The President has been very clear since before he took office that he embodies the New Left’s strange, unwavering belief in the inviolability of post-Westphalian borders; or if you prefer, how is the Administration dealing with the Sudan? Ending nuclear proliferation? While doubtless on the President’s agenda – he has said as much in yet another well-received speech – the actual work of ending nuclear proliferation appears to be less important to the President than whether he’s given a well-received speech this week. (Ask Pakistan. Or Venezuela. Or North Korea. Or…) Reform the international economic system? In fairness, President Obama has shown a greater willingness to re-enact Smoot-Hawley than any President in decades, though whether this is desirable is a different question. Whether the rest of the world is on board is, thankfully, not yet known.
The Obama Administration’s foreign policy appears premised on the idea that the Carter Administration was not inherently wrong on anything, just well ahead of its time. A left-wing, Latin American dictator is ousted by every other branch of government, following from an attempt to seize power in defiance of his country’s written constitution? Back the status quo ante. The Soviets – pardon, the Russians – are flexing their muscles in Eastern Europe? Give them breathing room. China is asserting its hegemony in Southeast Asia (concededly without invading Vietnam this time)? Let all of the region know that we don’t even understand what that means, and we certainly don’t intend to get in the way. India? At best, a neutral party, and never an ally.
If its foreign policy approach is merely the revenge of the rabbit-stalked, its grand strategy appears to be providing President Obama chances to appear before cheering crowds composed of non-Americans. Concrete effects simply do not matter, because they are not the goal. The President is the message; the President is the medium; the President is the goal. It is not coincidence that the word “I” appears more often than the words “a,” “an,” and “the” combined in the President’s speeches abroad; it is not coincidence that the only things anyone noted of the President’s tour were his bow to a figurehead Emperor and his announcement that he is the first Pacific President.
Taking this in the most charitable way possible, this represents a complete failure of understanding by the President. I say the President and not his foreign policy team, as some of his partisans are wont to do because, as an internet commenter noted the other day, what the Unitary Executive really means is this: When someone in the Executive Branch screws up, there’s only one man to blame.
Whether that man even knows it is, like everything else about his foreign policy, an open question.
Christopher Badeaux is Senior Editor of The New Ledger.
Goldman Sachs: the case for the defence
By William Cohan
Let us now praise Goldman Sachs, for the sole reason that it and it alone among the major, capital-intensive Wall Street institutions – both recently deceased and still living – actually understands something about risk and risk-taking.
By his own admission, Lloyd Blankfein, Goldman’s chief executive, ranks risk management as his number one daily priority, even ahead of doing God’s work. “I’m a risk manager and I’ve been that for a long time, a lot longer than I’ve been CEO,” he said recently at a breakfast in New York sponsored by Fortune magazine. “I live 98 per cent of my time in the world of 2 per cent probabilities. I live always in the worst case.”
Except for Jamie Dimon of JPMorgan Chase, what other Wall Street chief executive could have uttered those words with even a shred of credibility? Jimmy Cayne, at Bear Stearns? Dick Fuld, at Lehman Brothers? Stan O’Neal, at Merrill Lynch? Chuck Prince, at Citigroup? Ken Lewis, at Bank of America? Not likely. “If I had to focus on a key failure in this crisis, it was the failure of risk management” at other institutions, Mr Blankfein said.
Not that Mr Blankfein was relaxed about his own bank’s survival during the weeks after Lehman collapsed and the government fashioned an $85bn rescue of AIG (with Goldman benefiting as an AIG counterparty to the tune of $12.9bn). This was a moment when the 2 per cent probability had come to pass. Mr Blankfein and his colleagues quickly arranged for a $5bn investment from Warren Buffett and then $5bn more from the public. “That was an endorsement,” Mr Blankfein said, with some understatement. “At the same time, the world was riskier than I was comfortable having it be. And so I was very, very damn uncomfortable. It was scary. But you know something? There’s no doubt in my mind that we were as well capitalised as anybody else in the market. Probably better than anybody else in the market.”
A few weeks later, then-Treasury secretary Hank Paulson – Blankfein’s predecessor – force-fed Goldman $10bn from the troubled asset relief programme (Tarp). Eight other large financial institutions received another $115bn. Slowly but surely the acute phase of the crisis passed. In June 2009, Goldman paid back its $10bn, along with $318m in dividends and an above-market $1.1bn for the government’s warrants in the bank. In all, American taxpayers got a cool annualised return of 23 per cent on their Goldman investment.
To be sure, there is much to criticise Goldman Sachs for. It is still not crystalline whether Goldman’s special relationship with Mr Paulson and others in government allowed it to benefit unjustifiably from the eleventh-hour decision to save AIG, which had foolishly decided to insure much of the risk in the financial markets. Had Goldman hedged itself perfectly against its AIG exposure – as Goldman contends – or would the bank have suffered severely from the collapse of AIG, as suggested pointedly by Neil Barofsky, the Tarp inspector-general, in a recent report to Congress? “Had AIG collapsed,” Mr Barofsky wrote, “the systemic implications on other market participants might have made it difficult for Goldman Sachs to collect on the credit protection it had purchased against an AIG default.” In other words, did Mr Paulson save AIG to save Goldman?
There are also those who argue that Goldman’s efforts after December 2006 to hedge its long exposure to the mortgage market loaded AIG up with even more risk and drove up the cost of insuring against an AIG default. These people believe Goldman’s hedging strategy helped to cause AIG’s ultimate demise. (There are plenty of people who also believe Goldman exacerbated the collapses of Bear Stearns and Lehman, too.)
Then there is ongoing criticism of the bank for its uncanny ability to take advantage of the financial crisis – including the demise of competitors and the reluctance of those still around to take risks, even prudent ones – to make billions in profits and then to set aside $16.7bn (so far) for bonuses, pay and benefits. This strikes many people outside 85 Broad Street as piggish and unfair, since the American taxpayer helped rescue the system from which Goldman is now benefiting. At the same time, beyond the Hudson, unemployment is rising and capital is scarce – and pricey – for thousands of small businesses that need it desperately and that are generally responsible for creating most new jobs in a well-functioning economy.
To his credit, though, Mr Blankfein alone among Wall Street chief executives has had the decency to say sorry – albeit belatedly – for the role his bank played in exacerbating the financial crisis. “We participated in things that were clearly wrong and have reason to regret,” he said last week. “We apologise.” What took so long is not clear. Why his brethren have not also done so is equally baffling.
Despite all the criticism, Goldman’s risk-taking prowess and judgment should be applauded. Goldman’s top executives think more like owners than do those at any other bank. Thankfully, they actually lose sleep over the possibility of losing their shareholders’ and creditors’ money. For us to have even a prayer of avoiding another financial calamity, the rest of Wall Street will need to follow their example.
The writer is a contributing editor at Fortune and is the author of ‘House of Cards: a Tale of Hubris and Wretched Excess on Wall Street’
Goldman/AIG Conspiracy Theories: There’s a Reason They Won’t Go Away
Note: this post is by Thomas Adams, at Paykin Krieg and Adams, LLP, and a former managing director at Ambac and FGIC, with some minor additions by yours truly. This is a significant piece of some puzzles he, some other experts who prefer to remain anonymous, and I have been pushing on for several months.
As we have been reading the latest coverage on the AIG bailout from the SIGTARP report and the Treasury Secretary Geithner’s Congressional testimony, a nagging question remains unresolved: why did AIG get bailed out but the monoline bond insurers did not?
The business that caused AIG to blow up was the same that caused the bond insurers to blow up – collateralized debt obligations backed by sub-prime mortgage bonds (ABS CDOs). This was actually one of the few business that AIG Financial Products had in common with the monolines. AIG didn’t participate in municipal insurance, MBS or other ABS deals, which were all important for the monolines.
Certainly, AIG was larger than any of the bond insurers, but in aggregate, the bond insurers had a tremendous amount of ABS CDO exposure, which at the peak was probably over $300 billion. Despite AIG’s claims to have withdrawn from subprime at the end of 2005, we have identified particular 2006 deals with substantial subprime content that AIG most assuredly did guarantee.
In addition, the monolines had exposure to many other assets classes that AIG did not which created chaos for the holders of those bonds when the monolines were downgraded. The chain reaction risk of the bond insurers was arguably greater, when you throw in the damage to the aucton rate securities market, which was rooted in the muni market. In 2007, MBIA had over $650 billion of par insured, Ambac had about $500 billion, FSA had about $380 billion and FGIC had about $300 billion. Throwing in CIFG and XLCA, the total insured par of the monolines was about $2 trillion – this amount certainly would qualify as large enough to be “systemic risk” if the insurers were allowed to fail.
In contrast, while AIG’s aggregate insured par was greater, the only portion that really presented a systemic risk exposure was the CDS and structured finance exposures, which had an aggregate par exposure of about $400-500 billion. a persuasive argument could be made that the monolines were just as intertwined in the financial system as AIG and, thanks to their municipal exposure, presented as great or greater a systemic risk to the financial markets and the economy.
Yet AIG was bailed out and the monolines were not.
So what happened? How did the monolines get dropped and AIG get rescued? The popular reason given has been that AIG was so big that they affected all segments of the economy, whereas the monolines were only midsized and not critical to the economy. i believe that SIGTARP repeated this version of events last week. I understand that Treasury Secretary Geithner last week repeated this notion and added new information – that he was concerned about the cascading risk of AIG’s non CDS exposure.
While this produces a bigger par exposure for AIG, these other areas did not have the huge risks of loss, have largely remained functional, and did not have the issue of collateral posting. The risk were at the parent level, at AIG FP; the bulk of AIG’s business was written by regulated subsidiaries whose claims-paying ability would not be impaired by an AIG FP failure. So, in my view, this is a fairly weak, after the fact argument. A more plausible case might be made that AIG also had a securities lending business that had sprung a $20 billion leak, but that wee problem hasn’t gotten much mention in the official defenses.
I have a different interpretation. I should note that I am a former employee of a bond insurer, so I admit to a bias. However, I my general perspective had been, until recently, that neither AIG or the bond insurers should have been rescued.
When I was at FGIC, Deutsche Bank, Lehman, Bear and UBS were all over my company with sales coverage for CDO deals. But we never heard much from Goldman. I was actually surprised to see that they were so big with John Paulson’s CDO adventures (as recently disclosed in “The Best Trade Ever”), because I never thought they were that big in the CDO market.
One big reason I didn’t know Goldman was so big in CDOs – they didn’t work with the monolines.
Goldman wanted their counterparties to post collateral so they would have protection against corporate downgrades. The monolines refused to have collateral posting requirements in their CDS contracts. The rating agencies supported them in this position on the argument that maintaining their AAA rating was “fundamental to their business”.
AIG, on the other hand, agreed to collateral posting requirements. in fact, they used this as a competitive advantage – they got more business because of it and marketed their flexibility on this issue to the banks. There were two the key distinctions between the monolines and AIG – first, AIG had other businesses, whose losses could threaten AIG’s financial guarantee business while monolines promised to pay claims first, to protect investors. Second, AIG had a history of negotiating before they paid claims (there is an interesting history with a ABS film receivables deal where AIG refused to pay, while the monolines covered similar deals and did not have the same “out” in their policies. this deal did serious damage to AIG’s reputation in the ABS market and shut them out of many deals). So despite their AAA rating, AIG was not as trusted by the structured finance and CDS market – there was a fear that AIG would wiggle out of their obligations in a way that the monolines would not.
All of the other banks got comfortable with the monolines not having to post collateral for CDS trades because of their AAA ratings. Goldman never did.
Of course, Goldman was one of the few banks that clearly set out to profit from shorting CDOs. They obviously realized that if their CDS counterparty was on the hook for a lot of ABS CDOs that were going to blow up, the insurance provider would likely get downgraded. If the downgrade of the insurer was very likely, the only way the short-CDO strategy worked was if the insurer would post collateral.
So Goldman only used AIG, who would provide protection against their downgrade, which Goldman knew would happen because they were stuffing AIG with toxic ABS CDOs.
The banks that used the monolines for their ABS CDOs were making a major error by taking on the monoline downgrade risk without protection, especially if they knew that the ABS CDOs were toxic. So I suspect that most of the banks did not really know that the ABS CDOs would be as toxic as they turned out to be.
This is, of course, what happened. The ABS CDOs blew up, the bond insurers got downgraded, the banks that used them got crushed because their hedges against their CDO risks were now in jeopardy. A death spiral between the monolines and the banks ensued (the ARS meltdown added to the troubles). Goldman didn’t care, because they had collateral posted by AIG once AIG got downgraded..
All of the banks who faced the monolines had to start considering commutation deals with the monolines because it was obvious the monolines did not have enough capital to cover all of the CDO losses. in these commutations, the banks accepted payments as low as 40 cents on the dollar.
Most of the monoline ratings roubles had unfolded earlier in 2008 – many of them had been downgraded, several commutations had already occurred by the time of the AIG bailout. AIG managed to put off the threat of serious downgrade for a long time, despite the junk in their portfolio (as 2008 progressed, it was a mystery to me and many others why the onolines were being downgraded but AIG was not). While AIG had been downgraded to AA some time earlier, this hadn’t caused much of a disruption because the real trigger for collateral posting was if they went below AA. For a variety of reasons, this wasn’t a threat until September of 2008.
I hate to get sucked into the vampire squid line of thinking about Goldman, but the only explanation i can think of for why AIG got rescued and the monolines did not is because Goldman had significant exposure to AIG and did not have exposure to the monolines.
When it became clear that AIG could face bankruptcy, Goldman’s plan to profit by shorting ABS CDOs was threatened. While they had the collateral posted, thanks to the downgrades, this collateral could be tied up or lost if AIG went bankrupt. This was a real crisis for Goldman – they thought they had outsmarted the subprime market with their ABS CDOs and outsmarted all of the other banks by getting collateral posting from AIG when they got downgraded. But if AIG went away, this strategy would have blown up and cost Goldman billions.
All of this is essentially factual and based, for the most part, on public information.
As a matter of speculation, i believe that Goldman and their helpers deliberately pumped up the media with the threats that the subprime market posed in order to hasten the collapse of the subprime market. this allowed them to realize their gains sooner from shorting ABS CDOs – they had become impatient waiting for it to blow up.
In addition, I believe that Goldman and their helpers – including their many connections with the White House and the Fed – pumped up concerns about the systemic risk that the market was facing from a Lehman and AIG failure, so that they could force the government to step in and bail out AIG. This would also explain why Lehman was not bailed out. Lehman didn’t really matter to Goldman. But the fear created by Lehman’s failure served as a good excuse for why they should rescue AIG.
I have been wondering why the sub-prime market blow up led to such a massive crisis when subprime and structured finance had experienced big problems before without the issue of systemic risk and financial market collapse.
Certainly, the ABS CDOs were toxic and caused big holes, but not so big that it couldn’t be addressed by an RTC type of clearing system. Various analyst reports of the bad subprime deals (and ABS CDOs) makes it pretty clear that the 2006-2007 vintages were the worst and will probably only create about $500-700 million of aggregate losses. Terrible, but not insurmountable.
This leads me to conclude that the bailout was prompted by fear mongering and deliberate strategies and manipulation on the part of Goldman and a few select others, to make sure that AIG would be bailed out to protect their trades in shorting ABS CDOs.
i believe that John Paulson benefited from this bailout, on his $5 billon or so of ABS CDOs with AIG. But not as much as Goldman benefited themselves, via Abacus and, perhaps, other deals.
AIG, Goldman and ABS CDOs were tied together at the center of the crisis. From Goldman’s perspective, all of the other participants were secondary – they had no exposure to the monolines and they were probably hedged against the other banks. The only loose end was the collateral posted by AIG.
The final question that this raises for me: would it have been cheaper for the government and the taxpayer to have bailed out the bond insurers instead of AIG? The total amount of CDOs and credit default swaps that would have needed to be guaranteed would have been smaller. In the number of investors across the market that would have benefited would probably have been larger. The auction rate securities market, the muni market, the investors that held bond insurer exposure to MBS and ABS would have all benefited. None of these markets were aided by AIG’s bailout.
But a bond insurer bailout would not have helped Goldman much and the AIG bailout did.
Yves here. Note I differ with Tom on how much Goldman could or did pump up subprime fears. A lot of people focused on Jan Hatzius’ bearish calls on financial system losses, but quite a few people in a position to know claim that Hatzius is not the sort to take commercially expedient views. But once the asset-backed commercial paper started imploding in August 2007, the officialdom was very much engaged. So if one can connect the dots between Goldman and the fear and loathing that hit the ABCP market (recall all paper was repudiated as in being possibly tainted by subprime), the story becomes very tidy.
Obama's Failing: Too Much Head, Too Little Gut
By David Paul KuhnLiberals have long sought the professorial president. But Barack Obama is starting to betray some of the vices of that virtue.
This president appears too much brain and too little gut. Prof-in-chief has his drawbacks. The decision to send the confessed Sept. 11 mastermind to the civilian criminal court system was defensible in the academy. But it should have failed any seasoned pol's gut check. This crime was, after all, taken as an act of war.
Originally, thoughtfulness on the Afghan-war was welcomed and justified. But there have been nine major meetings of Obama's war-council. It's been nearly three months. Even as the decision nears, the deliberation has begun to feel like indecision.
It's also how this president speaks to the public. "Most folks believe that we've now turned the corner," Obama said of the recession in September. "Jobs tend to be a lagging indicator."
Obama's never had that gene, visible in other politicians, that allows him to convey the public's pain. Not in the deft sense of Ronald Reagan or Bill Clinton. Last month, it was telling that Joe Biden, not Obama, took up Reagan's line that, "when you're out of work, it's a depression."
During the campaign, there were clues that this professor carried some of the baggage common to his breed. That reference to Whole Foods arugula prices to Iowa farmers. Obama's remark to a group of liberal donors in San Francisco that small town folks in places like Pennsylvania "cling to guns or religion."
Pundits did reach for adjectives like "aloof" or "professorial" to describe Obama. And even The New York Times took up the discussion post-market collapse. "In a Time of Crisis, Is Obama Too Cool?" read the Times' headline. But running in the wake of George W. Bush's presidency, against John McCain's mercurial campaign and amid the financial crisis, Obama needed only to appear steady to be just cool enough.
W. was the polar archetype of the professor. He used too much gut, from gauging the Russian leader to his "bring 'em on" bravado that permeated even his approach to war. But distance from W. allows more perspective on the professorial presidency, including its negatives.
Those negatives consumed Teddy Roosevelt. The Harvard-man, who wielded a photographic memory, was obsessed with seizing the "strenuous life" to avoid what he saw as the pitfalls of zealous intellectualism.
No modern administration has had more Ivy Leaguers than Gerald Ford, roughly half of his team. But Ford's most important decisions came from breaking with top advisors and going with his instincts: the pardon of Richard Nixon and the use of those famous words, "America's long national nightmare is over." A decade later, Ronald Reagan would similarly disregard learned advisors and stick with the line, "Tear down this wall!"
Obama's intellect has been understandably celebrated. He was the only major candidate who refused to float a gas-tax holiday. From his race speech to his first public comments on the financial crisis to his speech in Cairo, his eloquence is a visible asset.
And yet, even that asset has been exaggerated. Obama's inaugural address did not ring or read like John Kennedy or Franklin Roosevelt's. Obama lacks Roosevelt's touch with the jobless and hopeless, perhaps because Obama lacks so-humbling an experience as FDR had with Polio.
This financial crisis' strongest speech came in an address to Congress. But it came not from Obama but an impassioned British Prime Minister Gordon Brown, when he spoke of the "irrepressible nation" in his March call to action.
The advantage of Obama's command of the complex earns outsized notice, however, because his predecessor was unusually inarticulate--for a president that is.
But there remains a tendency for those smart-guy dumb mistakes. Obama's recent bow to Japan's emperor was a powerful cultural gesture to the Japanese. But that bow came in the context of earlier controversies over Obama's smiling handshake with Venezuelan President Hugo Chavez and Obama's bow to Saudi King Abdullah.
Politics 101 teaches that creating jobs can also create votes. Yet Democrats decided not to create a new-New Deal. It would have visibly and proportionally focused job creation where unemployment is highest, among laborers. But the obvious move is often not the professor's move.
Democrats have, indeed, moved towards the professional class for decades. Obama was always the personification of two of the most important legs of the Democratic coalition, blacks and highly educated whites. Republicans won post-graduates by 2 percentage points in 1988. Two decades later, Democrats won the bloc by 18 points.
The political left came to, in Al Gore and John Kerry, realize the disadvantages of the overly brainy candidate. But Democrats still cherished the cerebral president. In the Bush era, many liberals found relief in "The West Wing" fictionalized presidency of Jed Bartlet, an Economics Nobel Laureate who spoke four languages.
But ever since one columnist branded Adlai Stevenson an "egghead" in 1952 it seems, many Democrats have proven unable to fully consider the substance of the charge.
Last year, the Daily Telegraph obtained a confidential letter from the British ambassador to the prime minister. It described Obama as someone who "can seem to sit on the fence, assiduously balancing pros and cons," with a demeanor that "does betray a highly educated and upper middle class mindset," a man who "can talk too dispassionately."
It was the sort of frank appraisal that thoughtful men should consider.
David Paul Kuhn is the Chief Political Correspondent for RealClearPolitics and the author of The Neglected Voter. He can be reached at david@realclearpolitics.com and his writing followed via RSSThe United States -- Decline and Fall?
The United States -- Decline and Fall?
By Richard ReevesLOS ANGELES -- It has become fashionable on both the left and the right to compare the United States to ancient Rome. Decline and fall: We are a militaristic power trying to make everyone else in the known world submit to our way, or we are an irreligious, hedonistic bunch going the way of all flesh. Or maybe both.
Not true, according to two interesting recent books.
Thomas F. Madden, a professor of ancient history at St. Louis University, begins his book, "Empires of Trust," by denouncing "political screeds that yank bloody bits of Roman history out of context in order to make hackneyed partisan points." Then he adds: "The Rome that fell, it should be remembered, was over two thousand years old. We should be so lucky. No, the young United States has nothing at all in common with the aged imperial Rome, but it has important things in common with the youthful Roman Republic."
Rome actually fell three times, argues Madden. In 27 B.C., the Roman Republic, the regime he compares with the United States, evolved into the one-man rule of an emperor in Italy and beyond. That Roman Empire was overrun by barbarians in A.D. 476. But the eastern empire with its capital in Constantinople, continued to thrive into the Middle Ages, finally falling to the Ottoman Turks in 1453.
It is that Eastern Roman Empire, also called Byzantium, that is the focus of "The Grand Strategy of the Byzantine Empire," by the often controversial national security intellectual Edward Luttwak. While Madden sees the Roman Republic and the United States as empires of trust -- nations with allies, some once conquered, who trust them as military and economic powers -- Luttwak advocates that the "American Empire" would do well to emulate the strategies of Byzantium.
"Economic crisis, mounting national debt, excessive foreign commitments," says Luttwak, speaking of the middle period of Roman emperors, "this is no way to run an empire. America ... has never been Rome, and to adopt its strategies now -- in ruthless expansion of empire by domination of foreign peoples, and a bone-crushing brand of total war -- would only hasten America's decline."
Luttwak, who says he has studied Byzantine documents and other writings for two decades, advises Americans to learn seven lessons from Byzantium. They are:
"1. Avoid war by every possible means ... but always act as if war might start at anytime. ... Train intensively and be ready for battle at all times.
"2. Gather intelligence on the enemy and his mentality, and monitor his actions continuously.
"3. Campaign vigorously, both offensively and defensively, but avoid battles, especially large-scale battles.
"4. Replace the battle of attrition and occupation of countries with maneuver warfare -- lightning strikes and offensive raids to disrupt enemies.
"5. Strive to end wars successfully by recruiting allies to change the balance of power. Diplomacy is even more important during war than peace.
"6. Subversion is the cheapest path to victory. So cheap, in fact, as compared with the risks and costs of battle that it must always be attempted. ... Remember: Even religious fanatics can be bribed.
"7. When diplomacy and subversion are not enough and fighting is unavoidable, use methods and tactics that exploit enemy weaknesses, avoid consuming combat forces, and patiently whittle down the enemy's strength."
As for Madden, he concludes with a rush of optimism:
"America is a young country and an even younger empire. ... Americans remain optimistic about the future and confident in their abilities. They have reason to be. ... Americans have almost secured their horizon. That is what an Empire of Trust is driven to do. We may not be able to see the end of America's road, but its direction seems clear enough. And, for both Americans and the world, it is a good road to follow."
Thanks, we needed that. There is some confusion and contradiction in what Madden and Luttwak have to say, but clearly they believe the sky is not falling yet. Thoughts and reflections like theirs might even cause a president to take his time in making decisions about trying to exercise great and lethal power beyond the horizon.
The parable of the sower
Monsanto
The parable of the sower
The debate over whether Monsanto is a corporate sinner or saint
FEW companies excite such extreme emotions as Monsanto. To its critics, the agricultural giant is a corporate hybrid of Victor Frankenstein and Ebenezer Scrooge, using science to create foods that threaten the health of both people and the planet, and intellectual-property laws to squeeze every last penny out of the world’s poor. The list of Monsanto’s sins dates back to when (with other firms) it produced Agent Orange, a herbicide notorious for its use by American forces in Vietnam. Recently “Food Inc”, a documentary film, lambasted the company.
To its admirers, the innovations in seeds pioneered by Monsanto are the world’s best hope of tackling a looming global food crisis. Hugh Grant, the firm’s boss since 2003, says that without the sort of technological breakthroughs Monsanto has achieved the world has no chance of doubling agricultural output by 2050 while using less land and water, as many believe it must. Mr Grant, of course, would say that. But he is not alone. Bill Gates sees Monsanto’s innovations as essential to the agricultural revolution in Africa to which his charitable foundation is committed. Josette Sheeran, the head of the United Nations World Food Programme, is also a fan.
Monsanto has come a long way from its roots in pharmaceuticals and chemicals (in which capacity it made Agent Orange). The original company was formed in 1901 to make saccharine. In 2000 it merged with Pharmacia & Upjohn, a drugmaker. Two years later the group’s agricultural activities were spun off into a new Monsanto. At that time the company was best known for Roundup, a herbicide popular with farmers. Roundup is still a leading brand, but margins have been eroded by competition from Chinese producers of other forms of glyphosate weedkiller. Roundup’s share of Monsanto’s revenue is shrinking towards 10%. There is talk that it might be sold. “It is no sacred cow. We look at it every year,” says Mr Grant.
Today most of Monsanto’s $11.7 billion of annual sales come from seeds, increasingly of genetically modified (GM), or transgenic, varieties (see chart), and from licensing genetic traits. Indeed, it is now best known, for better or worse, for applying biotechnology to seed production, winning a string of the sort of patents on living organisms that became legal in America only after a Supreme Court decision in 1980. In July it gave its GM seed a new master brand: Genuity, a name that evokes “being genuine, authentic and original”, according to a company spokesman. It will denote a “family of innovative products that will enable farmers to do what they do best, even better.”
In the 13 years since GM seed was first farmed commercially, agriculture—and Monsanto with it—has become increasingly central to several of the world’s most pressing policy debates, says Mr Grant, a Scot who joined the company in 1981. Nowadays he spends a good deal of his time taking part in those debates, which range from concerns about higher prices and shortages of supply to the use of land for growing biofuels rather than food, climate change and water. Arguments over water, thinks Mr Grant, “will dwarf the discussion that has taken place so far over food.” Monsanto is also getting caught up in the debate over intellectual-property rights in food and their implications for antitrust policy, on which Barack Obama’s administration sounds less friendly than that of George Bush. It has already marked agriculture for attention.
How successful Monsanto and rival makers of GM seed, such as DuPont and Syngenta, are in winning round a sceptical public and policymakers will play a big part in determining how lucrative their innovations prove to be. In public attitudes to GM food, Mr Grant believes “there’s been progress everywhere compared with 15 years ago.” Still, Europe remains “slow, a real slouch. European farmers have been denied the right to choose.” Although the European Union is slowly becoming open to imports of GM food, it is still largely opposed to growing the stuff. Monsanto has still to complete a test of any GM seed in Britain because protesters have destroyed its experiments. In Latin America, by contrast, Argentina and Brazil are both growing GM corn (maize) and soyabeans. In some ways, rising awareness of the food crisis has helped people to see “GM as something with potential benefits other than just boosting the profits of Big Food,” says Mr Grant—to Monsanto’s benefit. Well, maybe.
Turbo-charging Mendel
Monsanto’s innovations fall into two categories. The first is breeding, which seedmakers have been doing with increasing sophistication for decades. Monsanto is able to accelerate the process of selective breeding through better mapping of a seed’s genetic qualities and its suitability to grow in a particular place.
At Monsanto’s research laboratory in St Louis, the company’s home city, farmers on one of the many tours that are part of its marketing efforts are clearly fascinated by a piece of technology known as the corn chipper. A machine picks up an individual seed, rotates it to the right position, then chips off a sample, which has its genetic material analysed. (Getting the seed in the right position is the hardest step, because each one has a different shape and it is crucial that the chipper does not damage the embryo and thus stop the seed from growing properly.) The likely attributes of the plant that would grow from each seed are predicted from its DNA, the most promising seeds are planted, and the process is repeated with the seeds that those plants go on to produce.
The tour guide refers to the operation as “CSI: St Louis”, although testing now goes on all year, at centres around the world. In the past three years this technology has helped speed up dramatically Monsanto’s ability to identify and grow the most productive seed for any given location. “It is the mother and father of all dating agencies: we can analyse every single seed we harvest, do a health check, guess what its grandchildren will be like, send it anywhere in the world,” says Mr Grant.
The second category of innovation, in which Monsanto is becoming increasingly adventurous, is genetic modification: identifying genetic traits with particular qualities and transplanting those traits into seeds to improve their performance. In essence, the goal is to pack as much technology into a seed as possible.
The biggest breakthroughs so far have been in weed and bug control. Perhaps the most common feature of Monsanto’s range of seeds is that they are Roundup Ready, meaning that they are guaranteed to survive spraying with Roundup that will take out any surrounding weeds. Some plants have been bioengineered to deter pests from eating their leaves and roots, which reduces or even eliminates the need for insecticides. Farmers on their tours cannot fail to miss the display cases in which a healthy Monsanto plant grows next to a seriously ailing traditional specimen of the same variety.
Monsanto has just launched two new varieties of seed that have been engineered to be far more productive: Genuity SmartStax corn, which company trials suggest can increase yields by 5-10%; and Genuity Roundup Ready 2 Yield soyabeans, which in trials have shown yields 7-11% higher than the first generation of Roundup Ready soyabeans. Over the past couple of decades, soyabean yields have risen at an annual rate of barely 1%.
In around 2012 or 2013 Monsanto expects to launch a soyabean whose processing will result in fewer transfats. It will also offer an “omega-3 soyabean”, genetically enhanced to give consumers the many proven health benefits of omega-3 fatty acids. Until now, omega-3 has been harvested from fish and so, in Mr Grant’s words, “products with omega-3 in them taste a bit fishy.” Fish derive omega-3 from algae, so Monsanto has done likewise, extracting the relevant genetic material from the algae and putting it into soyabeans. Now, he says, without the fishy taste, omega-3 will go well in yogurts, health bars and so forth.
The company is also aiming to engineer seed to use nitrogen more efficiently—and hence to require less fertiliser. This would reduce farmers’ exposure to the price of oil, from which fertilisers are made, and the damage done when nitrogen leaches into the water supply.
In about three years’ time Monsanto expects to launch its first “drought tolerant” products. It is examining several ways of making plants more tolerant of drought. One is to improve the roots’ take-up of water. Another is to reduce water loss through the leaves. A third is to alter plants’ reaction to lack of water. When stressed, a plant shuts down growth in order to conserve what it has. They often over-react, and use a lot of energy when they restart. Genetic modification can help it interpret water conditions more accurately and avoid unnecessary stops and starts.
Because water shortages are predicted for many parts of the world, Monsanto expects these drought-tolerant plants to be a huge commercial success. The first of them will be corn, intended for a dry strip of America running from northern Texas to the Dakotas. Drought-tolerant technology has also prompted Monsanto to start focusing on dry-land wheat. Wheat acres have declined in recent years, contributing to shortages. In July the company paid $45m for WestBred, a wheat-seed firm.
Trust and antitrust
Acquisitions have been a key part of Monsanto’s strategy, giving it access to new seed markets. In 2005, it began to apply biotech to vegetables after buying Seminis, the world’s largest vegetable-seed company, for $1.4 billion. Since it was spun off, Monsanto has made more than 20 acquisitions (as well as several disposals). Those purchases are one reason why it was singled out as an appropriate target for the antitrust authorities in a paper published in October by the American Antitrust Institute, an independent competition watchdog. The paper laments the “impaired state of competition in transgenic seed”—which it blames on Monsanto above all.
The company’s acquisitions have been crucial in creating the horizontal and vertical integration that support its platforms in cotton, corn and soyabeans. Last year its share of the markets for GM corn and soyabeans was about 65% and that for GM cotton about 45%. The institute’s paper argues that, thanks to its dominance, Monsanto is actually harming innovation in seed. Monsanto had to make concessions to win the antitrust authorities’ approval for two of its biggest purchases, of DeKalb in 1998 and of Delta and Pine Land in 2007.
The next generation in the greenhouseTrue, for the past 13 years Monsanto has been licensing its technology broadly, to hundreds of firms, including some of its main competitors. This, the paper concedes, has ensured that Monsanto has not ended up in “control of large, totally closed platforms in transgenic seed that could be challenged only by the unlikely emergence of rival platforms.” However, it cites Monsanto’s reputation for defending its intellectual property fiercely through the courts as another reason why the antitrust authorities should take a look at the firm.
Monsanto’s terms of business require farmers to buy fresh seed every year. Its new Violator Exclusion Policy denies farmers who break the terms of its licences access to all its technology for ever. This summer it achieved its latest success in enforcing its stern line when it won a case against some Canadian farmers who had held on to seed.
Agricultural markets have been mentioned as an area under review by officials in the antitrust division of the Department of Justice. The DoJ is expected to make Google its main target, but it will be no surprise if Monsanto comes a close second. Already, the DoJ is looking into complaints by DuPont, perhaps Monsanto’s fiercest rival. In May Monsanto sued DuPont, alleging that Pioneer, DuPont’s seed arm, had broken licensing terms for herbicide-resistant technology in corn and soyabeans. After an ugly war of words, DuPont countersued and complained to the DoJ.
“We are in a hyper-competitive business. Farmers have no shortage of choice,” insists the unapologetic Mr Grant. “Our goal is to be competitive every spring at the farmer’s table. A farmer may be willing to abdicate the decision on what chemicals to use, but not on what seed to plant. We aim to win one field at a time, one spring at a time.” Enforcing licences is crucial to that strategy. Just as in the drug industry, innovation is expensive: Monsanto has a research and development budget of nearly $1 billion a year, and reckons it costs $100m to bring a new GM seed to market. If there is to be innovation, the firm insists, intellectual property must be protected.
However, Monsanto is using different language—and a different approach from that of big drugmakers—when it comes to dealing with the millions of poor people in Africa. Mr Grant says that he is determined not to repeat the mistakes of the pharmaceutical industry in holding back on making valuable innovations available to the developing world. He believes that “in a perfect world, on the same day you launch [a drought-resistant seed] in Kansas, you would launch it similarly in Nairobi”—although in practice Africa and other poor places that are short of water will have to wait a while longer.
Over the past three years, the firm has started to play a leading role in efforts collectively described as an attempt to create a “green revolution in Africa”. Mr Grant talks enthusiastically about his friendship with Norman Borlaug, the driving force behind the Green Revolution, first in Mexico, then in Asia, in the second half of the past century, which is generally reckoned to have saved at least 1 billion lives. Shortly before his death this year, aged 95, Borlaug reportedly expressed regret that he would not live to see the “gene revolution”.
In white corn, a staple in Africa and Mexico, Monsanto has donated all its intellectual property, seed and know-how for developing drought-tolerant genes to Water Efficient Maize for Africa (WEMA), a public-private partnership that has received grants from the Bill & Melinda Gates Foundation and the foundation of Howard Buffett, an Illinois farmer (and son of Warren Buffett). The five countries to benefit are Kenya, Mozambique, South Africa, Tanzania and Uganda. Mr Grant expects to launch drought-tolerant corn in Africa within two or three years of the launch in America. The company is also working with Millennium Villages, an anti-poverty project led by Jeffrey Sachs, an economist at Columbia University.
Big Pharma versus Big Farma
In contrast to the anti-retroviral drugs that pharmaceutical companies sell in Africa, this product will generate no royalties for Monsanto, says Mr Grant. “The buzzword is the ‘democratisation of technology’ and we have learnt from Big Pharma the dangers of being too slow,” says Mr Grant. The fact that seeds suited to one place do not necessarily grow well elsewhere greatly reduces the risk of parallel imports that affected the drugmakers. They feared that drugs given away in Africa would be shipped back to rich countries, undermining their business there.
That said, he does not believe that Monsanto could or should be expected to solve this problem on its own. “We studied what Borlaug did, which was work with local NGOs, tapped research institutes, brought disparate groups together. The new piece today is getting big companies involved, which hopefully means we can get this done much faster than Borlaug did.”
Mr Grant nonetheless regards this approach as “good business”, not least because the developing world will be a huge source of future growth for the firm. Monsanto sells more GM cotton in India than in America. Already, most of the countries where GM seed is sown are emerging ones. Around 90% of the world’s 12m farmers with at least a hectare planted with GM seed are smallholders in developing countries. America has 250,000-300,000 active farmers; India has 15m cotton farmers alone, several million of whom Monsanto says it has reached already.
This reinforces the firm’s fundamental message, that it is a driving force for higher farm productivity—and that higher productivity, not a return to the methods of the past, is likely to be the true source of agricultural sustainability. In America, GM seed has already brought about huge increases in productivity, says Mr Grant. He has no time for the “Malthusian thing about running out of food. This is eminently solvable.” He sees huge potential in merely raising yields in the rest of the world to levels already achieved in America thanks to better farming practices, Roundup and improved seed productivity. American farmers average about 160 bushels (of 56lb, or 25.5kg) of corn per acre per year, against 60 in Brazil and 27 in sub-Saharan Africa (22 excluding South Africa).
Moreover, even in America there is the potential to double yields again. Already, farmers in Iowa are producing as many as 200 bushels an acre. Mr Grant believes that 300 bushels are achievable by 2030. “We have just scratched the surface,” he says, pointing out that after the first GM crops came on the market in 1996, it took ten years for 1 billion acres to be planted. But the second billion took only another three years. “We are where transistors were in the 1970s.”
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