Dean Baker
The Guardian Unlimited, September 22, 2011

The United Nations Office of the Special Envoy for Haiti (OSE) released updated figures on the status of donor countries’ aid pledges earlier this week. The analysis reveals that just 43 percent of the $4.6 billion in pledges has been disbursed, up from 37.8 percent in June. This increase of $230 million is much larger than the observed increase in aid disbursement from March to June, when total disbursements increased by only $30 million. Also, an additional $475 million of aid money has been committed, meaning more money is now in the pipeline for Haiti. This increase is certainly a positive development, yet the overall levels of disbursement remain extremely low. The $4.6 billion in pledges was for the years 2010 and 2011, which means that donors have only a few months to fulfill their pledges.

While $1.52 billion was disbursed in 2010, this year, less than 30 percent of that—$455 million—has been disbursed. The United States, which pledged over $900 million for recovery efforts in 2010 and 2011, has disbursed just 18.8 percent of this (PDF). Of countries that pledged over $100 million dollars, only Japan has achieved 100 percent disbursement.

But it is important to go beyond the level of disbursements to see how much of this money has actually been spent on the ground and how it has supported both the Haitian public and private sectors. The following analysis shows that much of the money donors have disbursed has not actually been spent on the ground yet, that the Haitian government has not received the support it needs, and that Haitian firms have largely been bypassed in the contracting process.

Just 10 percent of funds disbursed by the Haiti Reconstruction Fund, which received nearly 20 percent of all donor pledges, have actually been spent on the ground. The Interim Haiti Recovery Commission has approved over $3 billion in projects, yet most have not even begun. Budget support for the Haitian government is set to be lower in 2011 than it was before the earthquake in 2009. Finally, only 2.4 percent of U.S. government contracts went directly to Haitian firms, while USAID relied on beltway contractors (Maryland, Virginia and DC) for over 90 percent of their contracts.

Disbursed By Donor Doesn’t Mean Spent on the Ground

The international community has set up a number of institutions that aim to centralize aid flows and projects, in particular the Interim Haiti Recovery Commission (IHRC) and the Haiti Reconstruction Fund (HRF). The HRF has received roughly 20 percent of donor funds.

Our analysis of the Haiti Reconstruction Fund’s annual report revealed that despite public announcements touting a 71 percent disbursal rate at the Fund, in reality, closer to 10 percent had actually been spent on the ground, much of which was on consultant fees.

The HRF report notes that “The Trustee has transferred funds totaling US$197 million in respect of those approved projects and associated fees to the Partner Entities,” and an additional $40 million is set to be transferred. Together the $237 million is equal to 71 percent of the total funds raised. However, as the HRF notes, this money has not actually been spent on the ground, but simply transferred to their Partner Entities (the World Bank, UN and the Inter-American Development Bank - IDB). The disbursement of funds from those organizations is just $35 million, or about 10 percent of the total contributions received. The IDB, which has received $37 million in HRF funds, has yet to actually disburse any of this total.

The Republican congressional leadership took the unusual step of sending Federal Reserve Board Chairman Ben Bernanke a letter warning against "additional monetary stimulus."This drew an outraged response from many Washington pundits, although for the wrong reasons.

Many in the pundit class expressed outrage that politicians would dare to influence the policy decisions of the "independent Fed." This is the high priest theory of central bankers. In this worldview, the Fed and other central banks are run by people who get the truth directly from the economy and make their judgements after carefully meditating on the latest economic data and connecting it to the sacred texts of the economics profession.

The high priest theory always warranted ridicule, but after the economic collapse of 2008 no self-respecting person should ever be associated with this view. The housing bubble that wrecked the economy was cleaarly visible from at least 2002. If the central bankers had any superior knowledge of the economy, they would have been shooting at the bubble at that point rather than allowing it to grow large enough so that its collapse would wreck the economy.

Note that shooting at the bubble does not mean raising interest rates. Note that shooting at the bubble does not mean raising interest rates [corrected -- thanks Sandwichman]. (Sorry, I had to say that twice for the economists who might be reading this.) It meant first documenting the bubble, showing that house prices had grown far out of line with historical trends and with rents. This information should have been at the center of every public appearance by Greenspan and other Fed officials. The Fed also should have used all its regulatory authority to crack down on the fraudulent mortgages that were being issued.

Dean Baker
Al Jazeera English, September 20, 2011

The Federal Reserve Board's Open Market Committee (FOMC) met today and decided on a modestly expansionary monetary policy. It decided to unload $400 billion worth of short-term assets over the next 9 months and replace them with longer term government bonds. The idea is that this would place some downward pressure on long-term interest rates.

The effect on interest rates and the economy is likely to be very modest. It is unlikely that long-term rates would fall by even 20 basis points (0.2 percentage points) as a result of this action and more likely the effect would be closer to 10 basis points, but at least it is a step in the right direction. This will make it cheaper for people to buy a car or refinance a mortgage. It will also be cheaper for firms to borrow to invest. It would have been good to see stronger action, but this is what the FOMC was prepared to do.

However what was most striking about this decision was the breakdown on the vote. Five of the people voting were members of the board of governors. (There are 7 positions, but 2 are currently vacant.) The governors are appointed by the president and approved by Congress for 14-year terms. Of the 5 sitting governors, 3 were appointed by President Obama, 1 was appointed by President Bush, and 1 governor (Chairman Ben Bernanke) was appointed by both.

The other members of the FOMC are the presidents of the 12 district banks. These presidents are essentially appointed by the banks in the district. All 12 district bank presidents sit in on the FOMC meeting, but only 5 vote at one time.

I remember well the gas shortages of the 1970s. Long lines at the pumps, and gas prices through the roof. Higher prices are, of course, the textbook free-market response to a shortage. Some economic analysts argue that an important reason we have high une

At the Inequalities blog, Brendan Saloner, citing a perennial report from the Heritage Foundation, notes: "… many of the so-called poor appear to be living at a more middle-class standard. Most of them have fridges, microwaves, televisions, and even air c