links for 2008-02-05

• The Skewed Benefits of the Tax Cuts - CBPP
• Bush promises the next president will balance the budget - Justin Fox
• Do we have a budget problem? - Free exchange
• Pursuing Synthetic Life, Dazzled by Reality - New York Times
• What did Israel bomb in Syria? - Seymour M. Hersh
• Liquidity, Monetary Policy, and Financial Cycles - FRBNY
• Credit crunch - Paul Krugman Blog

Comments

[anne]

http://krugman.blogs.nytimes.com/2008/02/05/services-take-a-plunge/

February 5, 2008

Services Take a Plunge
By Paul Krugman

The ISM survey of services has plunged. *

A bit of history: back in 2003 a surge in this index signaled the beginning of the “Bush boom”, which was never that much of a boom but at least marked the end of the alleged-recovery-that-felt-like-a-recession that had prevailed since late 2001. Now it has fallen off a cliff.

[Chart.]

* http://www.marketwatch.com/news/story/us-ism-services-sector-index-plunges/story.aspx?guid=%7B9EBD8850%2D57D9%2D45F2%2DBC02%2DE40E3E828A57%7D

[hari]

Seymour Hirsch article is long as ususal on his findings about the Israeli missile attack against a Syrian site which IDF (Israel) considered N Korean supported nuclear building for Syria or whatnot.

This story is still not transparent.(or)..extent of US gov involvement in planning/execution of Israeli attack on sovereign soil of Syria. Hirsch claims US military was NOT in the loop at the time of the attack. It was planned/controlled by the WH, yet he's unwilling to go that far in this assessment.

Hirsh is claiming it was a trial run by IDF before taking out Iranian nuclear site.

My own view is that if US wants peaceful co-existence between Israel and its Arab neighbours and return of Arab land by Israel after 1967 conflict, the US is mismanaging the hawks in Israeli gov.

[anne]

http://www.irinnews.org/PrintReport.aspx?ReportId=76591

February 5, 2008

Subsidising Agriculture is Not Enough
By IRIN

JOHANNESBURG - Malawi is riding high on the success of its fertiliser subsidy programme and has become a regional exporter hoping to profit from booming food prices, but analysts are a bit more wary.

Globally food prices have shot up by nearly 75 percent within a decade and will continue to do so, according to the World Bank's annual Global Economic Prospects 2008.

"We are looking to expand our exports regionally, at least; the high food prices have come as an added incentive. It is a good opportunity for our farmers - we have to invest in agriculture," said Patrick Kabambe, permanent secretary in the Ministry of Agriculture.

Malawi's National Food Reserve Agency officially exported 286,589 tonnes of maize to Zimbabwe by the end of December 2007, according to the USAID-funded Famine Early Warning System Network (FEWS-NET). The World Food Programme also sent 32,363 tonnes of Malawian maize to Zimbabwe, bringing the total official exports from Malawi to 321,406 tonnes. The country also donated maize to drought-hit Lesotho and Swaziland.

World prices have risen sharply partly because of the "stepped-up" use of food crops for biofuels and partly because of other factors like rapid income growth in developing countries, high fertiliser prices, low stocks, and droughts, the World Bank said.

In 2007, the ministry of agriculture recorded a "big jump" in the number of farmers growing maize, said Kabambe. "We are still compiling the data."

According to the last situation report from the Food and Agriculture Organisation (FAO), cereal-based food staples like bread, pasta and tortillas became more expensive in countries across the world, as did milk and meat.

"Prices have been contained for now but continue to remain high at the beginning of 2008," said Abdolreza Abbassian, secretary of the FAO-Intergovernmental Group on Grain. "The price of wheat and soya-bean [in January 2008] was at the highest it has been in 30 years, while maize is trading at 10-year high prices."

Fears of a global "economic meltdown" and a positive crop forecast for the northern hemisphere have helped stabilise food prices in the past few weeks.

Malawi's agriculture has turned a corner since the drought in 2005, which left close to five million people in need of food aid. The government estimated the 2007 maize crop at 73 percent higher than the average for the past five years. The country requires around two million tonnes of maize annually to feed its population of over 12 million but harvested surplus of about 1.5 million tonnes.

The government attributed the high maize production to subsidised fertiliser, which was sold to farmers at 950 kwacha [about US$6.50] per 50kg bag in 2007; in 2004 the price was around K4,000 [about $27] per 50kg bag.

Each kilogram of fertiliser applied per hectare can produce a minimum yield of over 3kg of grain, according to the Zimbabwe-based African Centre for Fertiliser Development. Farmers in Africa usually apply 16kg/ha, while the desirable level is 100kg/ha. Fertilisers account for one-third of the worldwide increase in cereal production, with India contributing 50 percent of the increase, according to the FAO.

The UN agency has warned that unless the nearly 70 million smallholder families in sub-Saharan Africa apply fertilisers and start practising sustainable land and water management on their farms within the next decade, they "will seriously jeopardise their long-term food security, productivity and incomes, while environmental degradation will accelerate".

FAO recommended that average fertiliser application rates in sub-Saharan Africa increase up to 23kg/ha within the next decade to prevent loss of nutrients in the soil and resultant low productivity, but few farmers in Africa can afford them....

[anne]

So far then, and in remarkably quick time agriculture subsidies with focus on fertilizer has turned Malawi to a food exporter and donating nation. The problem is being sure that fertilizer remains affordable, because even though food prices are rising the un-subsidized price of fertilizer is rising as well and higher priced fertilizer could become dangerously expensive to subsidize.

Then too, crop insurance is necessary for Malawi.

[anne]

http://krugman.blogs.nytimes.com/2008/02/05/stupid/

February 5, 2008

Stupid
By Paul Krugman

OK, a criticism on the other side: Hillary should not agree to debate on Fox News. Fox is part of movement conservatism; no progressive should help it maintain the pretense that it’s an objective news organization.

[anne]

http://www.nytimes.com/2008/02/04/washington/04rules.html

February 4, 2008

Leak on Cross-Border Chases From Iraq
By ERIC SCHMITT and MICHAEL R. GORDON

WASHINGTON — American military forces in Iraq were authorized to pursue former members of Saddam Hussein's government and terrorists across Iraq's borders into Iran and Syria, according to a classified 2005 document that has been made public by an independent Web site.

The document, which was disclosed by the organization Wikileaks and which American officials said appeared authentic, outlined the rules of engagement for the American division that was based in Baghdad and central Iraq that year.

It also provided instructions for how to deal with the radical Shiite cleric Moktada al-Sadr: his status as a hostile foe was "suspended," and he and his key associates were not to be attacked except in self-defense....

[anne]

Even as Turkey has been regularly bombing the Kurdish region of northern Iraq, there should be no surprise that we would be militarily active about the Iranian and Syrian and Pakistani border regions.

That Israel would be active in Syria, to make a military point also should be no surprise. The idea that suddenly there would be a nuclear weapons facility in Syria, grown like a beanstalk from magic beans, never seemed at all serious.

From Somalia to Pakistan the region evidently is tragically conflict ridden, with no determined on-going comprehensive diplomatic attempts at peace and no reason to think there will be more than periodic quietings till such diplomacy begins.

[anne]

Notice that America had earlier ordered the taking of Moktada al-Sadr dead or alive from Spanish occupied Iraq. This direct order was refused by the Spanish, and led to the quick pulling of Spanish troops from Iraq which Condoleezza Rice recently complained about openly while in Spain. Now we know that in 2005, America understood what a disaster the taking of al-Sadr would have been.

[anne]

http://www.cbpp.org/2-4-08tax.htm

February 4, 2008

The Skewed Benefits of the Tax Cuts: With the Tax Cuts Extended, Top 1 Percent of Households Would Receive More Than $1.1 Trillion in Tax Benefits Over the Next Decade
By Aviva Aron-Dine

KEY FINDINGS:

The top 1 percent of households (currently those with incomes over $450,000) will receive more than $1.1 trillion in tax cuts over the next ten years, if the 2001 and 2003 tax cuts are extended and relief from the Alternative Minimum Tax is continued.

By 2010, the tax cuts will average more than $60,000 a year for households in the top 1 percent — and more than $150,000 a year for households with incomes above $1 million.

The cost of the tax cuts (when fully in effect) for people with incomes over $1 million will exceed the total amount the federal government devotes to K-12 and vocational education, and it will exceed what the federal government spends on hospital and other medical care for veterans.

The annual cost of the tax cuts for those with incomes over $1 million also will exceed the total savings in each of the next five years from the cuts the President's budget proposes in an array of domestic non-entitlement programs, including education, health research, environmental programs, and others.