ES EN
Menu Menú

Publications

Publicaciones

Search Publications

Buscar publicaciones

Filters Filtro de búsqueda

to a

clear selection Quitar los filtros

none

Article Artículo

AP Further Documents Evidence of Honduran Police Death Squads; U.S. State Department Hits Back

A new investigative feature by award-winning Associated Press correspondent Alberto Arce probes deeper into recurring police death squad activity in Honduras. Following up on his reports in March, Arce details the cases of several gang suspects who have disappeared after being taken into police custody, as well as what witnesses have described as the gunning-down, in cold blood, of suspects in the streets. The article reveals that:

At least five times in the last few months, members of a Honduras street gang were killed or went missing just after run-ins with the U.S.-supported national police, The Associated Press has determined, feeding accusations that they were victims of federal death squads.
…

In March, two mothers discovered the bodies of their sons after the men had called in a panic to say they were surrounded by armed, masked police. The young men, both members of the 18th Street gang, had been shot in the head, their hands bound so tightly the cords cut to the bone.

That was shortly after three members of 18th Street were detained by armed, masked men and taken to a police station. Two men with no criminal history were released, but their friend disappeared without any record of his detention.

A month after the AP reported that an 18th Street gang leader and his girlfriend vanished from police custody, they are still missing.

As we have previously examined, Arce has noted that U.S. support for the Honduran National Police while some officers engage in death squad activity would seem to violate the Leahy Law. Rather than proceed with greater caution or reexamine ongoing policy, the U.S. State Department has responded defensively. Arce quotes Assistant Secretary for the Bureau of International Narcotics and Law Enforcement Affairs William Brownfield as saying

“The option is that if we don’t work with the police, we have to work with the armed forces, which almost everyone accepts to be worse than the police in terms of the mission of policing, or communities take matters in their own hands. In other words, the law of the jungle, in which there are no police and where every citizen is armed and ready to mete out justice,” U.S. Assistant Secretary of State William Brownfield said in Spanish during a March 28 video chat.*

CEPR / May 14, 2013

Article Artículo

Trade Deficits and the Dollar

In prior posts I have often referred to the run-up in the dollar engineered by the Clinton-Rubin-Summers team in the 1990s as being the root of all evils. The point is that their over-valued dollar policy led to a large trade deficit. The only way the demand lost as a result of the trade deficit (people spending their money overseas rather than here) could be offset was with asset bubbles.

To fill this demand gap, the Clinton crew gave us the stock bubble in the 1990s and the Bush team gave us the housing bubble in the last decade. In both cases the bubbles crashed with disastrous consequences, the latter more than the former. (It took us almost 4 years to replace the jobs lost in the 2001 recession, so that downturn was not trivial either.)

Anyhow, my take away from this story is that, using the advanced economics from Econ 101, we need to get the dollar down. I have made this point in the past and readers have often commented that trade does not appear to be responding as would be predicted from a falling dollar. I would argue otherwise. The graph below shows the non-oil trade deficit measured as a share of GDP against the real value of the dollar.

non-oil-trade-deficit-and-dollar

Source: Bureau of Economic Analysis and the Federal Reserve Board 

Dean Baker / May 14, 2013

Article Artículo

Credit Rating Agencies Likely to Evade Dodd-Frank Provision to End Conflict of Interest

One of the key issues in the financial crisis was the fact that mortgage backed securities (MBS), filled with subprime mortgages of questionable quality, managed to get Aaa ratings from the bond-rating agencies. While ignorance and stupidity may explain much of what happens on Wall Street, there were people at the rating agencies who did raise questions about the quality of these securities. In one e-mail at S&P an analyst complained that it would rate an MBS as investment grade if it were "structured by cows." The analyst's complaint was ignored for a simple reason, S&P was making lots of money rating MBS.

Senator Al Franken proposed a simple way to eliminate this obvious conflict of interest. He proposed having the issuer use the Securities and Exchange Commission (SEC) as an intermediary in the hiring process. Essentially, this means that the issuer would have to call the SEC when they wanted to have an issue rated and the SEC would then pick the rating agency. This would eliminate the incentive for the rating agency to issue an investment grade rating to get more business. The Franken Amendment passed the senate by a huge 65-34 majority, winning bi-partisan support. (Disclosure: I had written about this sort of reform and discussed it with Franken's staff.)

While this might have seemed like a victory for simple common sense, the amendment was largely eviscerated in a conference committee, apparently at the urging of then House Finance Committee Chair Barney Frank. Instead of implementing the amendment, the conference bill called for the SEC to study the issue and make a decision by the end of July, 2012.

The SEC is now almost a year late in this process, but apparently is prepared to ignore the rule, with an assist from the Washington Post. In an article discussing the SEC's plans, the Post dutifully repeated statements from the industry groups that were almost complete nonsense, without consulting any of the many experts who could have spoken in support of the Franken proposal.

Dean Baker / May 14, 2013