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In praise of … Ezra Nawi | Editorial

He is a rarity, even among that most endangered of species, the Israeli peace activist. Born in Basra to an Iraqi Jewish family, Ezra Nawi lives on the modest wages he earns as a plumber. As such, he comes from the same background which generates the hardline views in Israel. So he was speaking to his own kind when he told laughing border police who had just demolished Palestinian Bedouin shacks that all they would leave behind was hatred. Not content with the Bedouin shacks, the prosecuting authorities are now trying to demolish Mr Nawi’s life by threatening him with a prolonged stay in prison. His arresting officers claim that the non-violent resister had assaulted them - although the alleged assault was not included in their original statements. The whole incident (barring the alleged assault, of course) was caught on film, but the presiding judge believed the police. The sentencing was delayed on Wednesday because so many supporters turned up in court, some bearing a petition with 15,000 signatures. Mr Nawi is asking a bigger question of his countrymen: who is perpetrating the greater violence? Is it people like him, or is it a state which bulldozes Palestinian shacks while protecting the homes of South Hebron settlers which the rest of the world considers illegal? As Barack Obama and Binyamin Netanyahu trade in the semantics of a settlement freeze, it falls to a humble plumber to focus the world’s attention on the routine brutalities of occupation.

US begins major Afghan offensive

The first major operation under President Barack Obama’s strategy to stabilise Afghanistan has begun

Thousands of US marines and hundreds of Afghan troops have moved into Taliban dominated villages of southern Afghanistan in the first major operation under President Barack Obama’s strategy to stabilise the country.

The offensive in the once-forgotten war was launched shortly after 1am on Thursday local time in Helmand province, a Taliban stronghold in the southern part of the country and the world’s largest opium poppy producing area.

The goal is to clear insurgents from the hotly contested Helmand River Valley before the nation’s August 20 presidential election.

Dubbed Operation Khanjar, or “Strike of the Sword,” the military push was described by officials as the largest and fastest-moving of the war’s new phase, involving nearly 4,000 of the newly arrived Marines and 650 Afghan forces. British forces last week led similar, but smaller, missions to fight and clear out insurgents in Helmand and neighboring Kandahar provinces.

“Where we go we will stay, and where we stay, we will hold, build and work toward transition of all security responsibilities to Afghan forces,” Marine Corps Brig. General Larry Nicholson said in a statement.

Southern Afghanistan is a Taliban stronghold but also a region where Afghan President Hamid Karzai is seeking votes from fellow Pashtun tribesmen.

The Pentagon is deploying 21,000 additional troops to Afghanistan in time for the elections and expects the total number of US forces there to reach 68,000 by year’s end. That is double the number of troops in Afghanistan in 2008, but still half of much as are now in Iraq.

Capt. Bill Pelletier, a spokesman for the Marines, said the troops involved in the Thursday operation were sent in by a mixture of aircraft and ground transport under the cover of darkness.

The operation is aimed at putting pressure on insurgents, “and to show our commitment to the Afghan people that when we come in we are going to stay long enough to set up their own institutions,” Pelletier said.

Once on the ground, the troops will meet with local leaders, hear their needs, and act on them, Pelletier said.

“We do not want people of Helmand province to see us as an enemy, we want to protect them from the enemy,” Pelletier said.

Reversing the insurgency’s momentum has been one of the key components of the new US strategy, and thousands of additional troops allow commanders to push and stay into areas where international and Afghan troops had no permanent presence before.

In March, Obama unveiled his strategy for Afghanistan, seeking to defeat al-Qaida terrorists there and in Pakistan with a bigger force and a new commander. His strategy aims to boost the size of the Afghan army from 80,000 to 134,000 troops by 2011 and greatly increase training by US troops accompanying them so the Afghan military can defeat Taliban insurgents and take control of the war. The White House also is pushing forces to set clear goals for a war gone awry, to provide more resources and to make a better case for international support.

There is no timetable for withdrawal, and the White House has not estimated how many billions of dollars its plan will cost.

Last laugh for Al Franken as court ruling gives him Minnesota Senate seat

• Democrats now set to hold 60 of 100 Senate seats
• Republican blocking tactics likely to fail in future

The comedian and Democrat Al Franken is set to take his seat in the US Senate next week after the Minnesota supreme court yesterday ruled in his favour in the long-running election dispute.

His opponent, the Republican Norm Coleman, conceded almost immediately after the ruling, bringing to an end eight months of recounts, political sniping and courtroom arguments.

When Franken takes his seat, the Democrats for the first time in three decades will potentially have 60 of the 100 seats in the Senate, a conceivably unassailable majority that means they can overcome Republican blocking tactics, such as filibustering.

The victory boosts Barack Obama’s chances of getting more of his ambitious legislative agenda, such as health reform and climate change measures, and ensuring the confirmation of his supreme court nominee, Sonia Sotomayor.

Franken, at a press conference three hours after the supreme court ruling, said “it has not yet fully sunk in” that he had won. He listed as his priorities healthcare, education and renewable energy.

What mattered to him, he said, was not that he was going to Washington as the 60th Democratic senator but as the senator for Minnesota. He added: “I won by 312 votes so I really have to earn the trust of people who didn’t vote for me and let them know that I’m going to be working for every Minnesotan.”

Earlier, Coleman, speaking outside his home in St Paul, Minnesota, uttered the words that Franken had long waited to hear. “The supreme court of Minnesota has spoken and I respect its decision and will abide by the result. It’s time for Minnesota to come together under the leaders it has chosen and move forward. I join all Minnesotans in congratulating our newest US senator, Al Franken.”

Coleman had the option of taking the issue to the US supreme court and many Republicans had favoured such action to deny the Democrats a 60-seat majority for a few months more. But it is unlikely the US supreme court would have even agreed to discuss it.

Coleman said he was not sure what he would do in the future but he might spend the next few days fishing. “I’m really at peace,” he said.

Franken first rose to prominence as a comic on the Saturday Night Live television show. He fought the election campaign as a serious politician, only occasionally showing flashes of his old humour during debates and in a clever advertising campaign.

Coleman is, in Republican terms, relatively liberal. He is best known in Britain for his confrontation at a Senate hearing with the MP George Galloway over Iraq.

The White House welcomed Franken’s win, saying the president looked forward to working with him on “lowering healthcare costs and investing in the kind of clean energy jobs and industries that will help America lead in the 21st-century”.

Coleman initially emerged the winner of the November election, but with such a narrow margin that an automatic recount was triggered. Franken was declared the winner in January after a recount showed him with a majority of 225, out of 2.9m votes cast. A further recount increased his majority marginally to 312.

The two men spent just over $50m (£30m) fighting the election campaign but the recount gobbled up a further $11m.

The five-member Minnesota supreme court ruled unanimously against Coleman, who had argued that thousands of absentee ballots that had been rejected should have been included in the final count.

Franken will bring the total number of Democrats to 58. There are also two independents who normally vote with them.

But on some issues Obama cannot be sure of the support of all 58 Democrats or the two independents. About 20 Democrats, though socially liberal, are conservative on fiscal matters.

Another reason why the 60-seat majority is not as solid as it looks on paper is the ill health of two Democrats, Edward Kennedy and Robert Byrd, both of whom are often absent from the chamber.

International community pressures new government of Hondoras to quit

• Roberto Micheletti sworn in as new president
• Zelaya meets leftist allies in Nicaragua
• Obama administration condemns Zelaya’s overthrow

Honduras was increasingly isolated tonight as the international community lined up to denounce a coup which ousted President Manuel Zelaya.

Latin America, the United States, the United Nations and the European Union piled diplomatic pressure on the new government to quit just a day after the Honduran army seized the president in his pyjamas and bustled him into exile.

The capital, Tegucigalpa, remained tense with soldiers and armoured vehicles ringing the presidential palace but making no effort to clear nearby barricades manned by about 200 pro-Zelaya protestors.

The leftwing leader was ousted early on Sunday in a joint move by the army, judiciary, congress and disaffected members of his own party.

The architects of central America’s first military overthrow in 16 years said it was a necessary and legitimate action to remove a power-hungry president who had broken the constitution.

Congress swore in its speaker, Roberto Micheletti, as the new interim president. He urged the international community to respect Honduran sovereignty and said he would step down after presidential elections in November: “We respect everybody and we only ask that they respect us and leave us in peace because the country is headed toward free and transparent general elections. I’m sure that 80% to 90% of the Honduran population is happy with what happened today.” He said outsiders had no right to interfere. “Nobody scares us.”

Zelaya met leftist allies at an emergency summit in neighbouring Nicaragua. The summit depicted his downfall as a plot by rightwing elites to row back socialism in the region.

“If the oligarchies break the rules of the game as they have done, the people have the right to resistance and combat, and we are with them,” said Hugo Chávez, Venezuela’s president.

The presidents of Bolivia, Ecuador and Nicaragua were expected to join Venezuela’s leader in the Nicaraguan capital Managua.

The Obama administration, conscious of the US’s long history of supporting coups against Latin American leftists, condemned the overthrow. The secretary of state, Hillary Clinton, said Washington’s top priority was to restore full democratic and constitutional order in Honduras. Zelaya’s removal had “evolved into a coup”, she said.

The United Nations invited Zelaya to New York to report directly to members of the General Assembly. The head of the 35-member Organisation of American States said it would accept no Honduran president other than Zelaya. The European Union offered to mediate.

Zelaya, 56, a rich and flamboyant landowner, was elected in 2006 as a conservative but then embraced Chávez’s form of “21st century socialism”. He was popular among many of Honduras’s poor but his overall approval ratings hovered at 30%.

He angered the country’s institutions by trying to hold a non-binding referendum about changing the constitution to allow presidential terms beyond a single, four-year term. Opponents accused the president, who was due to leave office in January 2010, of plotting to perpetuate his power.

Just before the coup Zelaya fired the armed forces chief, who refused to cooperate in the referendum, and defied a supreme court ruling to abandon the vote.

Stonewall’s unfinished legacy | Nancy Goldstein

Forty years after the Stonewall riots started the modern gay rights movement, the US still treats us as second-class citizens

The modern lesbian, gay, bisexual and transgender rights movement in America was born 40 years ago this week. In the wee hours of 28 June 1969, patrons of Greenwich Village’s Stonewall Inn, a New York dive frequented by some of the most marginalised members of an already marginalised community – drag queens, transgender people, homeless youths, hustlers and the occasional butch – showered raiding police with bottles, locked them in the bar and set it afire. Three nights of rioting followed. It was the first sustained mass uprising against the police in LGBT history, and it was long overdue.

In 1969, and for most of the 20th century, LGBT people had no place to congregate in public other than a few mafia-owned rat holes like Stonewall that charged exorbitant entrance fees, sold us expensive, watered down liquor in dirty glasses and blackmailed patrons to the tune of millions of dollars.

In addition to being targeted for witch-hunts, dishonourable military discharges and blacklists, LGBT people could be arrested for solicitation if we so much as accepted a cigarette from an undercover cop. Officers often beat and raped us down at the station. Law enforcement and the mafia alike were emboldened by a legal system that considered us criminals and a medical profession that routinely subjected us to lobotomies, electroshock and even castration in its quest for a cure.

Post-Stonewall improvements in the lives of many LGBT people have been profound, though neither swift nor easy. The American Psychiatric Association finally removed homosexuality from its handbook of mental disorders in 1973. The US supreme court finally invalidated all remaining laws that criminalised sexual acts between consenting same-sex adults in 2003. Millions of us have come out of the closet – in our workplace, to our families and in our neighbourhoods, proving that we are, indeed, everywhere. LGBT publications and organisations abound, including 4,000-plus Gay/Straight Alliances in the nation’s schools.

Still, the trajectory of LGBT rights has not been one long, unbroken upward arc tending towards justice. A dozen years after Stonewall, the federal government wilfully ignored HIV/Aids for so long, as it thought it affected only men who had sex with men and other “undesirables”. No federal law protects LGBT people in the areas of workplace discrimination, housing or hate crimes, while the (significant) handful of states that do have laws often omit transgender people and LGBT youth from their protections. Anti-gay bullying runs rampant in our schools, and a disproportionate percentage of homeless youth is LGBT. Over 16,000 service members have been ousted from the US armed forces under the “don’t ask, don’t tell” (DADT) policy – an average of two per day.

Last November, Proposition 8 in California overturned an earlier court decision granting marriage equality. Though five states now recognise same-sex marriage, the 1996 Defence of Marriage Act (DOMA) deprives legally married same-sex couples of the 1,381 privileges that federally recognised heterosexual couples enjoy, including rights regarding pensions, social security survivor benefits and immigration. It also bars us from filing a joint income tax return and levies a heavy “gay tax” on health insurance and inheritance. Small wonder a recent UCLA report on poverty in the LGBT community found that same-sex partners are more likely to be poor than our heterosexual counterparts.

There’s been no lack of nerve on the part of elected officials when it comes to campaigning for LGBT dollars and votes, but the courage to actually pass legislation that advances LGBT civil rights has been in short supply. While New York State legislators continue to deny LGBT New Yorkers marriage equality, irony-deficient New York City officials are trying to lure LGBT tourists to the Big Apple as part of a Stonewall-based tourism campaign! President Obama, who campaigned on vows of “equality to all” and repeal of DADT and DOMA, hasn’t lifted a finger to make good on those promises.

Now would be an excellent time to demonstrate some of that audacity of hope. Instead, on 12 June, just two weeks before the Democratic National Committee $1,000-per-plate fundraiser headlined by vice-president Joe Biden commemorating – you guessed it – LGBT Pride Month and the 40th anniversary of Stonewall, Obama’s department of justice filed a brief defending DOMA. It compared same-sex marriage to incest. It denied that discrimination against same-sex couples is discrimination.

John Aravosis, who broke the brief, attributes the brief’s tone to “political calculation, not carelessness. I think someone whispered to the president: ‘Do you want to pass healthcare or not? Do you want to deal with the war or not? The gays are going to vote for you anyway in 2012. Why use up political capital?’”

But if the brief was highly calculated, its supporters just as greatly miscalculated the response to it. Virtually every LGBT organisation in the country and the entire progressive blogosphere, plus the New York Times editorial page and People For the American Way have expressed outrage. Headliners and major donors withdrew from the DNC fundraiser in droves, often leaving very articulate, very public statements of disgust and disillusionment in their wake. And activists, including Aravosis and Pam Spaulding of Pam’s House Blend, have called for the LGBT community to “close the gAyTM” by boycotting contributions to the DNC until the administration makes good.

After five days of online near-rioting, the administration went into damage control with a weak and hasty response that mandated extension of benefits to same-sex partners of federal employees – an option that already existed, with all the crippling limitations mentioned above. (The biggest irony: under DOMA, federal employees still cannot add partners to their health insurance.)

It reminded us what it was like to be taken for granted at the Stonewall Inn: welcomed into the club so long as we’re willing to be overcharged for watered-down liquor in dirty glasses and stashed in the back of the bar. It confirmed our status in the eyes of the powers that be as second-class citizens whose money is still good.

Even Lyndon Johnson, who was no die-hard friend to the civil rights movement, jammed through the 1964 Civil Rights Act when he saw that change was inevitable. But this administration and Congress prefer defending sweepingly oppressive laws like DADT and DOMA rather than taking even the tiniest steps to undo them. Apparently it’s easier to hang onto history.

Will hitting the Obama administration and the DNC in their wallets be enough to make them move forward? It might, and it should. But it’s a hell of a way to spend our anniversary – partying like it’s 1969.

The price of climate change | Thomas Noyes

The US climate change bill in Congress won’t just save the environment – it will save us money in the long run

The American Clean Energy and Security Act of 2009, better known as the Waxman-Markey bill, is likely to come up for a vote today in the House of Representatives. Most environmentalists, who earlier this year were worried that Barack Obama had too much on his plate to tackle climate change, are heartened to see the bill moving forward.

The bill includes renewable electricity standards, emissions reductions, a system for trading emissions permits and carbon offsets, investments in energy technology (unfortunately including “clean coal”) and energy efficiency standards. The bill sets target reductions of greenhouse gas emission of 42% by 2030 and more than 80% by 2050.

Opponents of Waxman-Markey, when not denying that global warming is real, are resorting to another time-honoured tactic of scaring people with wildly inflated cost estimates. Fortified with alarming numbers from thinktanks, opponents are calling the bill a “tax-and-trade” scheme that would saddle families with an unbearable financial burden for decades.

One source of these spurious numbers, the Heritage Foundation, claims that Waxman-Markey would reduce GDP by a total of $7.4tn and destroy 1.9 million jobs by the year 2035. A family’s electricity bill would climb 90% and natural gas prices would climb 55%, adding $1,500 to the family budget. An even scarier assertion that the bill would cost families $3,100 was purportedly based on an MIT study – a claim that one of the study’s authors, John Reilly, roundly disputed.

Opponents reached these conclusions by exaggerating the downside and ignoring the upside altogether. They have overstated the costs of renewable energy, underestimated the future costs of fossil fuels and left out the cost savings of improving energy efficiency. The Heritage Foundation report projects home energy prices will increase three to four times faster than the Congressional Budget Office or Environmental Protection Agency studies, and doesn’t include any benefits from improvements in energy efficiency or investing in new industries.

The CBO came in with a cost of $175 per household. The EPA projects a lower net cost per household of $80 to $111 per year, and predicts energy savings for US households would lower utility bills by roughly 7% by 2020. Critics often cite the burden on the poor as a reason to not support renewable energy. But the CBO analysis projects a net benefit to the lowest income quintile of $40 per year.

These savings will come by investing in renewable energy technologies that won’t be subject to the relentless and inexorable increase in fossil fuel prices. The EPA projects that by 2025 two thirds of new energy generation will be from renewable sources.

We heard similar scare tactics here in Delaware during a recent debate over offshore wind power, when opponents tossed out wildly inflated cost projections, some as much as 10 times higher than official estimates. But citizens and elected leaders considered the benefits, not just the exaggerated cost projections, and Delaware became the first state to sign off on an agreement to build offshore wind power.

There is one important factor the Heritage, CBO and EPA analyses all leave out: the cost of unchecked global warming, which could be considerable. Global warming will do more than inconvenience a few polar bears. Reduced snow melts in the Rockies and the Himalayas could disrupt agricultural water supplies in the US, China and India.

As more water is released from ice caps and mountain ranges, rising sea levels could force the relocation of significant populations and disrupt important infrastructure. Here in Delaware, rising sea levels could flood the principal highway and rail line connecting New York and Washington. Water and sewer service for more than half of Delaware’s residents could be rendered unsafe or shut down altogether.

A bill this complex on a subject this important deserves careful review. But opponents of Waxman-Markey have resorted to distorted analysis, one-sided arguments and crass exaggerations to make the case that we can’t afford to act. More careful – and balanced – analysis leads to the opposite conclusion that can’t afford to wait.

Barack Obama pleads with Congress to pass historic climate change bill

Package that would slash US emissions likely to win approval despite opposition from Republicans and Democrat rebels

Democrats in Congress are poised to vote through a sweeping energy and climate change bill tomorrow that could deliver on one of Barack Obama’s signature election promises and galvanise international efforts to agree action on global warming.

The vote, which for the first time could see the US commit itself to cutting back the carbon emissions that cause climate change, prompted a frenzied last-minute PR offensive, with Obama making his third appeal in 48 hours for Congress to act on energy reform.

Passage of the bill, which would reduce US greenhouse gas emissions by 17% from 2005 levels by 2020 and offer incentives for energy efficiency and the development of clean energy technology, would hand Obama a personal victory at a time when he has run into strong opposition over the trillion-dollar price tag on his other main election promise, healthcare reform.

In a speech from the White House rose garden, Obama said the bill would create millions of green jobs and lay the foundations of a stable economy.

“I can’t stress enough the importance of this vote,” he said. “We cannot be afraid of the future, and we cannot be a prisoner of the past.”

He also said the reforms were overdue, and crucial to demonstrating US leadership on the world stage. “We have been talking about this issue for decades and now it’s time to act.”

In Washington and beyond, the vote is seen as a historic moment, both for Obama’s political agenda and international efforts to reach a climate change treaty at Copenhagen in December.

“This legislation is a game changer of historic proportions,” said Ed Markey, the Massachusetts Democrat who is one of the authors of the bill. “The whole world is waiting to see if Barack Obama can arrive in Copenhagen as a leader of attempts to reduce greenhouse gas emissions.”

The bill could allow America to claim a leadership role in international negotiations, diplomats said. “If this goes through, it’s a very big achievement – no question,” said one diplomat.

The bill sets less aggressive targets on reducing emissions than the EU has pledged, and is more generous to polluting industries than Obama had wanted. But he said: “This is a huge ocean liner, the US economy, and the question is, can we start changing [its] direction? Ten years out, it’s not going to look as if the changes are massive. Twenty years out, suddenly you start really getting huge impacts. Thirty years out, you had a transformative difference in the economy. And that’s how we’ve got to look at it.”

The interventions from Obama capped an intensive lobbying effort for the bill by the White House and administration officials, Al Gore, and a broad coalition of environmental and business groups. The run-up had seen America’s oil, gas and coal industry increase its lobbying budget by 50% in the first three months of the year to try to kill the bill. The spoiler campaign has run to hundreds of millions of dollars and involves industry front groups, lobbying firms, television, print and radio advertising, and donations to pivotal members of Congress.

The last-minute push came as the Democratic house speaker, Nancy Pelosi, went over the vote-counts. The Democrats have enough representatives to win but dissidents from farm and rustbelt states needed to be won over.

Democrats grew increasingly confident of the bill’s passage earlier this week when its most formidable opponent in Congress, the Democratic chair of the house agricultural committee, said he would now push for its passage after winning concessions. “We think we have something here now that can work with agriculture,” said Collin Peterson, who led the Democratic opposition to the bill. “I think we will be able to get the votes to pass this.”

The stakes could not be higher. A defeat would destroy the last chances of enacting crucial energy legislation before the UN treaty negotiations at Copenhagen. It could also rebound on other items on Obama’s to-do list. The bill must also be passed by the Senate before Obama signs it into law, and while the Democrats face a tougher fight there, tomorrow’s likely victory would give them a burst of momentum.

The bill has faced almost uniform opposition from Republicans in the house, who say it amounts to a hidden energy tax. They have also argued that the bill would dramatically raise electricity prices – a claim debunked with the release of a cost analysis by the non-partisan ­Congressional Budget Office showing it would cost the average family a total of $175 (£107) by 2020, and would save poor families about $40.

The bill, now swollen to about 1,200 pages, would bind the US to reduce the carbon emissions from burning oil and coal by 17% from 2005 levels by 2020 and more than 80% by 2050.

It envisages measures to promote clean energy – from a development bank for new technology to new, greener building codes and targets for expanding the use of solar and wind power.

But there were concerns among ­environmentalists yesterday that the concessions had dangerously weakened the bill, and that the Senate could water down the green measures further.

After the reduction of the original ­emissions-cut target to 17% and the granting of far more free pollution permits for the cap-and-trade scheme than originally envisioned, the most significant concessions include how farmers are rewarded for practices that reduce carbon ­emissions, and a four-year delay in new regulations that would have cut the profits of corn-based ethanol and encouraged the ­development of non-food biofuels instead.

However, Henry Waxman, who has been leading the bill through Congress, argued that the most important element of the bill had come through the hard ­bargaining process intact.

“We have not given away the essentials of the bill because the essentials are the reduction of carbon emissions.”

Most environmental organisations said the bill – though not as rigorous as they would have liked – was as stringent as could be expected from Congress and were hopeful of making improvements in the future. However, Greenpeace late yesterday said it could not support the bill, and called on Congress to defeat it.

” To support such a bill is to abandon the real leadership that is called

for at this pivotal moment in history,” the organisation said.

Barack Obama to meet Pope Benedict XVI during G-8 summit in Italy

The president, criticised by American bishops for his views on abortion, will visit the pope during the G-8 summit

A White House spokesman says Barack Obama and Pope Benedict XVI will talk about their shared belief in the dignity of all people at their meeting next month.

The White House today said the two leaders would meet while Obama visits Italy for the G-8 summit.

Obama’s support for abortion rights and stem-cell research, which the Vatican opposes, has drawn heavy criticism from some American Catholic bishops.

White House spokesman Robert Gibbs says Michelle Obama plans to join the president on the trip to Italy.

New rules aren’t enough | Dean Baker

The Obama administration’s financial reforms won’t prevent future economic crises if regulators remain asleep on the job

The Obama administration’s proposal for reforming financial regulation has many useful features. In particular, the proposed consumer financial protection agency likely would have prevented many of the worst abuses in the subprime market over the last decade, as well as in other areas of consumer lending.

Other measures, like requiring that standardised derivatives be traded as clearing houses and that hedge funds register their interests with the Securities and Exchange Commission are positive steps towards modernising regulation, although they do not go far enough.

The US Treasury should be trying to standardise all derivatives and have them exchange traded to maximise transparency. There also should be increased public disclosure of hedge fund dealings. But, these are not the biggest flaw in the administration’s regulatory proposals. The biggest flaw is that they help to support the view that the main problem was inadequate regulations, rather than failed regulators.

The basic story of this crisis was not that the regulatory authorities lacked the ability to rein in this disaster before it was too late. Rather, the regulators – most importantly the Fed – opted not to use their power to rein in the housing bubble.

The Fed had ample tools at its disposal to burst the housing bubble before it expanded to such a dangerous size. To start, the Fed could have tried just providing information. First, Alan Greenspan could have devoted his congressional testimonies and other public appearances to warning about the housing bubble.

These warnings would include both a careful description of the evidence for the bubble (with tables and charts) and a detailed account of the damage that would be caused to both the economy and the financial sector from its collapse. The Fed could have also committed its staff of thousands of economists to detailing the case for a housing bubble and drawing out the implications for various regions and sectors of its collapse.

If Greenspan had followed this route, rather than insisting that there was no bubble, it is likely that it would have been sufficient by itself to burst the bubble. No major financial institution can simply ignore the Fed, and there was no plausible response to the argument showing the existence of a housing bubble.

If talk proved insufficient, the Fed should have used its regulatory authority to clamp down on many of the bad loans that were feeding the bubble. It eventually did issue guidelines that would have precluded many of these loans, but not until the middle of 2008.

Finally, if necessary, the Fed should have raised interest rates until the bubble burst. This would have been undesirable, since it would slow growth and raise unemployment, but it still would have been better than letting the bubble grow and create the basis for even more pain later. And the story of the crisis is the story of a collapsed housing bubble.

The discussion of financial issues has largely worked to hide the centrality of the housing bubble to the crisis. If there had been no credit default swaps, collateralised debt obligations or subprime and Alt-A mortgages but the housing bubble had still grown to $8tn, we would be in pretty much the same economic situation that we are in today.

Residential construction would have collapsed due to a huge glut in the housing market, and consumption would have plunged as a result of the loss of $8tn in household wealth. The financial problems created by failed regulation do complicate the picture, but the fundamental picture is a very simple one of a collapsed bubble causing demand to plummet.

Politicians and regulators have a direct interest in portraying the crisis as being the result of an inadequate regulatory apparatus rather than failed regulators, because failed regulators should get fired. However, by not holding failed regulators accountable, this reform proposal is setting the grounds for the next crisis.

Even a perfect regulatory structure will not work if the regulators do not do their job. They will not have an incentive to do their job if there are no consequences for failure.

In this case, we have seen the most disastrous possible regulatory failure. This is like a drunken school bus driver who gets all his passengers killed driving into oncoming traffic, and no one is held accountable. The message to future regulators is, therefore, to simply go along with the powers that be (ie the financial industry), and you will never suffer any negative consequences.

All the president’s emails as seen by Oliver Burkeman - Mon 22 June

In a unique experiment in democratic transparency, Barack Obama - a BlackBerry owner, and the first American president to use email while in office - has agreed to copy G2 in on his otherwise highly confidential electronic communications. Each week, we present a selection from recent days: As seen by Oliver Burkeman

09.15 Mon 22 June

To: Harry Reid [majority.leader@senate.gov]
Subject: Re: advice for dealing with infuriating insects, parasites etc?

Pretty simple, really. You just stay very calm, breathing in absolute silence, and wait for a moment when - however briefly - they’re not paying attention. Then, in a single, swift movement, you bring your open palm down on the back of the head - WHACK! - and death follows instantaneously. They don’t feel a thing. And you end up looking like a ninja, which makes everyone who’s watching think you’re fantastic. (And who am I to contradict the American people?)
Barack

To: Harry Reid [majority.leader@senate.gov]
Subject: Re: re: re: advice for dealing with infuriating insects, parasites etc?

Oh, my mistake - you were talking about the congressional opponents of healthcare reform! Actually, though … maybe try a similar tactic? Or ask Rahm to lend you his nunchucks. (We wouldn’t have got the spending bill passed without them.)
Barack

To: David Axelrod [david@davidaxelrod.com]
Subject: Re: Washingtonpost.com: Khamenei warns of crackdown on reformers

These guys need to CHILL OUT. I mean, you know there’s no love lost between me and my predecessor, but at least he stole the election with a relative degree of speed and panache. Perhaps we should send him over to advise? I hear his rates are pretty low these days.
BHO

To: Reggie Love [bodyman@barackobama.com]
Subject: Fly-swatting — thanks

You rule. Who knew you could buy ones that looked so realistic? And while I know the networks are still pretty friendly towards us, persuading them to dub in the buzzing sound over the interview footage was a class act. Respect!
BHO

To: Hillary Clinton [secretary@whitehouse.gov]
Subject: Re: Hey, Hillary Clinton, Someone Sent You A Free ‘Get Well Soon!’ E-Card!

Oh, it was nothing. I mean, literally: it was nothing. (That’s the great thing about free e-cards!) But I’m sorry to hear that Joe didn’t see fit to rein in his annoying conversational habit of delivering a jocular punch to the arm while making a point. It’s annoying at the best of times. I can’t imagine what it’s like when you’ve broken your elbow.
Warmly,
Barack

PS. Bet I could beat you in an arm-wrestle. (For the next few weeks, anyhow.)