Monday, May 7, 2012

U.S. Congress debates Export-Import Bank – Do we really need this bank?

By M. Ulric Killion

5-7-2012 3-21-28 AM

Photo Source: “Trade and aid are expected to top discussions during the China-Africa Summit...”; “Export-Import Bank of China extended $12.5 billion more in loans to sub-Saharan Africa in the past decade than the World Bank, Fitch Ratings said. State-owned EXIM lent about $67.2 billion to the world’s poorest region between 2001 and 2010 compared with the World Bank’s $54.7 billion…,” Mike Cohen, China’s EXIM Lends More to Sub-Sahara Africa Than World Bank, Bloomberg, December 28, 2011; cnsphoto/

The U.S. Congress is presently struggling with the issue of whether to renew the charter of the Export-Import Bank (Ex-Im Bank). Since its inception in 1934, the issue of renewing the charter of the Ex-Im Bank has hardly been a controversial one, as the U.S. Congress routinely and without controversy would renew its charter. This year, however, the renewal issue is causing a controversy, though surprisingly not along partisan lines. Rather, the center of the controversy is a division within the Republican Party.

According to the Associated Press, “In the House, Republicans are torn between their business allies who are strong Ex-Im backers and conservative groups which say the agency should be eliminated.” This controversy and division within the Republican Party also parallels diverging positions in the aircraft industry or trade in large civil aircraft, as seen in the difference between The Boeing Company (Boeing), which is a beneficiary of Ex-Im Bank financing, and Delta Air Lines that maintains Ex-Im Bank financing adversely affects its bottom line.

For those unaware, the Ex-Im Bank generally serves the critical role of helping to finance American companies’ overseas sales such as trade in large civil aircraft. In terms of global trade, the complaints of Delta Air Lines notwithstanding, for the U.S. economy, the renewal of the bank’s charter presents an economic imperative that will ultimately foster economic growth, productivity in manufacturing, jobs, and other positive amenities.

The role of the Ex-Im Bank and its potential to aid in the financing of overseas sales is important, as especially seen in the case of the European Union (EU) and its aircraft industry (i.e., trade in large civil aircraft). As Boeing earlier warned, as reported by the Financial Times, “Airlines will have to make greater use of the bond markets to pay for aircraft because European banks are pulling back from commercial aircraft financing.”

The reality of the present crisis of the large civil aircraft industry, as noted by Boeing Capital Corporation, which is the U.S. aircraft manufacture’s financial arm, airlines are now more likely to lease, rather than buy, new large civil aircraft, which is a direct consequence owing to a reduction in the availability of bank lending. According to Boeing Capital Corporation,

BCC expects that 10 per cent – or $10bn – of the financing for the 2012 deliveries will come from airlines and lessors tapping capital markets, mainly though bond rather than equity issuance. BCC estimates only 5 per cent of financing will have come from capital markets in 2011.

Meanwhile, BCC expects commercial bank lending for aircraft purchases to shrink as a proportion of aircraft financing, from 25 per cent in 2011 to 21 per cent in 2012. The absolute amount is due to increase slightly, from $19bn in 2011 to $20bn in 2012.

The benefits of an export-import bank, however, are subject to the world trading system and its rules, such as the World Trade Organization (WTO), Agreement on Subsidies and Countervailing Measures (SCM Agreement). It is notably that both Boeing and the EU’s Airbus have been subject to charges of violating the WTO’s SCM agreement, by receiving unfair subsidies.

For example, in March 2012, the WTO upheld a ruling that Boeing received “at least” $5.3 billion of unfair subsidies between 1989 and 2006, while also agreeing with Airbus that the effect of these subsidies or financial support was greater than their face value, as measurable in light of their “particularly pervasive” nature. There is also the pending WTO case against Airbus and its unfair subsidies. In April 2012, a WTO dispute panel agreed to further examine the EU’s compliance in the Airbus case, including an issue of new unfair subsidies.

While aircraft industry trending leans toward leasing rather than buying large civil aircraft, there are, however, exceptions to the rule such as the Development Bank of Japan (DBJ or Kabushiki-gaisha Nippon-seisaku-toshi-ginko), which is not pulling back from aircraft financing as seen with some European banks, and a growing participation in the market by some insurance companies.

Then there is the often overlooked potential role of the Ex-Im Bank in both international financing and international diplomacy. An exemplary example of such a role is the case of China and its export-import bank, which is the Export Import Bank of China (China Eximbank or Zhongguo Jinchukou Yinhang).

For instance, and quoting from an earlier article, China’s Eximbank earlier granted Belgrade a billion euro ($1.3 billon) loan to upgrade two power plants and, in the spring of 2010, commence the construction of a bride over the Danube River. Dusan Reljib, from the EU External Relations division of the German Institute for International and Security Affairs, described the Chinese presence as “gathering momentum right across the region. ‘The Chinese are in Slovenia, in Macedonia, they’re exporting buses to Skopje, they’re talking to Croatia about transport facilities, harbors, airports, railway connections,’ he said ‘and they’ve been talking to the Greeks about leasing possibilities in Athens harbor.’”

As Reljib also observed,

“With very little direct foreign investment coming into the region, tight government budgets and unemployment rates on the rise again, he says Balkan states need and welcome China’s money, which comes with grace periods, generously low interest rates and very few strings attached. ‘The Chinese do not attach economic or political conditions to their loans,’ Reljic said. ‘In a way, cheap Chinese money is an alternative to commercially expensive Western money or politically expensive money from the International Monetary Fund or the World Bank.’”

China’s creative international financing employs in many parts of the world, such as the regions of the Asia-Pacific, Latin America, Eastern Europe, and Africa.

In this respect, and demonstrating a broader importance of export-import banks, it may simply be an issue of a Beijing-form of creative international financing rather than a familiar Washington-form of capitalism.

In the end, a crisis looms because the charter of the Ex-Im Bank is set to expire at the end of this month, and there is also the issue of the Ex-Im Bank’s statutory lending cap of $100 billion. One reasonably suspects that the U.S. Congress will renew the Ex-Im Bank’s charter, and attempt to adjust its lending cap. This is because the role of the Ex-Im Bank rightly enjoys bi-partisan support, as it also actually aids in the promotion of competitiveness in manufacturing, economic growth, and world trade.


Jim Abrams, Ex-Im’s Future Caught Up in Congressional Fight, Associated Press, May 7, 2012.

Andrew Parker, Banks withdraw from aircraft financing, Financial Times, December 6, 2011.

Cathy Buyck, WTO upholds Boeing subsidies ruling: Airbus & Boeing both claim victory, Air Transport World, March 13, 2012.

World Trade Organization, Dispute Settlement - Dispute panel to examine EU compliance in Airbus case, WTO News, April 13, 2012.

World Trade Organization, SUBSIDIES AND COUNTERVAILING MEASURES: OVERVIEW - Agreement on Subsidies and Countervailing Measures (“SCM Agreement”); May 7, 2012.

M. Ulric Killion, Post-global Financial crisis: The measure of the “Beijing consensus” as a variety of capitalisms, MPRA Paper 26382, University Library of Munich, Germany, 2010.


See also The Republican Conundrum

All Rights Reserved M. Ulric Killion, 2012.

Tuesday, May 1, 2012

America’s Social Safety Net Teeters on Cliff Edge – Are Altruism, Democracy and Christianity Evil?

By M. Ulric Killion

5-1-2012 6-22-51 AM

Photo Source: “A federal court in Texas ruled to stop a new law on Monday that excluded Planned Parenthood from the Texas Women's Health Program, which serves about 130,000 low-income women in the state. U.S. District Judge Lee Yeakel ruled that the law was unconstitutional. . . After HHS cut off Texas' Medicaid money, Texas Gov. Rick Perry (R) promised to make up for the $30 million funding gap and pay for the Women's Health Program with the state's own money. But conservative Texas officials have suggested that they would rather end the entire program than allow Planned Parenthood to participate in it,” Laura Bassett, Texas Planned Parenthood Defunding Halted By Federal Judge, Huffington Post, April 30, 2012. Getty file.


The Republican Conundrum — “The United States cannot move out of history and be at the same time its most authentic contemporary expression.”

—  Mohamed Sid Ahmed, The Kagan Thesis (3) - Beyond Fukuyama and Huntington?, Al-Ahram Weekly On-Line No. 602, September 11, 2002.


Today, I was reading a blog at, which is written by Donna Barne, and titled, At Spring Meetings, Support for Safety Nets and a More Modern Bank. It is notable, as Barne explained, that the Washington D.C.-based World Bank recently “got the green light to ramp up work on social safety nets in a riskier world at the best-attended World Bank-International Monetary Fund Spring Meetings in the last decade.”

A primary goal of their spring meeting was two-fold: Closing the gap on social safety nets, and financial inclusion.

5-1-2012 5-57-34 AM

Photo Source: “The Spring Meetings and related events April 16 to 22 highlighted safety nets as a way to protect people from crises and to help “close the gap” in nutrition, gender equity, income and access to jobs”. . . Close the Gap: Safety Nets Work on April 18 brought together high-ranking officials from the Philippines and Brazil, development experts, and basketball stars to discuss, in a live webcast, how safety nets have changed lives in middle and low income countries, and why it’s important for governments to expand their investments in these programs,” Donna Barne, At Spring Meetings, Support for Safety Nets and a More Modern Bank,, April 23, 2012.

I found the article interesting, especially in the context of the American Republican Party and its explicit goal of ridding the country of entitlement programs and/or social safety nets and various rights of citizens, such as, for example, Obamacare, Medicare, Medicaid, social security, and gender equality. This is the new Republican Party, which is described by Robert Caro (author of "Master of the Senate," the Pulitzer Prize-winning volume of his Lyndon Johnson biography), in the article entitled, Robert Caro: Republicans Have Made Lawmaking ‘Near Impossible’, asintractable and it has the votes to stop legislation.” 

Barnes writes,

The Spring Meetings and related events April 16 to 22 highlighted safety nets as a way to protect people from crises and to help “close the gapin nutrition, gender equity, income and access to jobs. The Development Committee also called on the Bank to continue to look for solutions to the problems of fragile and conflict-affected states, food insecurity and malnutrition. High and volatile food prices are preventing millions of people from escaping poverty and hunger, according to the Bank’s latest Global Monitoring Report, released at the meetings.

Close the Gap: Safety Nets Work on April 18 brought together high-ranking officials from the Philippines and Brazil, development experts, and basketball stars to discuss, in a live webcast, how safety nets have changed lives in middle and low income countries, and why it’s important for governments to expand their investments in these programs. Some 80% of developing countries plan to create or improve safety nets, and this form of social protection is a critical component of the Bank’s new, 10-year Social Protection and Labor Strategy, released April 18.

In terms of the Republican Party, one reasonably suspects that it  supports the goals of the World Bank, and impliedly would support the goal of protecting “people from crises and to help “close the gap” in nutrition, gender equity, income and access to jobs; to name only a few of the issues and programs that they would generally characterize as entitlement programs or safety nets.

In other words, one suspects that the Republican Party probably supports this worthy effort to provide social safety nets for those living in foreign countries.

This is because the Republican Party has long taken pride in economic liberalization or globalization, which (commencing in the 1970s) the antagonists to globalization began to associate with the name of neo-liberalism.

Quoting from an earlier writing (Killion, Modern Chinese Rules of Order, 2007),

In the 1970s and 1980’s, the concept of neo-liberalism (or economic liberalism) begins to emerge with the debt crises in developing countries. In the 1970s, and pursuant to growing interests in international economics, the antagonists of economic liberalism and globalization commence usage of the nomenclature of neo-liberal, while those supporters subscribing to its tenants would rather prefer to themselves as simply libertarians, free marketers or conservatives. Neo-liberalism is also the name often given to the political-economic restructuring or reform programs proposed for developing countries by developed country economists, the IMF and World Bank, and some refer to the structural adjustment programs of the BWIs as simply neo-liberal reforms.

There are few who would doubt Republican Party support for the BWIs (i.e., Bretton Woods Institutions such as the International Monetary Fund (IMF) and the World Bank). Additionally, and quoting the earlier mentioned writing (Killion, 2007),

A criticism of neo-liberalism is that it arguably extends the same individual rights to transnational corporations and banks, and moves the rights of property from the status of a social right to that of a fundamental right. The complaint being that Western neo-liberalism treats transnational banks and corporate entities as equal, for instance, to a small farmer in China. The antagonists complain that while neo-liberalism grants significantly more freedom to corporate entities, a problem of neo-liberalism is that, historically, it does not extend the same freedoms to indigents and working people.

What should also be understood is that neo-liberalism necessitates neo-liberal policies and neo-liberal reform, because neo-liberal reforms, generally, encompass privatization, free markets, de-regulation, austerity and comparative advantage.

The problem of this earlier version of neo-liberalism, and its attendant neo-liberal policies, is that harsh criticism alongside debt crises in the 1980s actually necessitated a shift to more people-friendly policies; thereby, the birth of the idea of a more “pragmatic” neo-liberalism.

5-1-2012 7-15-43 AM

Photo Source; “These are only a few of the examples of education marginalization that occurs in every country in the world. These types of marginalization could only be addressed with policies that tackle underlying issues such as social inequity, gender disparity, and ethnic/linguistic disadvantages,” Global Education and Economic Downturn, Globalization 101, The Levin Institute - The State University of New York, March 14, 2011; Uganda – © UNESCO/Marc Hofer.

In other words, the previously mentioned tenants of neo-liberalism, who would rather prefer to themselves as libertarians, free marketers or conservatives, arguably have few qualms about protecting the social safety nets of other countries.

A problem is that in the context of the American people caught in the claws and fangs of globalization and its failings (i.e., the 2008 subprime mortgage crisis or global financial crisis), the Republican Party is showing little, if any, compassion for their fellow Americans, such as middle-class Americans and “very poor” Americans.

While the Republican Party, libertarians, free marketers or conservatives are clearly advocates of the earlier mentioned neo-liberal reforms, they admittedly might find the policies of protecting entitlements or social safety nets of other countries as objectionable. This may also be one of the objections of the Republican Party to President Obama’s recent appointment of Jim Yong Kim, Dartmouth president, to head the World Bank.

The seeming target of the new Republican Party and its extremisms on many social issues are vested rights, entitlements and/or social safety nets; such as women’s rights, the right to equal pay for women, fair employment rights, the Lily Ledbetter Fair Pay Act, the Affordable Care Act, abortion rights, contraception, the Blunt Amendment, the Family and Medical Leave Act, Planned Parenthood, birth control, and other issues that affect the lives of women, self-deportation of immigrants, education, feeding and housing the “very poor”, and a host of other social concerns.

It is admittedly also possible that the Republican Party may try to move against these new goals of the World Bank by following suit of Texas Governor Rick Perry (R), which means an attempt to terminate these social safety nets by defunding the World Bank, or simply, cutting off U.S. funds for the World Bank.

This, however, is mere speculation, because one also suspects that they will not object to the World Bank bolstering these social safety nets. Granted, they would not be doing so out of altruism or sympathy for poor people, because there is an economic benefit that arises from doing so. This is because developing countries ultimately offer the prize of comparative advantage (i.e., land and/or labor endowments, or simply, cheap land and low wages or cheap non-union labor).

In the end, the new Republican Party and its extremisms will eventually find itself far afield of both mainstream America and the world at large. In a post-Lehman world, for the majority of Americans, they are determined to demonstrate their lack of compassion for those now struggling for survival.

5-1-2012 6-42-55 AM

Photo Source: Paul Ryan gave speech on federal budget at Georgetown University; Power Panel: Child Labor and Catholics v. Paul Ryan. Young Turks, April 30, 2012.

This lack of compassion presents a deep-rooted problem for the new Republican Party. As Dave Johnson wrote, “Some say that maybe it is a bad idea to base a political party's ideology on a belief that altruism, democracy and Christianity are "evil." Others say that maybe it is a bad idea to base a country's policies on fictional novels rather than science and history.”

Johnson is referring to a Republican ideology born out of the writings of the novelist Ayn Rand, which he characterizes as the “Republican Party’s embrace of Ayn Rand and her cruel philosophy.”  What should concern an unsuspecting public, according to Johnson, “Disciples of Ayn Rand's philosophy of selfishness now dominate the thinking of the leadership of the conservative movement and the Republican Party.” Demonstrating the seriousness and breath of the problem, he writes,

There is no way around it. Republican budget leader Rep. Paul Ryan says Rand is his guide. Senator Ron Johnson (R-WI) says Rand's Atlas Shrugged is his "foundation book." Senator Rand Paul is named after her (or not). Clarence Thomas requires his law clerks to watch The Fountainhead. Fox News promotes Rand. Conservative blogs promote Rand. Glenn Beck has been promoting Rand for years. So has Rush. This isn't recent, Alan Greenspan lived with the Rand cult and promoted and implemented her ideas.”

Paul Ryan earlier explicitly stated that Rand is his guide, though now in political posturing he is exhibiting trepidation in the face of criticism from the Catholic Church concerning his so-called “faith-based budget” and the treatment of poor and vulnerable persons. Dana Milbank writes,

A week after Ryan’s boast, the bishops sent letters to Congress saying that the Ryan budget, passed by the House, “fails to meet” the moral criteria of the Church, namely its view that any budget should help “the least of these” as the Christian Bible requires: the poor, the hungry, the homeless, the jobless. “A just spending bill cannot rely on disproportionate cuts in essential services to poor and vulnerable persons,” the bishops wrote.

In response to the criticism of Ryan’s so-called “faith-based budget, the good Catholic Republicans just blew off the Catholic Church. On April 26, 2012, at Georgetown University, Ryan actually, though poorly, attempted to defend his budget as the fruit of Catholic teaching. Before inviting him to defend his budget, “A group of 88 Georgetown University faculty and staff members sent a letter to Ryan April 24 outlining their concerns over his ‘misuse of Catholic teaching’ to defend his budget plan.” Jesuit Father Thomas Reese said, “I don't think he can get away with Catholic social teachings as a cover for his budget cutting.”

5-1-2012 6-45-32 AM

Photo and Video Source: “The Truth About GOP Hero Ayn Rand,” Dave Johnson, Concern Over Republican Embrace of the Ayn Rand Poison, Huffington Post, June 10, 2011; See the Video here.

When referring to Ayn Rand’s philosophy, as Johnson observed, “maybe it is a bad idea to base a political party's ideology on a belief that altruism, democracy and Christianity are ‘evil’.”

Moreover, one would even venture to say that at some point the Republican Party’s extremisms (i.e., the war against women, the war on the poor, the war on immigrants, the war on health care, etc) will dissipate, because the citizenry that now supports its extremisms will eventually withhold their acclamation.

This is because, and showing the folly of their extremisms, as one recent study demonstrates, many Republicans, who are railing against entitlements and/or social safety nets and various rights, are actually in dire needs of the same entitlements and/or social safety nets and rights (i.e., equal pay for women, health care, etc). For instance, in reference to what the study shows, William A. Galston (Brookings Institution) when describing a group of Republicans that he characterizes as “the Disaffected”, wrote,

According to Pew, they are both anti-government and anti-big business. They are social conservatives with a deep antipathy to illegal immigration. But they are also the most financially insecure of all the groups—among Democrats and Independents as well as Republicans—and perhaps for that reason, less averse to a government that extends a helping hand to the downtrodden. For the most part, they are whites with no more than a high school education. Many report personal or family struggles with unemployment.

In other words, it’s not difficult to imagine “the Disaffecteds” also needing a safety net, as they are also “less averse to a government that extends a helping hand to the downtrodden.”

A better example of this tragedy or maybe even an oxymoron in the new Republican ideology might well be the real life example and experiences of Ayn Rand. This is because Paul Ryan’s mentor or guide spent most of her adult life railing against the evils of federal insurance.  In reality, however, and later in life and during a difficult period of money problems and health issues, both Rand and her husband reportedly did receive social security payments and Medicare payments.

In other words, the social safety net was there for both Ayn Rand and her husband in their time of need, as it has always been for many years now to help others – the poor, the hungry, the homeless, the jobless.

For now, however, and as a courtesy of the Republican Party and its ideology and extremisms, America’s social safety net teeters on cliff edge. With that being sad, I will leave the readers of this article to answer for themselves the question of whether altruism, democracy and Christianity are evil?


See also The Republican Conundrum

All Rights Reserved by M. Ulric Killion, 2012.

Colbert Takes On Fox News Reaction To Obama’s ‘Slow Jam The News’ On ‘Fallon’ (VIDEO)

Colbert Obama

April 27, 2012 --

You know that the 2012 presidential race is heating up when Stephen Colbert is willing to defend his former best friend Jimmy Fallon for hosting President Obama on his show.

>>See Colbert Takes on Fox News Video here.

On Thursday night, Colbert had some fun with Fox News' reaction to President Obama appearing on “Late Night with Jimmy Fallon” to do some slow jammin' of the news. And by “had some fun,” Colbert essentially let the stable of usual suspects -- Megyn Kelly, Gretchen Carlson, Bill O'Reilly -- speak for themselves, and rolled footage of the Fox News pundits bloviating about how dare the President go on a comedy show during an election year. Even though Romney appeared on Letterman, and George W. Bush had no hesitation in making fun of himself for going to war while in office.

4-28-2012 4-36-38 AM

Photo and Video: President Obama’s “Slow Jam The News” on “Late Night with Jimmy Fallon”; >>See the (Jimmy Fallon)Video here.

But no, Obama is truly the culprit for appearing exceptionally charming on a show viewed by millions of young people. As Colbert noted, youth voters will be forced to face the question: “Who do I like: The guy I like, or the guy I don't like?”. . . .

Source: Huffington Post


See also The Republican Conundrum

All Rights Reserved by M. Ulric Killion, 2012.