Saturday, January 29, 2011

NYT: Day of angry protest stuns Egypt

CAIRO — The center of this normally bustling, overcrowded, traffic-clogged city was largely quiet Sunday, the roads nearly empty, many of the stores shuttered, as the riot police came out in force to prevent a general strike aimed at signaling widespread discontent with President Hosni Mubarak and his government.
Egypt has virtually no organized political opposition, except the Muslim Brotherhood, which is banned and barred from politics.
But events Sunday underscored the rise of a potentially more dangerous challenge to the government's monopoly on power: Widespread public outrage and a growing willingness by workers and professionals to press their demands by striking.
The main complaint is economic, driven by rising food prices, depressed salaries and what opposition leaders say is an unprecedented gap between rich and poor. It is hard to say if the streets were empty Sunday because people stayed home for fear of getting caught in the crossfire between protesters and police, or because of the call to stay home as a form of protest.
Either way, the government took the threat of a mass mobilization so seriously that it issued a warning to potential strikers, saying it would "take necessary and resolute measures toward any attempt to demonstrate, impede traffic, hamper work in public facilities or to incite any of this."
In Cairo, riot police officers massed in Tahrir Square, the center of the city. They stood in formation outside the lawyers', doctors' and journalists' syndicates. State security agents had visited government workers in advance and ordered them to attend work on Sunday, some workers said. At the lawyers' syndicate, a few hundred protesters stood on the roof and on a balcony chanting "Down, down Hosni Mubarak."
Hundreds of students demonstrated at three universities in Cairo.
In Mahalla al-Kobra, the center of Egypt's textile industry north of Cairo, a melee broke out late in the day as the riot police fired tear gas and workers threw stones. Officials said there were more than 200 arrests around the country, including at least seven people arrested for their efforts to use the Internet to promote the call for a day of unrest.
"I am not about to claim that the Egyptian people are finally rebelling," said Abdel Ahab El Meseery, an organizer with Kifaya, an opposition movement, who once served as the Arab League's cultural attaché to the United Nations. "The element of fear is there. The people are afraid of the government, but the government is as afraid of the people."
Under Mubarak and his governing National Democratic Party, officials have succeeded in stunting the growth and influence of political opposition. The only opposition group with a broad network and a core constituency is the Muslim Brotherhood, which has little ability to effect political change because its members are routinely arrested and jailed. Local elections are scheduled for Tuesday, and the government has arrested hundreds of Brotherhood members and supporters in advance.
The Brotherhood, struggling to regain its footing after the intense and persistent police pressure, distanced itself from the call to strike and said it would not participate.
Since September 2007 the government itself has scrambled to keep pace with the growing reliance on strikes as a tool to press worker demands. Textile workers, tax clerks and university professors have all held strikes or threatened to strike.
Doctors have also threatened to strike, complaining that physicians with 20 years experience, for example, often make no more than 450 Egyptian pounds a month, the equivalent of about $80.
"What made us take more confrontational measures is that we saw other groups doing so and making their demands," said Hamdy El Sayyid, longtime chairman of the doctors' syndicate.
But what has turned the demands of individual workers into a potential mass movement, officials and political analysts said, has been inflation on food products, mostly bread and cooking oil. The rising cost of wheat, coupled with widespread corruption in the production and distribution of subsidized bread, has prompted the president to order a resolution to the problem.
But that has done little to calm public outrage, or lower bread prices.
On Adly Street, a broad thoroughfare in central Cairo, many more stores than usual were shuttered Sunday, according to street vendors and local residents. It was a windy day, with a sandstorm and rain showers, which may have offered people added encouragement to stay off the streets.
"People are staying at home today," said Ashraf, a clerk in a luggage store on Adly Street. He was afraid to give his last name, for fear of arrest, but he said he kept his children home from school and dressed in all black as signs of support for the protest. "Because of the prices, because we can't get food," he said explaining the reason for the strike.
The strike plans began with the workers in Mahalla, who had said they would strike at 7 a.m., when workers changed shifts, to protest low wages. But state security forces arrived in mass and workers said they grew intimidated and went to work.
But the initial plan led other, smaller groups to call for the day of protest as a general sign of discontent with the direction Egypt is taking.
Kifaya, which had been in the vanguard of opposition movements until 2005, when its public following dwindled, joined the call. What may have spooked government officials mostly is the way in which technology - especially text messages on cellphones - was used to spread the word, without any formal organization promoting the call, political analysts said.
Residents of Imbaba, a conservative, poor neighborhood inside Cairo, asked neighbors to stay home as a sign of protest.
Belal Fadl, a scriptwriter and satirist in Cairo, said that Egypt was going through a very confusing time, one in which, he warned, the government should not rely on a population that is politically apathetic.
The problems, he said, were now too widespread, and too close to home.
"People in Egypt," Fadl said, "don't care about democracy and the transfer of power - they don't believe in it because they didn't grow up to it in the first place. This is unfortunately the case. Their problem is limited to their ability to survive and if that is threatened then they will stand up."
Mona el Naggar contributed reporting.

National Review Online - Democrats, The Financial Crisis and Evil-Man Economics

JANUARY 28, 2011 4:00 A.M.
National Review Online

Chairman Phil Angelides and the Democratic majority on the Financial Crisis Inquiry Commission have released their report, a textbook-worthy example of the “Evil Man School of Economics.” Something went wrong, and a villain must be identified. This is tediously familiar territory for those who have followed the political establishment’s years-long attempt to evade responsibility for the crisis of which it was a cause.

“We conclude this crisis was avoidable,” they write. “The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire.” That much is hardly objectionable. But which human actions? On that question, the commission’s report is both implausible and nakedly political: The Evil Men are greedy corporate executives and Wall Street moneymen, and the crisis might have been averted if only they had been endowed with sufficient moral fiber — or had an appropriately mindful policeman appointed over them, which is the real point of the Angelides report. Which is to say, the Democrats have produced an analysis that relies upon and reinforces the mythology of the Left, producing a document that may as well have been written by Rolling Stone’s Matt “Vampire Squid” Taibbi, minus the literary flair.

Yes, this crisis was avoidable. To avoid it, we would have had to do a number of things differently. The first is to alert the authorities, beginning in the 1930s, that federal policies designed to encourage homeownership — well-intentioned though they have been — would create, and today continue to sustain, a set of economic incentives driving vast amounts of capital from around the world into the U.S. residential real-estate market.

From the Federal Housing Administration to Fannie Mae and Freddie Mac to the mortgage-interest deduction, U.S. government policies distorted the market, creating a massive misallocation of capital under the naïve theory that housing prices only move in one direction: up.

The second action would be to prevent the dot-com bubble of the 1990s, of which the housing-market meltdown was both an echo and a consequence. Like the real-estate bubble, the dot-com bubble was cheered on by the American government, the American consumer, and the American banker, because nearly everybody likes appreciating asset prices and the illusion of wealth that accompanies them. When the dot-com bubble burst, Washington responded the way Washington always responds: by slashing interest rates, hoping that a sluice of cheap money and easy credit sloshing through the economy would stimulate productive economic activity, or the illusion of productive economic activity, sufficient to disguise the damage done by the bubble. Having been burned by unprofitable start-ups at home and disappointing emerging-market investments abroad, a great many Americans decided to invest that easy money in houses. Washington was keeping interest rates down and encouraging the loosening of mortgage-lending standards; at the same time, Washington’s creatures, Fannie Mae and Freddie Mac, helped give the mortgage market enough liquidity to alarm Noah. They were helped mightily in that endeavor by the rise of massive savings in China and elsewhere in the developing world, all of which went looking for somewhere to invest: Where better than the American mortgage market, where a great many of the underlying loans were insured by the government or its proxies?

Third, we would need to convince a great many Americans not to take out mortgages they could not afford should their houses fail to appreciate, and convince a great many financial managers not to make bad investments large enough to bring down their firms.

Mr. Angelides, formerly the treasurer of California, should know something about man-made financial disasters. And the truth is that Goldman Sachs did not cause this crisis, and neither did Barney Frank. Bad investments, economics, and well-meaning government policies caused it. There were, and are, bad actors in this story. But the main problems have been the natural limitations on human knowledge, including the knowledge of government officials and the managers of large financial institutions.

The dot-com bubble actually destroyed more wealth than did the decline in housing prices; the housing meltdown became a crisis because the related securities losses were concentrated in a small number of firms, and because those firms were dramatically over-leveraged. If there is a public-policy proposal to be extracted from this mess, it is that in a world of “too big to fail” banks — and, like it or not, that is the world in which we live — large financial institutions should be subject to tighter leverage controls, with higher standards for capital reserves and liquidity. That dry, technical reform would solve most of the problems that we might hope to solve with new financial regulation, but it would not provide any emotional satisfaction to those who wish to use this crisis to rail against executive bonuses, which had almost nothing to do with the problem, or to those who wish to sermonize about the alleged moral failings of capitalism. Still less would it offer any political opportunity to former real-estate developer Phil Angelides and his Wall Street–backed Democratic colleagues, who wish to use the crisis as an opportunity to expand the size and scope of the managerial state that did so much to create it.

Monster debt threatens our future

5:15 PM, Jan. 28, 2011
Indianapolis Star 

The Congressional Budget Office issued yet another warning this week about the fiscal calamity awaiting the nation if the federal deficit is not soon brought under control. It's questionable, however, whether anyone on Capitol Hill or in the White House is prepared to seriously heed those warnings, delivered with ever-higher intensity over the past year.

In its latest projection, the CBO forecast that an additional $7 trillion will be added to the national debt in the next decade. If that occurs, annual interest payments on the debt, according to the CBO, would hit nearly $780 billion by 2021, which is more than the nation now spends each year on military defense.

Neither the president nor congressional Republicans have offered remedies that fully confront the looming crisis. President Barack Obama this week proposed a five-year freeze on optional domestic spending. Republicans have called for deep cuts in nondefense spending but haven't been willing to take on the Pentagon, Social Security or Medicare, all of which must be trimmed if the debt is to be tamed.

The CBO pointed out that the extension of the so-called Bush tax cuts and the temporary cut in the Social Security payroll tax, which Congress approved and the president signed last month, will add about $400 billion to the deficit this year alone. But the nation's long-term fiscal problems have more to do with spending levels than tax rates.

By 2021, federal revenues are projected to rest above the historical average of 18 percent of gross domestic product. Current projections, however, also show federal spending to be at more than 26 percent of GDP in 10 years.

It's more critical than ever that someone in Washington step forward to speak honestly about the painful choices facing the nation. Our government cannot continue to spend far more than it takes in without serious consequences. Our promises to future retirees cannot be met without substantive changes in Social Security and Medicare. Our future as a nation will be badly compromised, our children's future painfully altered, unless serious corrections are made in short order.

The alarms are sounding louder than ever. When will those elected to lead stop to listen?

National Debt Clock