–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

It’s July, teen unemployment has risen to 24 percent, and you—or your teenage children—still don’t have a summer job. This is a peculiarly American problem.

In Nepal, according to Hudson Institute research assistant and Nepalese citizen Astha Strestha, “teens just hang around all summer and spend their parents’ money.”

In France, summer vacations are shorter, only 6 weeks, and teens try to stay with relatives outside the city.

In America, summer vacation lasts the better part of three months, and teens work either to earn spending money, contribute to college tuition payments, or simply because they think that they should have a job.

These days summer jobs are less plentiful due to the economy and to increases in the minimum wage.

It’s easier to be employable at a wage of $5.15, the 2006 minimum, than to find someone to hire you at $7.25, the new federal minimum effective on July 24. But just because no one has hired you, it doesn’t mean that you can’t earn money. You can start your own business. If it grows, you can employ friends and siblings, and perhaps keep it going for the rest of the year.

Computer assistance. You may not know it, but you have a comparative advantage in computers. This can be used by helping older adults, who grew up when computers were larger than cars and programming meant putting a pile of cards in a machine. You could help people set up email or social networking accounts, figure out their iPods, build a Web site, organize digital photos on a computer, or construct spreadsheets for bills and expenses.

Tutoring. You may not get straight As in school, but you probably know more about a subject than kids two or three years younger than you. And some of them might want to review material from last year, or get a head start on their classes for next year. Even more likely, parents might think their kids need help. Your slogan can be “Give Your Kids the Best—the Power of Summer Tutoring.”

Bicycle Repair. It’s remarkable how people throw out bicycles that–with a little cleaning, grease and tube repair—can be almost as good as new. Some people have old bikes in their basements that they would like collected, and some cities are even willing to have discarded bicycles removed from their dump. With the help of a bike repair manual you can mend them and sell them on Craigslist.

Yard Service and Car Maintenance. What people value most is their time, and some don’t want to spend their time mowing their lawn, weeding, or washing their cars. In suburbia there are endless opportunities which can carry over into the school year with leaf clearing and snow shoveling.

Summer Camp. One step up from babysitting is setting up informal week-long summer camps for small groups of neighborhood children. The themes could be sports, arts and crafts, reading and writing—wherever your skills may lie. In order to start a business, you need enthusiasm for a publicity drive through word of mouth; flyers through neighbors’ doors; notices with tear-off telephone numbers at grocery stores, houses of worship, community centers, and libraries; or internet sites, such as your Facebook page and Craigslist.

The object is to let everyone know that you’re available. Since businesses generally spread through word of mouth, you could ask the first few clients to act as references, perhaps even giving them a discount to do so. Valuable references and good will are some of the best assets your young company can have. That means always being courteous and cleanly-dressed.

Pricing can be a challenge. Until you find the right price, you might want to ask your clients to pick the price—“pay me whatever you like to mow this lawn”—so that people don’t think that you’re out to exploit them. In some cases, your clients might pay you more than you would have dared to charge on your own.

Just as large businesses collect information about potential customers, you want to keep a good database of your clients by recording names, addresses, telephone numbers, and email addresses.

Then, if business is a little slow, or if you go on vacation and return to town, you can call your clients and politely ask if they need your services. The advantages of starting your own business are numerous. You work for yourself, not a boss. You set your own hours. You don’t have to put up with cranky co-workers. If you’re not interacting with your clients, you can dress as you choose: no one cares if you build a website in your pajamas.

On the other hand, entrepreneurship is unpredictable and has its ups and downs. You might need several tries to get clients. One teen I know intended to spend his summer tutoring full-time and fixing bicycles on the side, yet ended up fixing bicycles full-time and tutoring on the side, since he had more bike customers than students.

Teens, there’s a job out there for you. You just have to go out and make it.

– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own. –

“There is a great deal about Iran that we do not know…The United States lacks critical information needed for analysts to make many of their judgments with confidence about Iran.”

That was the verdict of a Congressional committee on U.S. intelligence policy two years ago. How valid it still is was highlighted by Iran’s June elections and their turbulent aftermath.

By most accounts, the huge margin of President Mahmoud Ahmedinejad’s victory, the equally huge demonstrations of Iranians crying fraud, and their brutal repression all came as surprises to U.S. intelligence and foreign policy experts.

The reasons for America’s problems of coming to grips with Iran are manifold: a 30-year absence of diplomats on the ground, an opaque political system difficult to penetrate, wishful thinking, a perennial temptation to “mirror-image,” that is to expect others to think and behave like yourself. Last but not
least: an acute shortage of Farsi-speaking analysts and agents.

The number of people in the sprawling U.S. intelligence community, 16 separate agencies with more than 100,000 employees, who speak Iran’s language is classified, as is the number of fluent Arabic and Pashto speakers. (The State Department says it has 22 foreign service officers out of 6,500 who are fluent in Farsi.)

The problem is not new and it contributed to the notorious misjudgments of the situation in Iran by the Central Intelligence Agency and the Defense Intelligence Agency in 1978, a few months before the Islamic revolution that sent the Shah fleeing into exile.

Said the CIA: “Iran is not a revolutionary state or even pre-revolutionary state.” Echoed the DIA: The Shah “is expected to remain actively involved in power over the next 10 years.”

There have been no CIA or DIA predictions of how long Ahmedinejad will stay in power but there have been public pledges to address the language deficit.

Its overall scale was thrown into sharp focus by the government’s disclosure, long after the September 11, 2001 attacks on New York and Washington, that it had a 123,000-hour backlog of taped message traffic in Middle Eastern languages.

America’s intelligence czar, Dennis Blair, says that a “lack of language-qualified personnel has been a perennial problem for the Intelligence Community.”

Leon Panetta, President Barack Obama’s choice as CIA chief, has repeatedly spoken of the need for officers who “read, speak and understand foreign languages.”

President George W. Bush two years ago announced a National Security Language Initiative to “dramatically increase” the number of Americans learning, speaking, and teaching “critical need” foreign languages. That was followed by a five-year Strategic Human Capital Plan that pinpointed part of what is one of the biggest problems: “non-U.S. citizens who cannot meet our security requirements.”

DIFFICULT SECURITY CLEARANCE

That phrase leaves out the huge pool of American citizens who are native speakers of Farsi, Arabic and other languages deemed critical for gaining a better understanding of  opaque countries like Iran or penetrating al Qaeda and its affiliates.

The vetting process for a security clearance is almost as high a barrier for them as for non-citizens. For decades, dual citizenship and having close non-citizen family members were grounds for automatic disqualification from jobs that required a security clearance.

That changed last October with a new directive that allows exceptions to be granted on a case-by-case basis when there is a “compelling need that is based upon specific national security
considerations.”

That requirement  is hard to meet for first-generation Americans who have close relatives living in Middle Eastern countries. The government fears they could be subject to blackmail or family pressure.

Added to this, there is “an underlying mistrust of Muslim Americans or Arab Americans in the national security area,” according to Frederick P. Hitz, a former inspector general of the CIA. In a recent book (Why Spy? Espionage in an Age of Uncertainty), Hitz termed this mistrust “short-sighted and a return to the attitude that enabled the United States to intern Japanese Americans during World War II.”

While the intelligence agencies, in the words of  Dennis Blair,  “continue to wrestle with clearing people who are native speakers of critical languages,”  the vetting process can take a year or more, somewhat of a disincentive even for potential recruits brimming with patriotic spirit.

The language deficit is so serious that some in the intelligence community think addressing it requires an effort as sweeping as the programs that were put into place after the Russians launched the first earth-orbiting satellite, Sputnik, in 1957 and the U.S. realized how far behind it was in space technology.

Sputnik spurred a major push to get young Americans to study mathematics, physics and Russian.

This is not likely to happen.

Given the time it takes to learn difficult languages, senior intelligence officials say the immediate emphasis is on drawing recruits from first-generation citizens.

It’s a work in progress and progress is slow. Which begs the question whether America’s intelligence services are as omniscient and omnipotent as Washington’s adversaries make them out to be.

Iran’s government saw the hand of the CIA behind the street protests and violence that followed Ahmedinejad’s June 12 elections. Perhaps it was. But a deep study of the Iran by one of America’s most respected think tanks makes one wonder.

Commissioned by the U.S. Air Force and released by the RAND Corporation a few weeks before the elections, the 230-page study said America’s understanding of Iran’s complex political landscape was so limited that attempts to foment internal unrest were likely to be unsuccessful.

You can contact the author at Debusmann@Reuters.com

– Matthew Goldstein is a Reuters columnist. The views expressed are his own –

Even as Ponzi king Bernard Madoff goes away to prison for the rest of his life and then some, there are still so many unanswered questions — both big and fundamental.

Were Madoff’s sons involved? What did his wife Ruth know? Were the operators of the giant feeder funds that sucked in tens of billions of dollars in investor money in on the charade?

Those questions, though important, ultimately pale when compared with the bigger ones that remain about the root causes of the worst financial crisis since the Great Depression.

Indeed, for all the misery Madoff and his Ponzi brethren have caused, none of those scam artists were the cause of the crisis that brought the financial system to the brink. If anything, it was the financial crisis that helped flush out Madoff and his scurrilous ilk, as many investors rushed for the exits at the same time.

So that’s why Congress needs to act quickly to get up and running a bipartisan commission to study the underlying causes of the financial crisis. House Speaker Nancy Pelosi likens this new 10-member panel to the Pecora Commission, the famous Depression-era investigative committee that led to passage of Glass-Steagall — the 1933 law that drove a wall between commercial and investment banking.

The 1999 repeal of Glass-Steagall contributed mightily to the current crisis by opening the door to an anything-goes mentality on Wall Street and allowing far too many banks to become too big to fail.

This new commission, armed with the power to subpoena witnesses and documents, is meant to investigate all aspects of the crisis, including regulatory lapses, Wall Street excesses and deceptive behavior by lenders and securities traders.

A first order of business for the commission should be looking at the Federal Reserve’s dereliction of duty for missing the warning signs of trouble. Congress can’t consider acting on the Obama administration’s proposal to upgrade the Fed’s status to supreme financial regulator before there’s a full accounting of its missteps.

But there are already worrying signs that this commission will lack the political nerve to tackle the tough issues, let alone ask the right questions.

Reuters reported last week that some of the people being considered for the commission include many former Congressmen, governors and familiar talking heads from Washington think tanks. Let’s hope that will not be the case because the financial system can’t truly be fixed until there’s a candid assessment of who let things get so out of control.

Sure, put some wise political statesmen on the commission. But also allow room for some longtime Wall Street critics, derivatives traders and hedge fund managers — the kind of people who know the system from the inside out.

Maybe, even include one or two people who were sharp enough to stay away from Bernie Madoff.

– John Kemp is a Reuters columnist. The opinions expressed are his own —

Perhaps the most frustrating aspect of much western comment on the unfolding crisis in Iran has been its over-simplification and lack of historical awareness. Perspectives are shaped by a single issue (western concerns about whether Iran is pursuing a nuclear weapons program) and the desire to draw a simple Manichean distinction between good guys (liberal-democrats) and bad ones (clerical-authoritarians).

The reality is far more complicated.

Part of the problem is a truncated sense of history. For most western commentators, the history of Iran’s troubled relations with the west starts in 1979 with the triumphant return of the glowering Ayatollah Ruhollah Khomeini at the head of the revolution which swept away Shah Reza Pahlavi’s western-backed regime and replaced it with a new Islamic Republic.

Western anxiety was compounded by the 444-day American hostage crisis that helped destroy the presidency of Jimmy Carter, and humiliated a United States still reeling from defeat in Vietnam and the Watergate crisis. Iran and the United States soon became embroiled in a series of proxy conflicts fought in Iraq, Lebanon, and via terrorist attacks on U.S. targets.

But for many Iranians the country’s troubled relations with the west can be dated further back — to at least the CIA-backed coup against Prime Minister Mohammed Mossadegh in 1953.

It marked a crucial turning point in Iranian history, something a bit like the Prague Spring, in which a popular, reforming and democratizing but also nationalist prime minister, who believed Iran should control the exploitation of its own petroleum resources, was removed by western intelligence agencies anxious to protect their countries’ interest in the oilfields.

The Pahlavist regime which replaced Mossadegh may have been modernizing and reforming, but it was also absolutist, dissolute and corrupt, and the Shah’s secret police, the SAVAK, ruthlessly hunted down and murdered opponents at home and abroad. While Pahlavist exiles abroad promote the memory of a modernizing golden age, there is no enthusiasm for monarchist restoration at home, and the Shah went into exile largely unmourned.

Criticism of the Shah’s regime was never confined just to religious conservatives. Even liberals were critical of the excesses of the Peacock Throne.

Iran therefore has no reason to love the western powers.

Subsequent events have deepened the mutual suspicion. When Iraqi President Saddam Hussein launched an unprovoked aerial attack on Tehran in 1980 and sent the Iraqi army across the Shatt al-Arab in a brutal war of aggression designed to exploit the turmoil and internal weakness of the fledgling Islamic Republic, the western powers stood aside.

Iraqi forces occupied the oil-rich and strategically vital province of Khuzestan, Iran’s cultural cradle, and captured the half-million strong city of Khorramshahr — and the west did nothing.

When Iran’s regular army and the volunteer forces of the Revolutionary Guard and the basij (the same groups now being used to suppress the protests) drove Iraqi forces back across the border and then moved into the al-Faw peninsula and began to threaten Iraq’s second city of Basra, Iraq resorted to chemical weapons — first the nerve gas sarin and then, when Iranian soldiers were given atropine-filled syringes as an antidote, switching to mustard gas.

Still the west did nothing. In fact, western companies were busy supplying the precursors Iraq needed to make its chemical arsenal and breach the Geneva Protocol. Meanwhile, western intelligence agencies were supplying Iraq with satellite reconnaissance photographs to aid the war effort.  Funding was catalyzed from friendly regional regimes to support Iraq’s faltering war effort and avert the risk of an outright Iranian victory.

To counter Iran’s successes on the ground, Iraq’s air force began strategic bombing of Iran’s cities, then switched to missile attacks on Tehran using Scuds, as Iran suffered its own version of the blitz.

None of this is to suggest Iran did not commit atrocities of its own, or to take Iran’s side over Iraq.

But when western leaders condemn Iran’s alleged quest for “weapons of mass destruction” and fulminate against Iran’s missile program, they betray a startling lack of perspective.

Some estimates put the number of Iranian soldiers who fell victim to chemical weapons as high as 100,000. Total casualties (killed or wounded) are put as high as 1 million. When Iran accepted a UN-mediated ceasefire proposal in 1988, Khomeini not unreasonably likened it to drinking a cup of poison.

Given this history, western leaders are in no position to deliver credible moral lectures, and it is hardly surprising that Iran’s leaders and media mutter darkly about western interference. Nor is it surprising that the Obama administration, seeking to improve relations, has been anxious to avoid the impression of meddling.

–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

Next Thursday, just in time for the July 4 holiday weekend, America’s unemployment rate is forecast to rise from 9.4 percent to 9.6 percent, well above rates in other industrialized countries.

Yet today the House of Representatives is rushing to pass the American Clean Energy and Security Act of 2009, even though the bill was incomplete yesterday and congressmen have not yet had the opportunity to analyze it. The bill would send America’s unemployment rate even higher.

The 1,200-page bill, cosponsored by Henry Waxman, Chairman of the House Energy and Commerce Committee, and Edward Markey, Chairman of the House Energy and Environment Subcommittee, would increase the price of energy by setting allowances for greenhouse gas emissions and mandating new standards for energy production and use.  The bill would raise $846.6 billion over 10 years while adding $821.2 billion to federal spending.

The bill requires that greenhouse gas emissions in 2012 do not exceed 97 percent of 2005 emissions, declining to 17 percent of 2005 emissions by 2050.  Meeting these standards now is technologically impossible without radically reducing our standards of living, but Congress is hoping that technology will magically appear as needed.

The mechanism for this is a “cap-and-trade” program under which allowances to emit greenhouse gases would be issued by the Environmental Protection Agency at a steadily declining rate through 2050.  When emissions exceed a firm’s allowance, or cap, it would have to purchase allowances from the government or other firms, a tax under another name, driving up costs that would be passed on to consumers.

Electric utilities have been given free allowances to encourage them to support the bill.  Oil and gas would be particularly hard hit, because they are responsible for 35 percent of emissions yet are allocated only three percent of the free allowances.

Just as the increases in oil prices in the 1970s brought about an increase in unemployment, the energy provisions in the Waxman-Markey bill could usher in years, perhaps decades, of lower economic growth and higher unemployment than would be the case otherwise.

The effects of the oil price increases between 1972 and 1988 have been extensively analyzed by economists Steven Davis of the University of Chicago and John Haltiwanger of the University of Maryland.  Although their research deals with the effects of oil price increases, it is also applicable to increases in the price of energy, which would be the effect of Waxman-Markey.

Davis and Haltiwanger find that oil price increases resulted in more jobs lost than jobs gained in almost every industry sector of the economy.  The largest oil shock, in 1973, caused an estimated eight percent decline in manufacturing employment over the following two years.

Oil price increases have larger effects on economic activity than oil price declines, Davis and Haltiwanger calculate, a finding shared by other economic studies.  In other words, when energy prices increase firms lay off workers, but when prices decline the workers are not hired back as fast.

Davis and Haltiwanger also find that higher energy prices are more likely to suppress employment than monetary shocks. Many politicians fret over the harmful effects of recent American monetary policy, but overlook the even greater danger to employment from the Waxman-Markey bill.

Supporters of the bill claim that the new regulations will create jobs, because people will have to be employed to produce the new technology.  But the funds for the new expenditures have to come from somewhere, and money spent on new products is money that cannot be spent on other activities, such buying clothes or food, or anything else that Americans would otherwise buy.  This would drive down employment in those industries.

In fact, not only does the bill penalize American firms through higher costs, it gives firms a financial incentive to move abroad through “offsets,” activities that supposedly lower carbon emissions elsewhere.  Since Congress knows that firms cannot meet the standards in the bill, legislators are allowing firms to meet 30 percent of their 2012 greenhouse gas reduction obligations, increasing to 60 percent by 2050, by buying offsets. Half of these offsets can take place abroad.

The offset provisions allow firms to shift economic activity abroad to countries with laxer emissions standards, further damaging U.S. job creation. A plant’s emissions might exceed its U.S. allowances, yet its technology might produce lower emissions than the norm in a developing country, allowing the relocation to count as an offset.

The American unemployment rate now exceeds those in France (8.9 percent) and Germany (7.7 percent). With unemployment climbing even without the Waxman-Markey bill, the question for Congress is the following:  how high do you want the rate to go?

– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

Michael Jackson’s will is bound to be as bizarre as the rest of the singer’s turbulent life. But one thing is for sure, the arguments over his deeply flawed financial legacy will keep lawyers busy for years.

Top of the list will be sorting out Jackson’s sell-out comeback tour, which was due to kick off next month. There are bound to be losses, insurance claims and the prospect of an empty London O2 Arena for 50 nights during the peak summer period.

Music industry bible Billboard reckons promoter AEG Live could lose as much as $40 million if its insurance is insufficient to cover what has already been spent on the production. That’s assuming they have to give refunds to the 750,000 fans who have paid big money for tickets. And that doesn’t count the cost of hotel reservations and flights from across the world.

Then there’s the small issue of the $500 million in debts that Jackson is reported to have left behind.

Bizarrely, Sir Paul McCartney, the super-rich former Beatle, could be one of the beneficiaries of Jackson’s will. Reports earlier this year said Jackson had left McCartney his stake in the Beatles’ song catalogue. But given that this share already has a $200 million loan secured against it, there could be a few court hearings before the former Beatle gets the songs back in his own collection.

Some estimate that Jackson’s top assets, including copyrights to his own songs and the Beatles song catalogue stake, are worth more than $1 billion.

No doubt Jackson’s family, his creditors, and partners such as Los Angeles-based real estate investment trust Colony Capital LLC and music catalogue joint venture partner Sony Corp, will all be laying claim to some of these assets.

The self-styled King of Pop’s music will live on in his recordings, but its a fair bet that the legacy of his high-spending lifestyle will be around for a good few years too.

– At the time of publication Alexander Smith did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.–

– Alexander Smith is a Reuters columnist. The views expressed are his own –

Investment banks are going to have a lot of explaining to do. After the lows of 2008, and despite the mauling they’ve had from politicians and the public, 2009 is going to be a bumper year for those that lived to tell the tale. The banks have pocketed an incredible $16 billion in fees in the second quarter, according to Thomson Reuters first half data on deals and fee income, released on Friday. Click here for related news.

True, this is down from Q2 2008, when fees were almost $24 billion. But it should not come as a surprise to anyone who has been watching — often in disbelief — the huge amount of capital raising that has been going on in both the equity and bond markets.

Take the bond markets, where total first-half issuance — excluding financials — has already reached $598 billion, outstripping previous records for an entire year. If anyone pretends it has been tough selling these bonds, don’t believe them. The sales teams have been pushing at an open door, with fund managers buying anything they could get their hands on. The fees are good and so far this year, the risk has been limited.

The ones to suffer have been the loan desks, with syndicated lending hitting a 13-year low. But since this market has always been seen as a loss-leader to help sell other products, there are probably fewer tears being shed at the top of the banks involved.

The real star of the show, however, has been equity capital markets. Traditionally the poor cousins to the sexier and higher profile “rainmakers” in mergers and acquisitions, ECM desks have raked in underwriting fees of $7.6 billion in Q2 alone, almost half the industry total. As with bond issues, lead managing or underwriting such deals does carry a risk, but so far this year that has been limited as shareholders have lapped up the rights issues.

There’s no denying that many companies badly needed capital and that the banks have the expertise to get these deals done. The question that will increasingly be asked is whether the fee structure can still be justified. True, rights issues can fail, as underwriters of the 4 billion pound offering by British bank HBOS last year no doubt recall. But with banks charging bigger fees and pricing offerings at larger discounts, the rewards currently outweigh the risks.

One area of investment banking which is still in the doldrums is M&A, despite the best efforts of some of the brightest minds in the game to get dealmaking back on track.

The Thomson Reuters data shows global M&A revenues declined for a third consecutive quarter, with fees on completed deals down some 66 percent on the same period last year at just $3 billion. M&A activity — measured by the value of deals done — is down almost 45 percent so far this year, the lowest figure since 2003 and the sharpest fall since 2001. Click here for related news.

Of course, it is possible that these big fees will be wiped out by continued losses on the toxic assets that some investment banks still have on their balance sheets. But for an industry that was teetering on the brink last autumn, investment banking appears in rude health. With a second backlash already beginning as salaries rise and bonuses come back into fashion, the big investment banks — particularly those which still owe taxpayers money or government shareholders — will need to make sure their lines are well rehearsed.

– At the time of publication Alexander Smith did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.–

– James Pethokoukis is a Reuters columnist. The views expressed are his own –

Ben Bernanke’s testimony to Congress about his involvement in the Bank of America-Merrill Lynch merger was a lot like an FOMC statement: short and unadorned, yet open to much interpretation.

When the Federal Reserve chairman wasn’t repeatedly saying “I don’t remember” or “I don’t recollect,” he was matter-of-factly stating that he didn’t intend to threaten Bank of America CEO Ken Lewis with termination if he didn’t go through with the Merrill deal.

Yet both Republicans (all) and Democrats (some) seemed astonished that Bernanke wouldn’t admit that having the Fed outline all the negative repercussions of invoking the “material adverse change” clause to escape the Merrill deal was a de facto threat to BofA management.

Whether or not Bernanke actually believed his script was impossible to prove, since the Republicans, particularly Representative Darrell Issa of California, didn’t have evidence that Bernanke did intend to directly threaten Lewis.

It was Issa who said on television that Bernanke was engaged in a “cover-up” to disguise his actions in pushing the merger. Great claims require great proof. And Issa didn’t have great proof, just a bit of hearsay.

Yes, there was an email showing that Richmond Federal Reserve President Jeffrey Lacker claimed he told Lewis, after having a long talk with Bernanke, that BofA management was “gone” if it played the MAC threat. But Bernanke said that was a misinterpretation of his chat with Lacker.

So unless there is a transcript of the Lacker-Bernanke chat floating around somewhere, a dead end has been reached. Issa clearly overplayed his hand if what he actually meant to prove was that an outright deception had taken place. (Even if he had a smoking gun and Bernanke was somehow forced to resign, Issa would probably not like Fed Chairman Lawrence Summers any better.)

Then again, perhaps what the Republicans were actually trying to do was to paint Bernanke as an enabler of President Obama’s supposed big government policies. There has been a conservative backlash against the notion of the Fed operating as a “systemic risk” regulator that could serve as a catalyst for government takeovers of financial institutions — or bullying them, as the GOP charged Bernanke with doing in this case.

Of course, another criticism of the Fed as super-regulator would be that such a role would overly politicize the central bank. Indeed, it did seem weird that after grilling Bernanke for three hours and implying that he was lying, one Republican offered up a question about M2 and monetary policy.

Perhaps the one bit of evidence that did come out of the Bernanke interrogation was that having the Fed regulate banks and conduct monetary policy is a bad idea if you care about central bank independence.

For more on politics and the economy, check out James Pethokoukis’ blog at http://blogs.reuters.com/james-pethokoukis/

– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own. –

It’s time to kill the international community. The phrase, that is.

Usually shorthand for the governments of “the West,” the phrase is over-used (a Google search produces 447 million hits) and under-thought. It is often misleading and sometimes plain wrong. As in President Barack Obama’s news conference remarks this week on Iran’s post-election crackdown on protest:

“The United States and the international community have been appalled and outraged by the threats, beatings and imprisonments of the last few days.”

Which international community? Certainly not one that includes the world’s most populous country, China, where there were no signs of outrage. Instead, the Foreign Ministry endorsed the disputed re-election of President Mahmoud Ahmadinejad as the choice of the Iranian people and expressed hopes for stability.

Stability in this context means an uninterrupted flow of oil: a month before the Iranian elections and the ensuing turmoil, Iran overtook Saudi Arabia as China’s top supplier of crude. Traders said it might be a one-month blip but the figures highlighted energy-hungry China’s dependence on Iranian oil.

The Chinese government enforced stability at home 20 years ago by gunning down hundreds of anti-government street protesters and sending in tanks to clear Beijing’s Tiananmen Square. To prevent public commemorations of the massacre’s June 4 anniversary, the government blocked Internet sites in a massive censorship operation.

Russia, the only country Ahmadinejad has visited since the disputed elections, showed no signs of being appalled or outraged. Does that mean that China and Russia do not belong to “the international community”? For purposes of international finance, they do — both belong to the G20, the group of finance ministers and central bank governors of the world’s most important economies.

“The Iranian people have a universal right to assembly and free speech,” Obama said. “If the Iranian government seeks the respect of the international community, it must respect those rights and heed the will of its own people.”

Again, which international community? Invoking the term is easier than defining it. If it means governments with an unblemished human rights record, most of the world does not qualify for community membership. If it means democracies, considerably fewer than half the globe’s nation states belong. If it means countries that value democracy more than stability, the community shrinks even further.

If it means, as it usually does, the United States and Europe, the community accounts for less than a fifth of the world’s population. If it means countries that actually take action to stop human disasters, the genocidal slaughter in Rwanda, for example, the record is appalling.

DANGEROUS REFERENCE POINT FOR THE NAIVE

Ruth Westwood, a Yale law professor, has described “international community” as “a dangerous reference point for the naive” because, she says, its connotation of commitment invites unwise reliance on others by those who must ultimately fend for themselves.

By logic, the term should belong to the United Nations, whose founding charter, drawn up in San Francisco a month after the end of World War Two, spelt out a shared vision for a better world and pledged to prevent wars, observe fundamental human rights, respect international treaties and promote better standards of life.

But the label “international community” is almost never applied to the United Nations, whose 192 member states include the world’s worst violators of human rights and international law. Think Zimbabwe. Think Sudan. Think Myanmar. If the United Nations represented the collective will of the world, that will often runs counter to the United States, which sees itself as the engine of the “international community.”

In General Assembly votes on contentious issues such as the U.S. embargo on Cuba or Israeli settlements on the West Bank, the United States tends to stand virtually alone.

The “international community” usually erupts into outrage after people in the developed world see shocking images of man’s inhumanity to man on their television or computer screens. In China, it was the image of a lone protester in a white shirt standing in front of a column of tanks. In Iran, it was a short amateur video clip of a young woman, Neda Agha Soltan, bleeding to death in a Tehran street after being shot by a sniper.

So perhaps the term international community rightly belongs not to the United States and Europe, nor to an institution with an address on Manhattan’s East River, but to the global network of Internet-savvy citizens (and reporters) who circumvent government censorship at great risk to provide the information that sparks the outrage.

So, how to get rid of the phrase in its standard amorphous usage? To start with, media organizations could discourage it (some already do). As to politicians: there’s always the option to ask for clarification. Yes, there’s outrage, Mr. President, but exactly who is the international community?

You can contact the author at Debusmann@reuters.com.

– Agnes T. Crane is a Reuters columnist. The views expressed are her own –

Reasons people give to explain the quick switch-back movements in stocks and other risky assets are becoming, well, just bizarre.

On Monday, it was the World Bank’s dire outlook for the global economy — no matter that the organization’s president already said output was likely to decline by close to three percent earlier this month.

On Tuesday, it was Moody’s Investors Service reaffirming the Aaa rating of the United States that gave stocks a brief lift, even though few expected any rating agency to make a move on its credit standing any time soon.

Investors should take these kinds of explanation and moves with a grain of salt, especially during the summer months when trading volumes are light and conviction easily undermined.

Those taking the long view shouldn’t let the noise, whether it be a World Bank report on the economic outlook or a perceived change in a data point, distract them from the fact that the financial system is still on life support and therefore susceptible in a very real way to a downturn once governments start to pull the plug.

The Federal Reserve is well on its way to purchasing $1.45 billion of mortgage-related assets in addition to $300 billion of Treasuries, which it could expand if central bankers decide they need more power to drive down interest rates.

This week, in an attempt to drive down rates even further, the European Central Bank is offering funds at a bargain basement rate of one percent for one year. The Bank of England, meanwhile, is keeping rates in that country at a record low while earmarking 125 billion pounds to buy up debt as part of its quantitative easing policy. And the list goes on.

The trillions of dollars injected into the global financial system have helped bolster short-term lending markets to such an extent that few are even talking about such hot-spot gauges as Libor/OIS that flashed beet red last year when banks balked at lending to one another.

By driving down short-term borrowing costs, this money, among other things, encourages banks and investors to invest in higher-yielding, riskier assets that had been beaten down by the crisis.

The return of risk appetite has in turn bred comfort that things are returning to normal. But they’re not, yet.

That’s why the timing of when governments begin to mop up this excess liquidity will be key to where markets go from here. There will be plenty of trading opportunities between now and then, to be sure, but it will be some time before we’ll see anything that we can call normal. Yet, normalcy is what many crave.

Many had hoped that the run-up in stocks and other risky assets since March was the real deal — a sustained rebound, in the manner of 2003.

Real money had been moving into stocks and risky corporate debt not because of isolated headlines but a growing, and I would argue misplaced, belief that the stabilization of financial markets held out the possibility of a rapid rebound, and the opportunity to rebuild 401(k) accounts and other investments pancaked by last year’s crisis.

After taking out $31.5 billion in March, investors rechanneled funds back into equities, adding approximately $36 billion to stock funds since then, according to AMG Data Services, which tracks mutual fund activity.

This isn’t surprising, as it’s hard to turn your nose up at 32 percent gains in the S&P 500 since it hit rock bottom in early March or the even more impressive 36 percent returns seen in the Merrill Lynch Master II high-yield corporate bond index.

But these returns are being juiced by easy money, which means the picture could look much different when cheap funding is harder to find.