Brief Observations, Post "State of the Union"

Here is President Obama, promising to do everything he said he was going to do and for the moment making it seem like it’s all possible while invoking a non-existent line-item veto to make it all cost less.

Here is Governor Jindal, Mardi Gras gumbo dripping off his lapel and still woozy from the post-Zulu parade festivities, saying no we shouldn’t let Obama do it, just wait for the Minutemen to show up.

Congressional Republicurs will recede to the background and the Republicur governors will come forward.

Let the games begin...

Death By Half Is Still Death

I am ever more deeply believing that the major banks of this country are zombies and have been since the initial crisis hit them last September. TARP was intended to prevent an immediate meltdown at the time and this is it did. It never had much of anything to do with liquidity and possibly may have been a last ditch effort for Bush people to funnel some Treasury cash to their cronies while keeping the banks themselves filled with employees drawing paychecks. I recognize that statement borders on conspiracy theory but we’ll see how things develop in the years ahead. Now, other than the employees (stockholders have already taken their hit), I wonder who at the top end of the pyramid will lose their valuables if the big banks eventually shutter, the zombies no longer able to gnaw on the brains of us taxpayers for sustenance? If they get nationalized we may never find out and instead continue to feel the cold air of day whiffle across our collective financial grey matter. Mmmm, feels like being at dinner with Hannibal Lecter. In other words, I don’t feel bold action is being taken and I wonder why?

The stimulus I am more optimistic about. This I believe is a leading edge for what will require by necessity more financial pumpitude down the line. The infrastructure projects will need to be expanded and maintained, particularly any aimed at developing a new energy grid. Gee, I’m going out on a limb supporting the ideas of the newest Nobel laureate in economics but I’m on the bus with Paul Krugman here that tax breaks don’t do much and we need to spend a lot more to build things up, get money in folks’ pockets and do it by keeping them busy on useful projects.

The foreclosure plan proposed today, well this one seems like a half-measure. I’ve written several times on this blog what I think should be done here to rebuild a housing market. Simply stated it requires a write down of mortgage principal available for everyone regardless of how they got in the situation they are in. We don’t have time to collectively shake our sanctimonious fingers at people who got bad loans through whatever means because getting the economy moving again is vastly more important. At some point, the wide net of devaluing homes will sweep up everyone and then all we’ll have is blame. You can’t eat blame. We’ll have time for that down the road (don’t you worry all you mortgage brokers, we’ll get around to auditing you eventually — yeah I know, it wasn’t just you, but I enjoy the fantasy).

The main focus of the plan is to slow the foreclosure rate so that folks can stay in the homes they are in now. And that’s ok as far as it goes. But for the purposes of a consumer economy, it doesn’t go far enough. This plan does nothing for the principal on loans, which will remain higher than the values of the homes they are on. Interest rates and terms may be stretched out to reduce payments, but the homeowners, although safe in their homes, are effectively trapped in them until such time in the future (at least four or five years in normal times for housing value appreciation, and much longer in the hardest hit places, California, Florida, Arizona, and Nevada) when home values manage to reach back up to where they were when the loans were initially made.

The trouble will be that by that point the banks, receiving regular payments, will have no incentive to approve short sales (the sale of a home for less than the amount due on the loan) so folks can’t relocate, can’t downsize or upsize depending on their circumstances (if they can upsize then they could presumably cover the difference in an undervalued home at closing, but then there’s no cash to pay towards a new home of any size). Meantime, we haven’t even hit bottom on devaluation and now we’re planning ahead for increases? We’ll end up back in the death spiral where the only way to get out is to default.

The only way to affect principal in this plan is through bankruptcy. That may work out for me since I’ve long planned to increase my law practice in that area, but honestly, it’s not good for the nation altogether. The banks will still end up losers in that kind of deal. But now, the homeowners end up having their credit destroyed which will make it difficult to impossible for them to remain involved in a consumer economy in any big way. Cash on the barrelhead for those folks only. In a world short on cash for consumers, that’s no way to run a recovery.

The only semi-reasonable explanation for why my friend Barry is taking this approach, which is feeling like a slowed down death instead of a guillotine on the one hand or a reprieve on the other, is pure political pragmatism. It comes back to doing what you can do. The Republicurs are convinced they have the nation’s ear with their constant trumpeting about tax and spend Democrats. And they’re right, they do have the ear. Except for my friend Barry himself, no Democrat seems yet to have figured out how to explain themselves in such a way that reaches people in the tasty little soundbites that they have to create to swing the discussion their way. It’s frustrating as hell because it doesn’t seem that tough but I haven’t been on TV and been asked the questions so I don’t know (though I’m working out my chops with occasional appearances on the friendly format of Progressive Blend Radio).

I’m halfway hoping that these are half-measures designed to work only so far while the Republicurs act like the philosophical Neanderthals they have become (read, dead-end). By the end of this year or the beginning of next, I’m hoping the results of policies to that point will demonstrate the absolute necessity to go all the way on stimulus spending and mortgage principal modification. At that point John Boner’s head can pop off in the well of the House and the remaining Republicurs can join their Whig forebears in the history books.

The only other thing that can get in the way of this, or anything else, would be something extremely nasty happening in foreign affairs, probably involving Pakistan as it continues to morph in to Talibanistan. In that case at least one thing I have going for me is I can make several wicked varieties of curry so I could have a peace offering in a pinch.

Stimulus: Pissing in the Ocean?

Like many folks I’ve been trying to wrap my brain around the causes, effects, and consequences of the economic meltdown we are enduring while still trying to maintain a semblance of my own personal economic existence. As I’ve mentioned in earlier posts, I’m in the real estate business and I’m in south Florida, so I’ve been feeling the effects of this downturn for going on 4 years now. Business has been steadily declining since hurricane Wilma hit here in October 2005. For me, I manage because I have very low overhead and can operate in a variety of fields, but for real estate specialists, stand alone title companies, and real estate sales offices, well, there are a lot of shuttered storefronts they used to occupy. And there are a lot of empty homes around here as well with many more soon to come empty.

So I heard a figure regarding the amount of debt that is actually hanging out there waiting to fall all over us. The figure is incomprehensible to people outside the astronomy business. It’s 1.14 quadrillion dollars. That is a thousand trillion. Every trillion is a thousand billion and each billion is a thousand million. That 1.14 quadrillion (and I am intentionally NOT italicizing or otherwise emphasizing the number. If it doesn’t already pop your eyes out to see the word, then more emphasis won’t help) is the amount calculated to be owed to the end-holders of the so-called derivative debt held throughout the world. That is compared to the total estimated Gross Domestic Product of the entire world which is approximately 60 trillion dollars. Yes that is correct — the debt owed is almost 20 times the actual value of everything OF value on the planet. (I am also not making links here because a simple Google search of these figures will provide you with numerous references from all manner of sites, both reputable and otherwise).

I will once again make reference to my first assessment of the financial crisis in that it’s not really a problem of credit in and of itself. The problem is that so much credit has already been extended that there is no way that the collateral which backs it can ever hope to come close to even cover a bankruptcy level of pennies on the dollar. Value is the problem. There isn’t any. The banks blew it. They are dead. Giving them money to revive is a false hope. They are dead. Not comatose, not faltering, not on the precipice, not pinin’ for the fjords, but dead.

The bank bailout (TARP) was nothing it was billed to be in the sense of saving the economy — at least not in the long term. It was a very expensive stopgap. Or at least it seems expensive to us mere mortals. The purpose of the TARP had much more to do with stopping the imminent complete meltdown of the world financial system while the US was in the midst of a tumultuous presidential campaign. The failure to include oversight meant that instead of going to lending, it went to cover salaries of the banks’ employees. And yeah, also to immoral bonuses to executives who made bad bets because there was no downside to them for losing on such risk —hence executive life under the Bush administration. But mostly it probably went to salaries for bank tellers and the like.

Further payments to banks won’t solve the problem, and I can’t see how at this point any so-called “bad bank” can soak up the level of bad debt that is out there. I’ve heard it said that the mortgage crisis, the foreclosures being endured in the marketplace, don’t really infect everything like the “bad apple theory” says. But my understanding of how these derivatives work defines them as classic bad apples.

Let’s say you have a bunch of loans that were made in 2004. Some in that bunch were $500,000 no-downpayment loans, pic-a-pay deals allowing $400 per month regardless of interest rate. The unpaid interest gets tacked on as additional principle to be recalculated later. The buyer is an unemployed janitor but it’s a no-doc loan so no one is checking anyway. “Don’t worry in a few years of steady payments your credit rating will improve and you can refinance for a regular 30 year fixed at a better rate and for more than you’re borrowing now because the values always go up my friend.” Well 5 years later, the loan resets, the pic-a-pay option is no longer valid and now it’s a $3,000 per month payment on a house now worth $300,000. I don’t care where our friend washes floors now, he’s out on his ass pretty quick.

But his loan lives on because it was sold off in pieces long ago. Complicated math algorithms, which I admit I can sense more than explain, take pieces of the $500,000 loan, its expected interest, and the time at which they all accrue over a 30 year period, and bundle them together with other pieces of other home loans, commercial loans, credit card debt, and other instruments of financial encumbrance, into a package which then gets insured in similar pieces, and then bet on to either stay solvent or not. Soon it all becomes a giant greasy clot of financial promises which can never be kept. But as long as not too many of the internal debts go bad, the dishes can continue to be spun in the air. Well folks, too many went bad. The banks holding them can’t pay. We can throw money at them forever and they will never be worth anything. Unless we get to Zimbabwean levels of inflation of course, which is possible, and that might not still cover it.

I’m afraid the stimulus bill isn’t what you think it is either. It’s not intended to save the economy. $800,000,000,000 when you’re staring down the barrel of a $1.14 quadrillion ($1,140,000,000,000,000) is pissing in the ocean. You might feel warm where you stand, but it doesn’t last long or go far from its source. The bill is intended to keep people busy doing the important work of making sure this country can be self-sufficient when we get to the other end of this thing. Self-sufficiency is not the American way anymore. Premature globalization has made Ross Perot a genius as so many major industries no longer manufacture any products in this country anymore. And we don’t power the things we still do here with our own energy supplies. No one in power can say it because of the effect it would have on markets, though it gets slyly referred to all the time, but the world’s finances are already shot and we’re just now trying to get a jump on the cleanup before the full extent of the filth rolls over on us. If I’m right and that’s what the stimulus is really for, then it probably isn’t enough. More of these will come down the line as reality finally sets in. Whether the republicurs get on the bus as well will largely determine their survival as a viable party.

The stimulus is to pay paychecks for folks who will build whatever it is that’s about to get built. I’m wondering when the banks will finally be shuttered, our accounts guaranteed by that New Deal stroke of genius, the FDIC, and someone can tell us no one has a mortgage to pay anymore. THAT would free up some spending money. Especially if we don’t have to pay the credit cards off anymore either. If that happens, hell I’m selling off the gold necklace I have stashed away safely on ebay to someone in the Chinese Politburo and using the cash to open a community bank on my front porch.

Honest Graft

Ok folks it seems the terms of the game have been set. The republicans left in congress don’t really have too many options left to them as they see things. And the way they see things is purely through the prism of power. Now, considering that they are politicians one shouldn’t begrudge them that perspective since they can’t accomplish anything unless they have power, so in their superficial little mythical republican worlds there’s no reason to support anything at all when it comes to measures proposed by their opposition in the Democrat party.

And by the way, I think I’m gonna start adopting that would-be slanderous usage in much the same way that a gathering mocking movement has begun which sees people adopting Hussein as a universal middle name. Part of the GOP strategy involves taking distinctive labels and using them as slurs against the folks they symbolize; hence “Hussein” as in Barack HUSSEIN Obama, calling the Democratic party the “Democrat” party (probably because it sounds somewhat spittle-like and almost crap), and of course, “liberal”, as if it was a straight-up curse or in the same league as “convicted infant pedophile”.

Today my friend Barry completed the first step in getting his economic stimulus bill in place by passing the House. Not a single republican voted in favor of it. They can take no credit nor receive any of the blame for its success or failure. It’s a mighty gamble considering the stakes. If this thing works even a little bit they can pretty much kiss their jobs (and maybe their party) goodbye because you can bet that any cash that might have flowed their way by participating in the stimulus is more likely to go elsewhere first. The price of purity in principles is going to cost them their jobs just as their constituents’ livelihoods are similarly threatened. And the constituents are to blame just as much as the representatives themselves. They voted ‘em in and clearly didn’t get the message of cooperation out to ‘em while they had the chance. We’re all taking our medicine for the past eight years and some will have to take a stronger dose down the line.

Let’s not be coy about this money business. One man’s pork is another man’s bacon and my friend Barry is trying to pull our collective bacon out of the fire. The business of government is effectively to move money around. When you like where it goes it’s stimulus; when you don’t, it’s pork. When you like the reasoning behind why it gets spent, it’s progressive, when you don’t, it’s socialist. All labels and all marketing and for most of the past near 30 years in power it’s really all the republicans have had. Since Reagan they have succeeded in marketing a series of slogans, slurs, and myths which have made a mockery of the unseemly but necessary business of governing. They have won election after election saying government is the problem and then proving it with utterly ineffective governing. In the process, especially in the past eight years, a small cadre of insiders has stolen almost everything of value in the country and shipped it overseas leaving behind promises of payback that can never be met, all the while telling the rest of us to borrow from them to buy stuff we didn’t used to need, and work harder for them and their profit margin.

If this is starting to sound like class warfare, another phrase they trot out anytime anyone actually analyzes where all the money went, that’s because it has been for all this time. But it’s not warfare against the rich guys, it has been warfare by the rich guys against everyone else who still had stuff they wanted. The republicans became a crowd of Veruca Salts. However much they had, they wanted more, and conned anyone not in their club to pay them to take it. And sorry religious righties, they conned you most of all because they made you think you were part of their club and doing God’s work the whole time. But only your rich reverends are part of the club. You, my Godly friends, are what you have always been, the sheep. And if it hasn’t yet happened, you will soon find that they slaughtered you long ago.

For 30 years everything they said was fake. And when the knock comes on your door and all that you have is taken away, then you may realize too late that this was the case. Or maybe you will self-flagellate yourself for not trying harder, doing better, making better choices. Or maybe you will blame a welfare queen. Who did you vote for?

Look, Democrats are not angels either. They are politicians and I don’t expect or want angelic behavior from a politician. They are humans with all of the usual human frailties only pumped up steroidally by enormous authority, excessive egos, a measure of self-righteousness, and honestly, only a limited ability to know everyone and everything among which to choose to dole out the largesse. But I do expect them to have a sense of proportion and degree. Unfortunately, I expect that out of near a trillion dollars, there will be amounts of fraud and waste that have never been seen before. But there will be much more good to come out of it all. Don’t let the inevitable bad news drown out the good. The media need to be kept somewhat honest too. We must be wary of oversensationalized bad news as compared to what will be much more and therefore mundane good news.

There is a distinction to keep in mind here between honest graft and dishonest graft. Honest graft means that friends of the local representative or senator may get the best shot at the contract for building the new water system for the county. They end up making a lot of money, probably with some delays and cost over runs but when it gets done, the water flows better, is cleaner, and cheaper. That’s good graft. The kind of graft the republicans have done for the past eight years involves destroying an entire country, then paying billions to Halliburton and other friends of the party to fail at rebuilding anything while American soldiers get killed acting as their bodyguards. While they managed to fully destroy Iraq, they didn’t quite complete the job here, and we finally came to our senses before the incapable republican repairmen started digging up the streets.

What we have seen the past eight years from the republicans and are now seeing as if it will continue is a “principled” determination to use the system for nothing even potentially useful if it is not all for them. So they will get nothing. No further opportunity to destroy by incompetence, just by non-involvement. Foolishness. Dereliction of duty. Maybe we need to come up with a word to use as a slur against the name of their party. Republicur? Maybe. But that would be childish and my friend Barry has asked us to leave aside childish things. He was referring in part to false and failed ideologies, specifically those held by the GOP for the past couple of generations. He is a master at the sly and elegant insult by the way. I’m glad he is my friend. And I hope to benefit from our friendship. I hope we all do.

The Politics of Prosecuting the Past

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.

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!

The Audacity of America

The United States remains the symbol of possibility for the world. The past eight years has sorely challenged that notion in more ways than most of us could ever imagine. But with the change of American leadership, brought about by the sweeping rebuke of Republicanism on November 4, 2008, we are reborn before all. Even in the throes of the worst economic downturn since the Great Depression, a palpable sense of joy or at least relief is in the air, on the minds, and is being expressed quite explicitly in the words of nearly everyone. Obviously I’m a political junkie and have no trouble voicing my thoughts on such issues but lately I’ve been hearing people at every level of society making their own statements about how good it is that we’re making this switch and that the Bush era is finally coming to an ignominious close.

The audacity of America is that we actually believe in the promise of our founding ideas. We regularly argue over the meaning of those ideas and how we might achieve their promise but it doesn’t change the fact that as a nation we agree that we are on a journey. It’s a journey Barack Obama also regularly refers to. He refers to our ongoing efforts to form a more perfect Union. By doing so he is challenging us to get more directly and deeply involved in what in means to be a citizen in this country.

The idea of America demands that we take citizenship seriously. Because of the demands of true citizenship, it is part of the reason the founders had no interest in extending it to all of the residents of the original 13 states. We The People are not idle words and they don’t represent an abstract concept. When my friend Barry calls us the collective “you” he intends that we take it personally as intended by the Constitution. He has been given a set of responsibilities which immediately put him in league with Franklin Roosevelt and Abraham Lincoln at the start of their terms. It’s pretty obvious to see that he is ready to take his responsibilities as seriously as his predecessor often failed to do. He expects us to do the same and I suspect is not going to hesitate to remind us of it.

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 Union. If we work, and argue, and challenge each other together, anything is possible. It’s an audacious belief, but it’s been that way since the absurd notion of forming a democracy on this continent was first considered. It is an audacity understood and marveled at by people in other countries throughout the world and it’s high time we become more acquainted with our own audacious heritage and renew it for ourselves and our posterity again.

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 Manhattan and the East Room of the White House. While an empty US Airways plane bobbed in the frigid waters of the Hudson River, George W. Bush spoke, seemingly oblivious, as he has been during the unfolding of events of his eventful presidency, bidding his farewell suckers to some handpicked lackeys, his clearly ecstatic wife, some people of color who did extraordinary acts, and a scowling Dick Cheney.

As I write, still breathless reporters all over the TV dial are exclaiming the Miracle on the Hudson following the ditching of the big plane in the river west of the city after what was likely a flock of Canadian Geese got run through the plane’s engines, shutting them down. The pilot, Chesley Sullenberg, brought the damaged plane down without incident, followed almost instantly by the appearance of New York City and Port Authority ferries to grab standing passengers off the floating wing of the plane to safety without a single life-threatening injury.

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.

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.

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…