Wednesday, April 15, 2015


I still appreciate real comments about my old blog. Cheers, Don

Saturday, July 4, 2009

My new blog is here:

Sunday, June 21, 2009

the Ortega government wants to silence an opposition-leaning media outlet.

TO BE NOTED: From Bloggings by boz:

"Nicaragua silences radio station

Nicaragua's government has canceled the license for Radio La Ley. While the government claims the license was canceled over some technical violations of the telecommunications law, it's clear to everyone watching the situation that the Ortega government wants to silence an opposition-leaning media outlet.

Sound familiar? This is a story that is becoming increasingly common in some countries in Latin America. Peru canceled the license for Radio La Voz over documentation issues, but it was clearly due to the station's reporting on the violent clashes in Bagua. Ecuador's government is moving to suspend or shut down Teleamazonas TV over various political disputes regarding the station's reporting. Venezuela's government continues to attack Globovision through various administrative rules, with President Chavez publicly stating that they can only remain on the air if they change their editorial line.

Shutting down private media outlets over political disagreements is a clear violation of freedom of the press as it's defined by the UN, OAS and most of these countries' constitutions. Governments do have rights and obligations to regulate the broadcast spectrum, but using legal technicalities to attack the media outlets does not make the violation of democratic rights any less egregious.

structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in Sept

TO BE NOTED: From the FT:

Fed plans repo markets revamp

By Henny Sender and Michael Mackenzie in New York

Published: June 21 2009 22:31 | Last updated: June 21 2009 22:31

The US Federal Reserve is considering dramatic changes to the giant repurchase – or repo – markets where banks around the world raise overnight dollar loans.

The plans include creating a utility to replace the Wall Street banks that handle transactions, people familiar with the matter say.

The Fed’s deliberations are partly motivated by concerns that the structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in September last year.

Fed officials plan to meet next month with market participants to discuss reforms.

People familiar with the Fed’s thinking say it is looking into the creation of a mechanism to replace the clearing banks – the biggest of which are JPMorgan Chase and Bank of New York Mellon – that serve as intermediaries between borrowers and lenders.

“The Fed is raising questions about whether the system really protects the interests of all participants,” says one person familiar with the Fed’s thinking.

In the repo markets, borrowers, such as banks, pledge collateral in return for overnight loans from lenders, such as money market funds.

The clearing banks stand between the parties, providing services such as valuing the collateral and advancing cash during the hours when trades are being made and unwound.

Fed officials fear this arrangement puts the clearing banks in a difficult position in a crisis. As the value of the securities falls, clearing banks have an obligation to demand more collateral to avoid losses. But in doing so, they could destabilise a rival.

“The clearing banks fear the positions of the investment banks are so large that a default would be difficult for them to manage,” the person familiar with the Fed’s thinking said.

“[Everyone] is thinking about how to remove conflicts of interest of the clearing banks and the investment banks so that the investment banks aren’t vulnerable to a sudden restriction of credit.”

The system’s complications were evident during Lehman’s collapse. JPMorgan, one of Lehman’s biggest trading partners, acted as its clearing bank in the repo market and – along with BoNY Mellon – served as the clearing bank for the New York Federal Reserve’s credit facility for securities ­companies.

Lawyers for the Lehman estate and for creditors have raised questions about whether JPMorgan acted too aggressively in seizing and marking down Lehman’s collateral.

Hedge funds have bought Lehman debt on the theory that the estate can claw back some of that collateral in court.

Citing confidentiality concerns, JPMorgan declined to comment.

The Fed hopes to have a new repo system in place by October, when its credit facility for securities companies is to close.

They see the financial crisis primarily as a moral crisis of Anglo-Saxon capitalism.

TO BE NOTED: From the FT:

Berlin weaves a deficit hair-shirt for us all

By Wolfgang Münchau

Published: June 21 2009 18:49 | Last updated: June 21 2009 18:49

A decision was taken recently in Berlin to introduce a balanced-budget law in the German constitution. It was a hugely important decision. It may not have received due attention outside Germany given the flood of other economic and financial news. From 2016, it will be illegal for the federal government to run a deficit of more than 0.35 per cent of gross domestic product. From 2020, the federal states will not be allowed to run any deficit at all. Unlike Europe’s stability and growth pact, which was first circumvented, later softened and then ignored, this unilateral constitutional law will stick. I would expect that for the next 20 or 30 years, deficit reduction will be the first, second and third priority of German economic policy.

Anchoring the stability law at the level of the national constitution is an extreme measure – like locking the door, and throwing the keys away. It can only ever be undone with a two-thirds majority – and even a future Grand Coalition may not be able to deliver this as both of the large parties are in a process of secular decline. It means that future fiscal policy will be in the hands of the justices of Germany’s Constitutional Court. The new law replaces a much softer constitutional clause – a golden investment rule that said deficits can only be used to finance investments. It was not a satisfactory rule, but at least it allowed structural deficits in principle. The new law not only sets draconian deficit ceilings, it also provides a detailed numerical toolkit to implement the rules over the economic cycle.

I can foresee two outcomes. First, Germany might end up in a procyclical downward spiral of debt reduction and low growth. In that case, the constitutionally prescribed pursuit of a balanced budget would require ever greater budgetary cuts to compensate for a loss of tax revenues.

To meet the interim deficit reduction goals, the new government will have to start cutting the structural deficits by 2011 at the latest. There is clear danger that the budget consolidation timetable might conflict with the need for further economic stimulus, should the economic crisis take another turn for the worse. There is still economic uncertainty. Bankruptcies are rising, and the German banks are just about to tighten their credit standards again. I simply cannot see how Germany can produce robust growth in such an environment, not even in 2011. If that scenario prevails – as I believe it will – the new constitutional law will produce a pro-cyclical fiscal policy with immediate effect.

One could also construct a virtuous cycle – the second outcome. If Germany were to return to a pre-crisis level of growth in 2011, and all is well after that, the consolidation phase would then start in a cyclical upturn.

Either of those scenarios, even the positive one, is going to be hugely damaging to the eurozone. In the first case, the German economy would become a structural basket case, and would drag down the rest of Europe for a generation. In the second case, economic and political tensions inside the eurozone are going to become unbearable. Over the past 25 years, France has more or less followed Germany’s lead at every turn, but I suspect this may be a turn too far. Deficit reduction has not been, nor will it be, a priority for Nicolas Sarkozy, the French president. On the contrary: he has listened to bad advice from French economists who told him that budget deficits are irrelevant, and that he should focus only on structural reforms. Budget deficits and debt levels matter in a monetary union. But a zero level of debt is neither necessary nor desirable.

I am a little surprised not to hear howls of protests from France and other European countries. Germany has not consulted its European partners in a systematic way. While the Maastricht treaty says countries should treat economic policy as a matter of common concern, this was an example of policy unilateralism at its most extreme.

What is the rationale for such a decision? It cannot be economic, for there is no rule in economics to suggest that zero is the correct level of debt, which is what a balanced budget would effectively imply in the very long run. The optimal debt-to-GDP ratio might be lower for Germany than for some other countries, but it surely is not zero.

While the balanced budget law is economically illiterate, it is also universally popular. Average Germans do not primarily regard debt in terms of its economic meaning, but as a moral issue. Der Spiegel, the German news magazine, had an intriguing report last week on the country’s young generation. One of the protagonists in its story was a young woman who had borrowed a little money to set up her own company. The company turned out to be a success, and she had began to repay the loan. And yet she said she had not felt proud of having taken on debt.

This general level of debt-aversion is bizarre. Many ordinary Germans regard debt as morally objectionable, even if it is put to proper use. They see the financial crisis primarily as a moral crisis of Anglo-Saxon capitalism. The balanced budget constitutional law is therefore not about economics. It is a moral crusade, and it is the last thing, Germany, the eurozone and the world need right now."

Unlikely as it may seem, the plan suggests a net increase in regulatory agencies. In the US, this requires real ingenuity.

TO BE NOTED: From the FT:

A thin outline of regulatory reform

By Clive Crook

Published: June 21 2009 18:43 | Last updated: June 21 2009 18:43

David Bromley

The Obama administration’s proposals for US financial regulation are pretty good, as far as they go. The problem is they do not go far enough.

Great care and intelligence went into the plan announced last week. It makes no stupid suggestions; recall Sarbanes-Oxley, a recent instance of unguided regulatory backlash, and you see this is no small achievement. But the plan’s comprehensiveness is a bit of an illusion. It ignores many issues, and has more loose ends and suggestions for further review than actual innovations.

Also, as in other areas, the White House is unwilling to confront the political barriers to fuller reform. You can call this pragmatism, or you can call it timidity. A crisis of this order demands big new ideas, and the leadership to push them through. In finance, if not now, when?

The administration asks Congress, which will have to write new laws for the plan to work, to fill some of the biggest holes in the existing structure. Systemically important financial institutions, whether or not they are banks in the old-fashioned sense, should be more tightly regulated by the Federal Reserve, says Mr Obama.

In addition, a new intervention regime should cover all such firms, modelled on the scheme run by the Federal Deposit Insurance Corporation for ordinary banks, says the plan. The idea is to wind up a failing bank early and in an orderly way, rather than facing the choice of bailing it out or letting it collapse and maybe drag others down with it.

The administration is right: these are big and necessary changes. But the details are vague. How exactly the tighter regulation of these “tier one financial holding companies” will work – what their capital and liquidity requirements will be, for instance – is for further study. Firms in this category will pay a regulatory surcharge, as they should. And the plan seems to favour counter-cyclical capital requirements too, which would brake lending growth in credit booms. Again this is right; again there are no specific proposals.

The plan calls for tighter regulation of securities markets. It proposes, for instance, that issuers of credit-risk securities should retain a share of the risk. It wants many over-the-counter derivatives to be traded on exchanges, which is safer, and proposes to bring “all OTC derivatives and asset-backed securities into a coherent and co-ordinated regulatory framework”. Quite right.

But what about Fannie Mae and Freddie Mac, the vast “government sponsored enterprises” that were instrumental in stoking the subprime boom? The plan bravely calls for a “wide-ranging initiative to develop recommendations”.

What about the credit-rating agencies, and the measurement of risk for regulatory purposes more generally? There is no point in telling financial institutions to set aside more capital if they are free to pump up their risks at the same time. The plan is thin. It wants better regulation of the rating agencies. Who doesn’t? But what would better regulation of the agencies look like? That needs further study.

“The financial crisis highlighted the problems associated with compensation structures that do not take into consideration risk and firms’ goals over the longer term,” says the plan. Indeed it did. The report says little on what to do about it, and next to nothing about wider bank corporate governance.

Fair-value accounting? Further review.

These are all complicated issues, and wide consultation is doubtless required to design the rules. So in a way it is unfair to complain about loose ends. It would be easier to feel that way if the administration had got things right at the organisational level. Unfortunately it has not. Perhaps the biggest disappointment in the plan is that it fails to address the bewildering complexity of the regulatory apparatus.

Unlikely as it may seem, the plan suggests a net increase in regulatory agencies. In the US, this requires real ingenuity. Recognising the issue of “jurisdictional disputes among regulators” – a problem that is going to get worse under these plans – it calls for a new Financial Services Oversight Council, chaired by the Treasury. This would advise the Fed on which firms should be regarded as systemically significant, and “facilitate information sharing and co-ordination”. Regulation by committee, atop a system of overlapping agencies unsure of their responsibilities, with financial firms still free to shop around for a regulator they like, does not inspire.

Crucially, it also militates against effective international co-ordination. Aside from poor oversight of the shadow banking system and the system-wide failure to account properly for risk, the biggest weakness in the existing regulatory scheme has been lack of cross-border co-operation by national regulators. The more complicated the domestic regulatory structure, the harder it will be for US regulators to work with their counterparts abroad.

Why no effort to streamline the structure? The answer seems to be that Congress would object. A simpler organisation chart would strip its oversight committees of responsibility, and their members of influence. The White House apparently regards this as too much to ask. On health reform, the administration has given control of the entire project to Congress. On financial regulation, it is still trying to direct the policy – but from the outset within limits that respect the legislature’s preferences, however ill advised. That is a pity."

And if you need hope, if you're coming apart You can surely find it in my dad's heart.

TO BE NOTED: From Catie Curtis:

The new version of "Dad's Yard" now released FREE here (with artwork) so scroll down and have at it!

"Hello, Stranger", the string band sessions CD I recorded earlier this year with Garry West at Compass Records, will be available as an itunes exclusive on June 16th! The actual CD, with cover art by best-selling illustrator/humorist Suzy Becker, will be released soon after. More details coming soon!

The BIG news today, is that the new version of my song "Dad's Yard," which I recorded with Grammy Award-winning musicians Stuart Duncan (Allison Krauss sideman), Alison Brown, George Marinelli and Darrell Scott, is available here as a free download! I have always thought that "Dad's Yard" would make a good tribute song/gift for Fathers Day (or to celebrate anyone whose motto in life is "Never throw anything away"). So as of today, "Dad's Yard" is here at! There is also artwork that you can download as a card/insert for the CD jewel case (make sure to reuse an old, scratchy jewel case in keeping with the song) which would make it an excellent Father's Day card with CD. Thanks to Compass Records for offering this gift to you.

This year has been pretty amazing so far. I got to dig in to the Sweet Life (Sept 2008), on the road in an extremely fun fall tour, including sold out performances in venues such as the Birchmere in Alexandria VA. I had the chance to share the gift of music through my Aspire to Inspire Guitar Initiative, which provided guitars to young musicians of limited financial means. In January, I performed at the HRC Inaugural Ball for Barack Obama, in February I brought Sweet Life to the UK, and in March and April I continued touring the United States, including a benefit concert in Madison with the Indigo Girls, Dar Williams and Ani Difranco.

I look forward to September, when I will join the the Olivia team on their Alaska Cruise. I can't tell you how excited I am for the trip, and for the pleasure of performing to an Olivia audience. Olivia has included you and me in this cool promotion:

"Join Catie on Olivia and get $100 off! For the next 30 days, Olivia is offering a group program discount to all Catie fans who want to join her on the Alaka Cruise, Sep 20 - 27, 2009. Just call Olivia at 1.800.631.6277, tell us you are part of the Catie Curtis group and you will receive $100 off per person. For more information on the trips, just go to " Maybe this is the time! Honeymoon, anyone?

I am about to enter summer mode, when I hang out with my kids on the shores of Lake Michigan until early August. There are just a couple events during June and July. One is a recently added a house concert in Topsfield MA, on June 14. The 7 pm show is sold out and they are adding another at 9:30 for which tickets are still available. Also, I will be in Provincetown, MA on July 2nd at a show presented by public radio station WOMR.

I hope you all are finding your own summer mode-- whatever that means to you!

See you out there,
ps: of course I'll still be on FACEBOOK this summer--- friend me sometime.

last updated Friday, June 12th, 2009 @ 1:19 PM


Dad's Yard Zip File (zip)
This is a zip file containting an mp3 of the song and a pdf to print out. Open the zip file once you have downloaded it.

It's got an old chair that's got no seat
Cracked snowshoes and warped wooden skis
Hardcover books, pages all turned brown
Dad has a reason for everything he keeps around
So if you need something when times get hard
You can probably find it in my dad's yard
And if you need hope, if you're coming apart
You can surely find it in my dad's heart.
You never really know just what might be in store
If you go in the barn and open the boxes on the second floor
'Cause underneath the paper crumpled up in balls
You might find a gem or you might find nothing at all
And that's the fun of it, it's that mystery
And all these things burying other people's history
You can look at this stuff and wonder where it's been
Or you can pick it up and you can use it again
So if you need something when times get hard
You can probably find it in my dad's yard
And if you need hope, if you're coming apart
You can surely find it in my dad's heart.
He can see the beauty beneath the dust and the grime
He can see potential where the rest of us are blind
He will polish the grey until it shines clear blue
And if you know my dad, well, he won't give up on you
So if you need something when times get hard
You can probably find it in my dad's yard
And if you need love, if you're coming apart
You can surely find it in my dad's heart.

fee would be paid by large bank holding companies that engage in risky activities beyond traditional banking

TO BE NOTED: From the NY Times:

‘Too Big to Fail’ Policy Must End, F.D.I.C. Chief Says

Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, is adding to the debate over what may be the largest overhaul of the nation’s financial rules in decades.

In an interview on CNBC Friday morning, Ms. Bair said a main priority was ending the “too-big-to-fail doctrine” — the idea that a financial institution can become so large and interconnected that it must be propped up at all costs — and called the Obama administration’s proposed regulatory changes an “opening in the process” toward that goal.

She said she wanted a seat at the table in redrafting banking rules and reiterated her support for higher insurance fees for large banks that take big risks, an issue that has been a sore spot between her and John C. Dugan, the comptroller of the currency.


As the insurer of $6 trillion in bank deposits, the F.D.I.C. should be included in the decision-making process, Ms. Bair said Friday, especially when it comes to dealing with risks to the entire financial system.

“We would obviously like a seat at the table in decision making on systemic risk,” she said. “The F.D.I.C. has tremendous exposure to the system.”

Ms. Bair is seeking to create a separate insurance pool, similar to, but separate from, the deposit insurance premiums the F.D.I.C. currently collects from banks, which would be designed to curb systemic risk. The fee would be paid by large bank holding companies that engage in risky activities beyond traditional banking. Ms. Bair mentioned proprietary trading and over-the-counter derivative trading as two examples of activities that could warrant the payment of the new insurance fee.

Ms. Bair said the fees would create economic disincentives for banks to take on more risk and grow to a size that would make them too big to fail, thereby posing a risk to the whole financial system.

She also said that she is not likely to continue in her role at the F.D.I.C. past her five-year term, which ends in 2011.

“I am very much looking forward to getting back to more sane hours and more time with my family,” Ms. Bair.

Cyrus Sanati"

Saturday, June 20, 2009

A genuine and fruitful dialogue between believers and nonbelievers is impossible unless one takes the standpoint of one's interlocutor seriously


The Chronicle of Higher Education
The Chronicle Review

Reason vs. Faith: the Battle Continues

In 1802 Georg W.F. Hegel wrote an impassioned treatise on faith and reason, articulating the major philosophical conflict of the day. Among European intellectual circles, the Enlightenment credo, which celebrated the "sovereignty of reason," had recently triumphed. From that standpoint, human intellect was a self-sufficient measure of the true, the just, and the good. The outlook's real target, of course, was religion, which the philosophes viewed as the last redoubt of delusion and superstition. Theological claims, they held, could only lead mankind astray. Once the last ramparts of unreason were breached — our mental Bastilles, as it were — sovereign reason would take command and, presumably, human perfection would not be long in coming.

Soon legions of skeptics and naysayers emerged to cast doubt on the Enlightenment's presumptuous self-conceit. By making the lowly human intellect the measure of all truth, weren't the philosophes arbitrarily isolating humanity from the possibility of attaining a higher order of truth? Who would really want to inhabit a totally enlightened universe, denuded of mystery, plurality, and sublimity? What if ultimate reality weren't attainable by the prosaic methods of cognition or secular reason? What if, instead, the Absolute had more to do with the faculties of the imagination, intuition, or the unfathomable mysteries of the human unconscious?

A cursory glance at the major cultural divide of our day suggests that, in many respects, we haven't gotten much beyond the landmark dispute between faith and reason that separated the leading lights in Hegel's time. For with the notable exception of Western Europe, on nearly every continent, religion seems to have found its second wind. And it would be difficult to deny that this global revival of spirituality has occurred in pointed reaction to the broken promises of enlightened modernity. Nineteenth-century utopians like Charles Fourier speculated that, once industrial society was perfected, rivers and lakes would pulsate with lemonade, public fountains would overflow with salmon, men would learn to fly, and wild beasts would do our hunting. Instead, as we confront on a daily basis the dislocations of Western modernity — teeming cities, urban blight, industrially scarred landscapes, massive pollution, and climate change of eschatological proportions — it seems as though Oswald Spengler's Decline of the West was more clairvoyant than Fourier's odes to universal harmony.

Prominent secularization theorists like Peter L. Berger who, as recently as the 1960s, openly conceded religion's demise, are having to radically alter their forecasts. They have had to invent new concepts and categories to describe the phenomenon of religion's unexpected global resurgence. The philosopher Jurgen Habermas now felicitously refers to the advent of a "postsecular society" to characterize religiosity's remarkable staying power. In recent works such as Between Naturalism and Religion (Polity Press, 2008), he questions whether modern societies possess the moral resources to persevere without relying on their religious roots — the Judeo-Christian basis of secular ethics, for example. And Berger himself, who was once secularization theory's most vocal proponent, has expressed his change of heart in a book title, The Desecularization of the World (W.B. Eerdmans Publishing Company, 1999).

Today academe is rife with discussions of "political theology," a term popularized during the 1920s by the German jurist Carl Schmitt. Schmitt meant by it that all modern political concepts — sovereignty, natural rights, the social contract — are secularized versions of theological concepts. He sought to call into question the legitimacy of the modern age, which in his view fed parasitically off of a nobler theological past. Along the same lines, two weighty anthologies edited by the Johns Hopkins philosopher Hent de Vries have stressed the centrality of political theology for comprehending the impasse of the political present, defined in terms of the sordid triumph of neoliberalism and globalization: Political Theologies: Public Religions in a Post-Secular World (Fordham University Press, 2006, with Lawrence E. Sullivan of Notre Dame) and Minimal Theologies: Critiques of Secular Reason in Adorno and Levinas (Johns Hopkins University Press, 2005, translated by Geoffrey Hale).

The resurgence of political theology suggests that the promises of secular modernity have played themselves out and been found to be severely wanting. Formerly, Marxism provided a framework for radical social criticism. But with Communism's demise, the discourse of critique has seemingly been deprived of an immanent, secular basis. This is one key reason behind the revival of scholarly interest in political theology, which employs a messianic or salvific idiom to expose the failings of a predominantly "secular age."

As de Vries and Sullivan observe in the preface to Political Theologies: "The model of limited governance in political liberalism ... and the unstoppable engine of globalization find their match in spreading expressions of discontentment and resistance, which are often articulated in theologico-political terms." An appeal to the promises of "negative theology" — although we can't claim to know what a redeemed humanity might look like, we can speculate about the debased social conditions that prevent its realization — was the plaintive note on which Theodor Adorno concluded his aphoristic masterwork, Minima Moralia. As Adorno poignantly put it: "The only philosophy that can be responsibly practiced in the face of despair is the attempt to contemplate all things as they would present themselves from the standpoint of redemption. ... Perspectives must be fashioned that displace and estrange the world, reveal it to be, with its rifts and crevices, as indigent and distorted as it will appear one day in the Messianic light." Adorno's dramatic shift away from the profane discourse of left-wing social criticism to the framework of negative theology is a path that numerous disillusioned former leftists have subsequently tread.

A Secular Age (Belknap Press of Harvard University Press, 2007) is the title of a hefty tome — 874 pages, to be precise — published to much acclaim by the Canadian philosopher Charles Taylor. Two centuries ago, the German philosopher J.G. Fichte described the modern world as being in an age of "total moral corruption." To judge by Taylor's account, Fichte's verdict may have been excessively mild. The problem is that in modern life, religiosity has ceased to be an all-encompassing imperative. Instead, it resembles another "lifestyle choice," akin to whether one practices yoga or tai chi at the local gym. Taylor shows his hand forcefully and early on: "In our 'secular' societies, you can engage fully in politics without ever encountering God, that is, coming to a point where the crucial importance of the God of Abraham for this whole enterprise is brought home forcefully and unmistakably." Our public spaces, he writes, "have been emptied of God or of any reference to ultimate reality. ... This is in striking contrast to earlier periods, when Christian faith laid down authoritative prescriptions, often through the mouths of clergy, which could not be easily ignored. ..."

In Taylor's view, the failings of a secular age are egregious and manifold. He claims that, to our detriment, we live in an era of "exclusive humanism." To him, it is self-evident that the ideal of "fullness" — of authentic "lived experience" — is tied to ends that surmount both the self as well as the profane ends of creaturely life. For Taylor, it is clear that such ends can only be religious or transcendent.

Taylor contrives a new "faith based" lexicon of social criticism to indict the multifarious shortcomings of a secular age. In his view, modernity's "crisis of meaning" has reached grave and epidemic proportions. As denizens of a fallen world, we systematically lack commitments and allegiances that transcend the narrow confines of our own monadic egos. Our social existence has withered to the point where we have become a mass of atomized, "buffered" selves — living caricatures of Descartes's shallow, epistemological solipsism, ego cogito sum. As social beings we are incapable of creating cohesive and lasting bonds. For this reason, we have become incapable of community. Taylor castigates Protestantism — for him, Luther's 95 theses represent the beginning of the end of a transcendent, divinely ordained cosmos — insofar as it sacralized the everyday and thus obliterated the distance separating the sacred and profane. Deism, the religion of choice among the philosophes, comes in for a similar indictment, since it heretically sought to reconcile divinity with the strictures of a soulless and mechanistic Newtonian universe. According to the worldview of modern physics, what it means to be human is simply to be a body or an atom careening in space. Surely, existence doesn't get any more forlorn and godforsaken than that. "Authenticity" and "fullness" have become, at best, dim and distant memories.

The problem is that, as a thinker, Taylor is constitutionally incapable of conceiving of meaning in secular terms. His account smacks of one-sidedness — it is insufficiently dialectical. In an era of multiculturalism and value pluralism, it is both impossible and undesirable to return to the inflexible prescriptions of Belief as such. Moreover, Taylor refuses to acknowledge that, traditionally, dogmatic, all-encompassing religious doctrines have stood in the way of meaningful self-determination. Historically, the fundamentalist credo whose loss he mourns has inhibited freedom of inquiry, tolerance, human rights, and political emancipation. A life course that is not self-chosen, but that instead is lived under the constraint of authoritarian value-prescriptions, be they secular or sacred, is not a meaningful human life.

Moreover, Taylor is unconscionably silent when it comes to acknowledging the historical and political excesses of dogmatic belief: the intolerance, the persecutions, the expulsions, the forced conversions, the autos-da-fé. With Vatican II, the Catholic Church embraced the modern world — democracy, human rights, and religious pluralism — and thereby magnanimously avowed the errors of its previous ways. Taylor stubbornly refuses to walk down that road. Instead he wishes to turn back the clock — knowing all the while that that is impossible.

The irony is that Taylor's book itself might be a primary symptom that the tide has begun to turn; that the "secular age" he describes is well on its way to becoming "resacralized"; that the age of belief is in fact making a noteworthy comeback.

The crisis of meaning afflicting modernity was astutely diagnosed by the sociologist Max Weber who, in "Science as a Vocation" (1919), forecast that "the fate of our times is characterized by rationalization and intellectualization and, above all, by the 'disenchantment of the world.'" For Weber, the rise of rationalization meant that in the modern age all aspects of life are increasingly subjected to the solvent of instrumental reason. Rationality's advance causes meaning — and qualitative human experience in general — to atrophy.

A vocal chorus of scientific skeptics has emerged to challenge religion's resurgence. In many respects, they have reformulated the philosophes' critique of belief, which they have supplemented and buttressed with neo-Darwinian claims. They argue that since religion is an illusion — an expression of "false consciousness" — and since illusions are detrimental to progress, the world would be a better place were the last vestiges of belief entirely extirpated.

The problem is that, historically speaking, belief and meaning — or, to use Taylor's preferred term, "fullness" — have been integrally intertwined. Hence, to reject belief in the name of science potentially aggravates the crisis of meaning, with its attendant upsets and dislocations: alienation, social disorientation, anomie.

The return of the sacred is in large measure a response to modernity's failings. However, religion's neo-Darwinian detractors seem unable to fathom the correlation. Moreover, they are peculiarly tone deaf, or "unmusical," when it comes to comprehending the very real attractions of belief and spirituality for a great many denizens of our hyperrationalized, disenchanted cosmos. Thus, in The God Delusion (Houghton Mifflin, 2006), Richard Dawkins's portrayal of belief is so dismissive and simplistic that one wonders why anyone would embrace such demented and malicious ideals. As Dawkins observes: "To the vast majority of believers around the world, religion all too closely resembles what you hear from the likes of [Pat] Robertson, [Jerry] Falwell or [Ted] Haggard, Osama bin Laden or the Ayatollah Khomeini." Dawkins goes on to praise a newspaper advertisement for a BBC documentary based on his book featuring a pre-September 11 image of lower Manhattan — with the World Trade Center towers prominently displayed — bearing the caption: "Imagine a world without religion." In other words: Religion and fanaticism go hand in hand; it is impossible to separate the two.

In Breaking the Spell: Religion as a Natural Phenomenon (Viking, 2006), the philosopher Daniel C. Dennett begins with a parable that ultimately reveals more about the author's own antitheological prejudices than about his purported object of study. Dennett describes the suicidal behavior of an ant that repeatedly strives to climb to the top of a blade of grass where it can be better spied by potential predators. It turns out that the insect is the victim of a parasite that, to the ant's peril, is angling for the completion of its own reproductive cycle. Dennett treats this vignette as a cautionary tale about the perils of religion as an instance of demonic possession — albeit, ideational rather than microbial possession.

A few pages later he stoops to purvey an even more unflattering and condescending analogy: "Think of people who are addicted to drugs, or gambling, or alcohol, or child pornography. They need all the help they can get." Dennett views Breaking the Spell as an intellectual "intervention" for believers who similarly need to be weaned from their unwholesome addiction to divinity and transcendence.

But from a narrowly neo-Darwinian perspective, it is impossible to account for religion's indispensable role in forming the higher ideals that, as a species, help to make us genuinely civilized. Historically, religious ideals have inspired agape, compassion, selflessness, brotherly and sisterly love, community, and numerous good works. They have spurred political leaders like Mahatma Gandhi, the Rev. Martin Luther King Jr., and Desmond Tutu to oppose oppression and champion the cause of social equality. Religious conviction provided the moral suasion behind the 19th-century antislavery movement and has been a spur to numerous instances of humanitarian intervention.

A genuine and fruitful dialogue between believers and nonbelievers is impossible unless one takes the standpoint of one's interlocutor seriously.

Richard Wolin teaches history and comparative literature at the Graduate Center of the City University of New York. He is author of The Seduction of Unreason: The Intellectual Romance With Fascism From Nietzsche to Postmodernism (Princeton University Press, 2004). A new book, The Wind From the East: French Intellectuals, May '68, and the Chinese Cultural Revolution, is scheduled to be published by Princeton University Press in 2010."

didn't give the 3,000 or more protesters high odds against the security forces


Informed Comment

Thoughts on the Middle East, History, and Religion

Juan Cole is President of the Global Americana Institute

Sunday, June 21, 2009

Mousavi Defies Khamenei;
Police Attack Protesters at Inqilab Square;
Downtown Tehran Burning

Mir Hosain Mousavi issued a powerful implicit denunciation of Supreme Leader Ali Khamenei on Saturday, and insisting again that the results of the presidential election be annulled in favor of wholly new elections. ABC reports:

' Mr Mousavi hit back at a speech by the country's supreme leader, Ayatollah Ali Khamenei, in which the Ayatollah ruled out any election fraud. In a statement posted on his newspaper website, Mr Mousavi said his demand for the annulment of the election was an undeniable right and vowed to side with the Iranian people in defending their rights. "If this huge volume of cheating and changing the votes... which has hurt people's trust, is presented as the very evidence of the lack of cheating, then it will butcher the republican aspect of the system and the idea that Islam is incompatible with a republic will be proven," Mr Mousavi said. The strong criticism headlined "the fifth statement of Mir Hossein Mousavi to the Iranian people: don't allow lies and cheaters to steal the flag of defending the Islamic system from you" was briefly pulled from the website but later reposted.'

Some reports say that Mousavi has privately told followers that if he is arrested, they should carry out a nation-wide strike.

Mousavi has thrown down a gauntlet before the Supreme Leader and a battle has been joined. By the rules of the Khomeinist regime, only one of them can now survive. And perhaps neither will.

A. Richard Norton asks at IC Global Affairs whether the Iranian state really has the upper hand. He writes, "Dealing with civil disturbances is a labor intensive work. The natural response is to arrest the leaders and cut their communications, but those steps do not seem to be working to this point. People who are sufficiently inspired to join a demonstration at some risk to their lives constitute a movement not a bureaucratically organized unit. Particularly in fast-moving street confronations where wile, personality and courage are the currency unexpected leaders quickly emerge. As important, people learn quickly how to test, taunt and stretch the government forces. Provided the demonstrators desist from using deadly violence, their moral legitimacy will be enhanced. Plus, the government forces are hardly a monolith."

Earlier on Saturday, Mousavi and Mehdi Karroubi, the other reform candidate for president, refused to attend a planned reconciliation meeting with the Council of Guardians, Iran's clerical senate that has been charged to recount ten percent of the ballots. The absence from this meeting, set up by Khamenei to smooth over the dispute, indicated that the reformers' confidence in Khamenei has completely collapsed.

The politics of the ayatollahs in Qom with regard to the conflict are explored by Aljazeera English:

ABC added,
'Witnesses reported widespread violence as thousands of opposition supporters tried to stage another protest against last week's election. Protesters chanted "death to dictatorship" as they walked to the rally, but many were stopped and beaten by security forces, including the dreaded Basij militia. As many as 60 people were taken to hospital. Police used teargas and water cannons to disperse the crowd. '

This observer from a distance in North Tehran, whose account appeared on an email list to which I am subscribed, didn't give the 3,000 or more protesters high odds against the security forces:

' Tehran June 20th, 2009. 6 pm.

. . . About five miles south of here [at Inqilab Square] pitched battles have been in progress between what appears to be a very large number of pro-reform supporters and Baseej security forces. Over their plainclothes, the latter are wearing standard issue sleeveless flak jackets, they are carrying riot squad helmets, a variety of sticks ranging from the traditional indigenous chomaq to more modern varieties such as extendable black electroshock stun batons and riot shields. They are, in other words, professionally equipped (and perhaps trained) riot police who perhaps misplaced their uniforms or have an unusual sense of style.

As the numbers of demonstrators began swelling soon after 4 pm, the
security forces prevented people from traveling south to Enghelab Square.

At Amir Abad tear gas was used to disperse the crowd. It is hard to know
the details of the mini-battles going on and too early to count the
causalities but it is not, sad to say, so difficult to place odds on the

There was one instance of demonstrators successfully chasing away
some security forces by sheer force of numbers and will. They raised a
stirring cheer with hundreds of hands in the air. Moments later the
security forces returned ten times more in force and pressed that crowd,
that happy crowd, back into, of all places, Freedom Street.

Shots were fired into the air. Perhaps they were blanks, although a police officer
had said earlier in the day that they had received orders to shoot below the waist with live ammo in cases of coming under attack. (Immediately a joke is making the rounds to the effect that all orders from on high are "below the waist"!)

But the advancing line of riot police had left their rear completely
unguarded and tens of Allahu Akbar chanting demonstrators, had they been
committed to violence (which they are not) could have attacked from the
rear trapping those poor security men. But that is not the nature of this
struggle; besides one just can't trap several dozen security people
without knowing what your going to do next. And since this movement is not
a military or violent one, not is it very organized, it could never
develop tactics like that.

By now, 7 pm, the crowds are mostly dispersed. I have not heard reports of
any fatalities yet thank goodness. I have not heard about other parts of
the city. All mobile phones are switched off in the area so no contact can
be made. Interestingly the authorities have become much more efficient
over the last week. At they beginning, they switched of ALL the mobile
phone service, including text service, in the entire city so as to disrupt
communications among the movement. But today, they only switched it off in
the troubled neighborhoods. . . '

Another observer said that the Basij hard line militia had positioned itself in Sanati Sharif University in Tehran and that military helicopters were ferrying arms and equipment to them. Security forces lined the streets and sent back up north any protesters trying to come into the city center from north Tehran.

But this person maintained that the protesters were gathering with the intention of marching into the city after dusk.

As it was, fires were burning on Tawhid Square in downtown, and one observer said that the capital was 'on fire.' Smoke could be seen billowing above Tehran.

The LAT reports
' By nighttime, witnesses said, the unrest stretched from the side streets along Enghelab Street all the way from Azadi (Freedom) Street to Vali Asr Street, a miles-long corridor that is among the city's most important east-west thoroughfares. There were reports that disturbances had also broken out in other parts of the city, especially key squares in the north Tehran, but they could not be immediately confirmed.'

The LAT adds, "As the clock struck 10 p.m. today, parts of the city roared with chants of "God is great" and "Death to the dictator," as a nightly ritual of protest continued."

Graphic video of protesting women shot down can be found here. Warning: Very disturbing.

Brave Roger Cohen is in Tehran for the NYT, and he speaks of motorcycles set on fire sending columns of flames into the air, of teargas swirling about, of police wavering about whether they can attack fellow Iranians, and of the barricades being staffed by courageous women of all sorts.

Around 10 pm GMT some Iranian sites were reporting that tanks had entered Azadi Square.

Likewise there were eyewitness reports on my lists of an outbreak of violence between protesters and security men in various districts of the southwestern city of Shiraz. Spooked police there have sometimes randomly attacked persons who only look as though they might be protesters.

Huffington has an important statement of Iranian Americans on the events in Iran.

End/ (Not Continued)

For "cont'd" postings, click here.
posted by Juan Cole

Map locates the Azadi Square in Tehran, Iran, where at least seven people were killed in clashes
Associated Press

despite all the worldwide handwringing about Helicopter Ben and his printing presses, the dollar is still the daddy

TO BE NOTED: From Inca Kola News:

"With Bloomie blasting silly headlines about Chile's Peso (CLP) being "the world's best currency this week" and Colombia's "the worst", I thought it was high time to revisit the evolution of local currencies versus the dollar and get a bit of perspective. This one year chart....

.....shows the various rises and falls (or in Argentina's case rises and rises) against the dollar for the major locally floated currencies (not much point in featuring the Vzla Bolivar Fuerte here, and Paraguay's Guaraní.....well, it's never going to attract the attention of George Soros, is it?).

The main takeaway? Some currencies are strengthing back more quickly than others. But in the end, when push comes to shove and despite all the worldwide handwringing about Helicopter Ben and his printing presses, the dollar is still the daddy. Every single major trade currency in LatAm is down against the dollar YoY, even the economic miracle packaged up for saps with a bow and labelled Peru. And with base lending rates dropping fast all over the region as countries try to stimulate growth, the attraction of parking cash at higher risk is lessening, too.

Anecdotally, if you ever need a lesson in what the term "reserve currency" really means come down here with a thousand British Pounds, or Euros, of Aussies or Loonies or even an ounce of gold in your pocket and try to exchange them for the local currency of your choice and at the same time get the same fair deal you'd get for the equivalent amount of USDs. They say travel broadens the mind.................."

At the same time, the central bank may “aim to convince investors that tightening is not imminent,”

TO BE NOTED: From Bloomberg:

"Spending, Home Sales Probably Increased: U.S. Economy Preview

By Shobhana Chandra

June 21 (Bloomberg) -- Consumer spending in the U.S. probably rose in May for the first time in three months and home sales increased as Americans became more confident the recession will end this year, economists said before reports this week.

Purchases advanced 0.3 percent, according to the median of 58 estimates in a Bloomberg News survey ahead of Commerce Department figures due June 26. Combined sales of new and existing homes likely improved to 5.18 million, capping the first back-to-back increase since 2006, the survey showed.

“There’s more optimism as we get further away from last year’s financial-market chaos,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Spending on the part of consumers seems to be picking up after a soft patch. It looks like housing has bottomed.”

Government efforts to restore the flow of credit and prop up incomes are allowing households to take advantage of retailer discounts even as unemployment soars. Federal Reserve policy makers, meeting this week, may try to reassure investors that interest rates will stay low for the foreseeable future and acknowledge the economy has improved since their last gathering.

The Commerce Department’s spending report may also show incomes increased 0.3 percent in May after gaining 0.5 percent the prior month, mainly reflecting the tax cuts and transfers linked to the administration’s stimulus plan, economists said.

Home Sales

Sales of existing homes climbed 3 percent to an annual pace of 4.82 million, the highest level since October, when the economy was in the throes of the financial crisis, according to the survey median. Foreclosure-driven declines in property values are helping to reduce the glut of unsold houses. The National Association of Realtors’ report is due June 23.

The next day, Commerce data may show purchases of new homes rose 2.3 percent in May to an annual pace of 360,000.

In another sign of the improving economic outlook, the Reuters/University of Michigan final index of consumer sentiment probably rose to 69 in June, the highest level in nine months, from 68.7 in May, economists’ forecasts show. The figures are due on June 26.

Business in Las Vegas has “clearly bottomed out,” said Jim Murren, chief executive officer of casino company MGM Mirage. “It’s just a matter of how long we’re going to be on the bottom, and that is what we’re debating internally,” Murren said in a telephone interview last week. “The business trends are no longer deteriorating.”

More Upbeat

Fed officials on June 24, at the conclusion of their two- day meeting, may say the U.S. is showing signs of emerging from the worst recession in a half century. Following their last meeting in April, policy makers said the economy will “remain weak for a time.” The central bankers will also keep the benchmark interest rate in the range of zero to 0.25 percent, economists said.

“The Fed is likely to sound more upbeat on growth prospects,” Dean Maki, chief U.S. economist at Barclays Capital in New York, said in a note to clients. At the same time, the central bank may “aim to convince investors that tightening is not imminent,” he said.

Such an announcement may be an attempt by policy makers to prevent borrowing costs from climbing even more, undermining tentative signs of recovery. The yield on the benchmark 10-year note reached as high as 3.95 percent at the close on June 10, after being as low as 2.54 percent on March 18, the day the Fed announced it would buy Treasury securities in a bid to push borrowing costs down.

Some parts of the economy are lagging. A Commerce report due June 24 may show bookings for goods meant to last several years slid 0.8 percent in May, the survey showed. Durable-goods orders excluding transportation equipment may have also fallen.

Gross domestic product shrank at a 5.7 percent pace in the first quarter, the same as estimated in May, revised figures from Commerce may show. Following a 6.3 percent pace of contraction in the last three months of 2008, the drop capped the worst six-month performance in five decades. The figures are due on June 25.

                         Bloomberg Survey

Release Period Prior Median
Indicator Date Value Forecast
Exist Homes Mlns 6/23 May 4.68 4.82
Exist Homes MOM% 6/23 May 2.9% 3.0%
Durables Orders MOM% 6/24 May 1.7% -0.8%
Durables Ex-Trans MOM% 6/24 May 0.4% -0.4%
New Home Sales ,000’s 6/24 May 352 360
New Home Sales MOM% 6/24 May 0.3% 2.3%
GDP Annual QOQ% 6/25 1Q F -5.7% -5.7%
Personal Consump. QOQ% 6/25 1Q F 1.5% 1.5%
GDP Prices QOQ% 6/25 1Q F 2.8% 2.8%
Core PCE Prices QOQ% 6/25 1Q F 1.5% 1.5%
Initial Claims ,000’s 6/25 13-Jun 608 600
Cont. Claims ,000’s 6/25 6-Jun 6687 6707
Pers Inc MOM% 6/26 May 0.5% 0.3%
Pers Spend MOM% 6/26 May -0.1% 0.3%
PCE Deflator YOY% 6/26 May 0.4% 0.1%
Core PCE Prices MOM% 6/26 May 0.3% 0.1%
Core PCE Prices YOY% 6/26 May 1.9% 1.8%
U of Mich Conf. Index 6/26 June F 69.0 69.0

To contact the reporter on this story: Shobhana Chandra in Washington at

the Fed talking about an exit strategy, so that helps to contain longer-term inflation pressures

TO BE NOTED: From Bloomberg:

"Treasuries Rise, Led By 30-Year Bonds, as Consumer Prices Fall

By Dakin Campbell and Susanne Walker

June 20 (Bloomberg) -- Treasuries rose, with 30-year bond yields falling the most in five weeks, as a report showing consumer prices tumbled the most in six decades eased concern efforts to revive the economy would generate inflation.

U.S. debt gained as traders bet losses that pushed 10-year yields above 4 percent and 30-year bond yields to near 5 percent last week wouldn’t be sustained. The cost of living dropped 1.3 percent in the year ended in May, the most since 1950. The Treasury said it will sell a record $104 billion in two-, five- and seven-year notes next week.

“There are a number of factors that seem to favor longer- term bonds,” said Christopher Sullivan, who oversees $1.4 billion as chief investment officer at United Nations Federal Credit Union in New York. “Foremost among them was valuation. They shot up to 4 percent and value investors came in. That was then confirmed by the inflation data.”

Thirty-year yields fell 14 basis points this week, or 0.14 percentage points, to 4.50 percent, according to BGCantor Market Data. It was the most since shedding 19 basis points in the week ended May 15. The 4.25 percent security due May 2039 rose 2 6/32, or $21.88 per $1,000 face amount, to 95 27/32.

Ten-year yields fell one basis point to 3.79 percent. Yields reached as high as 3.88 percent.

Exit Strategy

Longer-term debt outperformed shorter-term securities as investors prepared for next week’s auctions. The U.S. will sell $40 billion in two-year notes on June 23, $37 billion of five- year debt the following day and $27 billion of seven-year securities on June 25.

“The long end is performing relatively well versus the front end because of the supply that we’re getting next week,” said Alex Li, an interest-rate strategist in New York at Credit Suisse Securities USA LLC, one of 17 primary dealers that trade with the Federal Reserve. “It also relates to the Fed talking about an exit strategy, so that helps to contain longer-term inflation pressures.”

Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank is developing plans to reverse the “enormous amount” of monetary stimulus to prevent inflation from accelerating as the economy picks up. He spoke yesterday in an interview on CNBC Television.

President Barack Obama signed a $787 billion, two-year economic stimulus plan in February. The Fed announced on March 18 it would buy up to $300 billion in Treasuries over six months to lower consumer borrowing costs, as well as purchasing $1.25 trillion of bonds back by home loans.

FOMC Meeting

All told, the U.S. government and the central bank have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

The difference between rates on 10-year notes and Treasury Inflation Protected Securities, or TIPS, which reflects the outlook among traders for consumer prices, fell to 1.91 percentage points yesterday, from 2.01 percentage points two weeks ago. The figure has averaged 2.23 percentage points in the past five years.

The Federal Open Market Committee concludes its two-day meeting June 24 amid speculation officials are considering whether to use the policy statement to suppress any speculation they’re prepared to raise interest rates as soon as this year. The Fed’s target rate is at a record low range of zero to 0.25 percent.

Traders reduced bets policy makers will raise borrowing costs by the end of the year, according to futures on the Chicago Board of Trade. Expectations fell to a 47 percent chance, from more than 60 percent a week ago.

Foreseeable Future

“We don’t see a rate hike occurring anytime in the foreseeable future,” said Kevin Flanagan, a Purchase, New York- based fixed-income strategist for Morgan Stanley Smith Barney. “The market doesn’t believe the Fed will make an announcement about buying more Treasuries.”

The consumer price index rose 0.1 percent in May after being unchanged a month earlier, the Labor Department said June 17 in Washington. That’s below the 0.3 percent forecast by 75 economists surveyed by Bloomberg News.

Investors also bought Treasuries as a safe haven yesterday after Moody’s Investors Service said it is considering cutting California’s credit rating.

California’s rating, already the lowest among U.S. states, may be cut by Moody’s as government leaders seek ways to eliminate a $24 billion budget deficit. The move would affect $72 billion of debt, Moody’s said in a statement. California’s full faith and credit pledge is rated A2 by Moody’s, five steps below top investment grade.

Mortgage Rates

U.S. government debt handed investors a loss of 4.3 percent since March through yesterday, according to Merrill Lynch & Co. indexes. U.S. securities are set for the worst quarter since losing 5.9 percent in the first three months of 1980, the data show.

Rising yields have complicated the central bank’s efforts to lower consumer borrowing costs. Thirty-year fixed-rate mortgages rose to 5.43 percent on June 18, the first gain in six days, from as low as 4.85 percent in April, according to in North Palm Beach, Florida.

The Federal Reserve Bank of Philadelphia’s general economic index climbed to minus 2.2 from minus 22.6 in May, the bank said on June 18. The Conference Board’s index of U.S. leading economic indicators rose more than forecast in May for the second straight month.

To contact the reporters on this story: Dakin Campbell in New York at; Susanne Walker in New York at

Last Updated: June 20, 2009 08:00 EDT "

Alas, a solution that does not address the cost of care, and negotiate new prices for the services offered will not work

TO BE NOTED: From the WSJ:

The Wall Street Journal

The Myth of Prevention

A doctor explains why it doesn’t pay to stay well. Decoding what works, what falls short in Obama’s plans to reform health care

Art Resource, NY

A doctor tends to a mortally ill child in Sir Luke Fildes’s 1891 painting ‘The Doctor.’

When President Truman had his shot at universal health care in 1949, the American Medical Association unfortunately made use of Sir Luke Fildes’s famous painting, “The Doctor,” in a negative campaign. “The Doctor” happens to be my favorite painting, mostly because of the story behind it: Sir Luke Fildes lost his oldest son, Phillip, on Christmas Eve, 1877; despite the tragedy, he was so impressed with the physician who cared for the child, that for his first commission from sugar merchant Henry Tate (who would go on to establish a collection and gallery in London by his name) he chose to depict “the physician in our time.”

You’ve probably seen a print: At the center of the canvas a mortally ill child lies on a makeshift bed in what is clearly a fisherman’s cottage. The doctor seated by his patient, leans forward, chin on his hand, intently studying the child. His posture and gaze suggest that nothing less than the child’s recovery (or death) would lead him to break his vigil. The anxious parents are in the background waiting for some sign from the doctor.

The AMA used this image on thousands of posters, adding the caption, “Keep Politics Out of this Picture.” They hoped to convince the public (and did) that government intervention would mean the end of home visits; government intervention would eliminate what Fildes captures so well: the sacred bond between doctor and patient.

“Sacred bond,” alas, is not among the descriptors I hear when patients tell me what they think of us or our health care system. The descriptors fit to publish include “inattentive,” “no-one-in-charge” and “money grubbing.” In fact, a thoughtful lay friend recently said to me in the context of her medical care, “Face it, Abraham, medicine is corrupt.” She stated this casually, as if it were an obvious and well-known fact, not waiting to see if I would agree. At the time I remember that I sputtered. I wanted to protest but the sounds would not come out. That word “corrupt” gnawed at me for days.

Associated Press

President Obama in a speech to doctors promised to let them return to the work of healing as part of his proposed health-care reform.

I had another such sputtering moment during the course of President Obama’s speech to the AMA this week, but I shall come to that presently. The speech was remarkable for many things, but most of all for the way the audience of physician members sat and took their lumps. The fact that they clapped at times, and even gave him a standing ovation, surprised me. The speech was a model of clarity, full of the kinds of truths we in medicine have managed to dodge and distort for years. But keep in mind he was speaking to the AMA, the organization most responsible for conditioning the public to respond to the words “socialized medicine” with the fight-or-flight response one has on seeing a rabid skunk approaching.

President Obama pointed to the problem of “a system of incentives where the more tests and services are provided, the more money we pay.” As if to rub it in, he added, “And a lot of people in this room know what I’m talking about.”

Oooo, there was that “corrupt” word again, even though he did not say it. This part of the speech drew no applause, just stony silence.

Yes, Mr. President, a lot of people inside and outside that room know exactly what you are talking about. A skewed reimbursement scheme set up by Medicare, a system that pays generously when you do something to a patient, but is stingy when you do something for a patient, is largely to blame. Cut, poke, sew, burn, insert, inject, dilate, stent, remove and you get very well paid; if you learn how to do this efficiently, maybe set up your own outpatient center so you can do it to more people in a shorter time (which is what happened when this payment system was put in place in 1989) and you are paid even more. If, however, you are a primary care physician, and if, just like the young doctor who saw my parents yesterday, you spend time getting to know your patients, and are willing to play quarterback when your patient enters the hospital, so that you can herd the consultants and guide the family through a bewildering experience that gets surreal if you are in the intensive care unit, then you may have great personal satisfaction but you will make five to tenfold less than your colleagues in the doing-to disciplines.

Our reimbursement system, as the president put it, “is a model that has taken the pursuit of medicine from a profession—a calling—to a business.”

My wife tried to tell me the other day that she had just ‘saved’ us money by buying on sale a couple of things for which we have no earthly use. She then proceeded to tote up all our ‘savings’ from said purchases and gave me a figure that represented the money we had generated, which we could now spend . . .she had me going for a minute.

I mention this because I have similar problems with the way President Obama hopes to pay for the huge and costly health reform package he has in mind that will cover all Americans; he is counting on the “savings” that will come as a result of investing in preventive care and investing in the electronic medical record among other things. It’s a dangerous and probably an incorrect projection.

Prevention of a disease, we all assume, should save us money, right? An ounce of prevention . . . ? Alas, If only such aphorisms were true we’d hand out apples each day and our problems would be over.

Getty Images

Doctors perform heart surgery at Childrens Hospital Los Angeles.

It is true that if the prevention strategies we are talking about are behavioral things—eat better, lose weight, exercise more, smoke less, wear a seat belt—then they cost very little and they do save money by keeping people healthy.

But if your preventive strategy is medical, if it involves us, if it consists of screening, finding medical conditions early, shaking the bushes for high cholesterols, or abnormal EKGs, markers for prostate cancer such as PSA, then more often than not you don’t save anything and you might generate more medical costs. Prevention is a good thing to do, but why equate it with saving money when it won’t? Think about this: discovering high cholesterol in a person who is feeling well, is really just discovering a risk factor and not a disease; it predicts that you have a greater chance of having a heart attack than someone with a normal cholesterol. Now you can reduce the probability of a heart attack by swallowing a statin, and it will make good sense for you personally, especially if you have other risk factors (male sex, smoking etc).. But if you are treating a population, keep in mind that you may have to treat several hundred people to prevent one heart attack. Using a statin costs about $150,000 for every year of life it saves in men, and even more in women (since their heart-attack risk is lower)—I don’t see the savings there.

Or take the coronary calcium scans or heart scan, which most authorities suggest is not a test to be done on people who have no symptoms, and which I think of as the equivalent of the miracle glow-in-the-dark minnow lure advertised on late night infommercials. It’s a money maker, without any doubt, and some institutions actually advertise on billboards or in newspapers, luring you in for this ‘cheap’ and ‘painless’ way to get a look at your coronary arteries. If you take the test and find you have no calcium on your coronaries, you have learned that . . . you have no calcium on your coronaries. If they do find calcium on your coronaries, then my friend, you have just bought yourself some major worry. You will want to know, What does this mean? Are my coronary arteries narrowed to a trickle? Am I about to die? Is it nothing? Asking such questions almost inevitably leads to more tests: a stress test, an echocardiogram, a stress echo, a cardiac catheterization, stents and even cardiac bypass operations—all because you opted for a ‘cheap’ and ‘painless’ test—if only you’d never seen that billboard.

The Road to Recovery

Reformers and the American Medical Association have been at odds about health-care policy for nearly a century.

Hulton Archive/Getty Images

1921: Women’s groups like the League of Women Voters and the Women’s Joint Congressional Committee work to pass the Sheppard-Towner Act, which allows the federal government to give aid to states for maternity and child health programs.

The AMA calls the act “socialized medicine” and opposes its renewal in 1927.

1935: President Franklin Roosevelt signs the Social Security Act, which does not include health care.

A 1930s article in the Journal of the American Medical Association written by the publication’s editor, Morris Fishbein, equates health insurance with “socialism, communism, inciting to revolution.” Some scholars believe that AMA’s powerful lobby against health insurance influenced the president’s decision to leave it out.

Associated Press

1949: President Truman tries to implement a national health-care program that provides all communities with access to doctors and hospitals.

The AMA launches a campaign using Sir Luke Fildes’s painting “The Doctor” and the slogan “Keep politics out of the picture.”

1962: President Kennedy pushes to extend Social Security to include health insurance for the elderly.

AMA runs “Operation Coffee Cup,” a public relations campaign undertaken by the AMA Women’s Auxiliary. The actor Ronald Reagan lends his support, records an LP called “Ronald Reagan Speaks Out Against Socialized Medicine.”

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1993: Hillary Clinton proposes a health-care reform package. In a speech to the AMA she suggests “a new bargain” in which the White House would limit malpractice lawsuits and free doctors from onerous rules if they lend their support.

The AMA opposes central elements of the plan, including federal regulation of insurance premiums, cuts in growth of Medicare and Medicaid.

2009: President Barack Obama delivers a speech to the AMA about his proposals for health-care reform. In addition to calling for a public health insurance plan, he proposes a payment system that rewards doctors for the quality of the care they provide rather than the quantity.

An AMA statement says the organization supports health-care reform and “is committed to affordable, high quality health coverage for all Americans.”

--Juliet Chung and Abraham Verghese

Poor McAllen, Texas. It happens to be the focus of a recent “New Yorker” piece by Atul Gawande, a piece that President Obama referred to in his speech to the AMA, because health care costs in McAllen are twice that of comparable cities while health outcomes are no different. The reasons are complex but probably because good physicians are ordering lots of tests, calling in lots of consultants, making good use of the equipment they own and the imaging centers they might have a stake in (and yes, they think they can be objective in ordering an MRI or CAT scan that sends the patient to their own facility); it has to do with hospitals competing with each other for the kinds of patients with conditions that are reimbursed well, and wooing patients, wooing high-volume physicians (some of whom are invited to invest in the hospital) to make full use of their PET scan, their gamma knife, their robotic-surgery facility, their cancer center, their birthing center. That was Atul Gawande’s conclusion, and I would concur.

But I’d like to officially let McAllen off the hook and say that having practiced in five states, including 15 years in the great state of Texas, we are all complicit in practicing just that kind of medicine if you look hard enough and if you looked at us individually. Conflicts of interest are rife; they are almost the rule. So is the ability to wear blinders so we are (mostly) oblivious to our conflict.

Which brings me to my problem with the president’s plan: despite being an admirer, I just don’t see how the president can pull off the reform he has in mind without cost cutting. I recently came on a phrase in an article in the journal “Annals of Internal Medicine” about an axiom of medical economics: a dollar spent on medical care is a dollar of income for someone. I have been reciting this as a mantra ever since. It may be the single most important fact about health care in America that you or I need to know. It means that all of us—doctors, hospitals, pharmacists, drug companies, nurses, home health agencies, and so many others—are drinking at the same trough which happens to hold $2.1 trillion, or 16% of our GDP. Every group who feeds at this trough has its lobbyists and has made contributions to Congressional campaigns to try to keep their spot and their share of the grub. Why not?—it’s hog heaven. But reform cannot happen without cutting costs, without turning people away from the trough and having them eat less. If you do that, you have to be prepared for the buzz saw of protest that dissuaded Roosevelt, defeated Truman’s plan and scuttled Hillary Clinton’s proposal. The good news is that the AMA, representing perhaps 15% of active practicing physicians, is not as powerful as it was in Truman’s time, and in the eyes of the public and many in medicine, it’s identity in the reform debate, is that of a protectionist, self-serving, organization; as a result, even their most progressive statements are viewed with suspicion. I’ve found the views of the American Medical Student Association particularly exciting—the next generation of physicians I sense has a deeper commitment to affordable health care for all than ours; they are, simply put, better people.

We may not like it, but the only way a government can control costs is by wielding great purchasing power to get concessions on the price of drugs, physician fees, and hospital services; the only way they can control administrative costs is by providing a simplified service, yes, the Medicare model (with a 3% overhead), and not allowing private insurance to cherry-pick patients (some of them operating with 30% overheads, the cost passed on to you).

Contrary to what we might think, comparative studies show us that the US when compared to other advanced countries, does not have a sicker population: we actually use fewer prescription drugs and we have shorter hospital stays (though we manage to do a lot more imaging in those short stays—got to feed the MRI machines). The bottom line is that our health care is costly because it is costly, not because we deliver more care, better care or special care. Alas, a solution that does not address the cost of care, and negotiate new prices for the services offered will not work; a solution that does not put caps on spending and that instead projects cost-savings here and there also won’t cut it. Leaders have to make tough and unpopular decisions, and if he is to be the first President to successfully accomplish reform there does not seem to be much choice: cut costs.

To come back to my favorite painting: a computer cannot take the place of the doctor in Fildes’s painting; an electronic medical record (EMR) may or may not save money (it won’t be anywhere as much as is projected) but what it will do is ensure that we doctors, nurses, therapists, particularly in hospitals will be spending more and more time focused on the computer, communicating with each other, ordering and getting tests, buffing and caring for our virtual patient—the iPatient is my term for this phenomenon—while the patient in the bed wonders where everybody is. Having worked exclusively for the last seven years or so in hospitals that have electronic medical records (EMR), I have felt for some time that the patient in the bed has become an icon for the real focus of our attention, the iPatient. Yes, electronic medical records help prevent medication errors and are a blessing in so many ways, but they won’t hold the patient’s hand for you, they won’t explain to the family what is going on.

I have a print of the Fildes painting close at hand, a reminder that all the marvels of science, all the advances of medicine don’t replace what patients want of their doctors and what most of us wanted to offer when we felt the calling to medicine: the opportunity to be fully present at the bedside, to bring the human comfort that only the presence of an attentive physician can bring, to convey to patient and family the unspoken promise, “I will stay with you through thick and thin.” That’s a privilege I won’t trade for anything you can offer me. The line in the president’s speech to the AMA, a line that got great applause, was this and it says it all: “You entered this profession to be healers—and that’s what our health-care system should let you be.”

—Abraham Verghese is Professor and Senior Associate Chair for the Theory and Practice of Medicine at Stanford University. He is the author of the novel “Cutting For Stone.”