The American Strategist

Steve Clemons directs the New America Foundation/American Strategy Program. This post originally appeared at The Washington Note.

Latin America policy uber diva Julia Sweig chaired a news-making gathering at the Council on Foreign Relations in Washington yesterday morning. It was excellent, and the CFR has audio of the entire event here.

In response to a question I posed to Sweig's panel, Obama administration Summit of the Americas point man Jeffrey Davidow fell back on droopy anachronisms while Foreign Policy magazine blogger and best-selling writer and geostrategic interpreter David Rothkopf hit the ball out of the park with his statement:

Today the New America Foundation is honored to be hosting former Egyptian First Lady, Jehan Sadat. Dr. Sadat, who spends half her year as a scholar in residence at the University of Maryland, will be discussing the ideas she outlines in her latest book, My Hope for Peace.

This post was authored by Timothy Little, a Research Intern for The American Strategy Program

A couple months ago I commented on a new attempt by Senator Bond (R-MO) to create a Senate Appropriations Subcommittee on Intelligence. With the election and the financial crisis dominating much of the conversations in Congress, there has been little movement on this issue. However, recent changes in Senate chairmanships and the new WMD report released could revive this issue.

A commission chaired by Bob Graham and Jim Talent released its report on the prevention of WMD proliferation and terrorism. They concluded what many policy analysts have been saying for some time: "a weapon of mass destruction will be used in a terrorist attack somewhere in the world by the end of 2013." The year is open to debate, but it will likely be within the next decade.

However, the same report called upon Congressional leadership to "establish an Intelligence Subcommittee on the Appropriations Committees in both chambers of Congress with jurisdiction over the National Intelligence Program and Military Intelligence Program budgets."

The new Chairman of the Senate Appropriations Committee, Senator Daniel Inouye (D-HI) said in 2004 when he was Ranking Member of the Senate Defense Appropriations Subcommittee:

A recent letter from Representative Henry Waxman to the CEOs of nine major banks asked why they were using taxpayer dollars for employee compensation instead of increasing lending in the banking system. Waxman, Chairman of the House Committee on Oversight and Government Reform, accused the banks of using $108bn of the $125bn provided by the Troubled Asset Relief Program (TARP) to maintain inflated bonuses and salaries while failing to ease tight credit conditions. Last week, Waxman grilled former Fed Chairman Alan Greenspan about his tenure as chairman and commitment to deregulation.

Snapshot asks, if the economy falls into a recession or even depression, will Wall Street face a popular backlash led by Representative Waxman?

FT - Goldman Partners' Reduced Rewards
Bloomberg - Wall Street Won't Surrender Bonuses Amid Outcry, Veterans Say
Henry Waxman - October 28, 2008
Bloomberg - Citigroup, Goldman Asked by Waxman to Justify Bonuses

 Alan Greenspan, Federal Reserve Chairman from 1987-2006, admitted before the House Committee onGovernment Oversight and Reform that he made mistakes as Fed chairman. Greenspan said the "flaw" in the assumptions he had over four decades was that lending institutions themselves were best able to protect the interest of their shareholders. The testimony marked a dramatic shift from a previously defensive position regarding his terms as chairman.

Meanwhile, the major ratings agencies, Moody's and Standard and Poor's, are undergoing thorough investigation by Congress as internal conversations about ignoring risk to make profits are revealed.

Snapshot asks, should regulators be making assumptions about the ability of financial institutions to manage their own risk?

This post was authored by Joshua Meah, a research intern for The American Strategy Program

Late into the night of Friday October 3, 2008, in an effort to settle a dispute over whether Palestinian President Mahmoud Abbas has the power to extend his tenure as President and move elections for the next president of the Palestinian Authority until 2010, there was a meeting of high-level Palestinian officials, including Hamas' Nasser Eddin al-Shaer, the previous deputy prime minister of the PA and President Abbas himself, in Ramallah.

China's export surplus in September set a new record at $29.3bn, despite the global slowdown. But, Chinese government officials and economists agree that exports will fall in coming months. The Chinese leadership issued a report saying that the country would rely more on domestic demand as a source of growth as consumers in Europe and the US cut back on spending.

The Central Committee's report promised better healthcare, more education, housing, pensions, land rights for rural peasants, and a doubling of rural incomes by 2020. The strengthening of the social safety net, which has deteriorated in recent years, and providing higher wages, is thought to increase domestic Chinese demand.

Snapshot asks, does China's central leadership have the will and capacity to boost consumption?

Bloomberg - China's Trade Surplus Widens to Record $29.3 Billion
AP - China looking inward as foreign economies slow
Bloomberg - China to Double Rural Incomes to Boost Consumption

Dr. James Galbraith speaks with Steve Clemons on his new book, The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.

During one of the last meetings between James Galbraith and his late father and world renowned economist John Kenneth Galbraith, he was told that if he authored a book on corporate greed it would be the defining book of his generation. His most recent book goes beyond his father's call. It puts an end to an era of dogmatic economic theory focused on free market capitalism as well as predicts the current financial meltdown.

There is so much fear wrapped up in this financial crisis that government leaders are willing to support anything, even if this means the bailout bill was concocted mostly between Henry Paulson and his former colleagues as Goldman Sachs.

It is true that action is needed to contain the financial crisis. Many of the most gifted economists--Paul Krugman, Lawrence Summers, and Joseph Stiglitz, for instance-are now in favor of a bailout. Stiglitz, a Nobel Laureate, is the pioneer of "moral hazard" theory, so it's hard to argue that this group doesn't understand the dangers of public largesse.

The US Senate passed the Troubled Asset Relief Program (TARP) last night in a vote 75-24.