Opinion

The Great Debate

Plutocrat manipulates stock? Old news!

On Monday, the New York Times detailed William A. Ackman’s “extraordinary attempt to leverage the corridors of power” in order to to drive down Herbalife stock prices. Ackman, who runs the hedge fund Pershing Square Capital Management, has gone short on Herbalife.

He stands to make a great deal of money if the stock price declines — and he is not about to leave its decline to chance. So, the Times reports, Ackman has enlisted congressional representatives to solicit an investigation. He has organized news conferences and letter-writing campaigns. He is trying to make his attack on Herbalife’s stock seem a grassroots, civil rights issue.

The only thing extraordinary about all of this, however, is that the New York Times finds it extraordinary. These are some of the hoariest practices in American capitalism. Indeed, in 1886, Isaac Bromley, who was both a journalist and a lobbyist, accused the Times of being a tool of Wall Street bears in driving down Union Pacific stock. Bulls were using two other papers, the Indicator and the Graphic, to boost the stock.

Charles Francis Adams Jr., the president of Union Pacific, found himself in despair as Congress debated bills in 1886 to investigate his railroad. The railroad had a history of corruption — but that was not the point of the investigation.

Senators had unintentionally, Adams wrote, “been like jumping-jacks under the hidden manipulation of Wall Street influences. Men in Wall Street have pulled the strings and these senators have jumped up on their legs and waved their arms exactly like manikins.” 

from Nicholas Wapshott:

European leaders show their weakness

 

The European Union, at the forefront of the hostilities between Russia and the West, is in a bind.

It has belatedly adopted Ukraine as one of its own. Yet the EU economy is so frail,  thanks to its beggar-thy-neighbor economic policies, that it is reluctant to use financial and trade sanctions to punish Russia for occupying Crimea and threatening to occupy the eastern part of Ukraine.

Even if the EU appeases Russian President Vladimir Putin’s territorial expansionism and allows Crimea to be annexed, it is going to pay a heavy political and economic price. Had German Chancellor Angela Merkel, who drives the European enlargement project, and the International Monetary Fund been more clear about wanting Ukraine to eventually join the European Union, and more generous in their dealings with the nascent democracy there, they would have saved the Ukrainian people a lot of suffering, the world a deal of agony -- and the EU a lot of money.

from Reihan Salam:

In search of ‘Mr. Republican’

Who will be the next “Mr. Republican”? While the race for the 2016 Republican presidential nomination gets underway, there is another, more informal race going on as well. Since the Second World War, there have been a handful of elected Republicans who have distinguished themselves not by winning the White House, but rather by setting the party’s ideological direction.

The first Mr. Republican was Robert A. Taft, the Ohio senator who served as the most scathing conservative critic of FDR and the New Deal, and who later warned that America’s Cold War entanglements threatened freedom at home. His successor was Barry Goldwater, who called for rolling back the frontiers of the welfare state at home and communism abroad, and through his crushing defeat paved the way for the Great Society and a vast expansion of federal power. Goldwater inspired a generation of conservatives, including Ronald Reagan, who eventually overpowered the moderates and liberals who once played a central role in the party.

Jack Kemp crafted a less hard-edged and more optimistic “bleeding-heart conservatism,” which celebrated economic growth as a painless way to finance rising social expenditures. And Newt Gingrich, as architect of the first Republican House majority in a generation, offered a combustible mix of high-minded techno-utopianism and scorched-earth partisanship that transformed American politics.

from Lawrence Summers:

Ukraine: Don’t repeat past mistakes

The events in Ukraine have now made effective external support for successful economic and political reform there even more crucial. The world community is rising to the occasion, with concrete indications of aid coming not just from the International Monetary Fund and other international financial institutions but also the United States, the European Union and the G20.

At one level, the Ukraine situation is unique -- particularly the geopolitical aspects associated with Russia’s presence in Crimea and the issues raised by Ukraine’s strategically sensitive location between Russia and Europe.

At a broader level, the world community has seen many examples over the last generation where an illegitimate, or at least highly problematic, government was brought down and the world community sought to support economic reform and a new, presumably more democratic and legitimate one. Think of the transitions after the Berlin Wall fell or the Arab Spring.

For Bibi, time for talk is past

Prime Minister Benjamin Netanyahu’s speech to last week’s National Conference of the America-Israel Public Affairs Committee (AIPAC) was another rhetorical tour-de-force by this most silvered-tongued of Israeli leaders.

Netanyahu again promised to defend Israel against an Iranian nuclear threat and to be beholden to no other nation in his zeal to protect his people. There were applause lines for almost everyone.

He attacked efforts to orchestrate boycotts, disinvestment and sanctions against Israel in withering terms. He extolled Israeli medical advances and water conservation achievements, highlighted Israel’s role in treating victims of the Syrian civil war and envisaged Israeli strategic and economic cooperation with Arab Gulf States.

The nuclear option for emerging markets

Last year, greenhouse gas emissions reached a record high of 39 billion tons. Emissions actually dropped in the United States and Europe, but substantial increases in China and India more than erased this bit of good news.

That is all the more reason to focus on innovative solutions that slow the growth in emissions from emerging markets.

The U.S.-India civilian nuclear deal is one such solution.

The key principles of this agreement were signed by President George W. Bush and Prime Minster Manmohan Singh eight years ago this week. The deal brought India’s civilian nuclear program under the International Atomic Energy Agency’s inspection regime. In return, Washington removed sanctions and permitted India to build nuclear power plants with foreign help. Most of the discussion leading up to the deal has focused on its potential effect on non-proliferation treaties and on the partnership between the U.S. and India.

Cold War warmed over

Can we have a new Cold War without a communist threat?  Some important political players seem to think so.

One of them is Russian President Vladimir Putin. At his surreal press conference, Putin depicted the protest that overthrew the pro-Russian government in Ukraine as a plot by the West to undermine Russia. He even accused the United States of training the Kiev protesters: “I have a feeling that they sit somewhere in a lab in America . . . and conduct experiments, as if with rats, without understanding the consequences of what they are doing.”

Then there’s Senator John McCain (R-Ariz.), who seemed thrilled over the prospect of a new Cold War.  “We are all Ukrainians now!” McCain declared in what sounded like a call to arms. He even dragged out an article President Barack Obama wrote for a college publication more than 30 years ago. Obama had argued that “President Reagan’s defense buildup” had “distorted national priorities.

Why the NSA undermines national security

Questions about the legitimacy and efficacy of the mass-surveillance techniques used by the National Security Agency continue to swirl around the globe. The debate in the United States has mostly focused on a misleading trade-off between security and privacy.

“If you don’t have anything to hide,” goes the refrain, “you shouldn’t mind if the government collects information to prevent another terrorist attack.” In this trade-off, security will always trump privacy, especially when political leaders rightly see preventing terrorist acts as their top national security responsibility.

But this zero-sum framework ignores the significant damage that the NSA’s practices have done to U.S. national security. In a global digital world, national security depends on many factors beyond surveillance capacities, and over-reliance on global data collection can create unintended security vulnerabilities.

Assessing corporate risk in Ukraine

As the crisis in Ukraine escalates, boardrooms and senior management teams worldwide are now likely talking about the problems of doing business in conflict zones. These regions test the boundaries of risk tolerance.

Any multinational corporation involved in and around Ukraine and Russia must be feeling the impact. Companies such as Italian group Eni and France’s EDF, which signed an offshore oil and gas production-sharing agreement with Ukraine in November, are likely to be monitoring developments. So, too, are Chevron and Royal Dutch Shell, which signed shale gas deals with Ukraine.

Many financial institutions also have exposure. Consider UniCredit, one of Ukraine’s top 10 lenders. International companies involved with Russian finances include Austria’s Raiffeisen, France’s Société Générale, and Citigroup, Morgan Stanley, and Goldman Sachs.

To blunt Russia, time for American natural gas diplomacy

The American natural gas revolution has boosted economic competitiveness, and helped reduce U.S. carbon emissions to their lowest levels in 20 years. The question is now whether the United States will leverage this energy bounty to advance its foreign policy goals during the most serious East-West crisis in a generation.

Russian’s intervention in Crimea and looming threats against eastern Ukraine underscore Europe’s energy vulnerability. Roughly 80 percent of Russian exported gas to the EU passes through pipelines in Ukraine, which Moscow has turned off twice in recent years.

A shale gas revolution in Europe could help to limit the EU’s energy vulnerability to Russia. But while there are great hopes for the safe and environmentally responsible development of unconventional gas in the UK, Poland, and elsewhere, a reliable source of shale gas in Europe may still be a decade away.

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