Thursday, December 25, 2008
Alan Greenspan was groaning and shaking his head
For a ghost was abroad on that cold winter's night --
I was John Maynard Keynes, howling, "See" I was right!
"I was right! I was right! I was right all along!
"You believed Milton Friedman, but Friedman was wrong!"
"Enough," shouted Greenspan, "why can't you have pity?
"I admitted my fault to a Senate committee
"But old Milton Friedman died happy and smug
"Before unbounded greediness pulled out the rug.
"They had plenty of pork, but they took the whole hog, oh
"A curse be upon that damned U. of Chicago!"
So Keynes went to the Senate to try some soul saving
But Corker and Chambliss were ranting and raving,
And Bunning and Enzi and Cornyn and Thune
And Ensign and Inhofe all sang the same tune,
And Keynes said, oh Lord, I just can't take the drama,
Forget all these fools, I'll just talk to Obama.
And Obama sat silently, listening to Keynes,
Looking down at the hands that would soon hold the reins.
Keynes said, "Time to ignore what the financiers like,
"Time to get rid of Rubin and listen to Reich,
"Yes, it's time for a change, but a change that is real,
"Yes, the time has arrived for a new New Deal."
And Obama sat silently, cards to his chest,
Then said, "I'll endeavor to do what is best."
"Spend money," said Keynes, "spend a trillion! Spend two!
"They'll just call you a socialist whatever you do!"
Keynes had one more remark as he faded from sight,
"The whole world is praying that you get it right."
Sunday, December 21, 2008
And that, of course, was at the heart of the problem. In it's final days, Bernie Madoff's Ponzi scheme had gone worldwide, but it was built on a solid foundation of "investments" by his fellow Jews. All of them were successful, and most of them were pretty sharp. So why did they trust a goniff like Bernie?
Yes, he had a good reputation. He was a bright young man back in the sixties, when he founded BMIS, and in the seventies, when he was a leader in the creation of NASDAQ. Mostly, though, he was a lantzman, a guy you trust because he's, well, like you -- provided you're a wealthy Jew.
Anthropologists Karen Cook, Russell Hardin, and Mary Levi put it like this:
In general, we are likely to deal more with those whom we trust. Hence, we tend to narrow our associations to certain networks, such as a neighborhood group or an ethnic group. If others in the same context do the same, we have effectively defined a group from which others are de facto largely excluded from many of our relationships. They may soon enough become excluded deliberately and not merely de facto, so that we begin to define them as actively foreign. In a sense, then, distrust defines the boundaries of our group. (Cooperation Without Distrust; Russell Sage, 2005; p. 67)Bernie targeted Jews for one important reason -- it was easier than targeting goyim. Reading between the lines of the news coverage, it looks like he might have actively rejected non-Jews back when the scheme was new, perhaps concerned that they might be more inclined to entertain the occasional doubt. Ponzi schemes being Ponzi schemes, however, the supply of rich Jews eventually was exhausted. Hello, Banco Santander. Hello, Royal Bank of Scotland.
(It didn't hurt at all that Jews have been marrying out with increasing frequency in recent decades. Kinship networks facilitated the move into Europe, and from there to the Middle East and Asia.)
Some of my non-readers (does anybody read this blog?) may think I'm singling out Jews. I'm not. Exactly the same thing probably is happening among Lebanese Christians, Pashtuns, Tutsi, Mormons, and an host of other tribalized entities in this diverse, competitive world. We'll probably see more of the same kind of Ponzi scheme falling apart, although probably not nearly so extensive as Bernie's. He's not your average goniff, by a long shot.
Just the same, I think a lot of people wish he'd listened to his mother, and become a doctor.
Wednesday, December 17, 2008
It's easy enough to mock the hairstyle that looks like it was copied from a Japanese cartoon, and there's been some snickering at his ethnic name even in the most PC of media. Topping it all off, he's enough of an asshole to say potentially incriminating things on his office phone when he already knows he's under investigation.
But what, exactly, has he done? What, for that matter, has he tried to do, or suggested he might like to do?
Oh, that's right. We're all supposed to be terribly offended because he may have offered political favors and appointments -- including Barack Obama's vacated Senate seat -- for sale.
Well, face it, America -- our government has always been for sale, starting from when the founders instituted property requirements for voting. In the 19th century, Mark Twain observed, "We have the best Congress money can buy." If anybody thinks the reforms of the Progressive Era put an end to that, that person has no grasp of either history or politics.
How do you suppose somebody gets to become Ambassador to Lichtenstein? It's certainly not based on diplomatic skills or comprehensive knowledge of Lichtensteinian culture. How did lobbyists for major corporate interests wind up in charge of the federal agencies responsible for regulating those same corporate interests? What really is the difference between a large political contribution and a bribe?
Okay, I'll answer my own question. It is a difference of style, not of intent. Rod Blagojevich, as I'm sure you've noticed, is sorely lacking in style. His idea of a wink is a smack across the side of the head, and his idea of a nudge is a flying tackle. His is not the world of subtle, unspoken understandings. He likes his understandings clear and straightforward, clean and honest.
I believe Blagojevich sincerely believes he's done nothing wrong, and that is why he was so careless in his telephone conversations, and why he refuses to resign. He was just doing what American politicians have done for well over two hundred years -- so how could that possibly be unethical, much less criminal?
Ah, you poor sucker -- too open, too innocent, too honest!
Friday, December 5, 2008
No competent business owner sends a payroll, or a day's receipts, or anything else of significant value across midtown Manhattan without protection. Armed guards watch while the cashbox is transferred to the armored car, ride along with it for the eight or nine blocks, and supervise its transfer to its destination. It's just common sense.
Other businesses, though, send hundreds of millions of dollars worth of shipping through the Gulf of Aden or the Malacca Straight with no protection at all. Okay, maybe the captain has a revolver, but so what? If you're going to send hundreds of millions of dollars worth of ships and cargo through areas that appear to be quite a bit more dangerous than midtown Manhattan, wouldn't it make sense to hire a private security company to protect them?
Picture this: a cargo ship, say, 600 feet long, is happily chugging along when two motorized rubber rafts, each holding half a dozen illiterate Somali fishermen with AK-47s and, perhaps, grenade launchers appear in the distance. What will the captain do?
Currently, he'll try to outrun them. Maybe he'll make his getaway, maybe not. But what if he has a team of three or four private security contractors aboard -- say, from Triple Canopy or Blackwater -- and suppose they came equipped with a rocket launcher? Pirates, kiss your asses goodbye.
According to Douglas R. Burgess, Jr. in today's Times, the naval vessels from various countries now patrolling off the coast of Somalia may be ineffective because they're caught in a kind of legal limbo, forced to decide whether pirates are "ordinary criminals, or a quasi-military force." Actually, a more significant problem is that there's a lot of open water out there, and navy ships can't be everywhere at once. The establishment of a protected shipping corridor off the coast of Somalia has offered good protection for the ships that use it, but one wonders to what extent, if any, the private shippers who use the corridor compensate the US and European countries which maintain it. Saudi Aramco, for one, certainly can afford to do so.
Anyway, pirates are likely to see a strong risk of being blown out of the water by any target ship they might attack as a bit more discouraging than the difficulty of finding prey outside the protected corridor.
As far as I know, the legal principle of self-defense applies across all state boundaries, worldwide, and that certainly is the case in international waters. It's time for shipping companies to start looking out for their own interests. There is no shortage of mercenary forces in the world, and no shortage of armaments. If a ship and its cargo are important enough to be sent through dangerous waters, the ship's owners should be willing to pay for protection.
Wednesday, December 3, 2008
- Bullshit premise #1: The Employee Free Choice Act, which would make it easier for workers to form unions, would slow the growth of new jobs and keep unemployment high.
The argument is based on the notion that since unions would negotiate higher wages for members, employers could not afford to create as many jobs. That's total nonsense. Excluding nepotism, businesses never create unnecessary jobs -- and if a job needs to be done, somebody will be hired to do it.
Also, anybody who ever has negotiated a union contract knows that you can't get blood out of a stone. If a company can't afford to pay higher wages, there is no way a union can force it to do so -- and if a business really is in danger of failure due to union contracts, unions (like UAW) will renegotiate. A union contract is worth nothing if a company is forced to go bankrupt.
- Bullshit premise #2: Raising taxes on the rich must be postponed to prevent worsening the economic slowdown.
Yes, Keynesian economics teaches us that recessions require tax cuts, but that doesn't mean everybody's taxes have to be cut. The spending of those with adjusted gross incomes of more than $250,000 a year will scarcely be affected by increasing their marginal tax rate from 35% to 39.6%, which was the top rate during the Clinton years. To increase consumption and stimulate the economy, tax cuts should be heavily tilted towards the poor, who spend every cent they have available.
Now is not the time to forget that the immense shift in wealth from the poor and middle classes to the very rich was at the heart of the current crisis. Immense wealth looking for a place to go fueled the growth of mortgage backed securities, gambling on credit default swaps, and the drive to create all the other unregulated derivatives that continue to threaten our banking system. A downward redistribution, to undo some of the effects of the Bush upward redistribution, will do far more good than harm.
- Bullshit premise #3: Health care reform must be delayed until the recession is over.
Health care is not a good deployment of federal money now, say the critics of reform. Health care is too complicated and too expensive to address under current circumstances. If employers are forced to provide health care or, as in the Obama plan, pay into a fund to offset the cost of health care for the uninsured, businesses will not have the cash they need to survive and grow strong again.
It's true that the Obama plan might not be optimal at the moment. It wasn't designed for a period of economic crisis. A far better approach right now would be national, single-payer health insurance. It would allow government to effectively negotiate cost reductions with health care providers and big Pharma. It would relieve smokestack industries, like the Big Three automakers, of their legacy health insurance costs, making them far more competitive with foreign companies like Toyota and Honda.
So, we are left to wonder what Obama will do when he takes office. Will he play it safe and "centrist," or will he follow through on his promises to the people who elected him? Judging by his cabinet appointments to date, one suspects it may be the former -- but who knows? He's played his cards pretty close to the chest so far. Maybe he'll surprise us all.
Sunday, November 23, 2008
I'm really glad he's still with us. As far as I'm concerned, his was the most brilliant mind of the 20th century -- and I'm willing to bet he remains a lot smarter than the vast majority of those currently running this imperfect world. We only can hope that many of the Obamites have read Tristes-Tropiques and La Pensée Sauvage.
Happy birthday, Monsieur le Docteur, and I wish you many more. Also, I wish to see some structuralists around our new president. Maybe you could drop him a line, just to say hello. They say he's willing to listen. Okay. Let's see.
Thursday, November 20, 2008
Oh, well. I like Napolitano, but Obama missed an excellent opportunity. That's what he gets for not having me on his transition team.
Doris Kearns Goodwin has been all over the media lately, discussing the Team of Rivals that made up the Lincoln administration, and how the concept might be put into play by Barack Obama. (In the interests of full disclosure, I will admit to a major crush on Doris Kearns Goodwin.) Indeed, Obama has suggested that he will include a Republican or two in his administration. If he could persuade McCain to accept Homeland Security, the results would be entirely positive.
More than 46% of voters chose McCain, many because they believed he was better qualified to protect the country from terrorist attacks. It seems likely that a lot of Obama voters also thought McCain's anti-terrorist credentials were better than Obama's, but decided that the economy or some other factor was more important to them. Anybody unsure about Obama in this area would be reassured by McCain (and anybody unsure of McCain would be reassured by the fact that Sarah Palin would not be his second in command.)
Republican Party officials, of course, would be totally irate because Napolitano would appoint a Democrat to fill McCain's seat in the Senate. Fox News would be filled with aging white men huffing and puffing and shaking their jowls, which would provide needed comic relief amidst the ongoing news of economic collapse. (It certainly would tickle my funnybone.)
Would McCain accept? Maybe. Nobody in his party is looking to him for leadership, and plenty of Republicans are attacking him -- blaming him for the party's extensive losses. There's not much he can accomplish in a Democratic controlled Senate, and it's not in his nature to hunker down and dedicate himself to obstructionism. After a lifetime of service to his country, he probably would like to continue a while longer -- and his pal Joe Lieberman will be running the Senate committee.
Could Obama count on him? Certainly. McCain is honest, and loyal to a fault. His service on the Armed Services Committee and on Commerce subcommittees for aviation and surface and marine transportation gives him useful background knowledge.
McCain might not be especially popular with Rahm Emmanuel or David Axelrod, and his presidential campaign was more than a little unsavory from time to time, but he still is admired by most Americans -- even those who opposed him. If he became a member of the new administration, it would demonstrate conclusively that Obama is serious about postpartisan governance. Better than any other appointmet, it could bring the country together.
Tuesday, November 18, 2008
I'm not at all surprised that the Democratic caucus voted to keep Lieberman today, and let him keep the chair of the Homeland Security Committee. With Lieberman on board, there's a slim chance the Democrats can grab a filibuster-proof majority in the Senate. Without him, there's no chance at all.
Anyway, Joe Lieberman really is a Democrat. Look at his voting record, and there's absolutely no doubt. If Lieberman really was McCain's first choice for running mate, McCain's judgment -- politically, at least -- is even worse than indicated by the Sarah Palin choice. Lieberman diverges from the Democratic line in just one area -- foreign policy. You see, there's one group that claims greater loyalty from Lieberman than the Democratic Party -- and it's not the voters of Connecticut. That group is AIPAC -- the American Israel Public Affairs Committee.
Iraq never presented a threat to the United States. Even if somebody actually believed the hype about Iraq's weapons of mass destruction and associated delivery systems, there was no threat to the United States. There might have been a threat, however, to Israel. Threat or no threat, the idea of a U.S. puppet government in Iraq must have looked pretty good to a lot of Israelis. The real threat, of course, is Iran -- and permanent U.S. bases next door in Iraq could not help but improve Israeli security.
Fiasco notwithstanding, the U.S. staying in Iraq for however long it takes to achieve "victory" is a policy that works for AIPAC, and, hence, for Lieberman. Given decades of indoctrination by AIPAC and his Orthodox rabbis -- not to mention Connecticut defense contractors -- Lieberman had to side with Bush, McCain, and Exxon-Mobil rather than Obama and the Democrats in the recent election.
The hell of it is that AIPAC isn't a particularly good representative of Israel. AIPAC is a much better representative of Likud, and its leader Benjamin "Bibi" Netanyahu, than of Israel's current Kadima government. Rightist Likud naturally tends to allign itself with the rightist religious parties, and Lieberman is an Orthodox jew. Go figure.
It might be helpful if somebody could arrange a meeting between Joe Lieberman and Tzipi Livni, Israel's new Prime Minister. Maybe she could convey to Lieberman that support for AIPAC is not necessarily support for Israel.
Friday, November 14, 2008
While it's true you can't solve American education's endemic problems by "throwing money" at them, budget cuts will make schools a lot worse. Cut staff and schools become genuinely intolerable. The puddle of vomit stays on the floor all day, the decibel level in the cafeteria goes into the danger zone, and the bullies rule the hallways. In overcrowded classrooms, teachers spend more time on discipline and less on instruction. In some classrooms, that means there's no instruction at all.
The only students who seem to be able to learn under these conditions are the children of recent Asian immigrants. Before you call me a racist, let me call your attention to two recent articles in the New York Times.
In the first of those articles, we learn that Asian students are the group most likely to qualify for New York City's elite high schools, "including the storied triumvirate of Stuyvesant, Bronx Science and Brooklyn Tech." At Stuyvesant, 72% of those admitted, by competitive exam, are Asian. The second article is about the efforts of Long Island's well regarded Jericho school district to get the parents of Asian students to show up at school activities. They don't join PTA and don't attend concerts (even though the orchestra is 70% Asian.) Somehow their kids keep getting into top colleges even though they don't attend college nights.
Apparently, whatever Asian parents are doing to help their kids succeed is happening at home. If we really want to improve the results we get from American schools, we may have to replace some doctors of education with anthropologists.
Some say Asian parents put excessive emphasis on test scores (and violin?), but I don't see that as the reason their children tend to be so much more successful. I think the secret is that they care about accomplishment rather than "effort" -- that their kids never hear, "Don't worry, you tried your best." They trust teachers to do their jobs, but recognize that the student, not the teacher, is responsible for learning. It follows that Asian-American students actually find it necessary to work hard to gain parental approval. How innovative!
In his most recent column, Times contributor Nicholas D. Kristof calls on Barack Obama to make sure education isn't on the "back burner," and to make improvement of urban schools a primary concern. That, he says, is the "most effective anti-poverty program." Most would agree, but the difficult question is, how do we go about it? Nothing tried so far seems to have worked especially well.
Well, here's my idea. Let's replace all the administrators, guidance counsellors, and school psychologists with Asian immigrants. They know how to apply the right stimulus -- the one that gets results.
Tuesday, November 4, 2008
Tears were rolling down my face as I watched tears rolling down Jesse Jackson's face on CNN. That guy who delivered the concession speech was the old John McCain, not the nasty old bastard we've seen on the campaign trail over the past few weeks.
The president we really need right now is Franklin Delano Roosevelt, but he's long dead. Will Barack Obama rise to the challenge? It remains to be seen.
"We are and always will be the United States of America," says our next president. I don't know exactly what that means, but, what the hell -- I'm feeling hopeful tonight.
Monday, November 3, 2008
Here in New York, nobody has any doubt which candidate will get our electoral votes. If everybody I know voted for McCain tomorrow, it wouldn't make a damned bit of difference. On the other hand, it turns out that I live in a pivotal State Senate district -- and that is turning out to be increasingly amusing.
For as long as I can remember, the State Senate has been Republican and the Assembly has been Democratic -- and I remember back to the Averell Harriman administration. (I was at Ten Mile River Boy Scout Camp the year Rockefeller was elected. He came to visit, and we greeted him by singing "H... A... double R I... MAN spells Harriman..." We were city boys.)
So, now, the Republican control of the State Senate is endangered, and one of the danger spots is where I live, in eastern Suffolk County here on Long Island. Our Republican State Senator, Caesar Trunzo, has been credibly challenged by Brookhaven Town Supervisor Brian X. Foley.
Forget Obama and McCain. Out here in the Far East, we know which contest really counts. Nary a cent has been spent on the presidential election, but I've had glossy, full color mail every day from Trunzo and Foley. Sometimes I glance at it, sometimes I just put it straight into the recycling bin.
Foley's mail says how he cleaned up "Crookhaven." (The Dems didn't make that up -- my home town was widely known as "Crookhaven," and was a Republican patronage mill, from well before I moved here in the early 70s.) Foley's election didn't exactly create a revolution, but it helped.
Trunzo's mail screams, "Foley raised your taxes!" Hell, everybody raised our taxes out here, regardless of political party. (Even I raised our taxes, back when I was a local political operative for the teacher's union.)
I'm pretty sure the vast majority of the expensive, full color mailers wound up either in the recycling bins or the regular trash without anybody bothering to look at them. I'm pretty sure most people hung up on the recent robo-calls too, but I listened to a few.
I got two today. One was from Bill Clinton, asking me to vote for Brian Foley. When a former president gets involved in local politics, you know the party thinks it's important. The other wound up on my answering machine, so the whole first part probably was missing. The part I got asked me to vote for Barack Obama and Caesar Trunzo -- a split ticket. Maybe it was from the Trunzo people, trying to associate themselves with the sure winner. More likely, though, it was from the teacher's union. My old union started out making no endorsement in the race for State Senate. Then the gutless wonders got cold feet when it started to look like Trunzo would win. (They've always been pussies.)
My favorite robo-call came yesterday. It purported to be from a Lesbian/Gay/Bisexual/Transgendered group endorsing Foley because of his support for same-sex marriage. It was so clearly a Republican dirty trick, I had to laugh out loud.
I've met both Trunzo and Foley quite a few times over the years, and I'll vote for Foley over Trunzo, despite Trunzo's proven ability to bring home the pork since he was first elected during the Nixon administration. If the state Democrats are depending on my district to take over the State Senate, though, they'll probably be disappointed.
Saturday, October 25, 2008
Did you see it? Did you see it? It was like Toto yanking away the curtain to reveal that the Wizard was, essentially, just another schmuck (except, in this case, most of the world would have preferred to stay in Oz and not go plummeting back down to Depression era Kansas.) Well, the hearing still was intensely satisfying, at least for me. My only regret is that Milton Friedman died a little too soon, and so never got to eat his own portion of crow while watching his immensely destructive life's work going down in flames.
Speaking of screw-up economists, one of the architects of Reaganomics, Arthur Laffer, was on Bill Maher's show tonight. Remember the "Laffer curve," which purported to show how cutting taxes would increase government revenues? That bit of graphical nonsense was discarded years ago, but the stupid idea it was supposed to "scientifically prove" remained a basic tenet of the Republican faith, and is still alive and well in the McCain campaign.
* * *
It's now the next day, and I have to say I have a certain amount of admiration of Greenspan for eating his crow with an appropriate mix of contrition and dignity. We'll never know, but my guess is that Friedman would have choked on his own bile before admitting he was wrong.
Confronted by nothing more threatening than Maher and the bunch of college kids in Maher's audience, Laffer did the slippery-slide and disavowed his responsibility for three decades of ideologically driven economic auto-immolation. Perhaps, had he appeared on Maher's show instead of before Congress, Greenspan might have done the same -- but maybe not.
One way or another, if I were on the board of Mercer University, I'd try to find a way out of that unfortunate contract with Arthur Laffer. Tell me, provost, how are Soneshine Partners doing these days? How well is Alpha Theory software doing at predicting current market trends?
No matter. History has spoken. Laffer is a loser, and the epistomological paradigm shift is upon us. Maybe. Sigh.
Tuesday, October 21, 2008
As gasoline prices drop below $3 a gallon, commodity prices in general crash, and the CPI comes in unchanged, I have to consider the possibility that my fears regarding inflation (and the concomitant stagflation I've ranted about) well may be unfounded. On the other hand, all of us might be in better shape if I'd been right.
Gasoline prices fell because the price of oil is down, due, we're told, to a steep drop in demand. And how much of a drop in demand does it take to bring about a 50% drop in the price of a barrel of light, sweet crude? Since oil is valued in dollars, the calculation is easy -- 50% -- and we know it can't be just from people cutting back the mileage they put on their SUVs.
(Yes, I know -- gasoline prices have fallen by about a third, not by a half. So where has that extra money gone? Give it a little thought. It will come to you.)
Since we haven't exactly gone green in the past few weeks, demand for oil ought to be a pretty good indicator of the world's level of economic activity -- which leads one to surmise that the global economic slowdown might be a good deal worse than we've been told. Also, consider that if the CPI has dropped again the next time the figure comes out, we'll have entered the realm of deflation. Bye bye recession, hello depression.
Apparently, a new stimulus package is in the works. I sincerely hope there are no "checks in the mail" to individuals this time, given how little multiplier effect there was last time. Previously, I called for aid to the states, tied to infrastructure spending, to get the construction trades back to work. Now, I say, just give the money to the states -- no strings attached. A lot of it easily can be spent on infrastructure -- not even by creating new projects, but just by continuing existing projects. Did you ever notice how the roads always seem to get repaired in the months just before an election? Keep fixing those roads, governor! Build us some new schools, and repair some bridges! Even if all the contracts are assigned by patronage, and half the federal aid is used to pay relatively unproductive bureaucrats, people who otherwise might be unemployed will be working instead.
Of course, nobody actually has a clue what's really going on in the economy. Bernanke really seem to be playing it by ear, and Paulson changes direction as often as John McCain. Movement in the stock markets, as you've noticed, is totally erratic. Marketplace should forget about playing "We're in the Money" or "Stormy Weather" when it reports the Dow and the NASDAQ, and just play Willie Nelson's "Crazy" every time.
Way back in my youth, there was a frequently quoted fortune cookie that went something like this:
-- ancient Chinese curse
Well, whatever. Life sure is interesting these days -- but I can't help but hope that out of this painful mess may arise a kinder, happier, post-capitalist world.
Thursday, October 16, 2008
On the other hand, I suspect what the candidates had to say was lost on much of the audience. What may have counted most, I'm afraid, were the smiles -- the reaction shots. How did the candidates look when they weren't talking? How did each of them look in the background while it was his opponent's turn to speak? Hell, the American people never cared all that much about words. How confident did each of them seem to feel? Americans love confidence.
As we all know, eye-rolling isn't allowed -- not even in response to the inanities of Sarah Palin. The only alternative is a knowing, deprecating smile -- and both candidates did their best to maximize the knowingness and deprecatingness of the smiles they proferred while their opponents were speaking. Obama's grin was broad and crocodilian. McCain's was forced, distorted, and suggestive of the crazed irrationality the Obamites have attempted to attach to McCain's image over the past couple of weeks.
McCain smiled so badly, in fact, you might think Obama had won the debate -- but that broad, "I'm a wide mouthed frog" Obama smile was just a little too smug, a little too "Ivy League." I'd guess the broad Obama grin antagonized the rabid McCainiacs more than the McCain grimace amused the Obamites -- and that any semi-mythical "undecideds" who may or may not exist in the real world continue to wish they had a third viable choice.
Yes, the markets tanked again today as a few newly released figures reminded the herd and the computer programs designed to emulate the herd that, bailout notwithstanding, it's still a recession out there. Other figures, by the way, indicate that it's still an inflation out there as well, despite the recent sharp decline in the price of oil. A few mainstream economists -- in the media, no less -- are beginning to use the word, "stagflation."
Over the next few weeks, the implementation of the bailout probably will ease the credit markets considerably, but we'll still be deep in the woods as far as the broader economy goes. Thirty years of ideologically driven screw-ups are not about to be remedied in a few days.
Tuesday, October 14, 2008
First, we should thank Barney Frank and anyone else in Congress who helped him slip that provision into the bailout bill which allows Treasury to directly infuse cash into the banks by buying equity shares. Henry Paulson didn't ask for it, and didn't want it, but Congress gave it to him anyway.
Clearly, the former Goldman-Sachs CEO would have preferred to limit his actions to buying those nasty toxic assets from his old pals in finance. Having the power, clearly, was not enough to get him to use it -- and so thanks go out to France, Spain, Italy, and especially the UK for semi-nationalizing their own banks and thereby forcing his hand. (I think a nod is also due to Ireland, which started the ball rolling last week when it guaranteed all deposits in Irish banks. That meant the rest of Europe had to act fast to keep depositors from moving all their money to Ireland.)
So now $250 billion of our taxpayer $700 billion will be buying shares of preferred stock instead of shares of unwanted subprime derivatives. Let's hope the other $450 billion also is diverted from Paulson's original purpose. I suspect there is a good chance that can happen, because it is likely to take more time than the Bush Administration has left in office to chase down the relevant crap and approximate how much it may be worth.
I'd also like to extend personal thanks to the Nobel Committee that awarded this year's prize in Economics to Paul Krugman. To me, Krugman winning the prize is a kind of personal validation, since my perspective on economic policies coincides with his about 95% per cent of the time.
Did those wily Swedes pick Krugman this year to extend one parting middle finger to George W. Bush? That probably helped them decide to give Krugman the award this year -- but if it hadn't been this year, it still would have happened eventully. Krugman has a marvelous talent for seeing things that are right in front of our eyes, but which other academic economists miss because they are blinded by orthodoxy or ideology. His contributions to the field are very real, and very significant -- and I offer him my sincere congratulations
Friday, October 10, 2008
To tell the truth, I've actually been kind of upbeat as the market's tanked. It seems that Barney Frank and friends did manage to work a little wrinkle into the bailout bill that makes it possible for government to turn a profit on its rescue of the financial industry -- and, stranger than fiction, Henry Paulson is ready to avail himself of the power to do exactly that. Paulson is ready to intervene by buying equity in the banks instead of just buying the crap that's been clogging the toilets of the credit markets.
On NPR today, there was coverage of a McCain rally -- one of his "town hall meetings" -- where some pathetic supporter was ranting about how an Obama victory would send the USofA sliding towards socialism. I'm quite sure that's not Obama's intention, and even more sure it's not Robert Rubin's nor Paul Volcker's intention but, as Jeanne Kirkpatrick said, "History is a better guide than good intentions."
The last major capitalist meltdown, affectionately referred to as the "Great Depression," brought us "socialist" innovations like social security, unemployment insurance, and market regulation that worked fairly well (if not perfectly) until the Reaganauts and the minions of Milton Friedman tore it apart. There's good reason to hope that this latest meltdown will help us regain the ground that was lost to all the presidents who put their faith in Allen Greenspan -- and, if we're lucky, even make a little progress. National, single payer health insurance, for example, could do wonders for the bottom lines of GM, Ford, and Chrysler.
Hmmm.... where did I put that red flag? Oh! There it is!
Friday, October 3, 2008
Gosh darn it.
Thursday, October 2, 2008
The Senate bill still gives entirely too much unbridled power to Henry Paulson. Bush may be the lamest duck in the history of the presidency, but somehow Paulson has managed to dissociate himself, in the public eye, from the administration he serves. Let's not forget that Paulson's last job was CEO of Goldman-Sachs -- and that his next job is likely to be something very similar.
Speaking of Goldman-Sachs, Warren Buffett negotiated a pretty sweet deal with that firm. Goldman is only minimally exposed to the kind of toxic debt Paulson will be buying with taxpayer money, but Goldman will be paying huge dividends -- the equivalent of credit card interest rates -- on the $5 billion dollars of preferred stock it sold to Buffett's Berkshire-Hathaway. Don't expect Paulson to drive that kind of bargain.
The missing factor in the bailout bill -- the one that actually could make the whole thing worthwhile to those of us who will be funding it -- is a provision that would give government a chance to turn a profit on its investment. If a bank wants to unload its bad debt, perhaps it should be required to toss in some stock options -- redeemable in five to ten years at current market price. If the bailout doesn't work, taxpayers still absorb the loss -- but if the banks bounce back as they're supposed to, the public gets back its initial investment and then some. In some alternative universe, the House might amend the Senate bill to accomplish something like that. In this universe, it's next to impossible. In this universe, if the government of the United States of America managed to turn a profit on anything, it would be decried as socialism.
Today, Obama said that if elected he'd make a point of regaining the taxpayer investment in the bailout bill -- which he and McCain both support. If Obama wins, and we get somebody like Robert Rubin (or, better still, Robert Reich) as Treasury Secretary, I think that pledge will be fulfilled. If McCain wins, and we get Phil Gramm or some similarly unreasonable facsimile, there's no saying what kind of economic calamaties might befall.
In the meanwhile, though, we'll have to sweat through as much as $350 billion of Henry Paulson's judgment. Keep your fingers crossed.
Monday, September 22, 2008
Moreover, it probably won't even work.
It would be just a little more palatable if our government actually had the $700 billion Paulson and crew propose to spend on bad paper -- now frequently referred to as "toxic" debt. But no, we'll have to borrow the money somewhere -- mostly overseas. Nobody seems especially concerned that we would be incurring that debt to buy "assets" that currently have no value on the open market. $700 billion of government debt that can't be used for productive investment ties up just as much finance capital as $700 billion of private debt that can't be used for productive investment. The jobs of a few investment bankers may be saved, but it won't do a damned bit of good in the Rust Belt.
Even excluding the "fix it with duct tape" bailouts of the past few weeks -- Fannie, Freddie, and AIG -- so much additional debt roughly triples the federal deficit. The result is likely to be both inflation and an even slower economy. What really yanks my chain, though, is that the only assets we're planning to take off the hands of big finance are the toxic ones. With Fannie and Freddie, at least, we took the whole enchilada -- the good along with the bad. Given enough time, there's a possibility government might even turn a profit on Fannie's and Freddie's holdings.
In the current plan, though, government is likely to get nothing but the crap -- the immobile, overvalued securities that made fortunes for their originators but left the American economy with a severe case of constipation. And how much will the taxpayers have to pay for that crap? The figure being kicked around in Administration circles is 50% of nominal value -- but since we know the financial institutions have been inflating the value of their bad paper in attempts to avoid further panicking stockholders with truly frightening write-downs, 50% of nominal value is far too much.
If either presidential candidate has a clue regarding what's going on, it hasn't been observable in his public statements. In Congress, Democrats are taking great care to disavow ownership of the administration's plan. To me, that suggests they think it can't prevent economic collapse but they still want to curry favor with the financial industry -- and anyway, doing something always looks better than doing nothing.
And so Paulson will get what he's asked for -- maybe with a few "Main Street as well as Wall Street" amendments -- but the deal is pretty much done. If it saves the world's financial structure, that would be very nice. If it doesn't, though, it is important that we keep a failure from becoming a disaster. The devil is in the details.
Before any frozen assets are purchased from any financial institution, those assets should be examined by forensic accountants and realistically valued. Under no circumstances should government use taxpayer money to buy mortgage backed securities for more they're likely to be worth when, eventually, they can be resold. Given that "eventually" may be three to five years from now, 50% of their real value -- not their inflated valuation -- seems generous to me.
Pay attention, politicians! You all want to cut taxes. You all want to provide better government services. You'd also like to balance the budget -- maybe even start paying off the debt.
Well, there's only one option -- government, the largest business in the United States, has to start turning a profit on at least some of its activities. The current mess provides our government with a rare opportunity to buy into the private sector at rock-bottom prices. Let's keep the profitable divisions of AIG. Let's hang on to Fannie and Freddie, and develop a safe, steady income from the interest on well-vetted mortgage loans.
Most of all, let's make sure we turn a profit on those "toxic" mortgage backed securities. Wouldn't it be wonderful if, sometime in Ben Bernanke's lifetime, our national debt started going down.
Friday, September 12, 2008
LINDA DIVALL: We did a dial test and breakout sessions in suburban Milwaukee with swing voters, with Wal-Mart women and with younger voters...
JUDY WOODRUFF: Now, what do you mean by "Wal-Mart women"?
(Linda Divall got that "Uh oh, now I've done it" look on her face. You could see that her mind was racing, trying to find a delicate way to explain a very indelicate phrase.)
LINDA DIVALL: We mean women who are -- as Anna just said -- are very concerned about the economy, women who are economically distressed, whose disposable income has declined rather substantially.Neither Judy Woodruff nor Democratic pollster Anna Greenberg took her to task for what struck me as a blatantly patronizing expression, apparently already in widespread use within the McCain campaign. Now I'm hearing it all over the broadcast media, sometimes shortened to "Wal-Mart moms," but nobody seems to be giving the GOP the credit it deserves for the coinage.
I couldn't take my eyes off the reaction shots of the delegates as I watched the Republican convention. Clearly, there weren't any "Wal-Mart women" there. There were Norstrom women, Nieman-Marcus women, Lord & Taylor women -- but not a Wal-Mart woman to be seen. At the Republican convention, a Wal-Mart woman would have been viewed as a lower species -- somebody who really should have been in uniform, collecting the used coffee cups and sweeping up the confetti.
Sarah Palin, of course, is supposed to appeal to those "Wal-Mart women." She's just a regular gal, somebody you might find checking out the tabloids on the supermarket checkout line, or cheering on the kids at the local church sponsored wolf massacre. Is it any surprise she didn't look too comfortable during her interview with Charlie Gibson of ABC?
Look at her posture, closed off and defensive, legs crossed, hands clasped. Perhaps a defensive stance was called for, because Gibson didn't throw her many softballs. He treated her with all the respect a vice-presidential candidate deserves -- that is to say, the assumption that she would know how to answer substantive questions.
A group of McCain's top aides had exhaustively prepped her in the days between the convention and her first interview, and she had her talking points down pat. Her problem was that she hadn't been prepared with a talking point for every situation in a one-on-one interview. In a one-on-one, the interviewer can ask as many follow-up questions as he likes in an effort to get an answer that's not a talking point -- and that's exactly what Gibson did.
She didn't do badly, exactly, but she didn't do especially well either. Perhaps she needed more talking points, because she seemed to repeat herself, in exactly the same words, over and over. Some think it was unfair of Gibson to ask her about the Bush Doctrine without telling her just what that doctrine is, but even after he told her, her answer left much to be desired. I guess the McCain aides neglected to drill her on that one.
I wonder how much better prepared this ambassador to the Wal-Mart moms will be when it's time for the vice-presidential debate. Clearly, whatever she's learned by then, Joe Biden will know a lot more -- but demonstrating knowledge is not what the debates are about, as we've observed over the years. Can Biden be more likeable than Palin? We'll see.
Tuesday, September 9, 2008
The vast majority of Americans have no clue what the crisis is all about, and explaining it to them is next to impossible. Most people are economic illiterates. Use words like "securitization" or "derivative" and watch their eyes glaze over.
Barack Obama and Joseph Biden understand what's happening at Fannie and Freddie. John McCain and Sarah Palin do not. The unfortunate outcome is that McCain and Palin find it much easier to talk to America about Fannie and Freddie than Obama and Biden do. The Republican candidates can spout sound bites that really have no bearing on the severity of the problem, while the Democrats seem to feel obliged to say things that make economic sense -- and then watch the eyes glaze over.
Please! Can't some speechwriter compose a few populist sounding platitudes for them to produce when the cameras are running? How about, "When we reorganize Fannie and Freddie, we'll make sure that taxpayer money is safe again, and not being used to bail out rich investors and overpaid executives; we'll make sure that middle-class families can realize the dream of home ownership without fear of finding themselves out on the streets; and we'll end the irresponsible Republican policies that caused the mess we're in today."
Okay, that's just a statement of goals -- not even policy, much less a plan for policy implementation. So what. The hard stuff can go into the interviews by the New York Times and the Wall Street Journal -- it doesn't have to be on the evening news.
Speaking of the hard stuff -- the take-over of Fannie and Freddie got me to thinking, again, about those not-too-serious ideas I was playing with last month for putting real pressure on Russia. Well, this time, I might be just a little more serious.
One of the biggest problems with Fannie and Freddie is their enormous size -- too large to fail. The obvious solution to that problem is to split the monsters into a number of smaller companies, similar to the way AT&T was split into the "Baby Bells" back in the 1980s. The problem with that solution, though, is figuring out how to divide the immense debt Fannie and Freddie have incurred.
Well, here's my "little idea." Just as AT&T was divided regionally, why not divide the mortgage giants' debts regionally? One large company might inherit all the debt owed to China; another could inherit all the debt owed to investors in the European Union. Debts owed to Russia's sovereign wealth fund and other Russian investors could be assigned to yet another company; perhaps the debts owed to the various sovereign wealth funds of the Persian Gulf area could be grouped together, and assigned to yet another spin-off.
I'm sure that there are quite a few economists and bankers with the appropriate qualifications (including sense of humor) to enjoy slotting Japan, Indonesia, Mexico, Brazil, Venezuela, and all the others into amusing and entertaining categories that might make sense. As for American investors, I'd hope that the pension funds might be kept separate from the hedge funds, and that taxpayer bailout money be reserved for the former.
Well, let's see. Although we couldn't keep the debts incurred by the various companies sorted so neatly, initially, at least, the sorting could be useful -- especially when all of them are depending on a government safety net to keep them solvent. Unlike Fannie and Freddie, though, none of the new companies would be "too big to fail." If some foreign country were being especially uncooperative, the Fannie/Freddie successor company that owed that country's sovereign wealth fund a ton of money just might find widening holes in its safety net.
Okay, it's just a "little idea," and probably not feasible. Just the same, the greatest debtor in the history of the world ought to be able to find some way to leverage that great distinction for its own good.
Thursday, September 4, 2008
Cindy McCain's delivery was so bad, one suspects it was scheduled before her husband's to make him seem articulate by comparison. Then there was the "Meet John McCain" video, replete with monochrome scenes from the 60s reminding us just how old the guy is -- and who was it who thought Mama McCain referring to her Johnny as a "mama's boy" was somehow endearing?
McCain had his usual problems reading the teleprompter, and his speech was nothing but the usual Republican boilerplate. Not only were there no specifics, there was nothing even resembling a plan -- save for a suggestion that it might be time for a surrogate war with Russia as well as continued war in the Middle East.
Big applause line: "I have that record, and the scars to prove it. Senator Obama does not." Yes, John, you were a hero -- in yet another war we never should have fought -- assuming we are willing to accept the idea that being a hapless victim is the same as being a hero.
You say that after that, "I never was my own man anymore: I was my country's."
Well, you were enough of your own man to leave your crippled wife and marry rich. You let your new wife's rich father put you into politics. Yes, you were a maverick -- "a calf who becomes the property of the first person who brands it."
Prepare to see and hear a lot more of Sarah Palin, America. She's the main hope of the Republican Party.
Wednesday, September 3, 2008
Mitt Romney took the "liberal as boogieman" rhetoric to what may be a new extreme. It played very well with the convention delegates, of course. The main qualification for representatives to the Republican convention, it seems, is extremism. Mike Huckabee, as we have come to expect, spoke of a choice between good and evil (before rambling off into a story about veterans and school desks.)
Mind you, those were the speeches scheduled before the network coverage began.
Rudy Guiliani, on the other hand, was a lot more effective, and even managed to go close to ten minutes without mentioning 9/11. He was especially effective when attacking Obama's inconsistencies, although the delegates seemed a bit confused when he criticized Obama's change from being against wiretapping to being for wiretapping. Nevertheless, it was one hell of a speech.
Sarah Palin did exactly what she had to do. She read her speech from the teleprompter without stepping on any lines. She and her family are attractive and well-scrubbed, and she delivered the requisite digs against Obama, Washington, and the national media with a brilliant smile. Surprisingly, I heard very little that sounded like a direct appeal to women -- probably a good choice on the part of her speechwriters. Everybody assumes the choice of Palin was a calculated effort to peel away some of the women's vote from the Democrats, so a bit of understatement was in order.
The delegates loved it when Fred Thompson mocked Barack Obama. To me, it looked like the Tennessean had knocked back a bit of Jack before he went on, but maybe that was just his southern charm. Anyway, it was just more preaching to the choir.
Those same delegates alternated between gape-jawed dumbfoundedness and deer-caught-in-the-headlights panic when Joe Lieberman came on to assure America that John McCain is not George W. Bush. The delegates, it seems, were drawn from that 30% of the public that still won't admit anything went wrong over the past seven years. When Lieberman praised Bill Clinton's "bipartisan" initiatives, the collective gasp was deafening.
For tomorrow night, we can look forward to what Joe Biden called "a noun, a verb, and 9/11." Whoopie!
Tuesday, September 2, 2008
Minnesotans, she informed us, are nice. The cameras panned across the sleekest, blondest, whitest cross-section of America one can imagine. "Yes," their smiling faces echoed, "nice is nice. We are nice too. Nice and sleek and blond and white. Hooray!"
That speech was followed by a sleek, once-blond white guy with a brown, adopted daughter. He spoke about his brown, adopted daughter with several references to John and Cindy's brown, adopted daughter -- yes, the very same one the Bush campaign identified as McCain's "illegitimate black child" during the 2000 primaries. All the sleek, blond, white delegates applauded.
Back to teen pregnancy: years ago, when I still was married and living in a relatively upscale community, our next-door neighbors arrived at our door one afternoon. It was odd, because they weren't friends -- just "wave to" neighbors -- but there they were, at the door. Sure, we said, come on in. Coffee? Tea?
Well, it wasn't the most comfortable session. They'd come to tell us their teenage daughter was knocked up, due any day, and that they would be raising the child. "Um, sure," we replied, "that's nice." Why were they telling us that? Were we supposed to care? Did they think the child of an unwed mother living next door would bring down our property value?
Half an hour's worth of uncomfortable tea and cookies later, they left, and we went back to waving, driveway to driveway. The baby was born, and grew. Within a few years it was evident, even from next door, that he was a "special needs" child. They all moved away -- to the South, I believe -- a year or two before my marriage ended.
We were not at all concerned that the illegitimate baby's grandfather was deputy chief of the volunteer fire department. In that community, you put out your own fire if you could -- because if you called the fire department, they'd destroy your house. It didn't really matter who was deputy chief, that's just the way it was.
Does that have anything to do with Sarah Palin's daughter's pregnancy? Probably not.
They're doing dead war heroes at the convention now. I think I'll go out for ice cream.
Friday, August 29, 2008
Since the Republicans are a party of old white men, by and large, just finding a woman at all is a problem. There are four Republican women in the Senate. Olympia Snow and Susan Collins, both of Maine, are both firmly pro-choice. So is Kay Bailey Hutchinson of Texas. That leaves Lisa Murkowski of Alaska, whose views on abortion, stem-cell research, and related issues are mixed, at best. Add to that the fact that her father, former Alaska governor Frank Murkowski, is not-very-successfully fighting corruption charges, and her unsuitability is incontrovertable. (Sarah Palin, by the way, had a role in bringing Frank Murkowski down.)
Apart from Palin, there are two female Republican governors. M. Jodi Rell of Connecticut is not only pro-choice, but she supports gay marriage. Lisa Lingle of Hawaii is, according to current Republican rhetoric, unsuitable by virtue of being from that weird, foreign land, Hawaii. She's also a Jeeeeewwwww, by the way.
There are 20 female Republicans in the House, most of whom are completely unknown outside their districts. Kay Granger of Texas gets national press once in a while, but she's pro-choice. I thought a strong contender might be Marilyn Musgrave of Colorado, a Pentacostal ranked "most conservative member of the House" by The American Conservative Union -- but she's so far to the right even McCain might find her scary.
I was really hoping McCain would take Bill Kristol's stupid advice and go with Joe Lieberman, thinking of the cognitive dissonance it would cause all those who won't vote for Obama because he's black. Would they have voted for a ticket with a Jew -- even a right-leaning, warmongering Jew?
Obama succinctly countered the Republican line about how he would raise taxes on the middle class, and he delivered a solidly populist economic message. McCain, in Obama's construction, is a well-intentioned patriot, admirable in many ways, who just happens to be wrong about virtually everything.
Obama went on to deftly skirt the social issues so important to the religious right, pussyfooting around same-sex marriage and abortion. Gays, for example, should never be restrained from visiting their loved ones in the hospital. Hooray. Women should have access to family planning services, so they don't need so many abortions. (Yes, polling shows that American Catholics are okay with birth control these days.) For me, this was the weakest section of the speech, but it was over in under a minute.
I'm sure the Republican convention will be brilliantly choreographed, but clearly, McCain will never rise to Obama's standard of oratory. Prepare yourself for what may be hours of videos.
(Tangential reference #1: So, today was the anniversary of MLK's "I have a dream" speech. I was there, at the march on Washington, but not close enough to the podium to actually hear the speech -- it was very hot, I'd had a few beers, and I was probably wading in the reflecting pool at the time. The people around me were splashing, conversing, and playing their ubiquitous guitars, and the scheduled speakers were just a crackling electronic noise in the background with an occasional chorus of "We Shall Overcome." There were a lot of us on the periphery of history that day -- I wonder how many now believe they actually heard King's speech.)
(Tangential reference #2: Why did they decide not to mention Lyndon Johnson's 100th birthday yesterday? He contributed at least as much to Obama's current ascendence as MLK. Oh, yeah -- Hillary got in trouble for mentioning that a little while back.)
(Very tangential reference: Vladimir Putin, who we understand is not to be trusted, says the Georgians who killed his "peacekeepers" included somebody in possession of an American passport. He suggests that the Georgian incursion into South Ossetia was an attempt to bait Russia in order to gain advantage for "one of the parties" in the current American election. If Putin's claim, by some odd chance, is true, it's not hard to guess which of the parties that would have been -- and they can't be trusted any more than Putin. I guess we'll never actually know the truth.)
Wednesday, August 27, 2008
Michele Obama did just fine, of course. She's poised, intelligent, attractive, and extremely likable. She delivered a predictably predictable speech, but with consummate style and professionalism. She left me wondering, as I wondered back in 1992, whether we'd nominated the wrong spouse -- and if Michele wasn't good enough on her own, Sasha and Malia put the icing on the cake. Put Michele and the girls up against Cindy McCain in the "family photo" competition, and it's no contest.
My favorite speech for day 2 was by Dennis Kucinich. You didn't hear it, of course, because it wasn't covered by the networks, PBS, or cable news -- and even I wouldn't expect you to be watching CSPAN. Thanks to the internet, however, you still can watch it here.
Of course the speech everybody was waiting for was was the speech by Hillary Clinton. I thought it was a hell of a good speech, but no sooner was it over than the Obamists in the media started complaining that Hillary had not kissed enough ass. "She said mean, hurtful things about him during the primaries," they complained, "and she didn't even apologize." Well, guess what, assholes? The speech wasn't intended to assuage your hurt feelings. The goal was to unify the party by bringing the "we wuz robbed" Hillary supporters in line behind Obama -- and you know what? It looks like it worked.
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Some people think Dennis Kucinich looks like a marionette, but compared to Mark Warner, well... If there ever was a keynote speaker more wooden than Warner, he was burned for firewood back in the Eisenhower years.
Whoops! Bill Clinton is on now! Later!
Monday, August 25, 2008
Then, in yesterday's New York Times Magazine, I read David Leonhardt's article on Obama's approach to economics. If Leonhardt's take is accurate (and he's usually quite dependable), Obama might be more in line with my thinking than I previously suspected.
He certainly agrees that Reaganomics went entirely overboard in the area of deregulation, and that government needs to assert more control over the private sector (especially if government is expected to come to the rescue when it screws up.) His tax plan is designed to redistribute the wealth -- maybe not as fast or as far as an old pinko like me might like, but way beyond anything either Clinton proposed.
His proposed health care plan puts government into direct competition with private insurers, and counts on market forces to bring the private companies into line. Personally, I don't see why he thinks it's necessary to create a whole new agency when it would be so much easier to let employers and individuals buy into Medicare, but if he manages to get his plan past the hoards of lobbyists lined up against it, it will be an enormous step forward.
In short, I'm feeling encouraged -- but I'm wondering how much of the above will be clarified at the convention, starting later today. As little as I care to watch infomercials, I suppose I feel obligated to catch as much of it as I can stand -- although I wish the published schedule were more precise regarding time slots for various speakers and superfluous bullshit. I'm sure they have it planned out to the minute, if not the second -- but I guess admitting that would make the proceedings seem less [insert gagging sounds] "spontaneous."
Naturally, I'm pleased by the choice of Biden for the number two spot -- especially since I would have happily supported him in a run for the number one spot. I sincerely hope his role in an Obama administration will be equal to Cheney's role in the Bush administration -- just minus the evil.
On a totally different subject, and completely off-topic for this blog:
I'm with those college presidents -- by all means, lower the legal drinking age to 18. Young people old enough to die for their country in the military should be old enough to legally get liquored up before they head down to the recruiting office to enlist! If the MADD ladies are truly serious about reducing traffic fatalities, they should agitate to raise the driving age to twenty-one -- or maybe twenty-eight or thirty for males. Then again, a young person old enough to drive a tank through Baghdad probably should be allowed to drive a Chevy through Jersey City.
Seriously, though -- I'm old enough so that I was allowed to drink (and be drafted) at 18, but couldn't vote until I was 21. From what I recall of the time the laws were changed, the traffic fatalities were greater in the states that limited boozing to 21-year-olds than in the states with lower age restrictions. The reason was that the youth from the former states were driving long distances to the latter states to get drunk, and then crashing their cars on the way home. It wasn't raising the drinking age that made the difference, it was making it uniform across state lines.
Saturday, August 16, 2008
Western Europe is totally dependent on Russian oil; the U.S. is preoccupied with Iraq and Afghanistan and economic meltdown, and Bush is a lame duck who's already blown whatever moral authority this country may once have had. So far, Georgia's had no support from the West save a few vague threats about taking the G8 down to G7 again. But wait -- the U.S. does have style="font-style: italic;">some leverage over Russia, come to think of it.
There's that little matter of the $100 billion we owe them. What if we threatened them with default?
Yes, yes, I know -- defaulting on a debt can wreak havoc on a country's credit rating. On the other hand, one could argue that repaying money owed to belligerent, aggressor nations who invade and occupy other countries only serves to encourage them. (Yes, yes, I know -- the description fits us as well as it does them -- but hell, they don't owe us money!)
Am I joking? Maybe -- but considering how much money we owe sovereign wealth funds and powerful corporate players in potentially troublesome countries around the world, why not take this opportunity to use our colossal fiscal irresponsibility to achieve world peace? Think about it -- crazy as it sounds, it might even work.
Wednesday, August 13, 2008
When McCain talked about the importance of the Iraq-Afghanistan border, he erred. Errors arise out of of inattention, ignorance, or inability. McCain might have explained his error by saying, "I know there's no border between Iraq and Afghanistan, but I wasn't paying attention to what was coming out of my mouth," or, "I guess I'm just ignorant of geography."
Maybe McCain has erred every time he's said offshore drilling would reduce gasoline prices in short order, but that would mean he's been completely inattentive when speaking to his scientific, technical, and economic advisers, and hence remains immensely ignorant. More likely is that he's been following the advice of his Rovian political advisers. He knows that what he's saying is untrue, but he keeps repeating it anyway.
When somebody intentionally tells a falsehood, we say he lied. Somebody who lies repeatedly and shamelessly is called a liar. So why won't Barack Obama just point to the report of the Energy Information Administration and the analysis of every competent economist in the country and call McCain a liar to his face? Why is he, instead, lending credence to McCain's lie by offering a "compromise" on offshore drilling?
Washington politicians, and Democrats in particular, seem to have a hard time using the word liar. I seem to recall some Republicans resolutely (and correctly) asserting that Bill Clinton lied about his relationship with Monica Lewinski, but Democrats seem too "sensitive" to the feelings of others ever to use such "hurtful" language. Even George W. Bush and Dick Cheney, the two foremost liars of recent history, have been spared that epithet. Why?
Maybe the Republicans are right: Democrats are wimps. Lately it's been looking like Obama is the biggest wimp of them all. Maybe he's trying not to seem like "a scary black man," but if that's the case, he's overdoing it. How is he supposed to deal with Vladimir Putin or Mahmoud Ahmadinejad if he can't even take a firm stand during the campaign? Why must he immediately give ground and offer some half-assed "compromise?"
(By the way, I'm still not convinced that the Republicans didn't somehow help Obama get the Democratic nomination. Back before the primaries, it looked like the GOP didn't stand a chance -- but now?)
Sunday, August 10, 2008
Saturday, July 26, 2008
The name of the program got me to thinking -- when did soldiers and marines become "warriors?" I'm pretty sure it was a branding decision designed by some advertising firm to bolster enlistments in the all-volunteer army, and I believe use of the term really took off after the invasion of Iraq, when recruiting became more and more difficult.
It makes perfect (advertising) sense, of course. The term "soldier" might lead one to think of Beetle Bailey, Gomer Pyle, or Forest Gump. Soldiers march on parade fields, obey orders, and pull KP duty. It's not an especially romantic image. A "warrior," on the other hand, is more like Conan the Barbarian, or the Mel Gibson character in Braveheart. He's big and bad and scary. No eighteen-year-old boy, raised on movie violence and video games, wants to be Gomer when he can be Conan.
The big problem I see with the "warrior" branding decision, though, is that the military seems to have bought into its own ad campaign. "Warriors" don't get PTSD. When Schwarzenegger is wounded, he cauterizes his own wound with a knife heated in his campfire and fights on until, ten minutes later on, his injury miraculously disappears. Warriors don't suffer permanent disabilities. They may sport a sexy scar or an eye patch, but they always fight to the death. Disabilities, physical or psychological, don't figure into the equation.
The "image" doesn't match the facts, of course. Thanks to better body armor and battlefield medical care, nearly eight American fighters are wounded for every one killed -- as compared to four to one in Vietnam and less than two to one in World War II. Military leaders have these statistics, of course, but still continue to greatly underestimate the numbers who will need treatment -- often protracted treatment -- when they return from overseas.
Will a change in nomenclature make any real difference in the way the military and the VA treat wounded veterans? Probably not -- but I still believe the "warrior" designation should be dropped. Back in 1947, the United States changed the name of the Department of War to the Department of Defense -- a change many considered Orwellian, but which also reflected a real change in public wants and needs following the vicissitudes of World War II. Defense was necessary, but war was something to be avoided.
The role of a "warrior" is to fight wars -- offensive as well as defensive. "Warriors" were necessary to fight Bush's war of choice in Iraq, and the military filled the need with an appeal to the aggressive, anarchic components of the young male psyche. Now that a substantial majority of Americans realize they were conned into fighting a useless, wasteful, self-destructive war of choice by a cabal of greedy, self serving liars, the need for "warriors" is over -- not only in the ranks, but also among the Joint Chiefs of Staff.
If we're going to have an all-volunteer, professional military, the most important criterion for service should be professionalism. No broadsword waving, blood lusting, face painted, testosterone driven refugees from M-rated video games need apply.
Saturday, July 19, 2008
To the extent that the cash was used to pay down consumer debt, it may have delayed some write-downs by the banks -- but given the state of American indebtedness, most of those who used their "Bush Bucks"* to pay credit card bills probably were in just as much trouble when the next month's batch of statements arrived.
It seems likely that most of the remaining rebate money was spent on gasoline. The part of the oil company profits that didn't go overseas went to the usual fat cats, and wasn't spread through the economy to any significant extent. The multiplier effect of the rebates, it follows, was insignificant.
Now Democrats are talking about another stimulus package. Mind you, just before a national election is really a very bad time to discuss an economic stimulus because there's no possibility that politics won't play a big role in what takes shape -- but there are a few level heads in the relevant Congressional Committees, so perhaps there are a few rays of hope for a genuinely helpful package this time.
The hardest part will be enacting a package without rebates. A new round of rebate checks will be no more helpful than the last round -- but the temptation to woo voters with dollars may be too strong to resist. If the presidential candidates get on the rebate bus, there's absolutely no hope of putting the money to better use.
To be worthwhile, stimulus spending must be targeted. A good start would be direct financial assistance to state and local governments. State and local governments are major employers, and many state constitutions mandate balanced budgets. When sales tax revenues fall -- and they have fallen fast because of the current recession -- government employees are laid off.
Not all aid to the states should wind up in their general funds, though. Some should be specifically targeted towards infrastructure improvements. Workers in the construction trades were particularly hard hit by the collapse of the housing market, and infrastructure projects could put many of them back to work.
Yes, politically connected contractors, as always, would get the lion's share of the contracts -- but I don't care if certain brothers-in-law profit so long as they are paying worker salaries. In my ideal world, contractors being paid with federal funds would be required to hire union workers, but that's probably way too much to hope for, even if the Democrats win big in November. There still are entirely too many "New Democrats" out there.
If there was anything good about the 2008 Farm Bill, it was the improvement in the Food Stamps program (now to be known as the Supplemental Nutrition Assistance Program for the sake of a snappy acronym), but rising food prices make even more improvement necessary. I also was pleased by the expansion of unemployment insurance benefits. Both programs pump money into the economy at the bottom, where it is certain to be spent, and have the greatest multiplier effect.
In the long run, though, no economic stimulus will be especially effective if it drives the federal government deeper into debt, further depressing the value of the dollar. To the greatest extent possible, federal stimulus spending should be paid for with cuts in other areas. I can think of two places to cut, right off the bat: oil subsidies, and agricultural subsidies. Big oil and big agribusiness have been making out like bandits (an apt comparison) while the rest of America has been suffering.
I'd also suggest changes in the Alternative Minimum Tax: index it for inflation, so that Congress need not go through it's annual ritual of raising the floor amount; and make what essentially is a flat tax progressive, so that the super- and super-duper-rich pay more than the current 28%. Of course, the AMT could be eliminated entirely if Congress had the guts to undo some Reaganomics and create a couple of higher tax brackets for both individual and corporate income taxes.
In brief, I think the people who got us into our current mess should pay to get us out of it.
*(Note: I heard the expression "Bush Bucks" from my daughter. I don't know how widespread its use might be.)
Monday, July 14, 2008
Investors in the two companies raked in enormous profits all through the housing bubble, and the companies' executives did even better. Thanks to the pervasive anti-regulatory ideology of the past few decades and the powerful influence of Fannie and Freddie's lobbyists, those profiteering executives were able to indulge in all the greed-driven maneuvers that created the current economic crisis.
What portions of the mortgages Fannie and Freddie either hold or insure are less than secure? Given the lack of oversight, nobody knows, of course. Oversight, after all, is an insult to the miracle of the free market. Yes, Bernanke and the Fed drew up some new rules today -- truly onerous regulations like "before it lends a guy half a million dollars, a bank really ought to check whether or not he has a job paying more than minimum wage." So as not to upset the mortgage industry too much, though, that regulation won't take effect until October of next year.
In the meanwhile, the Treasury will be expanding Fannie and Freddie's lines of credit, and the Fed will open the discount window to the two privately held companies. To wit: in keeping with the rules of modern capitalism, the risks are socialized while the profits remain private. The profiteers get to keep everything they raked in while the housing bubble was still inflating -- but now that the bubble has burst, taxpayers get to absorb the losses.
Fannie Mae and Freddie Mac, if they can't make it on their own, don't deserve government bailouts beyond the relatively small two-and-a-half billion already written into law. It's true, though, that the housing market depends on the two huge companies, so they can't be allowed to die -- but government and the taxpayers it represents should not be taking on more risk and more debt without getting something in return.
Government should not "bail out" Sallie and Freddie. If share prices continue to drop, it would make more sense to use the bailout funds to buy one or both companies outright. Yes, that's right -- a total government takeover. Nationalization. With proper regulation and oversight, both companies will be profitable again someday, and the government of the United States can apply those profits to affordable housing for the poor, or universal health care, or maybe just balancing the budget. Why send the country deeper into debt just so the private sector eventually can reap the rewards?
Once again, I ask my eternal economic question: why is it that no government enterprise ever is allowed to turn a profit? Why is it that everything that earns money is privatized, and everything that loses money is socialized? If people really want more government services and lower taxes, the only way to do it is to give government a chance to turn a profit once in a while. A buyout of Sallie and Freddie at bargain basement prices presents an excellent opportunity to do just that.
Yes, I know that not every investor in Sallie and Freddie is a fat cat -- I'm pretty sure that both my pension fund and my mutual fund hold shares of one or both companies, but I'm also pretty sure that both funds are selling out as fast as they can. Just like most other Fannie/Freddie stockholders, I presume they recognize that companies which buy, insure, and repackage mortgage debt can't possibly be doing too well right now -- and that the finance sector as a whole is in a downward spiral worse than any it's encountered since the Great Depression.
Along with crisis, though, comes opportunity. The opportunity I see is for a basic reorganization of American government and economics. Mind you, I don't expect any of our short-sighted, ideologically blinded leaders to take advantage of that opportunity -- at least not in the short term -- but if things get bad enough, who knows? Maybe if the tunnel gets really dark, there could be some really bright light at its end.