Apocalypse soon

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Yeah, I know that #hackgate is important and interesting, but actually it’s very small beer compared to the looming catastrophe of a US debt default. Here’s Will Hutton’s take on it.

When President Obama, the supreme rationalist, says that there are just days to avert Armageddon, everyone should sit up and listen. For months, Republicans have used their new majority in the House of Representatives to block any move to lift the artificial cap on the amount the US government can borrow. If by this Friday they still refuse – insisting on up to $4trillion of spending cuts, excluding defence, and no tax increases as the price of their support – then the US will be unable to service its public debts. The biggest economy on Earth will default.

The results will be catastrophic, argues JP Morgan chief executive Jamie Dimon – a warning repeated by Obama. The US government will have to start to wind down: soldiers’ wages and public pensions alike will be suspended. But in the financial markets there will be mayhem. Interest rates will shoot up and there will be a flight from the dollar. Banks, uncertain about their expected income from their holdings of US Treasury bonds and bills, will call in their loans, creating a second credit crunch. Some may collapse. Even to get days away from such a prospect, says Obama, will now have costs: every creditor to the US has been shaken to the core by American politicians not taking their responsibilities as borrowers seriously. They will exact a higher price for lending in future, even if a bargain is struck now.

The prospect of a US default in early August is so apocalyptic that many people cannot believe that such a thing will happen. What they haven’t reckoned with is a Republican party in Congress manned by people who make Islamic fundamentalists look like Spinoza.

If the US defaults, we’re all screwed. Period.

See also: “Voodoo Economics Rules OK”

The smartphone challenge

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This morning’s Observer column.

My favourite line in the film A Fish Called Wanda comes when Otto (Kevin Kline), a psychopathically idiotic ex-CIA operative, objects to being called “stupid” by Wanda (Jamie Lee Curtis). To which Wanda replies: “To call you stupid would be an insult to stupid people! I’ve worn dresses with higher IQs.”

Until relatively recently, “dresses” could have been replaced by “mobile phones” in the script, and the line would still have raised a laugh. But that’s changing fast. Quite how fast was revealed last week in an extraordinary report from the Pew Internet and American Life Project. … The Pew report found that 35% of American adults now own a ‘smartphone’, that is to say a mobile phone with a significantly more powerful processor and much better internet connectivity than an old-style handset which could do voice and text and not much else…

So will the Digger have to swear on the Bible on Tuesday?

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The Telegraph thinks that he might.

According to Erskine May, which sets out rules governing Parliament, The Parliamentary Witnesses Oaths Act 1871 “empowers the House of Commons and its committees to administer oaths to witnesses, and attaches to false evidence the penalties of perjury”.

It says: “Where evidence is not given upon oath, the giving of false evidence is punishable as a contempt. It is not usual, however, for select committees to examine witnesses upon oath, except upon inquiries of a judicial or other special character.”

Paul Farrelly MP,a Labour member of the committee, told The Daily Telegraph: “We will take advice on Tuesday morning from clerks whether we will require them on this occasion to take testimony under oath.

“That power is available to the committee but it is rarely used and what is appropriate on this occasion given the misleading evidence to this inquiry from News International.”

The Wall Street Fox

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Joe Nocera on the Foxification of a once-great newspaper.

As a business story, the News of the World scandal isn’t just about phone hacking and police bribery. It is about Murdoch’s media empire, the News Corporation, being at risk — along with his family’s once unshakable hold on it. The old Wall Street Journal would have been leading the pack in pursuit of that story.

Now? At first, The Journal ignored the scandal, even though, as the Murdoch biographer Michael Wolff pointed out in Adweek, it was front-page news all across Britain. Then, when the scandal was no longer avoidable, The Journal did just enough to avoid being accused of looking the other way. Blogging for Columbia Journalism Review, Dean Starkman, the media critic, described The Journal’s coverage as “obviously hamstrung, and far, far below the paper’s true capacity.”

On Friday, however, the coverage went all the way to craven. The paper published an interview with Murdoch that might as well have been dictated by the News Corporation public relations department. He was going to testify before Parliament next week, he told the Journal reporter, because “it’s important to absolutely establish our integrity.” Some of the accusations made in Parliament were “total lies.” The News Corporation had handled the scandal “extremely well in every way possible.” So had his son James, a top company executive. “When I hear something going wrong, I insist on it being put right,” he said. He was “getting annoyed” by the scandal. And “tired.” And so on.

In the article containing the interview, there was no pushback against any of these statements, even though several of them bordered on the delusional. The two most obvious questions — When did Murdoch first learn of the phone hacking at The News of the World? And when did he learn that reporters were bribing police officers for information? — went unasked. The Journal reporter had either been told not to ask those questions, or instinctively knew that he shouldn’t. It is hard to know which is worse. The dwindling handful of great journalists who remain at the paper — Mark Maremont, Alan Murray and Alix Freedman among them — must be hanging their heads in shame.

#hackgate and David Cameron

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One of the side-effects of the Digger’s PR-driven ‘conversion’ has been to divert attention from David Cameron’s role in the scandal. He’s up to his neck in it too, so it’s nice to see that the Daily Telegraph isn’t letting go.

The Prime Minister has also done his best – unsuccessfully – to deflect attention from the fact that he spent Christmas with Mrs Brooks and her husband, and that Mr Coulson visited Chequers as recently as March. In addition, he is planning a long-term diversionary strategy that could impose state regulation on all newspapers, including those that, unlike the News International titles, did not shower him in hospitality.

Voodoo Economics Rules OK

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If you think that the economic problems of Greece, Italy, Ireland, Portugal or Spain are terrifying, then think again. The US is heading for default because the Republicans won’t agree to raise the debt ceiling. Here’s an extract from Paul Krugman’s latest NYT column.

Let’s talk for a minute about what Republican leaders are rejecting.

President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. These are extraordinary concessions. As The Times’s Nate Silver points out, the president has offered deals that are far to the right of what the average American voter prefers — in fact, if anything, they’re a bit to the right of what the average Republican voter prefers!

Yet Republicans are saying no. Indeed, they’re threatening to force a U.S. default, and create an economic crisis, unless they get a completely one-sided deal. And this was entirely predictable.

First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office.

As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals.

Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy.

Beyond that, voodoo economics has taken over the G.O.P.

Nero recants. Oh yeah?

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The front cover of today’s UK edition of The Economist.

Now let me get this straight.

1. Yesterday, July 14, the Digger gave an interview to the Wall Street Journal (one of his media properties) in which he declared that News Corporation has handled the #hackgate crisis “extremely well in every way possible,” and had made just “minor mistakes.”

2. Today, July 15, he meets the parents of Milly Dowler, the murdered teenager whose mobile phone was hacked by his goons. According to the Daily Telegraph report of the meeting,

The media mogul held his head in his hands as he repeatedly apologised to Milly’s parents Sally and Bob and sister Gemma and said “this never should happened”, the family’s lawyer said.

Speaking outside the central London hotel where the hastily-arranged meeting took place, Mark Lewis said: “He was humbled to give a full and sincere apology to the Dowler family.

“I don’t think somebody could have held their head in their hands and said sorry so many times.”

What links these two contradictory stories?

Simple. On June 14, News Corporation hired Edelman, a global PR company, to try to dig the Murdochs out of the hole they were busily excavating for themselves. As NBC Chicago reports it:

A large public relations firm co-based in Chicago has been hired by Rupert Murdoch’s News Corporation to help it manage its way through the ongoing phone-hacking scandal.

“Edelman has been retained by the Management and Standards Group at News Corp to provide communications support and Public Affairs counsel,” confirmed Cheryl Cook, the agency’s Executive Vice President and Director of Media Services.

No U.S.-based Edelman office will be doing any work for News Corp. All activity will be come from Edelman’s London office, said Cook.

The hypocrisy implicit in the Digger’s volte face is staggering. But what is truly nauseating is the way the Dowlers are being exploited by the Murdochs for the second time. First their daughter’s phone is hacked by News Corporation’s employees in order to increase sales of his publications. Now they are being used as passive stooges for the Digger’s PR-driven ‘fightback’.

It’s pass-the-sickbag time, folks. It’s hard to imagine anyone being taken in by this cant. But then an awful lot of people used to buy The News of the World.

So why did Old Crone quit?

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It seems that Tom Crone, who has been News International’s chief lawyer for over 25 years, has quit. Two questions arise from this unexpected development: 1. why did he go now? and 2. What role did he play in the hush-money payments to Gordon Taylor and Max Clifford (the ones that James Murdoch he authorised without knowing the full story)?

“Whether he jumped or was pushed still isn’t clear”, writes the Christian Science Monitor.

But his role at the paper, particularly in a decision three years ago to pay large out-of-court settlements to two men whose phones were hacked into by the company’s employees, is sure to be under scrutiny in the coming weeks and months.

Mr. Crone told Parliament in 2009 that he’d recommended and approved a $1 million settlement paid to Gordon Taylor, the head of the Professional Football Association, whose phone had been illegally hacked by NotW reporters. Colin Myler, then NotW editor, told Parliament that he, Crone, and James Murdoch collectively decided to make that payment. That hearing came after The Guardian newspaper broke the story of the paper’s payments. Celebrity publicist Max Clifford also reportedly received a settlement of over $1 million.

That has raised tantalizing questions about how much James knew about the illegal practices at NotW – both during his time at News International and before.

Yep.