Check It Out for Friday, May 29th
Paul Krugman at the NYTimes on the big inflation scare.
"Suddenly it seems as if everyone is talking about inflation. Stern opinion pieces warn that hyperinflation is just around the corner. And markets may be heeding these warnings: Interest rates on long-term government bonds are up, with fear of future inflation one possible reason for the interest-rate spike.
"But does the big inflation scare make any sense? Basically, no — with one caveat I’ll get to later. And I suspect that the scare is at least partly about politics rather than economics.
"First things first. It’s important to realize that there’s no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger.
"So if prices aren’t rising, why the inflation worries? Some claim that the Federal Reserve is printing lots of money, which must be inflationary, while others claim that budget deficits will eventually force the U.S. government to inflate away its debt.
"All of this raises the question: If inflation isn’t a real risk, why all the claims that it is?
"Well, as you may have noticed, economists sometimes disagree. And big disagreements are especially likely in weird times like the present, when many of the normal rules no longer apply.
"But it’s hard to escape the sense that the current inflation fear-mongering is partly political, coming largely from economists who had no problem with deficits caused by tax cuts but suddenly became fiscal scolds when the government started spending money to rescue the economy. And their goal seems to be to bully the Obama administration into abandoning those rescue efforts.
"Needless to say, the president should not let himself be bullied. The economy is still in deep trouble and needs continuing help.
Patrick Cockburn at The Independent about kickbacks at Iraq's Trade Ministry with the minister forced to resign and 1,000 officials facing arrest.
"Iraq plans to arrest 1,000 officials for corruption after a scandal which has forced the resignation of the Trade Minister and is threatening the food supply of millions of Iraqis.
"Corruption at the Trade Ministry is an important issue in Iraq because the ministry is in charge of the food rationing system on which 60 per cent of Iraqis depend. Officials at the ministry, which spends billions of dollars buying rice, sugar, flour and other items, are notorious among Iraqis for importing food that is unfit for human consumption, for which they charge the state the full international price.
"The scandal first erupted in April when police, entering the Trade Ministry in Baghdad to arrest 10 senior officials accused of corruption and embezzlement, were greeted with gunfire by the ministry's own guards. The shoot-out allowed several officials, including two brothers of the Trade Minister, Abdul Falah al-Sudany, time to escape out the back gate.
"The political crisis over corruption has escalated after a video surfaced showing Trade Ministry officials at a party, apparently drinking alcohol, cavorting with prostitutes, and deriding the Prime Minister, Nouri al-Maliki.
"Iraq is deemed the third most corrupt country in the world after Burma and Somalia, out of 180 countries, according to the corruption index compiled by Transparency International.
"Although it is an important oil producer, many Iraqis are on the edge of starvation; 20-25 per cent of Iraq's 27 million people live below the poverty line on less than $66 (£41) a month.
"Amid claims that Mr Sudany's relatives had made millions out of kickbacks from sugar purchases, Mr Maliki visited the leaderless Trade Ministry this week saying that his office would take over its functions. A committee is to take charge of Iraq's large import programme for grain and foodstuffs. "We will not keep silent about corruption after this day and we will chase all the corrupt and bring them before the judiciary," Mr Maliki said.
Helen Cobban at IPS News writes about US policy regarding Iran linkage to Palestinian-Israel issue.
"What is the relationship between the United States’ policy towards Iran and its performance on Arab-Israeli peacemaking, including the crucial quest for peace between Israel and the Palestinians?
"This quest took on new urgency after Palestinian Authority head Mahmoud Abbas had his first visit with Pres. Barack Obama in Washington on Thursday. After the meeting, Obama told reporters that "time is of the essence" regarding ending the Palestinian-Israeli conflict.
"The question of the linkage between the Israeli-Palestinian diplomacy and Washington’s Iran policy assumed new importance this week after Israeli reporter Yossi Melman reported that Dennis Ross, the State Department’s special adviser on Iran, has co-authored a book, due out next month, that scoffs at "the idea that if only the Palestinian conflict were solved, all other Middle East conflicts would melt away" - which was how the two writers defined the ‘linkage’ argument.
"Melman observed that it was strange that a man holding those views should be working for a U.S. administration that has made linkage between Iran policy and Israeli-Arab peacemaking a centrepiece of its Middle East policy.
"For example, right after his May 18 meeting with Israeli Prime Minister Benjamin Netanyahu, Pres. Obama said, "To the extent that we can make peace... between the Palestinians and the Israelis, then I actually think it strengthens our hand in the international community in dealing with a potential Iranian threat."
"For his part, Netanyahu seems to hate the idea that any such linkage exists, since that would imply that Israel should engage seriously with the Palestinians if it wants to win full U.S. support for the confrontational policy he favours towards Iran...
"The difference between Obama and Netanyahu over whether the Arab-Israeli peacemaking or the Iran question should have priority hangs to a large degree on a judgment regarding the motives of those Arab parties that have continued to resist Israel’s plans for the Middle East over recent years - primarily, Hamas, Hizbullah, and the Syrian government.
" 'The argument made by the Israeli hardliners is very similar today,' one Arab-affairs expert told IPS. 'Except now it’s Iran that is blamed for Palestinian militancy, not Iraq. But in fact, the main cause of Palestinian militancy all along has been Israel’s actions, and those are what need to change.'
"Two key Middle East elections are looming, too. Will Hizbullah and its allies do well in Lebanon’s elections on Jun. 5 - and how will Washington respond to that? What will Obama do with Iran after their elections, Jun. 12?
"The weeks ahead will be momentous ones for the Middle East. And the way that linkage works, or does not work, between the Israeli-Arab arena and Iran will crucially affect these developments."
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