While reading the news yesterday about the "bailout", I was confused. At first, I thought that Congress had voted down Paulsen's original plan. But that didn't make sense, because they had been working to amend that plan all weekend. Then I realized that they had voted down what was supposed to be the "compromise" plan. However, from what I am hearing this morning, many of the so called protections for taxpayers and limits on CEOS were not part of this legislation. It sounds like another fast one was going to be played on the public. "Oh yea, we will give all of these protections" but then the shell game started. They never really discussed what yesterday's bill actually contained. So if it was indeed the case that the protections weren't included, then I am glad it got voted down.
Some on the far left are claiming that this plan was designed by Paulsen to bailout every financial instrument from top to bottom, not just those that dealt with mortgages and mortgage backed securities. Since I don't understand enough about this plan, I can't say if that is true or not. However, it does look like a bunch of conservative, rich guys, trying to rob the Treasury.
The whole Republican plan from the start was to squeeze as much money out of the government as possible, to bankrupt it, so that they could cut or end social programs. They subscribe to the Ayn Rand version of capitalism (the kind presented in Atlas Shrugged) where only the "productive" get the rewards. The lesser of society "deserve" to be on the bottom because they are "lazy", "unskilled", and "stupid". It is a justification for what I call "neofeudalism".
Now, their own Republican congresspeople, are desperately afraid of loosing their jobs, are walking around sounding populist. Interesting turn of events.
UPDATE: October 1: I just found this at NPR It is one of the best explanations that I have seen thus far as to why Congress voted against the Bailout on Monday.
Tuesday, September 30, 2008
Neofeudalism
Monday, September 29, 2008
Nonsense is fun!
Did you see Sarah Palin on Katie Couric? Wow.
Let me post the relevant transcript. The question is about the bailout and why the $700 billion shouldn't just go to working class families:
That's why I say I, like every American I'm speaking with, we're ill about this position that we have been put in where it is the taxpayers looking to bail out. But ultimately, what the bailout does is help those who are concerned about the health-care reform that is needed to help shore up our economy, helping the—it's got to be all about job creation, too, shoring up our economy and putting it back on the right track. So health-care reform and reducing taxes and reining in spending has got to accompany tax reductions and tax relief for Americans. And trade, we've got to see trade as opportunity, not as a competitive, scary thing. But one in five jobs being created in the trade sector today, we've got to look at that as more opportunity. All those things under the umbrella of job creation. This bailout is a part of that.
While you're scratching your head trying to figure that out, let me recommend a fun tool you can use. If you'd like to interview her yourself, you can click here and keep reloading to get new questions and new nonsense answers. It spits out totally random garbage, of course, but is it really any different from the above answer? I "asked" Governor Palin about the role of the U.S. in Iraq and Afghanistan, and I got this response:
Iraq and Afghanistan will lead to further security of our best interests to fight against a regime, especially Iran, who would seek to wipe them off the face of the public trust. And that violation of the construction bonds and the 49th state, Alaska, and Russia. They are our next door neighbors are foreign countries. They're in the oversight as people are trusting these companies with their investments, with their investments, with their life savings, with their investments, with their life savings, with their life savings, with their insurance policies, and construction bonds, and everything else. When we see right now in Washington and that was some destruction.
Enjoy!
Update: Here's the SNL sketch parodying the interview that Bert mentions in the comments. The above response from Palin is used almost word for word in the parody.
No Bail Out- yet
So Congress has voted down the bail out. Obama's response. "I'm sure they will do the right thing."
The Republican's are blaming Nancy Pelosi and her last minute "partisan" speech. I really want to see if I can download her speech on the Floor today. The Guardian published some quotes from her speech. Nothing unusual.
But the real story is that the Republicans didn't want to support it despite Bush's up-to-the-minute appeals. The Democrats needs the Republicans' support to pass it. So . . . whose fault is it really?
So what's the damage?
Here is a visual picture from Smartmoney's Map of the Market at around 1 pm Pacifif Time on Sept 29, 2008. As you can guess, red means down.
Crude oil dropped $10 a barrel, to around $96, the biggest fall in 7 years. The US dollar strengthened, further eroding commodities values. And now Europe is feeling the pinch with the nationalization in the UK of Bradford & Bingley Plc and Netherlands and Luxembourg extended an $16.3 bil bailout to Fortis, the largest Belgian financial-services firm.
Buckle your seat belts. We are in for a wild and humbling ride!
GOP Tries to Have it Both Ways
A few minutes ago, the House of Representatives voted down the bailout plan. Democrats delivered 60% of their members, but Republicans delivered less than a third of theirs. Republicans plainly wanted the bill to pass on Democratic votes, so they could get the advantage of it succeeding, but also run against the bailout it in the elections. Pelosi and Reid have said nuts to that. Both sides must be on board, along with Obama and McCain, so that everyone takes the political heat for this equally. Nobody gets to "free ride" on the bailout. That is only fair.
If the stock market drops another 1000 points, the GOP might come running back to vote for a bailout. It is very obviously their fault it failed, with 2/3 of them voting against it. Amazingly, Boehner and others are saying that it would have passed but for a very partisan speech given at the last minute by Pelosi. I assume nobody is buying that. What, they won't vote for legislation because someone called them names?
Time to Go It Alone
The US House of Representatives rejected the Wall Street bailout proposal 228-205 this afternoon. The Democratic leaders in the House--who had compromised to the hilt to gain bipartisan support for a bill they personally detested--were stunned when less than a third of the Republicans ultimately voted for it. The Democrats clearly put country first, while the Republicans voted for political convenience.
The lesson for House Speaker Nancy Pelosi must be crystal clear: There is no point in compromising with the Republican leadership in the House. They have nothing to offer; their caucus is too disorganized (as RbR has described well). The Democrats should fashion a rescue plan that also gives strong protection to homeowners and revises the bankruptcy rules--provisions Congressman Barney Frank pushed hard to win, but ultimately sacrificed for the empty promise of Republican support.
I hate the idea of a bailout, but I hate the idea of a recession worse. If the Democrats are going to do what is right for the nation, it seems they need to forget about pleasing the fickle Republicans and instead rally their own caucus. It is time for the Democrats to go it alone. When the Republicans cannot even come together to save their own Wall Street backers, it is clear there is nothing across the aisle to reach out to.
Sunday, September 28, 2008
Sweat for Change
This past weekend, Bell Curve and I, along with another friend, went to Nevada to spend a day working on the Obama campaign. We drove to Las Vegas and began work at 9am. There were several hundred Californians assigned all over Las Vegas this weekend for this day in the "Drive for Change" campaign. We three went to some obscure neighborhoods in South Henderson and each walked alone on individual beats for several hours in the hot, hot sun. We had lists of Democrats and undecided voters whom we were to try to contact by knocking on their doors. We then tried to encourage the Democrats to vote early, giving them information, and to persuade undecided voters. I had a 20-minute talk with an undecided voter who concluded by saying he was mighty impressed that the Obama campaign had called him and come to his door. "McCain must just take us for granted," he said. While wearing my campaign gear eating a burrito at a Chipotle, I was accosted by a young man who told me he had just moved from Pennsylvania and wanted to know how to vote absentee there. I told him there was still a week to register in Nevada, got the paperwork, and signed him up. Then gave him the list of all the places (at supermarkets etc.) where you can vote early in Las Vegas starting on October 14th. Another voter in the bag.
The Obama campaign believes (we heard this repeatedly) that every 12 door knocks will result in, on average, another voter going to the polls for Obama. How this number was arrived at, I cannot say. But it was a good day for us. I knocked on 80 doors. If each Californian was responsible for turning out just three or four more votes, that would be a couple thousand votes gained that day. With Kerry and Gore losing Nevada by about 20,000 votes each, we know it matters to be a tiny cog in the wheel for a day.
And the Nevada organizers were gleeful at the crowds. All these people drove five hours to canvass voters, each spending at least $100 each for the trip, food, etc., not to mention two days of their lives. I understand our subgroup in S. Henderson of about 16 volunteers did more work in a day than they had accomplished in the prior few weeks with the 2-3 volunteers they can normally get. This is what the "ground game" is about. Our sweat. McCain doesn't even seem to have such a program, nor is he likely to find that level of enthusiasm. The hope also is that the tight cognressional and assembly races in Clark County, Nevada, will also swing on these GOTV efforts. A similar campaign is organized for Northern Californians to drive out to Reno and Washoe county in the North.
I felt like I have finally been able to do something more than just donate money. Beer tasted really good Saturday night.
Standard Time
In 2008, Daylight Savings Time in the U.S. began on March 9th and will end on November 2nd. As part of the "Energy Policy Act of 2005," Congress added two more months to Daylight Savings Time. This means we now spend two-thirds of the year (238 days) in "non-standard" time. Something has gone wrong somewhere.
Credit Cardholder's Bill of Rights
The Credit Cardholders' Bill of Rights Act of 2008 (H. R. 5244) passed the U. S. House of Representatives 312-112 on Sept. 23. It has now gone to the Senate. Given the $700 billion bailout, Democrats should shame Republicans into accepting this bill's basic consumer protections, which should have been enacted long ago:
1. Prohibits retroactive rate increases. Credit card companies may not increase the interest rate on existing balances, except when fixed-term promotional rates expire, or as a penalty for missing payments. In other words, the terms under which the prior credit was extended may not be arbitrarily changed.
2. Prohibits surprise rate increases. Credit card companies must provide at least 45 days notice in writing of any rate increase on future balances. Once notified, a consumer always has the option to cancel the card and repay the balance without incurring any fees.
3. Prohibits "universal default" rules. Credit card companies may not increase balances based on external factors such as the consumer's credit bureau scores.
4. Prohibits double-cycle billing. Finance charges may only be based on the balance of the current period, not the average of the previous two periods. This accounting trick has been used to bilk consumers of billions of dollars.
5. Prohibits excessive over-the-limit fees. Only permits credit card companies to charge over-the-limit fees once per billing cycle. Gives consumers the right to instruct a credit card company to refuse all over-the-limit transactions on their behalf, thereby avoiding all such fees.
6. Prohibits disproportional application of payments. When different portions of a credit card balance accrue interest at different rates, a creditor must apply payment proportionally to all. The credit card company may offer to repay the higher-interest portion first, but may never shunt disproportional payment to the lower-interest portion (except for special promotional offers).
7. Prohibits hidden due dates. Requires credit card companies to provide a clear "safe" payment due date on each statement, which if met will incur no penalties. Requires that any on-line or telephone payment made directly to the credit card company before 5:00 pm on that date be considered on time.
These are good, solid protections and I hope the Senate will act quickly! Too many consumers are unable to manage their debt because the terms are misleading or can be changed without warning. This has got to stop.
Saturday, September 27, 2008
The First Debate
Hi Everyone,
Friday, September 26, 2008
What the polls say about the bail out
In an earlier post US referenced a NYT article that suggested that opposition to the bail out was overwhelming. And indeed, CNN international seems to be echoing that statement in their questions. Lots of questions to pundits about "were you surprised at the savage opposition to a bail out?"
Thursday, September 25, 2008
The Implications of the Disorganized Right
Hi Everyone,
Millions of Americans Meet the Financial Crisis
My bank, Washington Mutual, just failed. The US government just took it over within the last couple hours. I am assured that in the morning JPMorgan Chase will have my money fine. They damn well better. If there is a tiny hiccup, we are yanking out all of our money. There will be a bank panic of terrible proportions if there are any teeny problems tomorrow, not so much with Washington Mutual, but the next bank rumored to fail. The next bank that is rumored to fail will be cleared out by depositors. Heck, we talked seriously about taking our money out of WaMu last week.
Millions of other Americans, and voters, are going to wake up tomorrow with the credit crisis in their own homes. And they will tune in to see the Presidential Debates. If John McCain isn't there, Obama will take questions for an hour, I am sure. McCain is just hanging around Washington hoping to take credit for any bailout plan that goes through. We don't need that. Especially not with him pretending that cheap grandstanding is for "country first."
Americans Are Pissed Off
"We're mad as hell and we aren't gonna take it anymore!" That seems to be the attitude of the American people. This bailout is the last straw.
The NYT is reporting that Representatives and Senators are getting slammed by constituents 95% AGAINST a bailout. The article is interesting. It shows what people really think of this administration. No wonder McCain is calling to cancel his campaigning. He's going to get painted as a White House supporter.
The best quote from the article:
War opponents, for instance, are telling lawmakers that they are tired of an administration that, in Mr. McDermott’s words [Rep. Jim McDermott of Washington, D], has “cried wolf” and played “the fear card” too many times by leading the nation into war in Iraq to find nonexistent weapons of mass destruction and curbing civil rights in the name of pursuing terrorists
I'm glad. It shows that Americans are tired of taking it lying down. They are still interested and engaged after what seemed to be a long period of complacency.
Wednesday, September 24, 2008
McCain's debate bailout
Well, John McCain wants out of the first debate because of the bad economy. And yes, you can take that sentence any way you'd like. Andy Borowitz gives a take that I think we'll see often, especially from comedians ... but how will the average Joe view it? Will it be seen as a cop-out by a candidate who doesn't want to talk about his party's disastrous economic policies? Or will it be seen as a brave, necessary move by a man who cares deeply about this crisis? I can't tell. I don't know any undecided voters. If you're an undecided voter reading this blog, I'd love to hear your thoughts!
The Zengales Plan
Prof. Luigi Zengales (University of Chicago) has presented an interesting alternative to the Paulson Plan. Zengales recommends establishing a special fast-track, pre-packaged form of Chapter 11 Bankruptcy to restructure ailing Wall Street investment banks and get them operating again. By way of encouragement, the Federal Reserve would only open its lending window to investment banks which accept this restructuring.
As I understand it, this plan would force banks that now have opaque, questionable balance sheets to write down and finally accept the diminished value of their devalued mortgage-backed securities. This would be a painful process that would entail corporate restructuring, but the special Chapter 11 Bankruptcy procedures would get these firms solid and running again as fast as possible. Zengales describes his plan thus:
Since we do not have time for a Chapter 11 and we do not want to bail out all the creditors, the lesser evil is to do what judges do in contentious and overextended bankruptcy processes: to cram down a restructuring plan on creditors, where part of the debt is forgiven in exchange for some equity or some warrants.
Again, as I understand it, the credit markets are freezing because banks are unwilling to lend money to institutions with opaque and questionable balance sheets. This was not a problem before, but now everyone is worried that that these banks are not solvent. This tough proposal would force banks with too much exposure to deal with the "toxic" assets once and for all. Ultimately, this should restore confidence in the financial markets, and the cost would be borne entirely by Wall Street without any infusion of taxpayer cash.
I am intrigued by this "tough love" proposal and I would very much like to hear our bankruptcy experts explain the plan... Because, frankly, I have to admit that really don't understand it. I hope what I have said here is merely distorted instead of dead wrong!
Tuesday, September 23, 2008
Omaha Stakes
Maine and Nebraska are the only two states that allow the electoral votes to be split and awarded to different candidates. Two votes go to the overall winner, but additioanl votes are awarded by Congressional district. Maine has four votes and two congressional districts, both expected to vote Democratic. No split is likely. Nebraska has five votes and three congressional districts. Nebraska's Second Congressional District consists of the city of Omaha. It is possibly "in play" this time around. If Obama wins Omaha, he can get one of Nebraska's 5 electoral votes.
This matters because some scenarios play out to a tie in the electoral college. Kerry received 252 EV. Obama needs 18 more EV than Kerry to win. Iowa (7) is probably in the bag, as Obama has been leading by double-digits for a while there in most polls. That means Obama needs to find 11 more EV to win with 270. Possibilities to win with 270 are any of the following: Ohio (20); Virginia (13); Colorado (9) + New Mexico (5) [=14]; Colorado (9) + Nevada (5) [= 14]; Missouri (11); and Indiana (11).
Scenarios for a tie with 269: New Mexico(5) + Nevada (5) = (10); Colorado (9) + New Mexico (5), but losing New Hampshire [14-4=10]; Colorado (9) + Nevada (5), but losing New Hampshire [14-4=10]; Ohio (20), but losing Minnesota (10) [20-10=10]; Ohio (20), but losing Wisconsin (10) [20-10=10].
Such a tie throws the decision to the H of R. The voting rule is that each state has one vote (so 50 votes, not 435). Given electoral trends, we might expect that H of R to vote Democratic, but it is not 100% certain. The new Congress votes, not the current one. Also, it may matter who won the popular vote. The current congress has 26 states controlled by Dems, the rest controlled by the GOP or split. A majority (26) is needed to elect, so we're barely there today.
Also, seven states have only one representative (VT, DE, AK, MT, ND, SD, WY). Where that representative is of a different party than the state's national preference, that person may be very concerned about voting. Four states fit that category: Red states with at-large Democrats: North Dakota, South Dakota, and probably Alaska (3). Blue states with at-large Republicans: Delaware (1). It is not sure how the split delegations would go. Very messy.
So if Obama wins Omaha, it could be huge.
How Stupid is the Washington Times, you ask?
There is an article today in the Washington Times about the possibility of an electoral college tie. It speculates that the Democratic-controlled House would elect Barack Obama, but that the Senate, being 50/50 split (and Lieberman voting for McCain) might elect a different VP. Of course, the Washington Times apparently doesn't know that it is the NEW Congress that elects the President, not the old one. They mention that as a "possibility" raised by "some scholars" on the second page of the article. What's funny (or tragic) is that this is the same seat-of-the-pants constitutional argumentation that is common to tax protestors and people who go nuts over fringes on flags. A little education dispels the autodidact's errors.
Let's review. The operative language comes from the Twelfth Amendment:
"[the electors] shall make distinct lists of all persons voted for as President, and all persons voted for as Vice-President and of the number of votes for each, which lists they shall sign and certify, and transmit sealed to the seat of the government of the United States, directed to the President of the Senate. The President of the Senate shall, in the presence of the Senate and House of Representatives, open all the certificates and the votes shall then be counted;--the person having the greatest number of votes for President, shall be the President, if such number be a majority of the whole number of electors appointed; and if no person have such majority, then from the persons having the highest numbers not exceeding three on the list of those voted for as President, the House of Representatives shall choose immediately, by ballot, the President."
This will not happen until January 6th, after the new Congress takes office. The Washington Times and its "scholars" are confused about when the H of R shall meet "immediately" after a tie. You see, the electors meet in their respective states on December 15th (the first Monday after the second Weds in December) and cast votes, and that tally is known (it is not a secret) but those vote are not formally transmitted to the President of the Senate for counting in the joint session at that time. On January 6th, according to 3 USC 15, they are opened in joint session of the NEW Congress.
Where does the Washington Times get these morons?
While You Were Sleeping . . .
Lest we forget with all the new son financial markets, there is still a war in Iraq. And the Washington Post reported today that some $9-$13 bil in reconstruction funds were wasted or stolen.
A brave former investigator for the Iraqi Commission on Public Integrity (US equivalent to the FBI oddly enough), Salam Adhoob, who managed 200 investigators and saw 32 of his colleagues killed, testified before Congressional Democrats that many projects that were paid for by US taxpayer money were either not needed or never started even the money flowed in. Yet, neither he nor the auditors assigned to the task can account for the money. One case mentioned in the article involved a $24.4 million electricity project that only existed on paper, what Adhoob calls "ghost projects".
Abbas S. Mehdi, former Iraqi Cabinet official testified to corruption in the Iraqi government. An unnamed Iraqi-American who has been a senior adviser to both the Defense and State department told of elaborate schemes carried out by the Iraqi government and Al Qaeda to sell Iraqi oil on the black market.
So, as you contemplate $700 bil, think about what falls through the cracks: budget dust to the President, but to the average American, that is how many new schools? How much in tuition grants for university students? How many cancer treatements? How much in quality care for the elderly?
The Latest Power Grab: Trash for Cash
Since we are now all over the financial crisis, what seems to be coming out now is a Constitutional problem . Paulson't proposal seems to be a blantant power grab. What Paulson is advocating is that the US Treasury, thus the US President, be given nearly total control of the US financial system with precious little oversight by Congress. The proposal sent to Congress states:
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
Now the Scilian in me sits back and asks herself, "Was this part of a little conspiracy? Wait until the problem was giagantic and then act with "emergency measures"? Then the American innocent kicks in and says, "nah. That would take too much complacency." But these guys are smart. These guys protect their own.
Since the most important Congressional checks over the Executive is the power of the purse, that is a pretty serious power to give up.
It's another "emergency" that requires Congress to sell off the house as the fire is raging inside. It reminds me a little of how we got stuck in Iraq. I think Congress is feeling the same way. Yesterday on the News Hour, Democrat Rep Brad Sherman Said, "Why should the Department of the Treasury have total carte blanche? We should require that every major contract entered into under this bill and every purchase of toxic assets be approved in advance by the GAO. Otherwise, this is just a license for the Treasury to hand out money in return for trash, cash for trash, and they get to decide who [sic]to do it."
To paraphrase Chris Dodd, they only get one shot at this and they have to do it right. In 41 days, there may well be a new Treasury secretary. So whatever they agree to has to work beyond November 2008.
What I also hear from Barney Frank, Chris Dodd and the like is that there has to be accountability. I don't think Congress will be railroaded this time.
How to Spend $1 Trillion of Your Money
Treasury Secretary Paulson is apparently objecting to any limits on executive compensation in the Wall Street bailout plan. US taxpayer money - my money - should, he argues, be used for multimillion dollar payouts to those very people who caused this crisis. Anybody who thinks about it for two seconds will answer this question the same way. The person most responsible for reckless risktakign at the heart of the mortgage crisis is: (a) the largely uninformed homebuyers who each made one transaction; or (b) the well-informed lenders who made millions of transactions and had armies of accountants and risk managers at their beck and call, and the well-informed billion-dollar investment banks that sliced and diced the commercial paper afterward.
Bueller? Bueller? Paulson? The answer is "B".
SecTreas Paulson says that if these limits are included, companies may be reluctant to participate in the bailout. Is he freakin' serious? If a company is so mismanaged with so little oversight that it would go into bankruptcy rather than restrict management salaries (particularly after the managers have proven to be such spectacular failures), the company is beyond any hope of redemption.
What does this say about Paulson, though, whose primary concern is for the welfare of corporate managers rather than anyone else? This reminds me very much of Carly Fiorina who (see blog post below) plainly thinks that being a highly-paid CEO of a billion-dollar company (a job she got fired from) is much harder than being President of the United States.
Even John McCain knows that taxpayer money shouldn't be spent on large executive bonuses for executives who, especially these, who totally failed their companies by greedily ignoring obviously unacceptable risks.
Of course, McCain and other converts to better corporate governance is still hoping that Congress will not wake up tomorrow and realize that we should spend $1 trillion to bailout homeowners rather than investment banks. According to the Pew Research center, total residential mortgage indebtedness stands at about $9 trillion. According to CBSNews, the national default rate on mortgages stands at just over 1.3% (10.3 for each 1,000 homes). Note that that is not a very high default rate, really. In some states it is as high as 3%, others much less. So, for $90 billion, the goverment could pay off all defaulted mortgages. Of course, all the govt has to do, actually, is keep them *current*, not pay off the principal. At a fixed 30/yr rate times 5% interest, the monthly mortgage payments for the entire country woudl are about $48 billion (at 6%, it's $53 billion - you can do this on any mortgage calculator). So the government could, for $1 trillion, pay every mortgage in America for almost two years. Or it could pay half the mortgage payments for four years. Or it could pay the principal of 1/9 of everyone's mortgages. We could be even more creative. The government could spread the $1 trillion evenly to each homeowner (rather than pro rata depending on the size of the mortgage. The math is hard to do on a napkin, but this would mean that houses below the national average price would get a payoff greater than 1/9, and those above less. For many homeowners, this would be huge.
That's how much money, how much of OUR money, the government is about to hand to Wall Street to blow.
Of course, as a progressive, I find all of this a bit mirthful. As Mark Shields said, "there are no libertarians in a financial crisis." Not since the New Deal has the government hurled anything like a trillion dollars around with the express goal of staving off economic downturn. This is a vindication for every progressive who knew, during the last 25 years, that laissez-faire was French for "irresponsibility." I just want to start hearing them admit it publicly. McCain spent his entire adult life pushing for deregulation. Electing him would be the dumbest thing we could do.
Monday, September 22, 2008
Valuing Risk
[This is an offshoot of RbR's thread re "Moral Hazard."] At the start of this discussion, I argued investors on Wall Street had been, "perfectly responsible and rational. They knew they would get rich when the big risks worked out and would get bailed out when they did not." As this conversation has continued, however, I have gradually been convinced (esp. by Handfish and Pombat) that I was wrong.
Oh, I still think investment bankers knew there was a fair chance they would not suffer the full consequences of failure. I still think they knew (at least subconsciously) that as a group they were, "too big to fail," and that government would bail them out if things got too bad. I still think Wall Street could see the historical pattern of bailouts as clearly as anyone else.
But I no longer think they were responsible and rational. I think there is a deeper lesson here: The free market simply does not correctly value risk. Many investors were simply gambling, just as many homeowners were gambling: Wall Street and Main Street exhibited the same behavior. This message is there for all to read in the skyline of Las Vegas: As a society, we so consistently under-value risk that you can build an entire industry on that premise. The free market cannot be expected to value risk correctly when its participants systematically under-value it.
So while letting firms go belly up may be satisfying, it will not teach the market any lessons. Increasing the cost of failure only provides deterrent where there is rational valuation of risk. Instead of altering incentives, we need to alter the law. You can hike the penalty for drunk driving all the way to capital punishment, but sometimes you just have to take away the keys. We need to ban certain overly-risky financial instruments (like derivatives) outright, and also require stronger liquidity ratios for institutions that indulge in speculation. Games need to be regulated and gamblers need limits, and maybe it is as simple as that.
Socialism Or Is It?
This Time/CNN.com article compares the current move to bail out Wall Street to the statist version of Social Democracy practiced in France. They do so with some whit and candor so it's worth a read. They argue that America is going socialist! But is this Wall Street bail out, and the auto industry bail out that is almost sure to be next, really socialism?
Saturday, September 20, 2008
Tony Blair on the Daily Show
Anybody else see Tony Blair on the daily show? Apparently he is teaching some course on religion about faith and globalization. As a recently converted Roman Catholic, Tony Blair has interesting views about religion. (Stewart did not ask Blair if he believed that birth control was morally indefensible, which is the position of his new church). But the truth is that Tony Blair sounded, well, not very smart. In fact, his embrace of GWBush in the interview was kind of odd, until you realize that they actually do BOTH have the same very limited worldview that has decided that we are in the middle of some sort of cosmic clash between democracy and Islamic fundamentalism that parallels WWII with its significance. That's the Lieberman position too, by the way. Repeatedly, Blair said "9/11 changed everything." That is very intellectually lazy. September 11th was the bloodiest of a string of terrorist actions stretching from the 1960s through the bombings in Spain and London, but it was of the same type. It changed us; it didn't change them. I came away with the impression that Tony Blair just isn't that bright after all.
And that explains an awful lot.
Troopergate Update
Hi Gang,
Friday, September 19, 2008
Moral Hazard and Morality
The central problem with the Wall Street bail outs is something called "moral hazard."
More From Ron Paul and Disunity On the Right
Ok so a while back, I posted about some rumblings among the Ron Paul people. I suggested that they were dissatisfied with the McCain-Palin ticket and might cause problems for McCain in a close race. An anonymous commenter (possibly a Republican lurker?) accused me of wishful thinking and strongly implied that I was making it up. Since then, Ron Paul has been put on the ballot in Montana and publicly refused to endorse either McCain or Obama. Here is the man again on national news talking about why he will never endorse McCain even though McCain has got Phil Gramm begging him to do so (I thought McCain and Gramm didn't hang out anymore - but Krugman thinks Gramm would be McCain's Secretary of the Treasury and be a disaster for the country).
"The chairman of the SEC serves at the appointment of the President and has betrayed the public's trust. If I were President today, I would fire him."
Wow. "Betrayed the public's trust." Was Mr. Cox dishonest? No. He merely changed some minor rules, and didn't change others, on short-selling. String him up! Mr. McCain clearly wants to distance himself from the Bush Administration. But this assault on Mr. Cox is both false and deeply unfair. It's also un-Presidential.
Unbelievable!!!!!
I just went to johnmccain.com The new slogan "REFORM. PROSPERITY. PEACE."
Peace??? John McCain? I guarantee you if he is elected, he will make war on Iran. He wants endless war in Iraq. His VP is threatening war with Russia. These people hate "peaceniks." How much doubletalk can the press stomach before someone calls him on it.
Save Wall Street!
So the financial markets are in even more turmoil. The Treasury (with Bush nowhere to be seen, mind you) is now going to insure money market funds. They have done such amazing things as banned the short selling of financial institutions' stocks. These are massive, I repeat, massive interferences in the free market. Paulistas must be apoplectic. For years, the cry of conservatives, Republicans, and financial businesses has been: "Get government off our backs! No regulation! Let the free market rule!" Amazing how all that goes away when they need some cash. Save us! Save us!
Now when ordinary people say that - whether their house was flooded or about to be foreclosed - these financial folks and economistas cluck their tongues and say that people should be forced to live with their own decisions. Ordinary people are getting tongue-clucked (or a word that rhymes with that) for having "speculated" or taken "risky investments." That is what Wall Street did in spades. They get bailed out, but not homeowners? Who matters more? When we talk about "improving the economy" only Republicans mean "fixing corporate balance sheets or GDP numbers." What we really mean is "improving the lives of regular people who work for a living." We don't care about the DOW or GDP for its own sake, but for its effect on people.
Apparently regular people need to be able to learn from failure, but not big businesses and banks. Sure, I understand that massive economic havoc will be caused if they are allowed to fail, and I more or less think we have to do it, but we should NOT then turn a deaf ear to the real financial crises of real Americans.
Now that we are shoveling out our money to investment banks like there's no tomorrow, we should form a national mortgage bailout fund so that we can eliminate all these freaky mortgages and put everyone who wants it on a fixed 30-year 5% mortgage. And we should make universal health insurance happen so that unemployment or "downsizing" does not mean losing the ability to take your kid to a doctor. And we should extend unemployment benefits. Republicans have opposed this bitterly. Here's the truth: In every family, there is a person who is "too big to fail" for that family. Maybe it's about time we took that seriously, too.
There also needs to be punishment for the greedy bankers who made all this personal profit for themselves and left us the bill. I would recommend a dramatic retroactive tax on all investment-banker bonuses for the past 5 years would be a start. These people have been making $50K-$100K or even more in bonuses for all the proifts they have reaped. And the management of these institutions must be sacked without golden parachutes. There are jobs in Starbucks: go work there and learn what the real economy is like. See if you still think, like Reagan did, that "Government is the problem." In fact, I think that before taking any bailout money, each corporate executive should be forced to publicly recant their (numerous) statements that "Regulation is Bad."
I hope Obama makes a dramatic proposal for a rescue for ordinary people in this mortgage crisis, not just the financial sector. If there's one thing this financial crisis should do, it should make Phil Gramm and every other freakonomics yahoo who mouths "trust the free market" or every Reaganite who says "Government is the problem" shut up and sit down while the grownups get to work trying to stave off a depression.
I'm sure my biting tone is not atypical of a lot of working people reading the news and then coming home and wondering, "Why is nobody going to bail me out with my mortgage that I can't pay, or college bills I can't pay." Obama will surge ahead in this election if he can tie this financial crisis to people's lives and the need for real change in how government works.
Thursday, September 18, 2008
I can see Iowa from my house
According to Radio Iowa, Palin and McCain came to do a rally in Iowa, and the crowd dissipated after Palin spoke. McCain should probably start going first. But the most fun was when Palin began the speech, "We want Sarah," the crowd began chanting as Palin said, "Thank you," to begin the rally. "Thank you so much Iowa, it is so good to be in Grand Rapids."
She was in Cedar Rapids.
McCain Confused Mexico and Spain In Interview
Here is a link to the interview. Basically a Spanish interview asked McCain if he would meet with Spanish Prime Minister , Zapatero (PSOE). McCain starts talking about Mexico and Latin America. Geez! Is Palin the SMART one!? At least she knows to evade the question if you don't know the answer.
Universal Health Insurance, the Easy Way
So, I got to thinking this morning. We, the citizens of the United States, need universal health insurance. Tuesday night, we just bought the world's largest insurance company for $85 billion. I see a solution here. Don't you?
Alaska Republicans Reject Palin
Alaska had its primary election for its (only) seat in the House of Representatives. Don Young, the Republican, has been ensnared in the same sort of corruption scandal that took down Frank Murkowski and has landed Senator Ted Stevens in a criminal trial. Palin championed Lt. Gov Sean Parnell for the seat (only in such a small state is Lt. Gov not as good a job as Congressman). She and he lost in a close race. Don Young won the Alaska GOP primary. So much for her vaunted popularity among Alaskan Republicans. Pollsters expect Young to lose to the Democrat, Ethan Berkowitz, giving yet another victory to the Dems in the Fall. Pollsters also expect Ted Stevens to lose to Democratic Anchorage Mayor Begich.
Oh, and when McCain says she beat former gov Tony Knowles (D) "like a drum" in 2006, it's another Mccain lie. She got just 48% of the vote in a 3-way race.
Women and the Far Right
Some of our international readers may be looking at the news about Sarah Palin and thinking, "OK, I knew Americans were crazy but this is just bizarre." But how unusual is the Palin phenomenon? Just off the top of my head, I can think of at least three other high profile women who are leaders of far right movements and who have (or had) some popular appeal even out the strict confines of their own movements' bases.
A Tale of Two Defectors
Yesterday two people defected from their party to endorse the candidate of the other party. Lady Lynn de Rothchild (an international banker who married into the famously beyond wealthy Rothchild family and lives half the year in Manhattan and half the year in London) was a big Clinton fund raiser who endorsed McCain because she thinks Obama (the son of a single mother who was on food stamps who worked and took out student loans to get a law degree from Harvard) is an elitist.
Obama Regains National Poll Lead
Well, the Palin bounce for McCain is over. The poll trends are are mostly in Obama's favor again and when I last checked the RCP poll average, Obama had a very slim lead with the polls with McCain being ahead being largely the older polls about to drop out of the average. State by state trends are starting to move in Obama's favor too.
Wednesday, September 17, 2008
Obama's Economic Plan in Ad Form
Obama has a new 2 minute ad that's on the air right now. It's not as strong an attack as US West would like but it is as detailed on policy as US West would like. He's got other ads that are strong attacks and the money to run both kinds of ads.
What If They Blew Up An Embassy And No One Noticed?
So Al Qaeda is being blamed for a deadly bombing at the US Embassy in Yemen (long a hot bed of Al Qaeda operations and recruiting - not to mention the home of the Bin Laden family). But it's not the top story. The top story is still the nationalization of AIG.
Tuesday, September 16, 2008
Fudget
The California Legislature finally passed a budget, three months late. The Democratic-controlled legislature cannot pass a budget without the concurrence of some Republicans, because the stupid constitution requires a 2/3 majority for the budget. Democrats are 6 votes (of 80) shy in the Assembly, and 2 votes (of 40) shy in the Senate. For want of those 8 Republican votes, we waited 3 months for a budget and got a total piece of legislative excrement (allow me to coin a new word: "lexcrement"). The problem: a $15 billion budget gap. That is about six weeks in Iraq. Or three years of Alaska's buget. The solution: Cut $9 billion and borrow $6 billion from future years' budgets. Way to fucking go. Republicans said "no new taxes" but would not take responsibility for the budget cuts. Democrats gave in on all kinds of budget cuts, but wouldn't give up $6 of $15 billion no matter what. Governor Steroids proposed a 1-cent sales tax increase (the most regressive tax possible) and that got nowhere. Although a Republican, Arnold couldn't get 8 Republicans to side with him on anything. He ended up being not an honest broker (the role of the governor in CA budget issues) but a third constituency that nobody wanted to please.
Now, in a hissy fit, Arnie is going to veto the budget. It's a meaningless gesture, of course, because the budget required a 2/3 vote anyway. It will be overriden within hours. But he has also threatened, out of spite, to veto most of the remaining 873 bills sitting on his desk. Democrats warn him that to do so capriciously will have consequences. The legislature can punish the Governor equally well by sending him bills he cannot sign for things he needs. And worse. The loser in this war of midgets is the people of California. (No wonder the State Supreme Court refused to move to Sacramento years ago).
After five years of Schwarzenegger, elected on a recall of the failed Davis administration, we have more debt, higher state university fees, lots of hidden "fees" instead of taxes, and state government is more broken than ever. A couple years ago, a Sacramento watcher (whose name I forget) described the budget battles in Sacramento as two kids threatening "Give me what I want or I will hold my breath until I turn blue and pass out." Then proceeding to do it. This year was even worse. The unstoppable force meets the immovable object.
The problem is (as we have discussed) institutional. Barring institutional fixes, however, the solution has to be with people - namely, with the governor. He (or she) alone has the megaphone and the power to rally the public, knock heads together, wheedle, cajole, and threaten legislators into breaking the logjam. A strong governor can change the contours of the debate, set the public agenda, and force sensible compromises.
Allow me to illustrate the power of political skill even in hard situations. In 1994, the Republicans took control of the CA State Senate and the State Assembly. Or rather, they should have taken control of the State Assembly, but they had only a 1 vote majority. Speaker Willie Brown (known as Wily Brown), a Democrat of 15-years' tenure in that seat, persuaded one Republican to vote for him, deadlocking the Chamber and leaving him in power. (Willie Brown's office, which he designed himself, was grander than the governor's, by the way). When that Republican was recalled by his irate constituents, Speaker Brown persuaded another Republican to accept the speakership for himself (at the expense of his party). When she fell too, another Republican patsy was found. It took a full calendar year for the Republicans to seize control of the Assembly after they had won it. When they finally got their own speaker, Chip Pringle, he served for 10 months, then the GOP lost the election and Dems have run the chamber ever since. The result of that brief interlude in 1996 was electricity deregulation. That worked well. I remember muttering to my friends at the time that if Bill Clinton had had just half as much guile and skill as Willie Brown, we would have had universal health care. Institutional problems don't make it hopeless, but they do require extraordinary people. And, as Robespierre supposedly said of the French Revolution, "We live in a time of great events, but little men." Indeed it is so. If Dianne Feinstein runs for governor, she could command attention and make changes. I support Garamendi, but I know he will have it tough with his lack of name recognition.
What happens to California now? The Governor is now a lame duck, that's for sure. He is termed out and there will be an electoral campaign starting in earnest right after Nov. 2008 for the Nov. 2010 election. Democrats have a good chance of winning. But they may not have the ability to increase their legislative margins to two-thirds, and probably won't be able confront the institutional problems that make the state increasingly ungovernable.
Obama's Plan
OK, just yesterday I said that Obama needed to unveil a plan (almost any plan) to deal with the economy to show the American people that he was going to do SOMETHING to address the current economic downtown and financial crisis. Today, Obama gave a nearly 40 minute speech on the subject that includes a fairly detailed plan (starts around minute 20). The plan is so detailed and thought out that I can't but think that he's had it in his pocket for a long time just waiting for an opportune moment to reveal it. As I said before, it's not as if these latest rounds of corporate collapses and bail outs were unexpected - at least not to the Democrats. If nothing else he was probably waiting for people to shut up about Palin for a second or two.
The Democrats Have to Run Ads On This
Michigan Republicans are using lists of people who have been hit with mortgage foreclosures to mount a "caging" operation. That when they send letters to targeted addresses with "do not forward" stamped on them. If the letters come back, the Republicans challenge the voter in question's ballot on election day. This is similar to tactics that Republicans have used in Florida and Ohio in 2000 and 2004. Now they are taking their circus of sleaze to Michigan.
It's only the Presidency
This is what's wrong with the pro-business Republicans, McCain, the "MBA Presidency" and all of that. Carly Fiorina (former CEO of Hewlett-Packard and McCain backer) said today that Sarah Palin didn't have the skills to run a major corporation. Nor, she said, did John McCain, Barack Obama, or joe Biden. But that didn't stop her from endording McCain and Palin. Apparently it's only the US Presidency, which is easier than running a major corporation. Note: no it's not. A Fortune 500 executive gets paid millions, is not much in the public eye, and has a concentrated task to keep corporate stock prices looking good.
It's not easy, but let's be realistic about how tough it is compared to the US presidency. For one thing, there's rarely a limit on the budget a CEO can use to hire talent to help. None of the jobs of motivation, speaking, or persuasion that a CEO needs ti develop can match that of the requirements for a President.
The US President has to handle every aspect of domestic and foreign policy on a limited budget in the public eye. He or she has to decide life or death issues. He even has to live in the office. And he regularly has to explain himself to the press. Also, corporations do not have "checks and balances."
This contempt for the office of the presidency is really contempt for the US government, belied by wearing little lapel pin flags. If you want to elect someone who thinks that being president is a step down from being a Fortune 500 CEO, vote for McCain and Palin. If you want to vote for someone who thinks that being President is the most important job in the country, vote for Obama. It's getting easier to figure this one out all the time.
McCain's Economic Phil-osophy
The "Phil" in Phil-osophy stands for Phil Gramm. Senator Phil Gramm (R-Texas, of course) was one of the authors of the financial deregulation of the late 1990s that has led to the financial crisis today. Gramm is also McCain's senior economic advisor, or rather he was until he said that Americans were a "nation of whiners" and he had to be quietly canned. Still, McCain repeates Gramm's phrases every day, including the idea that the "fundamentals of the economy are strong" and that we need "reform" of institutions. Reform, for Grammites, means more deregulation. So does "transparency." It all means the same thing: letting "the free market" do its thing. Regulation, to Grammites, means interference, and is always negative.
We could also call this Naivenomics. An Economics 101 understanding of the economy seems to underlie this view. It view the free market as if it were a perfect watch built by the Divine Watchmaker, and government as a constant drag and interference on that market. Government regulation creates inefficiencies. Just let the market be, these people argue, and prosperity will follow. It does generally follow, of course... for those wealthy few who advocate this Phil-osophy.
On this blog, we will battle about the extent of regulation, but most of us accept the basic premise that regulation is essential to the free market. In 1854, speaking of slavery in the Lincoln-Douglas debates, Douglas famously said that slavery could not last "a day or an hour" without government support. The same can be said of most of our financial sector. Without government and law, property and the economic system built around hypothecating and trading private property deteriorates and dies. I believe RBR was arguing something similar from Hernando DeSoto (not the first white man to find the Mississippi) that the rule of law was essential to economic devleopment.
Libertarians too will argue that all that is needed is to enforce the "natural" laws (basically: enforce contracts and punish property crimes). Most of us know that more is needed. Regulation for the economy is like regulation for your respiratory and circulatory system. It keeps you breathing. Right now, we have a financial system gasping for air (and breaking wind at the same time...).
The reasons why regulation is needed are, of course, complex, but the economic premise is relatively simple: the "free market" is a useful construct for some kinds of (mostly micro)economic analysis, but not a factual reality. Two forces have prevented government and the market from ever behaving as Libertarians or Grammites imagine. First, since time immemorial, powerful and wealthy interests have always leveraged government to their advantage. From the creation of the limited liability corporation (which allows investment without personal responsibility) to government spending (which alters market forces), the government has interfered on behalf of corporations and wealthy interests. The finger is always on the scale of moneyed interests. Second, since the New Deal, there has been a quiet political consensus in this country that economic situation for oridnary people must never again be allowed to get so bad as they did during the Great Depression. To do this, the process of "creative destruction" must be managed. The result, for better or worse, is that most sectors of our economy are dominated by huge institutions that are "too big to fail." Woe to those, like agriculture, that lack such institutions. They must derive benefit from "subsidies."
What this means is that private corporations get all the upside benefit, the public takes all the downside risk. For Phil Gramm, McCain, and others in the super-elite, this is fine. It's why they are Republicans and how they make lots of money. The rewards of success are private planes; the fruits of failure are golden parachutes. Republicans want the government to get the hell out of the way of anything that would interfere with the possibility of massive upside profits [for them] in bubbles and so forth, even if, by doing so, the public might be able to protect itself against shouldering the burden of the inevitable collapses. Indeed, Republicans even oppose taxing that massive wealth, although the people must pay for it on the other end. That's what Enron was all about a few years ago. We did this in the 1980s, and are going through it again. For a time, a few get very rich. Then it fails and those same people do not suffer: taxpayers and working people do.
Simply put, this is why we are in this mess. The solution is NOT, as some real hardliners say, to abandon the "too big to fail" policy. That would result only in more massive pain for ordinary people. The solution is for financial regulators to keep abreast of the economy and put on the brakes from time to time. This means that they must watch like hawks to beat down signs of the "moral hazard" created by a "too big to fail" economy.
And the support for this system ought to be through taxes on stock dividends, corporations, and so forth. The Republican philosophy that stock dividends and corporations should not be taxed at all looks even more outrageous in light of what is happening now.
Palin Refuses to Cooperate With Investigation
Well, we had to have expect this at some point. Governor Palin is now refusing to cooperate further with an investigation by the Alaskan legislature, into her abuse of power in firing her public safety director (aka "Troopergate"). Palin says that the investigating committee (3 Republicans and 2 Democrats) is being manipulated by the Obama campaign. There is also in independent counsel that has been appointed. The investigating committee voted 3-2 to subpoena Todd Palin, the Governor's husband. The deciding vote on the committee was cast by a Republican representative from Wasilla, Palin's home town. There is no word yet on whether the committee will subpoena the Governor. It sounds like if they do, Palin will resist testifying.
Obama Ad For Women
Here is a new Obama ad targeting women. It's about time. According to the summary, this ad is playing Virginia. They should play it nation wide.
Monday, September 15, 2008
It's the Economy Stupid!
Today we got some very bad news from Wall Street. Two of the bastions of the US financial sector have gone down in flames. Lehman Brothers has filed for bankruptcy and Merill Lynch had to be rescued by Bank of America for $50 Billion. Stock markets around the world are tumbling. The Dow Jones index lost 4.4% of its value. BBC.com is reporting that central banks around the world are responding with emergency injections of capital (to the tune of $50 Billion). The British stock market is also tumbling. The FTSE is down 3.9%. These are big companies. BBC is reporting also that Lehman Brothers employees in the UK alone are owed $75 Million in paychecks that may now bounce or never arrive.
Obama Getting Tough
I like this ad a lot. It does several things Obama needs to do. First, it directly calls McCain a liar (which he is). Second, by entitling the ad "honor" it pushes the one button guaranteed to make McCain lose his temper and act like an out of control ass. Third, it puts the focus on McCain - Sarah who? Finally, it keeps up the message that McCain is just running for a third Bush term.
Saturday, September 13, 2008
Palin Might Be Even Worse Than We Fear
This New York Times Article on Palin lists a series of concerns.
Obama vs McCain on Taxes
The Washington Post has this great comparison of the tax plans of McCain and Obama. Basically, both offer tax cuts for most people (sorry, Republicans call them "folks"). But Obama cuts taxes more for people in the middle and bottom of the income distribution. Obama will raise taxes IF and ONLY IF you make more than $600,000/year. And if you do make that much the difference in your tax bill will be around $115,000. So I can certainly see what the super rich would want to stop Obama. But why anyone who can even remotely call themselves "middle class" would be upset about Obama's tax plan is beyond me.
The Palin Doctrine
Conservative shysters have now devised a scheme to explain away Gov. Sarah Palin's embarrassing inability to answer Charles Gibson's question regarding the "Bush Doctrine." Their pocket pundits now claim there are several different Bush Doctrines, so when Palin looked like she was trying to dodge the question, she was really just innocently asking for clarification.
Of course that "explanation" might make more sense if Palin had actually indicated she thought there were multiple Bush Doctrines, or if there actually were multiple Bush Doctrines--although in that case apparently she did not know any of them. I have lamented time and time again about the right wing's total disdain and disregard for the truth. Here we go again.
McCain and Palin are now out-and-out lying about Palin's record regarding the "Bridge to Nowhere" and requesting "earmarks." It has become so blatant that the media is now--amazingly--actually starting to call them on it. The Republican response is, of course, to attack the press for bias. As Paul Krugman recently put it, at least the Bush campaigns had the decency only to tell lies that required a little thought or knowledge of mathematics to recognize.
Palin continues to claim credit, wrongly, for ending the "Bridge to Nowhere." She continues to claim, wrongly, that she never sought "earmarks" when she was Governor. Palin espouses creationism yet dismisses global warming as a myth. And on and on. She seems to believe that if you just keep wishing hard enough--if you just keep repeating a lie over and over again--then you can make it true. This must be the Palin Doctrine.
Friday, September 12, 2008
You Go, Gloria!
I think this is such a great piece by Gloria Steinem in today's LA Times about Sarah Palin, I want to post it in full.
Palin: wrong woman, wrong message
Sarah Palin shares nothing but a chromosome with Hillary Clinton. She is Phyllis Schlafly, only younger.
By Gloria Steinem
September 4, 2008
Here's the good news: Women have become so politically powerful that even the anti-feminist right wing -- the folks with a headlock on the Republican Party -- are trying to appease the gender gap with a first-ever female vice president. We owe this to women -- and to many men too -- who have picketed, gone on hunger strikes or confronted violence at the polls so women can vote. We owe it to Shirley Chisholm, who first took the "white-male-only" sign off the White House, and to Hillary Rodham Clinton, who hung in there through ridicule and misogyny to win 18 million votes.
But here is even better news: It won't work. This isn't the first time a boss has picked an unqualified woman just because she agrees with him and opposes everything most other women want and need. Feminism has never been about getting a job for one woman. It's about making life more fair for women everywhere. It's not about a piece of the existing pie; there are too many of us for that. It's about baking a new pie.
Selecting Sarah Palin, who was touted all summer by Rush Limbaugh, is no way to attract most women, including die-hard Clinton supporters. Palin shares nothing but a chromosome with Clinton. Her down-home, divisive and deceptive speech did nothing to cosmeticize a Republican convention that has more than twice as many male delegates as female, a presidential candidate who is owned and operated by the right wing and a platform that opposes pretty much everything Clinton's candidacy stood for -- and that Barack Obama's still does. To vote in protest for McCain/Palin would be like saying "Somebody stole my shoes, so I'll amputate my legs."
This is not to beat up on Palin. I defend her right to be wrong, even on issues that matter most to me. I regret that people sayshe can't do the job because she has children in need of care, especially if they wouldn't say the same about a father. I get no pleasure from imagining herin the spotlight on national and foreign policy issues about which she has zerobackground, with one month to learn to compete with Sen. Joe Biden's 37years' experience.
Palin has been honest about what she doesn't know. When asked last month about the vice presidency, she said, "I still can't answer that question until someone answers for me: What is it exactly that the VP does every day?" When asked about Iraq, she said, "I haven't really focused much on the war in Iraq." She was elected governor largely because the incumbent was unpopular, and she's won over Alaskans mostly by using unprecedented oil wealth to give a $1,200 rebate to every resident. Now she is being praised by McCain's campaign as a tax cutter, despite the fact that Alaska has no state income or sales tax. Perhaps McCain has opposed affirmative action for so longthat he doesn't know it's about inviting more people to meet standards, not lowering them. Or perhaps McCain is following the Bush administration habit, as in the Justice Department, of putting a job candidate's views on "God, guns and gays" ahead of competence. The difference is that McCain is filling a job one 72-year-old heartbeat away from the presidency.
So let's be clear: The culprit is John McCain. He may have chosen Palin out of change-envy, or a belief that women can't tell the difference between form and content, but the main motive was to please right-wing ideologues; the same ones who nixed anyone who is now or ever has been a supporter of reproductive freedom. If that were not the case, McCain could have chosen a woman who knows what a vice president does and who has thought about Iraq; someone like Texas Sen. Kay Bailey Hutchison or Sen. Olympia Snowe of Maine. McCain could have taken a baby step away from right-wing patriarchs who determine his actions, right down to opposing the Violence Against Women Act. Palin's value to those patriarchs is clear: She opposes just about every issue that women support by a majority or plurality.
She believes that creationism should be taught in public schools but disbelieves global warming; she opposes gun control but supports government control of women's wombs; she opposes stem cell research but approves"abstinence-only" programs, which increase unwanted births, sexually transmitted diseases and abortions; she tried to use taxpayers' millions for a state program to shoot wolves from the air but didn't spend enough money to fix a state school system with the lowest high-school graduation rate in the nation; she runs with a candidate who opposes the Fair Pay Act but supports $500 million in subsidies fora natural gas pipeline across Alaska; she supports drilling in the Arctic National Wildlife Reserve, though even McCain has opted for the lesser evil of offshore drilling. She is Phyllis Schlafly, only younger.
I don't doubt her sincerity. As a lifetime member of the National Rifle Assn., she doesn't just support killing animals from helicopters, she does it herself. She doesn't just talk about increasing the use of fossil fuels but puts a coal-burning power plant in her own small town. She doesn't just echo McCain's pledge to criminalize abortion by overturning Roe vs. Wade, she says that if one of her daughters were impregnated by rape or incest, she should bear the child. She not only opposes reproductive freedom as a human right but implies that it dictates abortion, without saying that it also protects the right to have a child.
So far, the major new McCain supporter that Palin has attracted is James Dobson of Focus on the Family. Of course, for Dobson,"women are merely waiting for their husbands to assume leadership," so he may be voting for Palin's husband.
Being a hope-a-holic, however, I can see two long-term bipartisan gains from this contest. Republicans may learn they can't appeal to right-wing patriarchs and most women at the same time. A loss in November could cause the centrist majority of Republicans to take back their party, which was the first to support the Equal Rights Amendment and should be the last to want to invite government into the wombs of women.
And American women, who suffer more because of having two full-time jobs than from any other single injustice, finally have support on a national stage from male leaders who know that women can't be equal outside the home until men are equal in it. Barack Obama and Joe Biden are campaigning on their belief that men should be, can be and want to be at home for their children.
This could be huge.
Gloria Steinem is an author, feminist organizer and co-founder of the Women's Media Center.She supported Hillary Clinton and is now supporting Barack Obama.
Calm down, Democrats
Obama was leading into the DNC convention, although by the time of the convention it was close to the margin of error. He spiked up to a 6-8 point lead in the poll *averages* thereafter. The Palin/RNC convention bump erased that lead. Fears of a shift to McCain have not materialized - it's just a few points more pro-McCain than it was a few weeks ago, and that is still in the margin of error. EV.com notes that the polling data really just shows an uptick in support in the deep South, where it is of no electoral value. The electoral map is shifting today not because of momentum to McCain, but because aggregations of state polls lag national polls. We've got a tie ballgame.
Is this surprising? Did anyone really think that McCain would never be able to make it close? I have done a bit of research, and polls showed even Mondale leading at one point. Dukakis and Bush Sr. also pulled ahead or led at some point in their ill-fated campaigns.
Frankly, the tiny bump is actually bad for McCain. The RNC with its wild Palin pick was his only chance to build up a national lead. It didn't materialize. Enthusiasm for Palin will inevitably wane as the bloom of novelty wears off and the fluff starts to ooze out. All he managed to do was get back to barely even or just above. Like Pickett's charge, these post-RNC-bump numbers are the high water mark for the Southern Party. And it's not enough. Expect to see the underlying dynamics of the race reassert themselves over the next 2-3 weeks. Republican mismanagement of everything - the war(s), the economy, health care, education, the budget, foreign policy - plus disgust with the incumbent at record levels remains very strong. Obama's strengths as a candidate -his charisma, intelligence, and organizational skills - beat McCain on every score.
I expect that by the time of the debates, Obama will again be leading, perhaps outside of the margin of error, and certainly in the Electoral College. The debates will refocus the race on Bush, health care, and the economy. That will create momentum toward Obama and probably seal the deal.
Thursday, September 11, 2008
Palin's ABC interview
We have a preview of Gov. Palin's interview with Charlie Gibson. It should make for interesting TV, in any case.
On a more serious note, I am really, seriously worried about what will happen to US-Russia relations under a McCain/Palin administration. Let's not forget that McCain wants to kick Russia out of the G8, which is one of the dumbest policy positions any Presidential candidate has ever taken, and I mean that sincerely.
Congratulations Dr. Strangelove
Hi Everybody,
Wednesday, September 10, 2008
Back to Square One.
The Air Force will have to wait even longer to get its new fleet of refueling tankers. After the first bidding process was scrapped a few years ago, because Boeing bribed Air Force contractors, and the second bidding process was overturned because Boeing didn't like the outcome (Northrop Grumman was the surprise winner), now the third bidding process (run by Defense Secretary Gates) has been killed because Boeing kept asking for delays and finally Gates decided it was "too controversial" too continue under his administration.
No one in the Bush Administration has any spine. Northrop won the bid fair and square with a better design. They should have told Boeing to stuff it three times over. In fact, after the first fiasco, why was Boeing permitted to compete at all? Can't these people do anything right? The first "MBA" president has been a total failure.
