Tag Archives: brazil

Why we’re all keeping an eye on the interest rate

The New York Stock Exchange has continued well into this week its steady (and for many, confusing) decline. Among the other effects of that is the stifling of an earlier conversation about the Federal Reserve raising the US’s federal funds rate. An incentive typically retained for crises or to address inflation, a heightening of that rate would increase the interest on loans between banks, credit unions, and other institutions, ultimately raising the interest rates on most other loans and forms of investment in the broader economy. Since a low interest rate is so useful in a crisis, the argument goes, the already currently quite low rate should be maintained to give investment circles and other parts of the financial system a bit of a breather.

federal funds rateThe historical federal funds rate, from here.

A crucially missing part of that expectation that the Federal Reserve should keep the historically low rates is a very specific understanding of why the Federal Reserve lowers rates. In the view that argues for keeping the current rate, a lowered rate is in and of itself the goal. A lower rate, so the theory goes, means transactions happen. It’s an indirect and finance-heavy form of economic stimulus. Is the lower figure on the interest rate itself the necessary end though? Can’t the lowering of the rate also be in and of itself a process?

Financial institutions act a specific way before the rate is lowered, and then alter their behavior when it reduces. In short, it’s about changing how they act through changing expectations of how profitable a given investment, loan, or other action would be. The key word there is change. This is about altering expectations of what a given rate would be.

In light of that differing view of the federal funds rate’s power, what use is it in the situation of an anemic economic recovery and jittery investors? What’s more, there’s not really anywhere for it to go lower to. It’s tapped out as a means of promoting economic action that otherwise wouldn’t happen within the economy. While raising it is probably not the wisest choice either, since it’s possible that would create a ripple effect of rising and disincentivizing interest rates across the economy, the centrality of the interest rate in the on-going discussion of how the US government can respond to a disastrous week on Wall Street is a bit odd.

A more illuminating portrait of the economic situation, in which the federal funds rate is only a bit player, was painted by Paul Krugman. He noted that a key part of what’s gone wrong so far on Wall Street is indicative of an on-going pattern of crises: first the economic downturn of various Asian economies in the 1990s, then the the boom-bust of the US economy from the early 2000s on, then a 2009-2010 Euro crisis, and finally another currency crisis in many other less developed economy (most notably Brazil). Krugman links these together as a recurring pattern of speculative “gluts,” each fed by the former as a source of initial investment funds and feeding the latter by driving investors there after that specific economic bubble pops.

In essence, the uncertainty of investors that could pull their funds out of the US economy and create economic distortions elsewhere is the problem, and the possibility of a not-very-well-timed federal funds rate increase is simply a justifying moment of bad luck. That’s the spark that could light a powder keg of huge investing resources concentrated in globally a small number of flighty hands and given greater mobility than ever before historically. The interest rate can’t go up, and various political groups are noting that necessity, but the structural reality that has made that and virtually all other stimulant economic policies must-haves to avoid an economic catastrophe needs to be talked about as well.

Our financial system (like many others around the world) is essentially set up to fail, and at moments like these it seems like there might be a clear reason why: to make anything less than stellar news for the financial sector even more disastrous for everyone else. There’s no better way to keep the policies you want than to make them in everyone’s best interest.

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The downside to Glenn Greenwald

TW: police detention, mass surveillance, police brutality

You may have heard about the controversy earlier this week as Glenn Greenwald’s partner, David Miranda, was detained while returning to the UK from a visit to Brazil. Greenwald was understandably incensed and wrote several thousands of words on the subject for The Guardian over the course of these past few days. While this incident has been largely pushed aside in light of the sentencing news for Chelsea Manning, I think this story from earlier in the week in illuminating in terms of the flaws in Greenwald’s journalistic practices.

To be clear here, this is not to suggest that Greenwald’s reporting on these events was biased or that either he or his partner “deserved” the scrutiny or restrictions placed on them by the UK government (and, as Greenwald and others have alleged, at the US government’s request, which the Obama administration has wholly denied). There’s something of a media campaign underway to paint this issue as reasonable comeuppance for Greenwald and Miranda which is obviously an elaborate profession-wide apology by the highest echelons of US-based journalists who hope to be the best stenographers to power that they can be. Greenwald’s bucking of that trend is something that we should all appreciate, and even if failing that, we shouldn’t hold Miranda culpable for Greenwald’s actions.

That said, the way that Greenwald’s role in reporting international surveillance systems has expanded to experiencing them as well is worrisome. Concerns about bias are understandable, but in this case seem unfounded. Instead, I think the real damage is in how this limits the most public reporting on these issues of the increasing use of mass surveillance by the US and UK governments. As David von Ebers wrote at This Week In Blackness, the UK has its own history of using these same methods of surveillance and detention to crackdown on both anti-colonial activists that had been displaced from British colonies as well as against locally marginalized and anglicized Irish protesters. There’s more than a past pattern of those tactics, actually, as across the UK and other EU countries anti-surveillance protesters took to smashing CCTV cameras (publicly placed video recorders) this very week.

(One German dissident dismantling a public surveillance camera in January, from here.)

On the distinct but related issue of the wave of UK riots two years ago, which were prompted in part in opposition to police brutality, Greenwald struck an odd tone. While he admitted that the riots were rooted in opposition to exploitation and “the system,” he likewise reduce them to being nothing more than “opportunistic criminality and inchoate rage“. Instead of attempting to sort through the diverse motivations for the riots, Greenwald essentially gave up, and missed out on reporting a connection between this larger backdrop of protest and resistance and the state systems he now takes so seriously.

As long as he’s reporting on the US’s possible involvement in detaining Miranda and likewise the US’s National Security Agency’s broad surveillance programs, why can’t he also mention Stop and Frisk, which as near as I can tell, he’s never covered? It’s also rather timely this week, given how New York’s Mayor Bloomberg has responded to the declaration of that policy as unconstitutional with calls for mass fingerprinting in poor, predominantly Black and Latin@ neighborhoods. Both that former policy and Bloomberg’s interest in replacing it with a similarly overpowered form of policing has gone chronically underreported and could do with a larger name like Greenwald’s throwing some attention its way.

The problem here, to repeat myself, isn’t his choice to cover the surveillance state and police overreach as it affects him personally, but his decision to primarily cover it then and only describe the system’s hostile actions as violence in that case. The contours of his reporting on this issue leave so much beneath the surface, unexplored.

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Violence is multifaceted

TW: racist criminalization, cissexism, transmisogyny, forced displacement of indigenous people

I mentioned this late last week, but one of the key things to remember is how violence and inequality can be expressed in so many different ways. This past week was a fairly blunt remind of this with three separate incidents throughout the Americas – which show that a government’s intervention or non-intervention in a situation can be violent, and that violence is by no means the exclusive property of governments.

In New York, a child was handcuffed and subject to police interrogation for multiple hours. You’ve probably already realized it, but the child was, of course, Black. Likewise the alleged crime, which all indications point towards him not having committed, was stealing $5 that a fellow elementary student dropped on the ground. I tag a lot of things as “racist criminalization“, meaning the way a person’s race can make police and other authorities more likely to perceive them as criminal or their actions as more severely criminal than they actually are, but this pretty much takes the cake.

South of there, in Charlottesville, Virginia, the police are refusing to organize searches or assist community efforts to find Sage Smith, who has now been missing for two months. Again, Smith is Black, but beyond that, she’s a transgender woman. While her race might make her seem to be a more plausible culprit, her gender identity is apparently a plausible reason to particularly ignore her likely status as a victim of kidnapping or murder. This sort of refusal to intervene as police and provide services that are expected is common when it comes to violence against transgender women, which has lead to what many are calling an epidemic of transmisogynistic attacks.

Even further South, in Brazil, the government has essentially ceded control over a mega-dam project in the Amazon to private interests, which won’t be held responsible for the ensuing environmental impacts and 40,000 indigenous people who will be forcibly relocated by the dam. The Belo Monte dam threatens the most politically marginal populations in Brazil, and again the government is refusing to intervene with regulations that are already on the books. You can sign a petition asking for Brazilian President Dilma to review the decision to approve the project, here.

(Indigenous protesters against the project in 2011, from here.)

In short, there’s a lot of violence in the world, and only some of the time is the issue that the police or other governmental figures have intervened where they shouldn’t. Much of the time, protections are selectively enforced, primarily to protect the enfranchised, leaving many diverse groups, from transgender women to indigenous peoples, without recourse should private enterprises or actors harm them. Any effort at establishing actual equality between those who are cisgender and transgender or indigenous and non-indigenous needs to acknowledge both of these dimensions of violence.

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Not just choice, but legitimacy

TW: coercion and restrictions on bodily autonomy, mention of sexual assault

Earlier today, I posted over at Velociriot! about the return of personhood bills in the House and how they threaten the security of nearly any one who could become pregnant in terms of having a right to control biological processes occurring within their own body. I felt like it was particularly important to mention this, however: “In a nutshell, it’s a massive restriction on fertility that both prevents some people (for instance, Mitt Romney’s children) from having children just as much as it forces others (for instance, the approximately 16,000 people in the US each year who are raped and become pregnant) to have children that they do not want.”

The issue of how many people tolerate the existence of such measures is deeper than coerced pregnancy. The ability to independently choose what occurs within one’s body should be a fundamental right, irrespective of sex, gender, race, or sexuality. But almost as readily as powerful institutions restrict people’s ability to avoid pregnancy, others deny them the right alter their own biology towards the goal of creating life. The fear of what will happen if these restrictions are not applied seems more profound than simply mandating certain births, and involve fundamentally distrusting people’s (especially women’s) autonomous decisions about bringing life into this world or not.

(According to the Personhood Bills, these are three different people. So making them with the intent to get pregnant is irresponsible, and if one forms in your body against your wishes, well, get used to it. Image from here.)

Perhaps this is inopportune to say, but much of the popular animus against these provisions clearly comes from a fear that some people are refusing to acknowledge pregnancies than many people would like to terminate. But I think we likely will need a response that’s broader than that, that acknowledges how many women judged as being ethnically inferior have been restricted from bearing children. From India, to Latin America, to Europe, to the US, there’s a consistent pattern of women not only being coercively forced into pregnancy, but also forced away from it.

And while in vitro fertilization is by no means the only way that same-sex couples have children, the fact remains that these measures impact not only the security of some that they will not become pregnant but also complicate others’ desires to become pregnant. Were these bills to actually become law, which seems to be the end game the Republicans are hoping to push us towards as a country, we would face wholesale restrictions on biology that would harm and restrict people who want to control their own bodies, with the harm magnified in the lives of those who are simultaneously lower class, people of color, LGBT*, or women. And that harm comes in broader forms than only forced pregnancy. As pregnancy typically affects women, we seem to be stuck in the same old fears about women’s legitimacy as reporters of their experiences.

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Billions of people aren’t enough leverage?

The Hindu recently published a rather interesting opinion piece on Chinese foreign policy, that looked over the history of how China has annoyed almost every neighboring country in the past couple of decades, and consequently is feeling a little lonesome. While India is one of those countries, as the two have previously come to blows over a border dispute, a number of different international factors is driving the two to look past those squabbles and focus on the need for joint international action on various issues. Chief among those reasons to unite forces would be climate change.

But the fact that China and India must tactically coordinate in order to influence international policy actually leads to only further questions. Both nations are by far the largest single-state portions of the global population, and the coming decade China is predicted to outpace the United States as the world’s largest economy. While both superstates have per capita wealth that’s dwarfed by the US, Canada, Australia, and much of Western Europe, there’s clearly indications that their economies are actually more stable and in a sense more robust than those of “more developed” countries.

In spite of this, India or China acting independently on the issue of climate change would apparently get nowhere. There’s two potential explanations for that. For one, as individual countries they’re in such completely unique positions that their political views, while influential, fails to connect with the interests of others. Alternatively, their needs are at least somewhat similar to not only each other but many other countries. In spite of that, even when working collectively, their capacity to influence world affairs is disproportionately small. It seems as though both are highly plausible arguments.

For one, a frequently used socio-economic category for countries used since the fall of the Soviet Union and disintegration of the idea of a capitalist first world, socialist second world, and unaligned third world, has been that of BRICS. The steadily more democratic Brazil, ostensibly more open Russia, developing India, increasingly Western-friendly China, and post-apartheid South Africa represented to many analysts a confusing and new national category in the changed global landscape. They were unified by recent indications of growing prosperity and bright political futures in spite of past histories of violent repression and extensive concentration of wealth in a small elite. Likewise, they were all populous regional powers that contained diverse religious and ethnic groups. Occasionally, Mexico and Indonesia would be included within the category as similarly emergent powers.

(The BRICS countries, from here. They contain for approximately 2.9 billion people. If Indonesia and Mexico are included in the same category, they account for 3.3 billion people.)

As negotiations over the original Kyoto Treaty began to become more urgent in the late 1990s and early 2000s, they successfully pushed for the exemption of “less developed countries” (which included all of their categorical members except Russia) from stipulated cuts in greenhouse gas emissions. The economic development of the poorest countries in the world, which to some extent still included the BRICS countries, was understood as an acceptable alternative to stricter environmental protections (especially since most of the historical emissions had been produced in wealthy developed countries).

That said, the classification of Russia as a developed country has led to it pushing for policies more in line with those proposed by Japan, the US, and Canada, rather than India or China. As Al Jazeera’s coverage of the discussions shows, the EU is essentially the lone voice within the “developed world” in even entertaining the idea of a second or additional periods of proposed cuts. India and China have disagreements between each other, and with the coalition of the poorest and most flood-prone countries, but have the beginnings of a consensus among “less developed” countries. The positions of South Africa and Brazil are unmentioned, but it’s unclear why they would disagree with those other nations.

Even assuming that the positions of India and China are unacceptable to their fellow BRICS-type countries, inadequately strict for the most vulnerable nations, and anathema for the developed world aside from the EU, those three collectively are 3 billion people of the planet’s 7 billion. Surely, a few additional millions can be found in places too poor to be considered “developed” and too secure from rising tides to be considered among the most at-risk. Reaching a plurality if not a majority of the world’s population in terms of signatory states to a new treaty is not some unthinkable prospect. But it’s still treated as a long-shot.

The only explanation is that not all countries’ votes count for as much. The treaties are non-binding and there’s not really any clear context for punitive measures for refusing to sign on. So the majority of the population of the “developed” world can burn what we want without a care, even if we number a noticeably minor portion of the world’s people. The oil-rich gulf states (another tiny minority) seem to gladly agree to our right to do that, since they can turn a tidy profit from it.

Not only does climate change spell out a future where your race and class within wealthier countries may determine your security, but the same factors play out across the entire globe. And China and India might be better situated than other nations, but their voices are still devalued in the current debate, even if their nations represent a third of the world.

Edit: I apologize for erroneously calling China the world’s current largest economy in the original published version of this article. I was confused by misleading representations of this argument, that China may have a much larger GDP than largely believed.

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