Waterboarding is torture. Torture is a crime. Crimes should be prosecuted and punishments meted out accordingly. We are a nation of laws and no one is above the law.
Politics is about getting things done … or not.
Sometimes a cigar is just a cigar.
Let me be clear about where I stand just in case it isn’t already by the name of this blog: I believe George W. Bush, Dick Cheney, Donald Rumsfeld, Alberto Gonzalez, David Addington, John Yoo, and many others, both conspired to engage and indeed did engage in criminal acts involving the authorization of torture and the use of illegal interrogation tactics in prosecuting their fraudulent war in Iraq and by extension the so-called War On Terror. I believe they should be indicted, tried, and if found guilty, sentenced in accordance with the standards of law appropriate for the heinousness of the crimes committed. Though certainly impeachable offenses while all were still in office, these crimes may also rise to the level of treason and should then also be treated accordingly. I think I’ve now made myself clear.
Nevertheless, I have serious doubts that the Obama administration will proceed with an in-depth investigation and is even less likely to seek indictments. If I am correct, it is not for a lack of desire to do so because I think the new administration is quite serious about bringing lawfulness and openness back to the White House. But I also understand that this country faces enormous challenges to its existence on a variety of fronts. Regardless of the principled approach Obama will demand of his policy-makers, he is first and foremost a pragmatist and is engaged in the work of getting things done at a time when things badly need doing. So in the short term, meaning at least for Obama’s first year in office, the discussion of whether or not there will be any investigations of the former administration is going to be left to the probably increasing agitation of the folks on the far left of the political spectrum. They will keep the issue alive and for that I want to thank them in advance because I am with them. But before we get to the business of putting Bush and friends in the dock, I am more inclined to focus first on policies which will assure that there will still be a country with a legal system that can support such trials a year from now.
Already we can see the makings of what will become a delicate dance between congressional democrats and republicans over the economic stimulus package. The extremes have declared it is either; a) too small; b) too big; c) not fast enough; d) overlarded with pork; and so forth. If this so-called era of new bi-partisanship is to occur, the Boehner (pronounced Boh’-nr) faction will require some manner of mollification to sign on.
Regardless of the outcome, for now the economy is by necessity the immediate focus of the administration. Of course, as Obama said during the transition in one of his many sly swipes at the Bush administration, “[we] should be able to do more than one thing at a time.” So theoretically running an investigation of Bush torture crimes should be easy to manage over at Justice while the money folks are working out the stimulus plan. However, as should be obvious to anyone familiar with the Republican party the past 15 years or so, their operating principle is, McCain’s campaign slogan aside, Party First. As such, you can be assured that any serious whiff of official engagement in engaging a torture tribunal will be met with wholesale obstructionism by the GOP on every major policy effort Obama makes. If it hasn’t become clear that many in the GOP would rather see the country continue to swirl down the toilet rather than adjust their principles or cede some authority willingly, then I’m not sure what the point is of continuing to read this post.
Should an investigation into war crimes immediately begin work? Absolutely. Will it? Presuming we even get an Attorney General soon (see previous paragraph for an explanation of this one), the answer will be no. Claims will be made that the Department of Justice needs to be put back in order and in the business of ferreting out financial crimes rather than to get involved in such high profile and partisan a matter as war crimes and really, it’s just too political a hot-button issue for now. There really is current work which needs to be done that does not need to be stone-walled because Bush and company spent too much time emulating 24.
And really, if we’re talking expediency here, let’s give it a year and see if the economy can be set on solid footing; let’s allow the Obama administration to get some bi-partisan support to do some good things to fix the mistakes of the past eight years. If they can manage that in a year, garnering the credit and political capital which would result, well, then it’s time to start thinking about the 2010 elections. That would be a fine time to declare some victories and get into the business of redressing past grievances. The netroots folks will need their rallying cry and this will be a perfect time to make the push to get over 60 in the Senate and begin the process of putting the GOP as it still exists out of our misery. Maybe then, publicly plucking Bush from his plush digs in Dallas, and Cheney from his iron lung in Dubai will show the world that we in the United States really do care about following the laws we enact.
Sunday, January 25, 2009
Tuesday, January 20, 2009
What Storms May Come...
What a great day.
I woke up, turned on the TV at about 7 this morning to MSNBC (official cable news station of the Obama administration) and saw an already large crowd gathered as the sun rose on the National Mall between the Capitol and Lincoln Memorial in Washington DC. Impressive, considering the temperature was in the teens and wind chill in the single digits. I started watching, got myself ready for a couple of early morning court hearings and began to revel in the glow of the dawning day.
I truly feel the past eight years has been an almost unending nightmare since election day in 2000. I was teaching US History at Florida State at the time, and initially, it seemed the day had turned on a number of votes roughly equivalent to double the size of the freshman class I was teaching at the time. I didn't make my leanings known to the students but I did try to encourage registration as much as I could. My best student that semester came to me before class the day before the election asking about absentee ballots. Of course it was way too late at that point for an absentee ballot and I told him as much. He was very upset about missing out on his first presidential election. On Wednesday, he came up to me looking horrible and I asked why. Turns out as soon as class ended on Monday, he got in his car and drove home to Miami just to vote. For those of you not familiar with Florida geography, it's about a 7 hour drive from Tallahassee to Miami (unless my mom is driving in which case it's a 5 hour drive). He took his vote seriously enough to make that commitment, unfortunately in a losing effort.
In the weeks following, Tallahassee became the center for the farce of the 2000 recount and I got to see some of it first hand. It seemed clear to me that Gore had probably won the state but it was also clear to me that he was engaged in a legal fight with poor tactics. He asked for recounts in specific counties assured to go Democratic instead of recounting the whole state. Although that was allowable under Florida's ridiculous voting statutes, I knew it would end up going to the Supreme Court, meaning it would be analyzed by 14th Amendment standards. To me that meant Gore was doomed to failure because Gore made some votes (the ones in the counties he chose) more important than the ones in the rest of the state. Seemed like an easy loss on equal protection grounds and I ended up right. Gore lost because he didn't have enough confidence in his possible victory to challenge the whole state. Such was the piecemeal thinking of the Democratic party until my friend Barry went for everyone's vote.
Nevertheless, I started my lecture the day after the election by saying to my class, "for the rest of your lives, if anyone ever tells you your vote doesn't matter, you can tell them you know better, because you were in Florida in 2000." And I could tell the 1/3 of the class, approximately 50 kids, who hadn't voted, knew they messed up (as did the ones who voted for Nader).
At that point though, we didn't know what to expect. GW Bush was an enigma. The apparently not too bright older brother of our governor at the time and the son of the former one term president. The economy seemed solid and the world at relative peace so maybe he would just be a caretaker who would throw some bones at members of his own class but otherwise bring a little quiet to American government after the final tumult of the Clinton impeachment years. And then Gore could try again in '04 and take what was rightfully his in the first place.
And then came the storms...
I scarcely recognize the country I love since that night over 8 years ago now. My life has certainly changed in ways I could never have conceived of at the time either. But here we are, and the result has now been another world changing event but I think for the first time in a long time, a positive one. Maybe one of the greatest in all modern history, not just US History. We have managed to make the most powerful man in the world out of a astoundingly smart kid from Hawaii with a background and experience unlike anything ever seen in a president before, but common enough in this country to be considered All-American. And by the way, he's black (even though he's equally white and was raised by his white family).
This country has been through it. Born in blood with high ideals as well as the stain of slavery, expanded by the genocide of the natives, civil war over human racial bondage, built into an economic giant on the backs of the poor and the eager but unknowing immigrant, made a world power by sending men to war while the women stayed home and built the ships, planes, and bombs, we have incrementally continued to strive towards building a more perfect union.
By 1980, unchallenged as the mightiest and richest nation human history has ever known, a conservative economic philosophy gradually started to chip away at the engine of this country, the vast middle class, sold to us by fear with mythologies of a world that never existed except in the unformed experience of children, with a purpose to hoard or steal what had taken generations to build and share. Finally with a falsely won election under its belt, GW Bush had his suit filled with this ideology, concocted by members of his class of noblesse oblige, and married it to the shallow militaristic ideology of the intellectual heirs of a cadre of disgruntled Stalinist sympathizers re-labelled as neo-conservatives and essentially brought this country and in some sense much of the western world, to the brink of self-destruction.
It is indeed time to lay aside childish things. Thank you America for coming to your senses and giving this man, my friend Barry, Barack Hussein Obama, the chance to guide us through whatever other storms are surely to come.
What a great day indeed!
Read More...
I woke up, turned on the TV at about 7 this morning to MSNBC (official cable news station of the Obama administration) and saw an already large crowd gathered as the sun rose on the National Mall between the Capitol and Lincoln Memorial in Washington DC. Impressive, considering the temperature was in the teens and wind chill in the single digits. I started watching, got myself ready for a couple of early morning court hearings and began to revel in the glow of the dawning day.
I truly feel the past eight years has been an almost unending nightmare since election day in 2000. I was teaching US History at Florida State at the time, and initially, it seemed the day had turned on a number of votes roughly equivalent to double the size of the freshman class I was teaching at the time. I didn't make my leanings known to the students but I did try to encourage registration as much as I could. My best student that semester came to me before class the day before the election asking about absentee ballots. Of course it was way too late at that point for an absentee ballot and I told him as much. He was very upset about missing out on his first presidential election. On Wednesday, he came up to me looking horrible and I asked why. Turns out as soon as class ended on Monday, he got in his car and drove home to Miami just to vote. For those of you not familiar with Florida geography, it's about a 7 hour drive from Tallahassee to Miami (unless my mom is driving in which case it's a 5 hour drive). He took his vote seriously enough to make that commitment, unfortunately in a losing effort.
In the weeks following, Tallahassee became the center for the farce of the 2000 recount and I got to see some of it first hand. It seemed clear to me that Gore had probably won the state but it was also clear to me that he was engaged in a legal fight with poor tactics. He asked for recounts in specific counties assured to go Democratic instead of recounting the whole state. Although that was allowable under Florida's ridiculous voting statutes, I knew it would end up going to the Supreme Court, meaning it would be analyzed by 14th Amendment standards. To me that meant Gore was doomed to failure because Gore made some votes (the ones in the counties he chose) more important than the ones in the rest of the state. Seemed like an easy loss on equal protection grounds and I ended up right. Gore lost because he didn't have enough confidence in his possible victory to challenge the whole state. Such was the piecemeal thinking of the Democratic party until my friend Barry went for everyone's vote.
Nevertheless, I started my lecture the day after the election by saying to my class, "for the rest of your lives, if anyone ever tells you your vote doesn't matter, you can tell them you know better, because you were in Florida in 2000." And I could tell the 1/3 of the class, approximately 50 kids, who hadn't voted, knew they messed up (as did the ones who voted for Nader).
At that point though, we didn't know what to expect. GW Bush was an enigma. The apparently not too bright older brother of our governor at the time and the son of the former one term president. The economy seemed solid and the world at relative peace so maybe he would just be a caretaker who would throw some bones at members of his own class but otherwise bring a little quiet to American government after the final tumult of the Clinton impeachment years. And then Gore could try again in '04 and take what was rightfully his in the first place.
And then came the storms...
I scarcely recognize the country I love since that night over 8 years ago now. My life has certainly changed in ways I could never have conceived of at the time either. But here we are, and the result has now been another world changing event but I think for the first time in a long time, a positive one. Maybe one of the greatest in all modern history, not just US History. We have managed to make the most powerful man in the world out of a astoundingly smart kid from Hawaii with a background and experience unlike anything ever seen in a president before, but common enough in this country to be considered All-American. And by the way, he's black (even though he's equally white and was raised by his white family).
This country has been through it. Born in blood with high ideals as well as the stain of slavery, expanded by the genocide of the natives, civil war over human racial bondage, built into an economic giant on the backs of the poor and the eager but unknowing immigrant, made a world power by sending men to war while the women stayed home and built the ships, planes, and bombs, we have incrementally continued to strive towards building a more perfect union.
By 1980, unchallenged as the mightiest and richest nation human history has ever known, a conservative economic philosophy gradually started to chip away at the engine of this country, the vast middle class, sold to us by fear with mythologies of a world that never existed except in the unformed experience of children, with a purpose to hoard or steal what had taken generations to build and share. Finally with a falsely won election under its belt, GW Bush had his suit filled with this ideology, concocted by members of his class of noblesse oblige, and married it to the shallow militaristic ideology of the intellectual heirs of a cadre of disgruntled Stalinist sympathizers re-labelled as neo-conservatives and essentially brought this country and in some sense much of the western world, to the brink of self-destruction.
It is indeed time to lay aside childish things. Thank you America for coming to your senses and giving this man, my friend Barry, Barack Hussein Obama, the chance to guide us through whatever other storms are surely to come.
What a great day indeed!
Monday, January 19, 2009
The Audacity of America
The audacity of
The idea of
We must now do a better job of knowing ourselves, knowing each other, and our respective places as citizens of this country. Continued failure to do so may very well assure that we forever lose the chance to regain any part of a stature only recently thought unshakeable. We must become more thoughtful, more aware, more genuinely critical of each and every proposal put forth by the new government. We have little room for error anymore after 8 years of fairly complete neglect. The ship of state is rotted but it must continue to float or we and very likely the entire world as we know it is sunk. We must be especially wary of the renewed use of tired labels used to frighten us about concepts which have no relation to the problems we face. We must be leery of the greedy and the selfish who would substitute the long-term health of the nation for their own short-term gain. The goal as mentioned in earlier posts is to reject ideology in favor of solid, practical solutions to what are not yet but very nearly intractable problems.
As my friend Barry has stated, we tend to be at our best when things are teetering on their very worst. It’s been a long time since things were genuinely this dangerous in so many ways. The biggest threat to our continued happy existence as a nation though is not from without, but more truly within, from our own failure to rise to the tasks before us. We have a chance to rebuild this nation into something resembling a more perfect
Friday, January 16, 2009
Excellence On The Hudson
The Miracle will be if we survive the Bush presidency intact.
No more stark contrast could have been on display yesterday than the difference between events on the west side of
As I write, still breathless reporters all over the TV dial are exclaiming the Miracle on the
But this was not a miracle.
What we see here is the result of excellence and we should be no less in awe of it. It’s just that after the relentless pummeling of failure and incompetence on display before us and the world of the Bush administration and their apologists trying to spin it away, we can hardly recognize competence and excellence anymore.
The pilot of the plane, and no doubt his co-pilot, the flight attendants, the air traffic controllers, the ferry boat operators, the manufacturers of the plane, and yes, the government bureaucrats at the National Transportation Safety Board (NTSB) all worked together to assure that a disaster in the making instead is hailed as a miracle. Instead it should be hailed as a mark of pride that such a wide range of people can succeed to such a degree in split seconds in an incident for which all were trained and prepared.
All of these people should be celebrated not for performing miracles, they should be celebrated for being the very best at the jobs they do every day.
You can pray and hope for miracles and for much of the Bush presidency that’s what we had to do all too often to little effect because we could not rely on most of the folks at the top to do their jobs much less do them well. That era (or perhaps error is a better pun) is over.
All appearances and claims are that the incoming Obama team is put together largely because of the excellence that all will bring to their tasks. If that is the case, then maybe Americans and the world can return to the expectation of things as they once were, that we can celebrate excellence in the things we do rather than hope for miracles when nothing else works. If the standard of expectation is excellence miracles aren’t necessary.
Monday, January 12, 2009
A Modest Proposal
In the past few weeks current vice president Dick Cheney admitted that he authorized and supported waterboarding as a method of "enhanced interrogation." Yesterday current president George W. Bush admitted he was presented with a series of interrogation "tools" to use on Khaled Sheikh Muhammed after he was captured and sent to Guantanamo, approving them all, incuding waterboarding. Bush says all those tools remain necessary.
Constitutional law professor and MSNBC legal analyst Jonathan Turley just presented some fairly straightforward logic which goes like this: if waterboarding is torture and torture is illegal, a president who authorizes waterboarding is guilty of a crime.
A succeeding president who states that waterbaording is torture and no one is above the law, at approximately 12:30 PM on Tuesday January 20, 2009, having already taken the oath to "preserve, protect, and defend the Constitution of the United States," and just about the time he will be concluding his inauguration speech, should then immediately spin around, point at the most recent former president and vice president standing behind him and instruct the two burleyest members of his secret service security detail, stating in loud, clear, ringing tones, "arrest these two men for war crimes and crimes against humanity," whereupon they would then quickly be cuffed, have hoods thrown over their heads, and flown straight to a cell in Guantanamo next to the aforementioned Khaled Sheikh Muhammed for a trial of some form or another to take place at some future undetermined time.
Part of looking forward invloves in making sure lingering past issues are appropriately addressed.
Read More...
Constitutional law professor and MSNBC legal analyst Jonathan Turley just presented some fairly straightforward logic which goes like this: if waterboarding is torture and torture is illegal, a president who authorizes waterboarding is guilty of a crime.
A succeeding president who states that waterbaording is torture and no one is above the law, at approximately 12:30 PM on Tuesday January 20, 2009, having already taken the oath to "preserve, protect, and defend the Constitution of the United States," and just about the time he will be concluding his inauguration speech, should then immediately spin around, point at the most recent former president and vice president standing behind him and instruct the two burleyest members of his secret service security detail, stating in loud, clear, ringing tones, "arrest these two men for war crimes and crimes against humanity," whereupon they would then quickly be cuffed, have hoods thrown over their heads, and flown straight to a cell in Guantanamo next to the aforementioned Khaled Sheikh Muhammed for a trial of some form or another to take place at some future undetermined time.
Part of looking forward invloves in making sure lingering past issues are appropriately addressed.
Monday, December 29, 2008
Reboot: Let’s Party Like It’s 1999
Someone needs to tell me what’s flawed about this or admit that maybe it isn’t.
The following is intended as a practical solution to the “credit” crisis. I have been trying in my limited time to think through the problem, this solution, and the consequences of doing it this way. I mentioned it briefly in an earlier post and since then I haven’t been able to come up with major practical flaws in it. Politically it may be a different story but we seem to have entered upon times where maybe, just maybe, good old American practicality will trump the ridiculous ideological wars of the past generation.
First, the problem with the economy is not a credit problem as described in the mainstream media and by the still “in charge” administration. A lack of flowing credit is not the problem but in fact an over-abundance of credit is what created the problem. Too much went to too many for too long and it was secured by too little. The problem is that there is not now and likely never will be enough value to meet the obligations that have been made against it. Our assets are nowhere near as much as our debt. That is the definition of bankrupt. This nation is bankrupt and needs to act accordingly. But the means must be such so that once the plan is in place, it doesn’t relegate us to a second-rate risk for the rest of time. Here’s my plan:
Assuming most of the problem arises from the housing market, the idea is pretty simple. It’s time to reboot. The real estate market went haywire sometime between 2001 and 2003 and pretty much everything after that promises that can never be kept. A house bought in 2002 for $150,000 topped out in value around 2006 or so at maybe $300,000. That level of appreciation is insane and the reaction is that the values are plummeting back down. But it’s happening at such a pace that it’s hard to tell when (or if) it will ever stop and what the value will be when it does.
I suggest deploying an army of appraisers and determining the value of effectively the entire housing market, neighborhood by neighborhood, then offering everyone --- yes everyone --- the chance to refinance (or renegotiate if you prefer) the actual principle of their current loans. Whether they are upside down or not, whether they are in default or not, whether it’s a second home or an investment property or not.
We are not making value judgments on the character of the people who took out the loans, we are not investigating if they committed fraud when they took them out. We will check to see if they have the ability to pay the loan at the new value now and if so, they can have it without any recourse for the difference. It cannot be allowed to affect their credit histories or the plan will not succeed in rebooting the economy.
People who cannot afford a loan at the new value should immediately sign over a Deed in Lieu of Foreclosure to preserve whatever creditworthiness they have, or be foreclosed on and take the usual consequences. The recent notion that everyone in America should own a home is just plain wrong. Everyone is not well-placed, for any number of reasons, to own their own home and theirs nothing wrong with that.
On its face this is a very simple plan and it’s the simplicity that concerns me. On the other hand, the simplicity should make it easy to criticize but I haven’t been able to generate any yet other than that it seems too simple to be viable. But sometimes a simple solution is the best one. Hopefully putting it out here will start a discussion that can either knock this thing into better shape, deem it in good shape as-is, or knock it out altogether. Here are the consequences as I see it so far:
1.It puts appraisers back to work;
2.It sets a floor on the plummeting values;
3.It allows the banks to get back in the business of quality loaning;
4.More people will need to be hired to handle the enormous, legitimate business at the banks;
5.Title companies, surveyors, lien search companies, assorted couriers, and any other business connected with assuring the quality of ownership will shift into high gear with heavy hiring going on;
6.The tax base of cities, counties, and states can stabilize, assuring that services can be maintained and people don’t lose good jobs;
7.At reasonable prices, houses can be bought and sold again between people who can afford to do so. Teachers, firemen, nurses, and cops can live near the communities they serve. And it has a further bolstering effect on the local tax base.
8.When homeowners can lower their mortgage payment, they will end up with more money in their pockets, which will inevitably be spent even if some folks have been spooked into actually saving by this crisis. The economy will still improve with the return of disposable income;
The obvious missing piece here is: what happens to the missing debt obligations? Who takes the hit when a $300,000 mortgage gets knocked back to $150,000? There is the challenge and I suspect the answer that isn’t being discussed yet. Someone with better access to the figures and a better handle on the math than me can do the calculations. I’m guessing though, that the before and after difference will contain somewhere in the neighborhood of the number of zeros which have been flung around for the past few months saving the guys near the top of the pyramid in this giant Ponzi Scheme that the world economy had become. Accordingly, if fairness is folly enough to be included in this scenario, then it only makes sense to throw a similar load of cash out to directly assist the folks on the so-called Main Streets of the nation. And this plan makes it a relatively quick transition from total fear to complete relief and back to (smart) business as usual.
So I guess what I’m saying is that all of us together, by way of our government absorb some of the loss. But if the upside of it is that our economy strengthens and we are all able to pay the national debt down because of it then there’s another benefit.
The banks themselves must take a substantial piece of it as well. Here is a point where someone more knowledgeable than I can help. I feel like some change in accounting rules must be possible so that the losses sustained can be spread out over time instead of taken all at once. That way the loss can eventually be met by the actual returns on the now-safe loans out there generating interest that is being reliably paid back.
Finally, we’ve been led to believe that by far the largest part of the national debt exposure at this point is held by China. Well guess what? China is going to have to eat some of it too. Everyone here is taking the hit to an extent and my view is that they can either go along with this and lose some of their investment, or refuse to participate in some loan forgiveness and thereby end up losing it all. Their economy is not nearly mature enough to absorb domestically the consumer goods they currently ship here. Not that we need more lead painted train sets or melamine flavored dog chew toys, but they have nowhere else to sell it. And if we sink we take pretty much all of the developed world with us anyway.
Perhaps Bono can go to China and lend his voice to our cause…
Read More...
The following is intended as a practical solution to the “credit” crisis. I have been trying in my limited time to think through the problem, this solution, and the consequences of doing it this way. I mentioned it briefly in an earlier post and since then I haven’t been able to come up with major practical flaws in it. Politically it may be a different story but we seem to have entered upon times where maybe, just maybe, good old American practicality will trump the ridiculous ideological wars of the past generation.
First, the problem with the economy is not a credit problem as described in the mainstream media and by the still “in charge” administration. A lack of flowing credit is not the problem but in fact an over-abundance of credit is what created the problem. Too much went to too many for too long and it was secured by too little. The problem is that there is not now and likely never will be enough value to meet the obligations that have been made against it. Our assets are nowhere near as much as our debt. That is the definition of bankrupt. This nation is bankrupt and needs to act accordingly. But the means must be such so that once the plan is in place, it doesn’t relegate us to a second-rate risk for the rest of time. Here’s my plan:
Assuming most of the problem arises from the housing market, the idea is pretty simple. It’s time to reboot. The real estate market went haywire sometime between 2001 and 2003 and pretty much everything after that promises that can never be kept. A house bought in 2002 for $150,000 topped out in value around 2006 or so at maybe $300,000. That level of appreciation is insane and the reaction is that the values are plummeting back down. But it’s happening at such a pace that it’s hard to tell when (or if) it will ever stop and what the value will be when it does.
I suggest deploying an army of appraisers and determining the value of effectively the entire housing market, neighborhood by neighborhood, then offering everyone --- yes everyone --- the chance to refinance (or renegotiate if you prefer) the actual principle of their current loans. Whether they are upside down or not, whether they are in default or not, whether it’s a second home or an investment property or not.
We are not making value judgments on the character of the people who took out the loans, we are not investigating if they committed fraud when they took them out. We will check to see if they have the ability to pay the loan at the new value now and if so, they can have it without any recourse for the difference. It cannot be allowed to affect their credit histories or the plan will not succeed in rebooting the economy.
People who cannot afford a loan at the new value should immediately sign over a Deed in Lieu of Foreclosure to preserve whatever creditworthiness they have, or be foreclosed on and take the usual consequences. The recent notion that everyone in America should own a home is just plain wrong. Everyone is not well-placed, for any number of reasons, to own their own home and theirs nothing wrong with that.
On its face this is a very simple plan and it’s the simplicity that concerns me. On the other hand, the simplicity should make it easy to criticize but I haven’t been able to generate any yet other than that it seems too simple to be viable. But sometimes a simple solution is the best one. Hopefully putting it out here will start a discussion that can either knock this thing into better shape, deem it in good shape as-is, or knock it out altogether. Here are the consequences as I see it so far:
1.It puts appraisers back to work;
2.It sets a floor on the plummeting values;
3.It allows the banks to get back in the business of quality loaning;
4.More people will need to be hired to handle the enormous, legitimate business at the banks;
5.Title companies, surveyors, lien search companies, assorted couriers, and any other business connected with assuring the quality of ownership will shift into high gear with heavy hiring going on;
6.The tax base of cities, counties, and states can stabilize, assuring that services can be maintained and people don’t lose good jobs;
7.At reasonable prices, houses can be bought and sold again between people who can afford to do so. Teachers, firemen, nurses, and cops can live near the communities they serve. And it has a further bolstering effect on the local tax base.
8.When homeowners can lower their mortgage payment, they will end up with more money in their pockets, which will inevitably be spent even if some folks have been spooked into actually saving by this crisis. The economy will still improve with the return of disposable income;
The obvious missing piece here is: what happens to the missing debt obligations? Who takes the hit when a $300,000 mortgage gets knocked back to $150,000? There is the challenge and I suspect the answer that isn’t being discussed yet. Someone with better access to the figures and a better handle on the math than me can do the calculations. I’m guessing though, that the before and after difference will contain somewhere in the neighborhood of the number of zeros which have been flung around for the past few months saving the guys near the top of the pyramid in this giant Ponzi Scheme that the world economy had become. Accordingly, if fairness is folly enough to be included in this scenario, then it only makes sense to throw a similar load of cash out to directly assist the folks on the so-called Main Streets of the nation. And this plan makes it a relatively quick transition from total fear to complete relief and back to (smart) business as usual.
So I guess what I’m saying is that all of us together, by way of our government absorb some of the loss. But if the upside of it is that our economy strengthens and we are all able to pay the national debt down because of it then there’s another benefit.
The banks themselves must take a substantial piece of it as well. Here is a point where someone more knowledgeable than I can help. I feel like some change in accounting rules must be possible so that the losses sustained can be spread out over time instead of taken all at once. That way the loss can eventually be met by the actual returns on the now-safe loans out there generating interest that is being reliably paid back.
Finally, we’ve been led to believe that by far the largest part of the national debt exposure at this point is held by China. Well guess what? China is going to have to eat some of it too. Everyone here is taking the hit to an extent and my view is that they can either go along with this and lose some of their investment, or refuse to participate in some loan forgiveness and thereby end up losing it all. Their economy is not nearly mature enough to absorb domestically the consumer goods they currently ship here. Not that we need more lead painted train sets or melamine flavored dog chew toys, but they have nowhere else to sell it. And if we sink we take pretty much all of the developed world with us anyway.
Perhaps Bono can go to China and lend his voice to our cause…
Friday, December 12, 2008
Brother Couldn't You Spare a Dime?
Mitch McConnell and the Senate Republicans killed the auto bailout bill last night. They may have killed off two of the Big Three as a result. Watch the market go into free fall today. Enjoy the ride. This will likely be the final act of the Republicans in power. This is what conservatism and free market mythology gets you. Idiots ran those companies and now the lives of about 2 percent of the American population hangs in the balance. Congratulations folks. Maybe the saviors Bush and Paulson will throw some TARP funds their way instead. Gee there's a warm feeling.
Read More...
Thursday, December 11, 2008
Size Doesn't Matter
As a coda to yesterday’s blog, I would argue that the main reason that our economy as a whole has become so big, so international, so interconnected, is because it has been so relatively safe and so relatively stable for so long. Since the Great Depression and since World War II, American economic behavior was consistent, reliable, and smart. It had a fine balance between risk aversion while allowing for enough risk-taking that innovation remained robust. That behavior came about as a result of decades of fairly large economic swings, previously called “panics” which were the hallmark of the 19th and early 20th century business cycles.
The Depression demonstrated the extreme consequences of leaving the markets to operate without controls on extreme behavior. Additionally, tax policy after WWII encouraged wealth creation up to a point, then made it more beneficial for the wealthy to keep money in the stream of commerce rather than in their pockets. Finally, labor policy assured that workers had enough money in their pockets to buy the products they made. These factors effectively created the modern middle class, a class which requires stability and reliability in economics in order to flourish.
That system began to loosen a bit during the Nixon years, with the resultant economic distress of the 70s. The trend towards reversing tax and regulation policy back to a 19th century model accelerated during the Reagan years, a period which also saw the denigration of the average worker by attacking the unions which had built the relationship between management and labor enabling the growth of the middle class. At the same time though, credit availability expanded. That trend continued until the GW Bush administration at which time all regulations were removed or went unenforced, and credit availability exploded. Fake money based on no standards flooded the economy and now that the credit has dried up we are seeing what that flood has washed away.
A generation of conservative economic policy has destroyed what controlled liberalism built two generations before. It is no longer safe to be big much less possible at the moment to grow that big. Until the controls are put back in place and the mess cleaned up, we will become a shadow of our former economic selves. If we don’t pull it together faster than other nations we will become a second-rate power. And we have no one but ourselves to blame for it. We will be the shame of our children. Size won’t matter in a place that can’t be relied upon to manage it properly.
Read More...
The Depression demonstrated the extreme consequences of leaving the markets to operate without controls on extreme behavior. Additionally, tax policy after WWII encouraged wealth creation up to a point, then made it more beneficial for the wealthy to keep money in the stream of commerce rather than in their pockets. Finally, labor policy assured that workers had enough money in their pockets to buy the products they made. These factors effectively created the modern middle class, a class which requires stability and reliability in economics in order to flourish.
That system began to loosen a bit during the Nixon years, with the resultant economic distress of the 70s. The trend towards reversing tax and regulation policy back to a 19th century model accelerated during the Reagan years, a period which also saw the denigration of the average worker by attacking the unions which had built the relationship between management and labor enabling the growth of the middle class. At the same time though, credit availability expanded. That trend continued until the GW Bush administration at which time all regulations were removed or went unenforced, and credit availability exploded. Fake money based on no standards flooded the economy and now that the credit has dried up we are seeing what that flood has washed away.
A generation of conservative economic policy has destroyed what controlled liberalism built two generations before. It is no longer safe to be big much less possible at the moment to grow that big. Until the controls are put back in place and the mess cleaned up, we will become a shadow of our former economic selves. If we don’t pull it together faster than other nations we will become a second-rate power. And we have no one but ourselves to blame for it. We will be the shame of our children. Size won’t matter in a place that can’t be relied upon to manage it properly.
Wednesday, December 10, 2008
Size Matters
To bail or not to bail, that is the question. The answer, quite simply, is yes. Over and over, completely and without fail no matter how much it hurts, and it’s gonna hurt, the answer has to be yes. For the sake of the health of our economy and way of life, if we are to even have a chance to try to do all the good things my friend Barry has proposed to actually bring this country properly into the 21st century, each and every giant industry teetering on the brink of collapse has to be publicly rescued. It doesn’t matter why these industries are in trouble – they have to be preserved for one very simple reason – size matters.
The banking industry, the auto industry, certain sectors of the insurance industry, and others like them which are all on the verge of self-immolation have to be given enough cash to buy time to attempt a genuine restructure because they are so big, employ so many people, and are the source of the livelihoods of so many more people that to allow them to fail will plunge the nation and the world into an economic tailspin which would make the Great Depression seem like just a bad day at the office. We could be looking at the start of a New Dark Ages.
This is the peril of uncontrolled Capitalism. Free Marketeers like to talk about the concept of “the invisible hand” and the “magic of the market” as if these concepts, frequently but incorrectly cited as core principles laid out by Adam Smith, function perfectly when no government intervention is allowed. The suggestion is that a perfect balance of supply and demand will only be disrupted if an outside force intervenes. The outside force generally blamed for messing up an economy in a capitalist society is the government. The charge often made, usually from right wingers or other misguided conservatives, is creeping liberalism, socialism, or communism. We started to hear such desperate cries towards the end of the campaign when Barry suggested to poor old Joe the Plumber that tax policy should be restructured in order to assure the wealth of the country could be spread around a bit more fairly. Heavens to Betsy!!
Let me make a distinction right here: Capitalism is an economic system, one which I would argue is the natural state of humanity. Socialism, Communism, and for purposes of this blog, Liberalism, are political systems which seek only to control the excesses of Capitalism. Capitalism can function perfectly well within any of the political systems and has for time immemorial.
Free Marketeers are as blinded by their delightful academic philosophy as are Communists. On a chalkboard in a classroom the graphs and supply lines for both look beautiful and elegant. The poetic language of both magic markets and to each according to his needs is elegant to the point of poetry. They are ideals that each ignores one very important reality – human nature.
Generally speaking humans are decent enough creatures. For the most part we are kind to and generous with our friends and family, the people we work with and for, and random strangers we come across on a daily basis. But not everyone behaves this way. Some are greedy and selfish, some mean and hateful, some plain crazy, psychotic and sociopathic. It doesn’t take too many of those bad folks to wreak an incredible amount of havoc in the world. Just look at what a couple of Arab loons in Afghanistan managed to do by convincing 19 half educated dead-enders to use planes as missiles to see my point. For that reason, to control the folks on the far end of the behavior spectrum, we create laws that lead to punishment for such behavior. In the world of commerce it’s the same. The most aggressive types of people will break or bend the rules of morality and legality to achieve their ends of being the best and the biggest. Sometimes that behavior can lead to incredible risk taking and successful innovation as a result. A fair amount of the country was conceived in that manner by those types of people. But those same people also engaged in the worst kinds of abuse and greed and immoral behavior to accomplish those feats. When too many go too far and then fail, we all suffer as a consequence whether we were in their game or not.
That is why at the beginning of the 20th century, government officials led by that symbol of rock solid Republicanism, Theodore Roosevelt, decided a lot of rules were necessary to protect the public from the abuses of the corporate class. Later his cousin Franklin Roosevelt instituted rules to assure that business worked in a controlled manner without undue risk. In the past 8 years a lot of those rules were thrown out in order to let the invisible hand work its magic. The obvious result is that we are all getting the finger from a handful of people who took untold billions, maybe trillions out of the system leaving us with nothing more than the printing presses to throw more cash into the stream of commerce. And as I said above, we have little real choice but to cut down a few forests to get it out there.
There is an alternative which was suggested during the period that the Roosevelts bookended. Louis Brandeis, Harvard law professor and later Supreme Court Justice advocated for the breakup of all large business conglomerates. He worried about the consequences of bigness in business. It is indeed true that the bigger a business is, the better able it is to benefit from economies of scale, to produce and to sell its products efficiently, widely, and cheaply. This is truly a phenomenon that works in the real world given the opportunity. But the failure of a big concern has ripple effects that extend well beyond the risk taking of the bosses of the company.
Average people, working people are that way because they don’t take the risks that the big boys take and that’s fine. We need people to work the assembly as much as we need them to come up with big ideas and put them into practice. Brandeis advocated for a less risky system that discouraged large companies and instead encouraged many small companies to exist. The wealth might not be as big for the folks at the top, the prices for goods might be a little more than it would be otherwise, but variety can be preserved, regional preferences can flourish, and market stability can be considered more reliable. In the case that some business should fail as indeed they would, the effects could be easily contained.
When a big company is still relatively young and successful, it can seem as if the gravy train can roll on forever. However what we’re seeing in the case of the auto industry for instance, is that with a few generations under its belt, the big three (GM, Ford, Chrysler) thought they were sure how the world works so never questioned their methods when international upstarts entered their market with a different variety of products and manufacturing methods. The men occupying the top of the corporate culture of the Big Three, who had nothing to do with the innovations that made the companies big, failed to innovate in order to compete in a world with competition. And so they are about to fail. That is the true nature of capitalism; not to carry on inevitably but to innovate or die or get eaten by the competition. Competition does not exist for the sake of competition but to destroy the competition til the winner stands alone. It's a brutal world and that can't likely be avoided. But it can be tempered. Only government wields the power to dictate terms that can temper the brutality of the market. And government needs to do that now. To allow the auto industry and any other giant industry to fail now is to simply allow the worst economic disaster to occur. If the government tries, at least there’s a chance of avoiding the worst. Throw out the current management for creating the mess, throw the cash in to get the current bills paid and do it long enough to get a new set of plans rolling quickly to keep people working, continue to get them paid, and to get a good product out. Anything less assures we all end up with nothing except guns and religion to cling to. And next time checks are written to the banks, it has to be done so with a requirement that it immediately moves through the system and into the stream of commerce.
All of this is just a finger in the dyke. The real work is to repair and strengthen the dyke. More about that soon.
Read More...
The banking industry, the auto industry, certain sectors of the insurance industry, and others like them which are all on the verge of self-immolation have to be given enough cash to buy time to attempt a genuine restructure because they are so big, employ so many people, and are the source of the livelihoods of so many more people that to allow them to fail will plunge the nation and the world into an economic tailspin which would make the Great Depression seem like just a bad day at the office. We could be looking at the start of a New Dark Ages.
This is the peril of uncontrolled Capitalism. Free Marketeers like to talk about the concept of “the invisible hand” and the “magic of the market” as if these concepts, frequently but incorrectly cited as core principles laid out by Adam Smith, function perfectly when no government intervention is allowed. The suggestion is that a perfect balance of supply and demand will only be disrupted if an outside force intervenes. The outside force generally blamed for messing up an economy in a capitalist society is the government. The charge often made, usually from right wingers or other misguided conservatives, is creeping liberalism, socialism, or communism. We started to hear such desperate cries towards the end of the campaign when Barry suggested to poor old Joe the Plumber that tax policy should be restructured in order to assure the wealth of the country could be spread around a bit more fairly. Heavens to Betsy!!
Let me make a distinction right here: Capitalism is an economic system, one which I would argue is the natural state of humanity. Socialism, Communism, and for purposes of this blog, Liberalism, are political systems which seek only to control the excesses of Capitalism. Capitalism can function perfectly well within any of the political systems and has for time immemorial.
Free Marketeers are as blinded by their delightful academic philosophy as are Communists. On a chalkboard in a classroom the graphs and supply lines for both look beautiful and elegant. The poetic language of both magic markets and to each according to his needs is elegant to the point of poetry. They are ideals that each ignores one very important reality – human nature.
Generally speaking humans are decent enough creatures. For the most part we are kind to and generous with our friends and family, the people we work with and for, and random strangers we come across on a daily basis. But not everyone behaves this way. Some are greedy and selfish, some mean and hateful, some plain crazy, psychotic and sociopathic. It doesn’t take too many of those bad folks to wreak an incredible amount of havoc in the world. Just look at what a couple of Arab loons in Afghanistan managed to do by convincing 19 half educated dead-enders to use planes as missiles to see my point. For that reason, to control the folks on the far end of the behavior spectrum, we create laws that lead to punishment for such behavior. In the world of commerce it’s the same. The most aggressive types of people will break or bend the rules of morality and legality to achieve their ends of being the best and the biggest. Sometimes that behavior can lead to incredible risk taking and successful innovation as a result. A fair amount of the country was conceived in that manner by those types of people. But those same people also engaged in the worst kinds of abuse and greed and immoral behavior to accomplish those feats. When too many go too far and then fail, we all suffer as a consequence whether we were in their game or not.
That is why at the beginning of the 20th century, government officials led by that symbol of rock solid Republicanism, Theodore Roosevelt, decided a lot of rules were necessary to protect the public from the abuses of the corporate class. Later his cousin Franklin Roosevelt instituted rules to assure that business worked in a controlled manner without undue risk. In the past 8 years a lot of those rules were thrown out in order to let the invisible hand work its magic. The obvious result is that we are all getting the finger from a handful of people who took untold billions, maybe trillions out of the system leaving us with nothing more than the printing presses to throw more cash into the stream of commerce. And as I said above, we have little real choice but to cut down a few forests to get it out there.
There is an alternative which was suggested during the period that the Roosevelts bookended. Louis Brandeis, Harvard law professor and later Supreme Court Justice advocated for the breakup of all large business conglomerates. He worried about the consequences of bigness in business. It is indeed true that the bigger a business is, the better able it is to benefit from economies of scale, to produce and to sell its products efficiently, widely, and cheaply. This is truly a phenomenon that works in the real world given the opportunity. But the failure of a big concern has ripple effects that extend well beyond the risk taking of the bosses of the company.
Average people, working people are that way because they don’t take the risks that the big boys take and that’s fine. We need people to work the assembly as much as we need them to come up with big ideas and put them into practice. Brandeis advocated for a less risky system that discouraged large companies and instead encouraged many small companies to exist. The wealth might not be as big for the folks at the top, the prices for goods might be a little more than it would be otherwise, but variety can be preserved, regional preferences can flourish, and market stability can be considered more reliable. In the case that some business should fail as indeed they would, the effects could be easily contained.
When a big company is still relatively young and successful, it can seem as if the gravy train can roll on forever. However what we’re seeing in the case of the auto industry for instance, is that with a few generations under its belt, the big three (GM, Ford, Chrysler) thought they were sure how the world works so never questioned their methods when international upstarts entered their market with a different variety of products and manufacturing methods. The men occupying the top of the corporate culture of the Big Three, who had nothing to do with the innovations that made the companies big, failed to innovate in order to compete in a world with competition. And so they are about to fail. That is the true nature of capitalism; not to carry on inevitably but to innovate or die or get eaten by the competition. Competition does not exist for the sake of competition but to destroy the competition til the winner stands alone. It's a brutal world and that can't likely be avoided. But it can be tempered. Only government wields the power to dictate terms that can temper the brutality of the market. And government needs to do that now. To allow the auto industry and any other giant industry to fail now is to simply allow the worst economic disaster to occur. If the government tries, at least there’s a chance of avoiding the worst. Throw out the current management for creating the mess, throw the cash in to get the current bills paid and do it long enough to get a new set of plans rolling quickly to keep people working, continue to get them paid, and to get a good product out. Anything less assures we all end up with nothing except guns and religion to cling to. And next time checks are written to the banks, it has to be done so with a requirement that it immediately moves through the system and into the stream of commerce.
All of this is just a finger in the dyke. The real work is to repair and strengthen the dyke. More about that soon.
Sunday, December 7, 2008
Housekeeping
Ok folks, if you take a little look around this here blog you will note that I've been engaged in a fair amount of upgrading, fixing, changing, rearranging, streamlining, and hopefully promoting this space. All in an effort to make it a little more user-friendly and inviting. My posts have tended to be on the long side which, for those of you who know me, this shouldn't be a surprise, as we all know I'm a little long-winded at times. (at times?) But that is the reason this blog has finally come into existence. Anyway, I hope you like the changes. Those of you more experienced in the format, please make suggestions for further improvements and promotions. Tell your friends, enemies, fellow travelers, and adversaries. And please don't hesitate to leave comments and reactions to my posts. Thanks for reading.
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