September 30, 2008
Rosh Hashanah (Or, What's Up With Nancy Pelosi?)
The day after Congress fails to shovel $700 billion into the maw of Wall Street, in the midst of what economists call the worst financial crisis since the Great Depression, you'd think that members would roll up their sleeves and get back to work to produce some kind of rescue package for the U.S. economy. When the Administration is in full panic mode, pleading for urgent emergency measures, when markets are experiencing unprecedented turmoil, you'd think Congress would be responsive. No. Instead, Congress has adjourned for the beginning of the Jewish High Holy days. Maybe it'll come back to work Wednesday. Or Thursday. But Tuesday is a normal working day. Businesses are open, banks are open, the mail is being delivered. Wall Street is open, as are markets around the world. Maybe during an ordinary time Congress taking a day or two off would be a charming mark of respect to a religious minority. But taking time now just adds insult to injury. If it had been a question of taking Easter off my guess is that Congress would've stayed in session. (And does Congress ever even take any Muslim holidays?) I don't see any excuse for Congress here, nor any excuse for people not to complain about it. And I wonder whether that's the point.
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September 29, 2008
Half-cocked Legislation
It's probably necessary to have some kind of a financial rescue package, but that wasn't the right one and it didn't come at the right time. For something allegedly so serious the Congress behaved irresponsibly in not giving the matter thorough consideration, including hearings. True, the Democrats significantly walked back the Administration's proposed give-away. But not by enough. Though Republicans in the House were not completely coherent in their objections, they had a better sense of the toxic nature of the thing than did the Democrats. I doubt the House leadership can manage on a re-vote to pass the very same bill, but significant changes in its language will take time to hammer out. Now, perhaps, we'll see whether Paulson was crying wolf. And if he was, that'll fundamentally alter the terms of the deal.
September 24, 2008
Wait... What "Crisis"?
The real crisis — as I've been saying for years, well before this website and the EP podcast existed — is that the U.S. has hollowed out its economy by offshoring jobs. That crisis will come to a head when foreigners stop buying dollars; there'll be no quick fix. Unless our political class has the sense to see the inevitable and try to prevent it by restoring America's industrial capacity, we'll be well and truly screwed. But as for the financial markets today, I'm not so sure. The more I think about this proposed bail-out the less I like it. And the more it seems a contrived crisis by a small gang of crooked insiders. A lollapalooza of embezzlement of the public fisc.
September 23, 2008
The Fine Print
Let's take a look at the proposed language of the bill the Administration sent to Congress. The first thing to note is their use of the term "mortgage related assets." Defining this term at the end of the bill they say that it "means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages..." A very broad definition. Importantly, the bill does not define the "financial institutions" from which the Treasury Secretary is authorized to buy these "mortgage related assets." One may well imagine that the Administration intends to buy credit default swaps from institutions that are failing due to bad bets on CDS deals, as was more or less the case with AIG. But while AIG could at least pretend to respectability as an insurer lots of the other "financial institutions" holding questionable CDS paper are out and out hedge funds. My feeling is, if the $60-odd trillion (that's trillion, with a "t") in CDS paper being passed around by hedge funds vanishes in a puff of smoke, too damn bad for them. The point of this bill is, or should be, to prop up values of real assets in the housing and commercial property markets. Bailing out rich, unlucky gamblers and high finance Ponzi scheme operators ain't in it.
September 21, 2008
No. Blank. Check!
Nobody, except extreme Libertarian ideologues, wants to see another 1929 Wall Street crash. So a bail-out makes sense. Except: a bail-out with no strings attached, not so much. A bail-out without recognition of the deeper structural problem of chronic current account deficits — the U.S. doesn't manufacture exports to pay for the imports we buy — for which there is no bail-out mechanism when foreigners stop wanting to buy dollars. And a bail-out that doesn't mention the huge market in derivatives (the definition of quadrillion may actually be needed soon). Congress should say, "Wait a doggoned minute, we won't sign a blank check!"
September 17, 2008
Wall Street Must Be Regulated
An AIG bankruptcy would've been too damaging to markets so — tough call — the government did the right thing to bail them out. Likewise, it did the right thing letting Lehman fail. The next financial house to go belly up probably also should be allowed to fail, and we should expect there to be several more, because so much of the commercial paper out there can't be sold. But is this a financial meltdown like the Great Depression? No. Apart from the small but real possibility of wholesale panic on Wall Street we don't get to that point of economic distress unless and until people outside the U.S. stop buying U.S. Treasury bills such that they force a rapid unwinding of the U.S. current account deficit: paying for our consumption with real goods is a much deeper structural problem for which no "bail-out" mechanism exists. Over the medium and longer term the U.S. has got to restore its manufacturing capacity and start exporting manufactured goods to pay for imports. Otherwise, a Great Depression (Part Deux) is inevitable.
September 15, 2008
2008 Annual Podcast Awards Competition Now Open: Please Vote!
The 2008 Podcast Awards competition is now open. Please VOTE! Last year EP was one among ten finalists in the political category, along with the Democracy Now podcast and the Slate podcast (none of us won). It would be great to be a finalist again this year, maybe even win the category! All it will take is a little bit of your time, so please help!
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September 14, 2008
The Knowledge
Magnetic scans show that London cabbies, like homing pigeons, have extra-developed navigation centers in their brains. Perhaps it's a stretch, but might not professional politicians have similar built-up brain cells to tell them which way the political wind blows and further, might not Democratic brains point one way and Republican brains another? Running to the center may mean entirely different things depending upon the mental political geography of party. The conventional wisdom of always running to the center to win being almost certainly wrong.
September 13, 2008
What "Bush Doctrine"?
If somebody were to ask me what I thought about the Bush administration's notions of preventive war I'd have something to say. Or on the "global war on terrorism." Or on a raft of other policy measures /slash/ rhetorical devices. But as far as I know there's never been a "Bush Doctrine," either in foreign policy or domestic. The Bush people just don't have enough intellectual clarity (or firepower) for anything they do to be accurately describes as doctrinal unless it might be their unspoken philosophical belief that rich people should always get richer, and at the expense of everybody else.
September 11, 2008
The Seventh Anniversary
Today we observe the seventh anniversary of 9/11/01, the day that ushered in a post-constitutional American national security state, its attendant two wars, and counting. In commemoration the mainstream media will wave flags and copiously shed crocodile tears. The administration's little drummer boys will beat their march of death. Others, however, continue the painstaking and largely unheralded work of trying to piece together exactly what did happen on 9/11, knowing that the real story bears no resemblance whatsoever to the establishment narrative. It's slow work, but it's steadily gaining ground. David Ray Griffin, a leading skeptic, has another book just published this month, The New Pearl Harbor Revisited: 9/11, the Cover-Up, and the Exposé
September 10, 2008
Obama's Glass Jaw
The man doesn't have fight in him. This latest ad making him out to be a pedophile. Well, there's not a whole lot to say about it except that Americans hate to see a person who's capable of standing up for themselves cave in to a bully. Obama never engaged in a serious tussle with Hillary — it was all rope-a-dope and rise above the fray. Looking further back, he's never had a fight with a serious Republican opponent in his whole political life. (A Democrat, yes, in Rep. Bobby Rush over the first district in Illinois, where he got whipped.) Did he ever really fight for anything while in the U.S. Senate? If he did, not so as anybody knows about it. Ditto the Illinois legislature, where he earned a reputation as a consensus builder. It's not that he's a bad guy, it's just that if McCain beats his brains out while he doesn't fight back the public will turn on him. His current electoral college advantage notwithstanding, once McCain has built up some momentum Obama will go down for the count. Charles Atlas, where are you when we need you? Ouch!
Female Podpeople
First it was the soccer moms. Then it was the security moms. This election cycle it's the down and out waitress moms. What's wrong with America that its female population can be so easily stampeded like a herd of nervous gazelles whenever the ultra-conservative right wants to win an election? I pose the question rhetorically, yet intuitively a couple of partial answers suggest themselves to me; possibilities, nothing more, so take this speculation with a grain of salt.
Carville on Palin and Kuttner on Obama
For those of you who don't regularly look at the Financial Times, here's an excellent essay by the certifiable outer space alien James Carville, on Sarah Palin. Whatever else you may think of Carville he's had lots of experience with political campaigns — this essay nails the "not-serious" aspect of Palin and what that means, problem-wise, going forward for Republicans. And so I stand by my derisive rejection of her. One other essay this morning caught my eye, by Robert Kuttner. It's a tremendously important piece that gets at the febrility of Obama's campaign by matching it to his ideological lack of clarity. As I've been arguing for a while in the EP podcast, Obama's got to energize the progressive base — whether anymore he understands that base may be the question.
September 9, 2008
Quo Vadis, America?
Defining citizenship should not be treated as if it were a trivial question. Too many people on the left take the view that humanitarian compassion trumps other concerns such that if somebody makes it into this country illegally they should be allowed to stay. The compassion in this argument has more than a whiff of illogical rationalization about it, but setting aside whether advocates truly believe what they're saying or just have strong feelings on the matter, those 'other concerns' present progressives with clearly unpalatable choices.
September 8, 2008
H.R. 676
Let's say that you were on vacation in London, got sick, and went to a local (Socialist, i.e., government owned and operated) hospital. Before they admit you they would ask, "Are you a lawful resident of the UK?" and if it turns out you weren't you don't get that excellent, free, Socialist care but instead must pay cash according to a set schedule for foreigners, transients, and so forth. Whoa, Dude! And if you were on vacation in Quebec, got sick, and went to a local (government-funded but privately run) hospital, they would ask, "Are you a lawful resident of Canada?" See, there's a pattern here.
