Yesterday afternoon Venezuelan President Hugo Chávez passed away, after a long battle with cancer. The announcement by Vice President Nicolás Maduro came just minutes after Chávez’s death and elicited an immediate wave of obituary pieces by pundits who described Chávez as “divisive”, “authoritarian”, “antagonistic” and “anti-American”, many of them eager to rush the “transition” in the hopes that Chávez’s political project would soon fall apart. 

In stark contrast with these predictable characterizations and demonization of Chávez in the major media is the response that Chávez’s death has elicited from his peers, fellow presidents from throughout the Americas. Tributes, messages of solidarity and heartfelt condolences came in from Central and South America, reaffirming support for the ideals of regional unity and independence promoted by Hugo Chávez during his 14 years as president of Venezuela. Very few media outlets noted the outpouring of sympathy from Latin American leaders.

“He is more alive than ever, and will keep being the inspiration for all people fighting for liberation,” were the words of president of Bolivia, Evo Morales.  With his voice cracking and struggling to speak, Morales said that he was “hurt, devastated,” by the death of his “compañero and brother.” And repeatedly referred to the liberation of South America forged by Chávez saying that, “the best way to remember him is with unity, unity.”

José Mujica, President of Uruguay, expressed the profound pain that Chávez’s death caused him:

“Death is always felt, but when it is the death of a great fighter, one that I once defined as the most generous governor that I have ever met, the pain is on another dimension… Its magnitude is bigger than the loss.”

Dean Baker
The Hankyoreh (South Korea), March 6, 2013

The most striking feature of the U.S. economy over the last three decades has been the upward redistribution of income. The top 1.0 percent of households has managed to pocket the vast majority of gains over this period. That is a sharp contrast with the three decades immediately following World War II when the benefits of much more rapid growth were broadly shared.

This pattern of growth might lead people to question the policies that have led to this upward redistribution (e.g. trade policy, labor policy, monetary policy, and anti-trust policy). In order to prevent such questioning and to further the process of upward redistribution many wealthy people have sought to focus public attention on programs that benefit the middle class and/or poor.

Peter Peterson, the Wall Street investment banker, has been most visible in this effort, committing over $1 billion of his fortune for this purpose. Recently he enlisted a group of CEOs in his organization, Fix the Debt, which quite explicitly hopes to divert concerns over income inequality into concerns over generational inequality. It argues that programs like Social Security and Medicare, whose direct beneficiaries are disproportionately elderly, are taking resources from the young.

It is easy to show the absurdity of this position. The amount of money that the young stand to lose from the upward redistribution of income is an order of magnitude larger than whatever hit to their after-tax income they might face due to the continuing drop in the ratio of workers to retirees. Also, older people generally have families. This means that when we cut the Social Security or Medicare benefits of middle and lower income beneficiaries, we are often creating a gap that will be filled from the income of their children.

Nonetheless, when you have a billion dollars to throw around, you will have plenty of people willing to argue absurd positions. Therefore, it is not surprising to see the Fix the Debt crew and various other Peterson derivative organizations pushing the line about generational conflict, but what is NPR's excuse?

Mark WeisbrotAl Jazeera English, 5 de marzo, 2013Página/12, 7 de marzo, 2013En Inglés | En Portugués

Venezuelan Vice President Nicolas Maduro’s announced today that President Hugo Chávez had died at 4:25pm. According to Venezuela’s constitution [PDF], new presidential elections are supposed to be held within 30 days.

The news could present an opportunity for an improvement in U.S.-Venezuelan relations, but that is unlikely. Earlier in the day, Maduro announced that the Venezuelan government would expel the U.S. military attaché for unsanctioned meetings with certain Venezuelan military officers. While this is of course a significant development in U.S.-Venezuela relations that marks yet further deterioration, unfortunately it seems safe to say that most U.S. media outlets will not provide the crucial context necessary in order to understand current relations and why they are so tense.

Maduro mentioned the April 2002 coup d’etat in his press conference today. Declassified C.I.A. and other government documents reveal the U.S. role in that coup against Hugo Chávez. As Scott Wilson, former foreign editor at the Washington Post has explained:

Yes, the United States was hosting people involved in the coup before it happened. There was involvement of U.S.-sponsored NGOs in training some of the people that were involved in the coup. And in the immediate aftermath of the coup, the United States government said that it was a resignation, not a coup, effectively recognizing the government that took office very briefly until President Chavez returned.

I think that there was U.S. involvement, yes.

(Video clip here. This information has however never been reported this fully in the pages of the Washington Post itself.)

Mark WeisbrotAl Jazeera English, March 5, 2013En Español | Em Português

The U.S. Agency for International Development Inspector General (IG) last week released an audit of a program to provide loans to businesses in Haiti (available here). The audit is just the latest report from the IG to find significant problems with USAID’s programs in Haiti, following previous findings regarding cash-for-work programs, shelter provision, food aid and USAID’s largest contractor, Chemonics. The Associated Press’ Trenton Daniel reports that:

An audit of a U.S. Agency for International Department program that aimed to boost Haiti's economy by providing loans to businesses has found that the program failed to award loans to intended targets, train workers and keep accurate records.

The aim of the audit released in late February by USAID's Office of the Inspector General was to see whether a USAID loan program was indeed introducing lending practices to overlooked areas and borrowers, particularly in the areas of agriculture, construction, tourism, handicrafts and waste management. Most of the loans were supposed to go toward women, first-time borrowers and small- and medium-sized enterprises.

The loan program provided some $37.5 million in guarantees, of which just over $19 million in guarantees have been extended. According to publicly available data, only about a quarter went to woman-owned businesses, less than 30 percent went to first-time borrowers, and 75 percent were concentrated in the West department, though these numbers likely overstate the reality on the ground. In addition to many other problems, the audit found that “the key monitoring data was outdated, incomplete, or inaccurate,” for example, information on whether the recipient was a first-time borrower was “recorded incorrectly 41 percent of the time.”

The focus of the audit, Daniel reports, was the four largest of the seven guarantees, “worth $31.5 million,” of the $37.5 million total. Of these Daniel notes that two were made after the 2010 earthquake:

They were a Haitian bank named Sogebank, a Haitian development finance institution named Sofihdes that USAID helped create in 1983 and an agriculture-focused outfit named Le Levier Federation.

The audit found that few women and first-time borrowers received loans and lenders didn't make much effort to work with them.

And while the loans were intended to target “development corridors,” Daniel notes,

Instead they stayed in the Port-au-Prince area.

Ninety percent of Sogebank's loans were confined to the capital and the bank didn't give loans to other parts of the country. Some 81 percent of the Sofihdes loans were in Haiti's capital.

Dean Baker
Al Jazeera English, March 5, 2013

The Federal Reserve Board disastrously missed and/or ignored two huge bubbles in the last decades: the stock bubble in the 1990s and the housing bubble in the 2000s. The collapse of both bubbles led to recessions from which it was difficult to recover. Neil Irwin inadvertently tells us today that the Fed is still utterly clueless when it comes to dealing with bubbles.

The problem is that, at least according to Irwin's account, no one at the Fed seems to understand how bubbles hurt the economy. On the one hand, he presents the views of Fed governor Jeremy Stein, a bubble hawk, who he tells us:

"argued in a Feb. 7 speech that there are already signs of overheating in the markets for certain kinds of securities, including junk bonds and real estate investment trusts that invest in mortgages. And if those or other potential bubbles get so large that if they popped the whole U.S. economy could be in danger."

By contrast we have Fed chair Ben Bernanke and vice-chair Janet Yellen, the latter of whom he quotes as saying:

"At this stage there are some signs that investors are reaching for yield, but I do not now see pervasive evidence of trends such as rapid credit growth, a marked buildup in leverage, or significant asset bubbles that would clearly threaten financial stability."

Unfortunately, the concern about financial stability and discerning bubbles in a wide array of economic data completely misses the point. First, financial instability is not what caused our problems in either 2001 or in the current downturn. As much fun as it is to see the Fed chair, Treasury Secretary and other important people sweating over the collapse of huge financial institutions, this crisis was very much secondary to the country's economic problems. We know how to paper over a financial crisis, which the Fed eventually did (as did the European central bank), the hard part is replacing the demand that had been generated by a bubble once the bubble has burst.

This directly leads to the second point. The bubbles that we have to worry about are not hard to find. Suppose there is a huge speculative bubble in soy beans that pushes their price to 20 times their normal level. This could be bad news for people that like soy beans and derivative products. It may also be disastrous for producers in the industry if they get caught on the wrong side of things. However, the collapse of this bubble will have minimal impact on the economy. If for some reason our bubble watchers at the Fed failed to notice the rise in soy bean prices, the problems caused by its eventual bursting will not sink the economy.

The L.A. Times ran a very nice and uncommon report by correspondent Vincent Bevins about media bias in Brazil on Sunday.  The article notes that most of the major media is still controlled by the same handful of rich families who supported the military co