State of...

I've been digesting the State of the Union address for a few days, not that there was all that much to digest in it. The most important thing about it, as far as I can see, is that the president came across as likable. It's hard to hate a guy who seems so nice.

Okay, the teabaggers won't have been converted, but those alleged "independents" who've been drifting away from Obama in recent months may be inclined to drift back a bit. In my experience, most "independents" are people who don't know a damned thing about politics or policy, but make their political decisions based on their perceptions of a candidate's personality.

Take, for example, those nitwits in Massachusetts. Brown, you see, was a "regular guy" — while Coakley was, well, Coakley. It didn't have anything to do with health care, or the Democratic party, or anything else the pundits have been prattling on about. It was a matter of personalities, pure and simple.

Want to be elected to office? Smile a lot. Make a few self-deprecating jokes. Don't sound too intellectual. The "independent" vote will be yours.

Enough?

Let's hope so.

It seems that Rahm and I think alike — well, not that much alike, but enough so that Our President, yesterday, came out with what I asked for on Wednesday. Obama now appears to be an an anti-big-bank populist — and please note the emphasis on the word "appears."

The official story is that Summers and Geithner were working on it — under the genial and gerontological guidance of Paul Volcker — for months. Yeah, right. If they'd actually believed in restraining the banks, you'd think they might have gotten it out before they lost Vote Number 60 in Massachusetts. You'd also have thought they would have spent less time dumping on Volcker over the past few months.

Summers has to go. Maybe Geithner can stay, considering how he's a total wimp who will take whatever orders he is given. Mind you, I haven't forgotten how Volcker brought on the recession of the early eighties (not to mention the collapse of a few emerging economies) with his tight money policies, but what the hell — presumably it got us out of the stagflation, and Carter would have lost anyway (yes, I believe in Reagan's secret deal with the Ayatollah — a belief reinforced by Iran-Contra.)

So let's see what happens. If it's just a lot of wind, I'll be disappointed, but not surprised. If you want me behind you, Barack, just do the right thing.

Jobless "recovery"

Now that the senatorial election in Massachusetts has tossed Obama's lame-ass health care bill into the toilet, nothing will help the Democrats but some aggressive action against the bankers. How can that be done, considering that Wall Street is a major funder of candidates of both parties?

Beats me. Frankly, I see the plutocracy remaining firmly in control. As you may have noticed, I tend to be bearish on America.

Shit.

Here's why the recovery is jobless:

1. Productivity — When employers figure out that they can get more work out of decreasing numbers of desperate workers, that's exactly what they do. In case you haven't noticed, that's exactly what they're doing now. Why hire more?
   
2. Low Interest Rates — The low rates now being maintained by the Fed are supposedly going to make it easier for businesses to borrow, expand, and hire more workers. Nope, not quite. Low interest rates make it easier for businesses to afford the machines that replace workers. Why spend money on some smelly, angry guy who wants health insurance when you can have a machine that demands nothing?
3. That Whole Globalization Thing — Maybe you can train an out-of-work factory worker to be a telephone customer service representative, but cost-benefit analysis still will send the business to Mumbai or Calcutta. The whole argument that better education will improve the American economy is crap, because, whatever it is, we can't do it for less then they can.

So where do the jobs come from in this "recovery?" Beats me — and if the jobs are scarce and pay minimum wage, who has money to buy the services (we can pretty much forget about goods, except for export) the alleged recovery will produce? The Chinese? Maybe we could retrain unemployed Midwest factory workers to speak Chinese, so they can work the telephones for Chinese collection agencies.

Nah. The Indians will get those jobs.

So what is a cafe au lait president who promised change and so far has delivered just more and more of the same to do?

Me, I'd start by firing Larry Summers, Tim Geithner, and anybody else who ever was attached to Robert Rubin's teats. I'd replace Summers with Joseph Stiglitz. As for Treasury, Paul O'Neill would be a pretty amusing choice, and could help Our President continue his idiotic pretense of seeking bipartisanship.

Frankly, I don't think the Democrats have the guts to enact health care reform via reconciliation, so unless one of those oddball Republican women from Maine crosses over to the "dark" side, health care reform is as good as dead. All that's left to rescue Democratic candidates in 2011 is a really hard, stinging slap at Big Finance — accompanied by a lot of rhetoric about Republicans sucking Wall Street's balls. Since the Republicans will be sucking Wall Street's balls, the only obstruction to using this approach will be the difficulty Democrats will have disentangling Wall Street's balls from their own tonsils.

If you're looking for work — good luck. If you need health care and don't have insurance — good luck. What the hell — if you're living in contemporary America, good luck! You'll need it.

Haiti

FYI: The best NGO working in Haiti at this time is Doctors Without Borders. In Haiti long before the earthquake, Doctors Without Borders has no political nor ideological axes to grind. It is an organization made up entirely of medical professionals doing exactly one thing — providing medical care to people whose survival is threatened by violence, neglect, or catastrophe.

It has field staff in over 60 countries, including active war zones. Administrative expenses are 1.1% of total expenditures, as compared to 5.9% for the American Red Cross. Nobody is making an obscene salary.

Please give if you can.

Regarding the Bank Tax

I wish I could figure out what the Obama administration has in mind regarding that idea for a tax on the big banks. Whose idea was it? Did it come from Summers and Geithner? (Maybe, but I don't think so.) How about Rahm and the political team? (A lot more likely.) Somebody else? (I hope so!)

You see, it's actually a pretty good idea — provided it's done right. There is that little problem that it would have to be enacted by Congress, which means that getting it done right is very unlikely. Nevertheless, unable to rid myself of a residual twinge of optimism left over from my youth, I can't help thinking of how it might be done right.

Here's how it might happen: noticing how unhappy most of America is with the giant banks, their bailout by government, their vast, government subsidized profits for the past year, and the huge bonuses they are paying to their inept executives, members of Congress who are not total prostitutes to Wall Street will decide it might be a good idea to go a bit populist. They will go along with the Obama administration's efforts to assuage teabaggers and fellow travelers who think a balanced budget will restrain their taxes.

Community banks certainly cannot afford additional taxes — enough of them already are failing because they financed all those half-empty strip malls. Community banks will be excluded from the new taxes. The targets will be the big banks — the ones that are too big to fail.

If you slap a big tax on the biggest banks, it's a dead cinch that those big banks will break themselves into manageable pieces — pieces that are small enough to fail (and not pay those taxes.) Congress won't do it, but an appropriate tax will encourage the banks to do it to themselves.

Will it happen?

I'm not too optimistic, but, what the fuck, there's a chance.

Still, I'm not holding my breath.

The Harold Ford Strategy

Harold E. Ford Jr., former Congressman from Tennessee, appears ready to mount a primary challenge against current New York Senator Kirsten E. Gillibrand. Why?

Look no further than Wall Street.

Gillibrand is considered vulnerable, because she was appointed to fill Hillary Clinton's seat by now less-than-popular Governor David Patterson, who himself gained office by virtue of Elliot Spitzer's little problem with prostitutes. Gillibrand has not attracted much attention from the media, but she has been a dependable vote with the Democratic caucus in the Senate — what some, including Ford, might call a "hack."

Ford came to New York to take a job as a vice-chairman at Merrill-Lynch (now part of Bank of America), and it is with the encouragement (and, no doubt, the contributions) of his buddies on Wall Street that he will be making his primary run. Let's see how that could work out:

1. He could lose his primary bid, but the contest would deplete the Gillibrand war chest, thereby making her more vulnerable to a Republican challenger.
2. He could win the primary and the general election, thereby giving Wall Street another "moderate" Democratic shill in the Senate — from a state with a largely liberal population.
3. He could win the primary and lose the general election, thereby giving Wall Street a typical Republican stooge in the Senate.

However Wall Street looks at it, backing Ford in a primary challenge is a great idea — and I have no doubt that there are thoughts of downstate black voters finding him more appealing than a white woman from Albany. It's almost diabolical. (Well, maybe deleting the "almost" would make that last statement more accurate.)

Okay, then, what do you want — a hack, a shill, or a stooge?

Me, I'll take the hack.

Letter

I just sent the following letter to the New York Times:

To the Editors:

I suspect I am not the only reader who found page 3 of the January 9 edition bitterly ironic. The juxtaposition of news of 85,000 new job losses with advertisements for $135 dress shirts (a bargain!), $850 pearl earrings, and an 18K white gold and diamond cocktail ring is, to me, indicative of the moral bankruptcy of American society. Call me a socialist if you will, but I still believe that those who continue to engage in conspicuous consumption, while others struggle just to survive, are beneath contempt.

I think I can predict, with fairly complete certainty, that the letter will not be published.

What Actually Happened?

Bernanke says the problem at the heart of our recent economic problems was lack of regulation, not (heaven forfend!) Fed monetary policy. Interest rates, he says, were not too low.

Perhaps it wasn't interest rates — and, certainly, I'm not one to argue against greater regulation. The problem is that the financial instruments that brought on the crisis could not have been regulated because nobody knew what the hell they consisted of, or what they conceivably might have been worth. It's pretty clear that the ratings agencies that gave those instruments their AAA ratings didn't have a clue.

In other words, the crisis arose from a straightforward case of market failure, based on lack of information, and what really is needed is vastly more transparency. All securities should be sold on public exchanges, so that all buyers know what others are paying. Buyers should be fully informed of the content of the tranches of securitized debt they purchase, and not have to depend on the seller's optimistic evaluations of risk and reward. When banks hold such vehicles on their books, they should be valued according to real market prices, not imaginary projections of what they might be worth some day — and all of a bank's holdings should be on the books, not hidden away in SIVs.

If a regulator — the Fed, or anybody else — is going to make sure that banks no longer can become so grossly overleveraged that they threaten the world's financial structure, it is necessary to know all about their assets and liabilities. Secrecy (and creative bookkeeping) made the recent crisis possible, and only openness can prevent it from happening again.

And what can we expect from Congress?

My prediction: a little lip service to consumer protection, and a lot of kissing Wall Street's ass.