Dean Baker
USA Today, September 18, 2013

Yesterday the non-partisan Congressional Budget Office (CBO) released its 2013 Long-Term Budget Outlook, and it has some great news. Specifically, CBO is predicting substantially lower health care spending this year and 25 years into the future. 

CBO states that it "now projects that federal spending for major health care programs would equal 8.0 percent of GDP in 2038 under current law, down from the previous projection of 8.7 percent." Specifically, "4.9 percent of GDP would be devoted to spending on Medicare... and 3.2 percent would be spent on Medicaid, CHIP, and the exchange subsidies."

The U.N. Sustainable Development Solutions Network released its World Happiness Report for 2013 last week. Following up on the first such report, released last year, the U.N. says that the 2013 edition

delves in more detail into the analysis of the global happiness data, examining trends over time and breaking down each country’s score into its component parts, so that citizens and policy makers can understand their country’s ranking. It also draws connections to other major initiatives to measure well-being, including those conducted by the OECD and UNDP’s Human Development Report…

The World Happiness Report, as with similar such studies as the Happy Planet Index is in part a response to perceived shortcomings with traditional economic and social measures such as growth, poverty rates, employment, education, life expectancy and other indicators.

While U.S. media coverage of the report was not overwhelming, there was some. The report was also covered in numerous international outlets in countries throughout Europe, in Asia, Africa and Australia and New Zealand, among others. CNN noted that 

“On a regional basis, by far the largest gains in life evaluations in terms of the prevalence and size of the increases have been in Latin America and the Caribbean, and in Sub-Saharan Africa", the report said. Reduced levels of corruption also contributed to the rise.

But CNN neglected to mention that Venezuela ranked first – again – among South American nations as happiest.

The United Nations mission in Haiti, already facing a credibility crisis over its introduction of cholera, is facing new allegations that one of its troops raped an 18-year old woman this past weekend in the town of Leogane, according to police inspector Wilson Hippolite. In an e-mailed statement, the U.N. acknowledged that they “are aware of the allegations made against a military staff member” and noted that a “preliminary investigation has been launched to determine the facts of the case.”

According to Metropole Haiti, the alleged assault occurred off National Highway #2 on Saturday when the 18-year old woman was approached by a Sri Lankan U.N. military officer. A Justice of the Peace, conducting a preliminary investigation, visited the site of the alleged assault on Sunday and found a used condom. Further tests are being conducted, according to the report. The accused has been moved to a different MINUSTAH base in another part of the country as the investigation unfolds. As of July 30, Sri Lanka had over 860 troops stationed in Haiti, making it the third largest troop contributing country to the 9 year-old mission.

This is but the latest in a string of sexual abuse scandals that have plagued the U.N. mission in Haiti. And it’s not the first time Sri Lankan troops have been involved; in 2007 over 100 Sri Lankan members of MINUSTAH were repatriated after allegations of “transactional sex with underage girls.” In fact, according to the U.N. Conduct and Discipline Unit, there have been 78 allegations of sexual abuse and exploitation by members of MINUSTAH reported in just the last 7 years.

Dean Baker
Truthout, September 16, 2013
The Huffington Post, September 16, 2013

Dean Baker
Al Jazeera English, September 16, 2013

There have been considerable efforts made over the last five years to convince us that the bankers at the center of the financial crisis were victims just like the rest of us. Robert Samuelson does his part in a column today.

The main line in his argument are a couple of studies showing that most of the top execs at the banks at the center of the crisis were themselves heavily invested in real estate. This means that they also bought into the housing bubble. Therefore there was no fraud, just bad business judgment. That doesn't follow.

Let's look to Enron, a case where everyone agrees there was fraud. Did Ken Lay, Jeffrey Skilling and the other top execs believe that Enron had a viable business model? I never met any of these folks, but my guess is that they probably did believe in the company and certainly their stockholding pattern was not consistent with people who knew they had a Ponzi scheme on their hands. It is entirely plausible that at one level they both believed they had a really clever business model and that they also committed fraud to advance this model.

If we look to the Countrywides and Citigroups it is entirely plausible that their top honchos really thought that the housing market was just going to keep rising forever. It is also entirely plausible that they issued and securitized millions of fraudulent mortgages to maximize their profit from this rising market. Being stupid about the housing market does not in any way prove that they did not commit fraud, just as the Enron boys would not be somehow exonerated if they really believed in the company's business model.

There are two other points worth noting in Samuelson's story. He is quick to dismiss the idea that the problems of the financial crisis were a deeply corrupt financial sector. He tells readers:

"We were victims of success. The crisis originated from 25 years of prosperity, from roughly the end of 1982 to the end of 2007. This conditioned people — bankers, regulators, economists, almost everyone — to take stable growth for granted. The longer the prosperity continued, the more it inspired the risky behaviors that ultimately wrecked the economy."

The piece tells us how great things were over the quarter century from 1982 to 2007. The big problem with Samuelson's story is that by almost every measure things were better over the prior quarter century and certainly over the first quarter century after World War II. If prosperity created the conditions that led to the crisis, why didn't the much great prosperity over the period from 1947-1972 lead to any comparable crisis?

The answer is that the problem was not prosperity, the problem was that it was prosperity that was being driven by asset bubbles. And, as we should all know, asset bubbles burst. If they are the basis of prosperity, then it is destined to end badly.

This brings up the second point and another serious Robert Samuelson confusion. He tells readers:

Earlier this week, U.S. Ambassador to Honduras Lisa Kubiske gave a talk at the Institute of the Americas in San Diego. During the Q and A, audience member Aaron Montenegro asked her about the May 11, 2012 DEA-related shooting incident in Ahuas, in Honduras’ Mosquitia region in which four local, unarmed villagers were killed and several others wounded. (As Americas Blog readers know, CEPR has co-authored two in-depth reports on the incident with Rights Action, based on evidence and interviews with survivors, witnesses, and various U.S. and Honduran officials; and on a review of official investigations.  And we have blogged about ongoing developments regarding the case as well.)

A recording of the revealing exchange is posted here, and a full transcript follows:

Question:  I'd like to mention something that you didn't talk about, and that's the Ahuas case in Mosquitia and the lack of cooperation coming from the U.S. Embassy.  For those of you who don't know, in indigenous territory, the Mosquitia, there was a massacre that took place in the name of fighting narcotráfico, and this was taking place with U.S. State Department helicopters, with DEA agents and subcontracted Guatemalan pilots. And there has been a refusal to participate within this investigation as far as the ballistic tests are concerned.  So I would just like for you to maybe address that and why there hasn't been so much forward participation with that if you are talking about impunity. And then, another question I would like to 

Moderator: Wait a minute, let’s do that one...

Question: OK.

Neil Irwin had a discussion of the failure to prosecute any of the Wall Street honchos for the conduct that led up to the financial crisis. He concludes that:

"America doesn’t criminalize bad business decisions, even when they lead to business failure."

That is obviously true, but this is not the issue. The Financial Crisis Inquiry Commission (FCIC) found:

"Lenders made loans that they knew borrowers could not afford and that could cause massive losses to investors in mortgage securities. As early as September 2004, Countrywide executives recognized that many of the loans they were originating could result in “catastrophic consequences.” Less than a year later, they noted that certain high-risk loans they were making could result not only in foreclosures but also in “financial and reputational catastrophe” for the firm. But they did not stop.

"And the report documents that major financial institutions ineffectively sampled loans they were purchasing to package and sell to investors. They knew a significant percentage of the sampled loans did not meet their own underwriting standards or those of the originators. Nonetheless, they sold those securities to investors. The Commission’s review of many prospectuses provided to investors found that this critical information was not disclosed."

The question was not whether the top executives of mortgage issuers like Countrywide and investment banks like Goldman Sachs bought into the housing bubble, the question is whether they followed proper business practices in their lust to cash in. The assessment of the FCIC is that they did not. Issuing a mortgage that is known to be based on false information and then selling it in the secondary market is fraud and punishable by time in jail. Similarly, packaging loans into mortgage backed securities that an investment bank has good reason to believe are based on false information is also fraud and punishable by time in jail. (It's actually common for true believers in a bubble to also commit fraud. It is likely top executives at Enron believed that they were actually running a profitable company.)

The way prosecutors would construct a case to prosecute top executives would be by starting at the bottom. They would have gone to branch offices at major subprime issuers like Countrywide and Ameriquest and find out why mortgage agents were issuing so many mortgages with improper documentation. Since this was done by many agents, they presumably could have gotten one or more to report that this was a policy of the branch manager. Presumably branch managers told agents that they needed to issue certain numbers of mortgages and they did not care if the mortgages did not meet proper standards.