Opinion-Columns.com

BAILING OUT WOODEN ARROWS WITH WOODEN NICKELS

According to the gurus over at Wikipedia, “A wooden nickel, in the United States, is wood token coin, which are usually issued by a merchant or bank as a promotion, sometimes redeemable for a specific item such as a drink. Wooden nickels were most commonly issued in the US in the 1930s, after the Great Depression.”

Which is fine (as far as it goes), although in the sense of the current bailout of fraudulent and specious investment vehicles, it seems the wooden nickel is upon us almost before the fact. We have been snookered out of our underwear before the game began.

Investment ‘vehicles’ are well named, invented as they are to drive off with your money. In case you missed the point of the failure in the House of Representatives to pass Hank Paulson’s giveaway to his former partners in crime over at Goldman Sachs, it was to provide political cover for the coming election, while allowing the Senate to unashamedly lard the legislation.

Seldom does the Senate step in ahead of the House, but paid-off Senators were well paid and only a third of them are standing for reelection. Thus are leaders made. Such is the power of a corrupt two-party system that badly needs a viable third party to disrupt partisanship where stalemate and power-plays have all but replaced representative government.

Hope for a future lies in meaningful coalition governance. What we have allowed in Washington simply will not suffice. Consider what Nancy Pelosi (rhymes with Bela Lugosi) has given us for this month’s monster under the bed;

(Rescue Sweetened With Tax Incentives, by Cecilia Kang, Washington Post)

The House of Representatives yesterday approved $107 billion in tax breaks for businesses and consumers as part of a sweeping financial rescue package designed to stave the credit crisis.

Saddled onto the 450-page bill is a provision to shield as many as 25 million Americans from the alternative minimum tax and $18 billion in tax credit extensions for wind and solar energy production.

Yet to appease lawmakers and make the bill more attractive, several more prosaic tax provisions are included, according to a government budgetary watchdog group.

Saddled. Well chosen metaphor. Indeed, the nation’s economic horse very nearly sank to its knees under the load. Any vague hope that “the best Congress money can buy” would seek anything other than its own unending grip on Democratic dominance (under an Obama administration) sank as well.

Pelosi, who has an absolute majority in the House, said, “We were dealt a bad hand; we made the most of it.” This witless Speaker of the House has made nothing but excuses for the deplorable job she has done since the 2006 mid-term election gave her what she wanted and cannot find a way to use—control.

In the week that was, last week’s $700 billion refusal became this week’s acceptance--larded with an additional $150 billion in earmarks and other buried treasures. Republicans have been watching all year, like cats at a mouse hole, for a bill that could not be refused to which they could attach pet legislation.

They got it this week on a platter, thanks to the Pelosi-Reid dumbo combo. Less able 'leadership' has seldom haunted the halls of Congress. Republicans are not always civic-minded, by by god they are able and showed it by their expansive mood.

(Time Magazine) Paulson's original request was barely three pages long, whereas the bill passed today runs well over 400 pages.

Pork, of course, is not exactly speech-writing, but it does take language and language takes pages. Fortunately, that language was at the ready, loaded, primed and parsed, eager to be fired so everyone could go home and leave the mess to Obama or McCain. With change like this, who really cares who occupies the White House?

(Washington Post again) NASCAR will be able to write off racetrack costs over 7 years and manufacturers of wooden arrows for children will be shielded from an excise tax applied to other shafts. The NASCAR provision was introduced by Rep. Mike Thompson (D-Calif.), who voted in favor of the bill.

Nice job, Mike. That certainly bails out the auto-racing industry, which grosses more than any other organized sport and is awash in profits. A friend of mine, just today, sent me a pretty good idea--that those in Congress be required to wear NASCAR-like uniforms, so we could readily see their sponsorship. I don't know the attribution, it's not original with him, but it's pretty accurate and (would be) funny if it didn't cleave so close to the bone.

The bailout package also provides tax rebates on rum imported from Puerto Rico and the Virgin Islands and tax credits for economic development on the island of American Samoa.

"In the midst of a debate over a historic bailout package, Senate pulled out an old bag of tricks: piling billions of dollars of unrelated legislative provisions into the package and daring the House to reject the bailout again," said Ryan Alexander, president of Taxpayers for Common Sense. "Many of these provisions are tax extenders that have been waiting in the wings for months, hoping for a legislative train to leave the station."

The bill passed the House yesterday 263 to 171. It was a last-ditch effort of sorts for proponents of renewable energy to get tax provisions extended before they were set to expire by the end of the year. Those extensions, estimated at $18 billion, had repeatedly failed to pass legislative muster in both the Senate and House over the past year.

The tax breaks in the legislation total $149 billion over 10 years, and are offset by $42 billion in tax increases. The hikes include a new levy on hedge-fund managers who avoid taxes by transferring income offshore, a provision that would raise $25 billion over 10 years.

It was an absolutely bi-partisan effort. Everyone got their hand in the till, regardless of race, creed, gender or political affiliation. No cause was too large ($150 billion in tax breaks) or too small (39 cents on wooden arrows).

(Bloomberg) Senators attached a provision repealing a 39-cent excise tax on wooden arrows designed for children to an historic $700 billion financial-markets rescue that passed tonight by a vote of 74-25. The provision, originally proposed by Oregon senators Ron Wyden [D] and Gordon Smith [R], will save manufacturers such as Rose City Archery in Myrtle Point, Oregon, about $200,000 a year.

Senators Widen and Smith can’t get any more bi-partisan than that.

(Wikipedia) It was during this (depression era) decade that some banks and chambers of commerce in the United States issued wooden nickels with expiration dates to mitigate difficulties faced by merchants in making change at times of instability.

Wooden arrows—wooden nickels—guess we’ve now seen the closing of the circle. We can hope, but not be assured, that the circle is not a noose in disguise.

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Media comment:

• Houston Chronicle-Equal treatment
• Boston Globe-Benevolence amid an orgy
• National Post-Canada-Bailout bill more about shafts than building confidence
• Guardian-UK-Now Wall Street may shun $700bn bail-out
• The Australian-Australia-Paulson bailout won't impress sceptics

A CHEAP SHOT AT CRAVING CHEAP CREDIT

Don’t Talk to Me About Craving Cheap Credit to Spend on Imported Goods.

It’s our cravings that are at fault, the fraudsters on Wall Street bray. Consumers demanded cheap credit and we just didn’t know what to do except provide it—even at the personal cost of having to take those hundred million dollar salaries. They made us do it, with their lifestyle demands. Wal-Mart wasn’t a scheme to wreck Main Streets across America, centralize all the purchasing in the Walton family private coffers—it was the cry of manic consumer demand for Chinese TVs and toxic toys for the kids.

We had a gun at our head to create credit default swaps out of the whole cloth that used to be collateralized lending. Remember when you went to your bank for a loan? In those creaky old horse-and-buggy days, the banker wanted some reasonable idea you were going to pay him back. He cared about such things, because it was your (and his) neighbors’ money he was lending. Your reputation might count for something back then, because he knew your reputation. But every month at the loan committee meeting, you were smiled or frowned upon.

I never craved cheap credit, worthless goods or seven credit cards. Credit cards weren’t even in common use until Visa and MasterCard rolled out in the sixties. Oh yeah, you might have carried a Texaco or Standard Oil card for buying gas, maybe had a department store charge account, but the swiping of card-readers came with the usury-friendly 18% interest rates for unpaid balances.

Texaco, Standard Oil or the department store merely got angry with you, cancelled the card and hounded you into court. Visa, MasterCard and the other big guys made a profit out of a great new business opportunity. Why make 5% warehousing, transporting and selling a sofa, when you can make three times that loaning out the money and the Congress of the United States will enable the process.

You can’t get a more prominent enabler than that.

Everyone jumped on the band-wagon of marketing and consuming because they had made the actual manufacture of goods a pauper’s business. No longer able to invent and build, the world’s most successful nation of inventors and builders turned to selling each other cheap crap and calling it the new economy. In a scant forty years, the core values of a nation were cored like apples.

So, the race was on and in four decades that race essentially boarded up the Main Streets of small towns, outsourced our jobs to the cheapest offshore producer, transformed us from the world’s largest lender to the world’s biggest debtor, put college educations out of common reach, changed the relationship between worker productivity and reward, busted the unions, set off an advertising based feeding-frenzy of consumption and—now that it has busted the bank—hands us both the bill and the blame.

Unlike your friendly neighborhood bank of forty years ago, the new-age swindlers who arranged a home mortgage or line of credit for the un-creditworthy, needed a place to offload the offal. Bingo, derivatives were invented—not regulated, but invented—the not regulated part was just another low and outside curve-ball lobbed to a well-fed and well-paid-off Congress.

Derivatives were a hedge-fund invention, a way to whistle up large fees and churn the money pump, essentially hiding rotten apples at the bottom of otherwise shining and radiant barrels of produce. The language in these shell-game contracts was so arcane as to be un-understandable to those who took their cut, closed their eyes, held their nose and shoveled them on down the line.

Rating agencies knew of the stink and approved them AAA in spite of it, for (what else) money. Mortgage bankers, investment bankers, rating agencies and insurers—essentially all the guys looking for bailouts now—knew and collaborated and stirred the conspiracy-pot for a classic RICO indictment.

Instead, Henry Paulson is Santa Claus to save the financial markets.

(TARP—Your Money at Work) those unregulated derivative contracts that allow investors to bet on a debt issuer’s financial prospects, loomed so big on balance sheets that they now drive every bailout decision.

. . . “The last eight years have been about permitting derivatives to explode, knowing they were unregulated,” said Eric R. Dinallo, New York’s superintendent of insurance. “It’s about what the government chose not to regulate, measured in dollars. And that is what shook the world.”

Don’t bother to save the co-conspirators, Henry. Rhett Butler nailed it when he looked deep into Scarlett’s eyes and said, “Frankly, my dear, I don’t give a damn.” As a taxpayer, I’m still reeling from the $11 trillion we’ve accumulated in national debt since Ronnie Reagan (the communicator) deregulated me out of my underwear.

Now you guys have come after the underwear.

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Media comment:

• Bloomberg-Treasury Seeks Asset-Buying Power Unchecked by Courts
• Guardian-UK-US Treasury takes on the house in high-stakes game
• Wall Street Journal-Paulson Presses Congress to Act On $700 Billion Bailout Plan
• Reuters-Treasury plan lacks taxpayer protection: Sen.Schumer
• Boston Globe-Can America afford it?

SEVEN YEARS AFTER 9-11, TIME TO GET OVER IT

The annual national hysteria over the September 11^th attacks on the World Trade Center and Pentagon is in full cry. Dedication of a remembrance garden at the Pentagon, moments of silence, disclosure of any personal tale of woe that can be dragged out of survivors is fair game.

No matter that survivors of that tragic event have been awarded (on average) some $2 million, no matter that the nation has plunged itself into an unwinnable war on their behalf, no matter that we are near bankruptcy, awash in contractor greed and fraud. Most importantly, no matter that over 4,000 American kids have died in Iraq, nearly 1,000 additional in Afghanistan and tens of thousands bear emotional and otherwise hidden wounds that will change and have changed their lives forever.

All but forgotten, is the brutal fact that we fail almost without exception to care for those who return, relegating them to the same stumbling, mumbling, suicidal lives of Vietnam vets.

Forgive me if I fail to join those who feel we have not done enough, soon enough, in sufficient quantity or quality (or whatever) for those who survived in New York and Washington. Or don’t forgive me. I don’t really give a damn, as I watch a large portion of the world implode by way of American nationalism, patriotism, ignorance and just plain revenge.

Revenge that is, as long as someone else’s kid pays the cost. Revenge as long as it doesn’t impede the trip to the mall, stock dividends or a cozy retirement.

This is the revenge war whose costs are hidden from view, whose caskets come home unmet in the dark, whose troops are 99 and 44/100^th percent of the class that didn’t graduate from Princeton. I’m sick to death of Rush Limbaugh, Bill O’Reilly and that Coulter witch, who rev the engines of hatred over the bodies of decent young American men and women. There isn’t a one of them who ever risked their fat asses on anything more dangerous than a cocaine high, or who wouldn’t risk a kid for a rating or another book deal.

They are trash.

The headlines today are maudlin, self pitying and organized in such a way as to perpetuate the myth of victimhood:

• From Families' Grief, a Symbol of Loss, Hope

The completion of the memorial is not the result of a large-scale government endeavor, but one led by a determined group of victims' family members who have channeled their sorrow into a ceaseless fundraising campaign.

• Lives Shaped by Loss

Children who lost a parent on 9/11 still grapple with what it means to have had a childhood so steeped in national tragedy, so riven with anguish and pain.

• Where They Were on 9/11
• A Sister's Undying Love
• Share Your Story

How about sharing the story of two million Iraqi families who have been run out of their country and threatened with death if they return? What do we say of the undying love that died—the 25 festive, hopeful Afghans at a wedding, blown to (literal) bits, including the bride? Who mourns 60 Afghan children and thirty adults, killed by mistake?

Their stories are not unique among thousands. Their stories are ordinary, among hundreds of thousands.

In case you wondered, on 9-11 they were ending a normal Baghdad day, waiting to cross busy avenues unmarked by bomb craters and barricades. They were thinking of heading home to neighbors they knew and talked with, whose kids played together and headed to the park for soccer and maybe an ice cream. They watched Saddam’s TV offerings and life wasn’t all that great under the pressures of economic boycott—but it was life.

George Bush named al Qaeda responsible and then stumbled over the targeting, missed everyone but the innocents and the not-so-innocent who came out of the woodwork for their own revenge. Muslims understand revenge, as Westerners can’t even comprehend it.

The mistakes along the way to ‘bring ‘em on’ are too many and too pathetic to recount here, but sending Darth Vader outfitted American kids (who speak no Arabic and are scared half to death) to kick family doors off the hinges and terrorize Iraqi women and kids might have been a not-entirely-thought-through message.

“Bring ‘em on,” brought ‘em on in numbers and with intent that put the lie to American shock and awe. But that’s another argument, one about which Ann Coulter no doubt has much to say. Rush never apologized to a single American family for beating the drum with his phallic cigar that brought their kid home in the middle of the night to a silent and press-not-allowed air base. Bill O’Reilly, the mouth-that-roared, skitters off home to whatever gated community can stand the smell.

And all of this in the name of patriotism. It’s Rudy Giuliani’s day, George Bush’s war, Rumsfeld’s mistaken hubris--and the world is not a better place for it.

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Media coverage;

• Edmonton Journal-Canada-McCain, Obama unite for 9/11 memorial
• Bloomberg-Obama, McCain Put Politics Aside on 9/11 Anniversary
• Scientific American-9/11: Can the lingering medical and emotional effects be measured?
• New York Times-More Asthma Among Those Near 9/11 Site
• New York Times-At Pentagon, Bush Solemnly Looks Back at 9/11

“First We Take,” the Lessons of 1933 Germany

As may be apparent from the title, I am going to make comparisons to the early years of Hitler Germany, when he demanded and took various powers by entirely legal and democratic methods. Hitler ended up a dictator, but he was enabled to that ultimate goal by a population terrified by an economic maelstrom and the ever growing lawlessness across Germany.

Conservative, disheartened and increasingly desperate Germans repeatedly went to the polls and elected National Socialist (Nazi) candidates.

The Holocaust has taken Nazi Germany as ‘off the table’ of political discussion as Nancy Pelosi’s unilateral removal of impeachment and perhaps for similar reasons; sensitivity. It’s just too divisive, says Nancy, as though we were frightened children needing to hide our faces in her skirt. Never again, say the Israelis, as 800,000 Rwandans are massacred and Stalin kills (by some estimates) 25 million of his own people, Mao another 35 million and the carnage goes on, uncompared.

Forbidding the discussion of parallels is to make them invisible. Invisibility is the workplace of those who would do us wrong, not in the light of discussion and criticism, but behind closed doors, in secret session. Every attack against our constitutionally guaranteed rights, since 9-11, has been whisked behind the opaque door of ‘top secret’ and ‘national interest,’ thereby kept from the public view.

Comparison? We are denied comparison as well. Nazi, has been made yet another N-word; unspeakable in polite society and therefore far more dangerous to our civil rights and the lessons history has to teach. Author Aldous Huxley cautioned us that "Facts do not cease to exist because they are ignored"

Unable to debate the similarity between America today and Hitler’s 1933 Germany, those who oppose authoritarian presidencies in place of constitutional balance are disarmed. Relegated to the pillow-fights of uncritical media, we stand impotent while our country is slid out from under us. If you value Nancy Pelosi’s sensitivity above and beyond the lessons of history, go turn on MTV and leave this column to the less frightened.

(Washington Post, August 16^th, U.S. May Ease Police Spy Rules, by Spencer Hsu and Carrie Johnson)

The Justice Department has proposed a new domestic spying measure that would make it easier for state and local police to collect intelligence about Americans, share the sensitive data with federal agencies and retain it for at least 10 years.

The proposed changes would revise the federal government's rules for police intelligence-gathering for the first time since 1993 and would apply to any of the nation's 18,000 state and local police agencies that receive roughly $1.6 billion each year in federal grants.

Forget 9-11 and put aside the past eight years of the Bush-Cheney administration, clear your head of various blue-ribbon panel recommendations and recognize that this ruling is made at the exit-gate, by an organization on its way out the door. It’s publicly announced by the Justice Department on a Saturday in mid-August.

With Germanic precision, Bush’s Department of Homeland Security has put the nation’s police departments on the intravenous-drip of federal money. Did you ever suspect that one day America would be called a Homeland. Did you ever in your most Orwellian dream believe that Americans would stand for that? Not only stand for it, but wave the flag?

You guys need night-vision, armored personnel carriers, automatic weaponry, training, anti-terror camps? Line right up at the fed spigot and drink deeply. It’s the nationalist thing to do, patriotic to the core, swinging into step for God and country. Nice new toys, huh? Shiny and cool, you bet. Manly and preparedness-friendly, yessir.

For the Phoenix police? For Detroit? We need armored personnel-carriers and machine-guns for Phoenix and Detroit? This, for a response to a terrorist act? Crowd control against American crowds? Gimme a break.

Now, says the Fed, we don’t want to see you lose all that great stuff and we don’t want to intimidate—not us. But, remember where those toys came from. Quicker’n a sub-prime loan, they can be taken back. 18,000 police departments that grab a part of that $1.6 billion (and more to come), lose most of their autonomy (noun: Immunity from arbitrary exercise of authority: political independence).

Quietly unveiled late last month, the proposal is part of a flurry of domestic intelligence changes issued and planned by the Bush administration in its waning months. They include a recent executive order that guides the reorganization of federal spy agencies and a pending Justice Department overhaul of FBI procedures for gathering intelligence and investigating terrorism cases within U.S. borders.

Taken together, critics in Congress and elsewhere say, the moves are intended to lock in policies for Bush's successor and to enshrine controversial post-Sept. 11 approaches that some say have fed the greatest expansion of executive authority since the Watergate era.

They are also, without a shred of doubt, setting groundwork and legal precedent to protect Bush administration abuses from actually sending officials to prison. Prior to January 20^th, look for Bush to provide blanket immunity for all acts against terrorism—however that term may be defined. The Reagan administration, choir-boys by comparison, suffered 61 indictments.

Bush, while still president (and, in his own mind, still able to preside by decree) will absolutely protect Cheney, Addington, Rumsfeld, Rice and whatever smaller fish threaten to fall into the nets of American justice.

1933 Germany was a parliamentary republic and thus the Chancellor was subject only to votes of confidence. Wobbly in his hold on office, Hitler chose to burn down the Reichstag (parliament), blame it on his nearest political enemy and take immediate dictatorial control in the heat of public panic. The Bolsheviks were at the gates.

We elect our presidents for a maximum of eight years, but there are those who fear an attack on Iran and a ‘temporary’ suspension of habeus corpus and a ‘necessary’ period of martial law ‘until the terrorist threat subsides.’ Terrorists rather than Bolsheviks at the gates. Easier perhaps, than a bogus fire within the Congress of the United States.

America has already been scared half to death in preparation, but Blackwater stands ready to ‘assist’ local police, should there be any ‘outbreaks of terrorist activity.’ New Orleans was the prep event.

As in 1933 Germany, first we take the public confidence. Then we replace the democracy blamed for losing the public confidence by trains that run on time, a hustling off of dissenters, polishing the apple of modern media and possibly an additional sop such as a holiday on mortgage foreclosures. The banks will be massively subsidized for their inconvenience.

When first we have taken, then all else falls into place. Writers of columns such as this will be gone.

White House spokesman Tony Fratto said the administration agrees that it needs to do everything possible to prevent unwarranted encroachments on civil liberties, adding that it succeeds the overwhelming majority of the time.

Bush homeland security adviser Kenneth L. Wainstein said, "This is a continuum that started back on 9/11 to reform law enforcement and the intelligence community to focus on the terrorism threat."

Those statements, in and of themselves, ought to chill the most conservative blood.

Under the Justice Department proposal for state and local police, published for public comment July 31, law enforcement agencies would be allowed to target groups as well as individuals, and to launch a criminal intelligence investigation based on the suspicion that a target is engaged in terrorism or providing material support to terrorists. They also could share results with a constellation of federal law enforcement and intelligence agencies, and others in many cases.

Allowed to target, with no more than a suspicion of providing support to terrorists. We have by that, just given over innocent until proven guilty to its direct opposite. Would be allowed to smash down your door at 2AM and hustle you (or me) off to Guantanamo and no one the wiser.

And last week, Attorney General Michael B. Mukasey said that the Justice Department will release new guidelines within weeks to streamline and unify FBI investigations of criminal law enforcement matters and national security threats. The changes will clarify what tools agents can employ and whose approval they must obtain.

Clarify. Ja, ve vill clarify, but first ve vill streamline.

Critics say preemptive law enforcement in the absence of a crime can violate the Constitution and due process. They cite the administration's long-running warrantless-surveillance program, which was set up outside the courts, and the FBI's acknowledgment that it abused its intelligence-gathering privileges in hundreds of cases by using inadequately documented administrative orders to obtain telephone, e-mail, financial and other personal records of U.S. citizens without warrants.

Constitution, poof! Ve haff already crossed that bridge and who obcheckted? No von, not von obchecktion from the Reichstag, uh, Congress. Vat critics remain, ve haff means to silence critics.

Jamie Gorelick cited the recent disclosure that undercover Maryland State Police agents spied on death penalty opponents and antiwar groups in 2005 and 2006 to emphasize that the policies would require close oversight.

Ofersight, ja. Ve haff no problems with oversight.

German, an FBI agent for 16 years, said easing established limits on intelligence-gathering would lead to abuses against peaceful political dissenters. In addition to the Maryland case, he pointed to reports in the past six years that undercover New York police officers infiltrated protest groups before the 2004 Republican National Convention; that California state agents eavesdropped on peace, animal rights and labor activists; and that Denver police spied on Amnesty International and others before being discovered.

"If police officers no longer see themselves as engaged in protecting their communities from criminals and instead as domestic intelligence agents working on behalf of the CIA, they will be encouraged to collect more information," German said. "It turns police officers into spies on behalf of the federal government."

Ja (chuckle), I qvote the vice-prezident; “So vat!” First ve take, then vill be plenty time to give.

Conspiracy theorist? Me? Please, that charge is so 1933.

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Media comment:

• Islam Online-Police Allowed to Spy on Americans
• Los Angeles Times-Justice Department eyes domestic spy role for local police
• Baltimore Sun-Police spying prompts hearings
• Hagerstown Herald Mail-Maryland must investigate police spying
• AlterNet-CA-Dissent Is Essential to Democracy

 

 

When Steven Pearlstein Writes, We Are Obliged to Pay Attention

Steven Pearlstein is, at least for me, one of the few reasons left to bother reading the Washington Post. Others who quickly come to mind are the two Danas, Milbank and Priest, but altogether they  whole lot number less than the fingers on one hand.

Political writers with equal skepticism for both sides are hard to come by, investigative reporters too far and in-between and top-notch writers on the economy almost non-existent. Pearlstein must have somehow missed the opportunity of a Harvard MBA. He is not of that ilk and a man of rare insight in a profession that has lost it along the way.

(Washington Post-A Delicate Balance, By Steven Pearlstein)

You know something's up when both the secretary of the Treasury and the chairman of the Federal Reserve give speeches calling for a new mechanism to allow them to manage the orderly liquidation of a major financial institution.

You have a sense that things are getting desperate when General Motors has to offer six-year loans at zero-percent interest to unload its gas-guzzling trucks and SUVs, and people openly speculate about how long it will be before the automaker runs out of cash.

And you can feel the foundation shaking under Wall Street when Fannie Mae and Freddie Mac have to pay three-quarters of a percentage point more to borrow money than the U.S. Treasury, which implicitly guarantees their debt, and top government officials feel compelled to reaffirm their support.

We're nearing that delicate point in the cycle when even the usual cheerleaders have hung up their pompoms, consumer and business confidence has disappeared and investors are driven mostly by fear rather than greed.

Well, we have been a long time wandering down this road. It’s not something we can boast of having come to honestly, because there’s been dishonesty aplenty and it feels more like the snake-oil days of the late twenties than it does the beginning of a new millennium. Distracted by the threat of computer meltdown as the millennium turned, we failed to see the true culprit—our native fascination with something for nothing.

Disaster takes its toll on credulity and the ten years after the ’29 crash dropped the nation to its knees, adding desperation after desperation, as Ford cars cost $500 a copy and no one had the five hundred. Hell, no one had five bucks, at least not to spare. There were three cures to this misery.

1. Franklin Roosevelt’s massive public works programs, a Democratic effort to pull the country back to a reasonable level of employment, that would not be matched until a Republican president Dwight Eisenhower launched the Interstate Highway program just after WWII.

2. World War Two itself, a struggle so intense that all hands were at work churning out the material of war.

3. The G.I. Bill, which educated beyond all precedent an entire generation of homeward bound military personnel from the war. Partly, the bill prevented the wholesale dumping of soldiery on a delicate jobs market, but the unintended consequence was to ultimately provide the best-educated workforce the nation had seen to date.

Sobering and useful circumstances all, yet they are beyond the living memory of only a diminishing few. Returning heroes begat the Boomers, the Boomers begat the exuberance of the fifties, the social upheaval of the sixties, the Vietnam seventies, Madonna eighties and Monica nineties. Unsure of what they had wrought and nervously peering into the new century, the World Trade Center fell and all the cats were let out of the box at one time.

My old daddy once said of an aunt of mine near the end of her days, “she spent her whole life worried she wouldn’t get what was coming to her—and now she’s afraid she will.” Spoken, dear old daddy, for a generation you didn’t live to see—from Wall Street to K Street to Congress, the Pentagon, the halls of Congress and deep into the heart of every man who ever drew to a straight-flush.

. . . A financial crisis is not a morality play. What matters most isn't the precedents that are set, the amount of taxpayer money that's implicated or whether people are made to suffer fully for their financial misjudgments. In the end, what matters most is that we get through it as quickly as possible with an economy and a financial system intact.

I have a problem with Pearstein's last paragraph. I absolutely agree that the financial crisis is not a morality play, but Band-Aiding our way through the present turmoil is not a goal he and I share. I don't so much care that the top investment bankers rake in major dough from throwing monkey-wrenches in the gears. I'm not even all that outraged by $5 million birthday parties or $50 million severance packages.

What I am scandalized by is the money that has been made available from Wall Street and the business community to pay off the most corrupt Congress in memory (and my memory extends through eight decades). Those who worried they wouldn’t get what was coming to them. If they finally do get what they have coming, it will be because

• Hedge funds are totally unregulated, lobbying and bribing their way past regulation.
• Military contractors (icons like Boeing and Lockheed-Martin) regularly commit fraud against paid-off Pentagon administrators, protected in turn by paid-off Congressmen and Senators.
• Earmarks are such a source of mutual profit between crooked representatives and their equally crooked constituents, that they threaten the basic terms of self-government.
• Healthcare has been made hostage to the profiteering of pharmaceutical companies, doctors, insurance companies and third-party providers.
• Congress is so swamped by bribery that the likes of Blackwater and Halliburton have burst the dam of public intervention.

Money, in quantities unknown to prior generations has served to buy every special interest, confound every legal recourse and overwhelm every civic responsibility. Each day a dozen major thefts and frauds are exposed against the common people by their industries, their institutions and their representatives. If we ignore what Pearlstein calls 'an economic morality play,' we will have lost perhaps the last chance to regain control of a basic ability to self-govern.

America is losing on all fronts as our small town merchants are destroyed, industrialized agriculture wrecks the safety and balance of our food supply, we declare the undeclared, spend the unearned, torture and bomb and lie our way through foreign policy as if we are telling truths.

A financial crash of epic proportion--a '29 style meltdown--would cause absolute havoc over the lives of the nation's mostly innocent populace. But what has been raised as tribute to our 'consumer economy' over the past thirty or forty years is a death-by-a-thousand-cuts to traditional American progress and prosperity. We are bleeding and helpless as Wal-Mart destroys our Main Streets, the insurance industry destroys our healthcare and off-shoring destroys our job base.

Welcome (you Boomers and the offspring you now find back in their upstairs bedrooms) to the 'service society.' If your life seems less productive, your family needs two (or three) jobs to survive, your kids got a crappy education, you worry about retirement and reach for Valium and Viagra to get through the week . . .

. . . dial 9 and remain on hold for 40 minutes while you are assured your business, or problem (or potential suicide) is very important to us.

Compared to where we find ourselves, Mr. Pearlstein, at the end of a forty-year pornographic consumerized massage, a morality-play might be a snap. If not exactly a snap, perhaps better medicine than Viagra or Valium.

But beware the side-effects.

In the substitute for morals that we have eagerly accepted and welcomed into the lexicon of what it means to be an American consumer, an economic meltdown might be the best medicine.

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Media comment;

• Dallas Morning News-Phil Gramm's alternate universe
• Detroit Free Press-Worse to come on foreclosures?
• CBS News-Paulson And Bernanke: Economic Melt-down "ongoing"
• MarketWatch.com-Options expert calls Fannie, Freddie shares 'worthless'
• Baltimore Sun-Fannie Mae, Freddie Mac meltdown?

 

"Having Been Unable to Strengthen Justice, We Have Justified Strength"

That's a quote concerning justice and strength from the dim past of 350 years ago--another proof that not much changes across the pages of history--by philosopher-mathematician Blaise Pascal, dead since 1662.

Barbara Ehrenreich writes in the Huffington Post; "The Democrats are feeling empowered -- in part -- by the resounding echoes of change that is ringing in their ears."

That would be a hopeful message, if it were true. But what is more likely to be ringing in their ears is a phone call from Squibb or Martin-Marietta. Meanwhile, what rings in the ears of the electorate (the 55% that is left of it) is the apathy and incompetence  of the long-awaited congressional control by Democrats.

Ehrenreich is not easily dismissed. She was a regular columnist for Time, currently contributes regularly to The Progressive and has written for the New York Times, Mother Jones, The Atlantic Monthly, Ms, The New Republic, Z Magazine, In These Times, Salon.com, and other publications. Author of some 20 books. The lady knows the territory and, to her credit, has not become inured to echoes of change ringing in ears.

We've seen the first act of the play yet to come, titled "Democrats Back in Charge." It's had a bunch of bad 2006 reviews. Spencer Tracy had it right about stage presence; "learn your lines and don't bump into the furniture."

Thus far, Democratic control has yet to achieve either goal. At a time when Democrats need desperately not to act like Democrats, Harry Reid tries to morph from wrestling-coach to statesman. It's just not in the man from Nevada. The hand is a bust. Pelosi, all wriggly and giggly from her moment of fame has shown herself to be too partisan a dominatrix of House discipline to serve her country in time of need. 

• We are no closer to getting out of Iraq than before
• The uncontrolled (and disastrously un-admitted) real estate bubble has imploded in a mire of  fraud and conspiracy
• Health care is an issue for tomorrow and tomorrow and tomorrow
• Impeachment of the most criminal administration in the history of the country remains 'off Nancy Pelosi's table.'
• A small and unheralded, largely unseen military dies on a daily basis to prove the unprovable staying of a headstrong president's course
• This new and toothless 'Congress of change' can't even enforce its will to bring testimony from a successfully defiant executive branch

Pelosi and Reid are terrified, not of impeachment (or the fantasy that it will complicate election 2008), but of their personal roll in the Democratic complicity that an impeachment trial would reveal. Every single step of the way, the Bush administration's murky wreckage of American ideals was approved by Democrats.

The ongoing whine that Pelosi & Co just can't get past a need for 60 votes in the Senate is ample evidence. Republicans were in exactly the same position. Had Democrats the will, had Pelosi and Reid the guts, Bush would never have been able to run off with the country.

Newt Gingrich and Tom DeLay at least had the guts not to give a shit. They stood there, guns blazing and dressed the theft of American politics as a Contract With America. Had Bush and Cheney not been so heavy-handed, the Gingrich-DeLay legacy would not yet be at risk.

American government has been on the take for decades, mainlining the intravenous drip of special interest money until the body politic tumesced from bloat. Democrats were (and are) in on the deal, a consideration that sets the stage for massive disappointment once November has come and gone. (Which November of which year has recently become a question, since we seem to have gravitated toward multi-year campaigns)

"Change" is a feel-good, but meaningless word. Defined as "Become different in some particular way, without permanently losing one's or its former characteristics or essence."

Parse that, baby. Become different (Democrat rather than Republican) without permanently losing former characteristics (power, greed) or essence (the best government money can buy). Justice doesn't happen to be a part of change in this context and we are full-circle, back to the brilliant observation of Pascal that in the absence of justice, strength will suffice. Or the promise of strength, the hope of strength, the vision or the image of strength, when strength itself has proven too costly.

This self-servingly constructed framework of government under whose foot we find ourselves has to be ripped apart and reconfigured to serve society. We need to pull the money out of legislating and I don't see a program (or even an admission such a thing exists) on the part of national or regional candidates.

I am uninspired that the very legislators who have pounded together these lobbyist- congressional- military- industrial- pharma- agri- oil complexes (nail by nail, like Jesus on the cross) are the ones upon whom we must rely to tear it all down. Don't ask a theologian to tear down the church.

Barack can't do that, nor can Hillary or John. Only citizens in the streets can do that and they are busy at the moment, lowing like cattle behind the fences government has erected for them. Unless.

Unless it all comes down on their (and our) heads in a massive failure of the American and world economies, a financial disaster of the breadth and scope of 1929. That would, essentially, change all the rules as it did in the aftermath of the Hoover administration, a time not too unlike our own.

There's little purpose in speculating on that scenario. If it happens, it will not be a subject of speculation, but one of reality and the cards will fall as they may--but certainly, they will fall.

I find it personally interesting that, in the wake of the most frightening upheaval Wall Street has faced in recent decades, that Henry Paulson and Ben Bernanke have contrived (some might say conspired) to keep the Dow-Jones happily above 12,000. They have done that by irrationally, unsettlingly and without precedent, opening the money pumps to private investment banks. The money in that pipeline does not exist. They printed it.

Your and my house, car, furniture and lawnmower is worth half today of what it was when George Bush took office.

You will not be aware of that, because it is not likely you have reason to keep up with international currencies. Within the United States, all seems well. The waters are quiet. Outside America, a financial tsunami has taken place and the dollar is on the brink of collapse. No one wants our currency. No one wants our debt. No one wants much of anything America has chosen to export in the past seven years.

It seems that, having failed to strengthen justice, we have pulled off the double-whammy of failing to justify strength as well. Meanwhile, the two candidates upon whom we pin our faintest of hopes in the most perilous of times, have descended to a controversy over which among them is or is not elitist.

The government we demand is, unfailingly, the government we deserve.
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Media comment;

• USA Today-Poll shows no change in Pa., Clinton up by 6
• Kansas City Star-Obama, rivals spar over 'elitist' remarks, but voters see nuance
• CNN-Congress wants to jolt economy - again
• Spiegel Online-Germany-The Madness of Ben Bernanke
• EuroNews.net-France-G7 finance chiefs push for financial market transparency

Conversations With the Clueless; (a discouraging look at where the Fed is taking us)

The Washington Post headline is Stocks Surge as Fed Offers A Boost and it’s written by T. M. Tse and Neil Irwin, who are staff writers and may be forgiven their sins. Certainly they are not Steven Pearstein (probably one of the finest business-writers extant today) even though he too is beginning to waver on Fed actions that ‘may prevent a serious meltdown.’

Serious meltdown is what we need, Steve. It may in fact be our only hope.

Unfortunately, no politician likes to see SM (sado-masochism or serious meltdown, take your pick) on his or her watch, and so we’ve had a half century of transgressions patched over and forwarded to the next bunch coming in. Getting down to the nitty and the gritty;

NEW YORK, March 11 -- The Federal Reserve took bold action Tuesday to revive the economy's ossified credit markets by offering to take over the risk of spurned mortgage securities, igniting a rally on Wall Street that sent stocks to their best performance in five years.

It annoys me when a national newspaper, ostensibly of some repute, characterizes an inflationary printing of money as bold action. It’s not. Bold action would be letting the fraudulently inflated markets take their well-deserved bath, while still preserving the value of the dollar. That's the job of the Fed, defending against inflation and supporting the dollar.

Ben Bernanke has failed miserably at both. I don’t damned doubt a rally was ignited, as Wall Street dodged another bullet and went out to celebrate.

When your securities stink so badly that no one will touch them, it’s a relief to have the Fed come along and haul your ashes. Ossified indeed. The credit market is road-kill, lying there with all four legs in the air, body swelling with the rot of gigantic fraud.

Setting aside earlier reservations, the Fed essentially made itself the lender of last resort to investment banks squeezed for cash by offering them up to $200 billion in new credit against their holdings of highly rated mortgage securities that no one else is eager to buy. This move, coordinated with four other central banks, was the most aggressive step the Fed has taken to address the spreading credit crisis.

Nice try, Tse and Irwin, but no home run there either. The Fed has not made itself lender of last resort, it has made the American taxpayer lender of last resort, without ever checking in to see if it was OK. The Revolutionary War was begun over just such an issue. Christ, that argument was over tea.

The Federal Reserve doesn’t have $200 billion, nor does it have the additional $100 billion it has promised each and every month until the cows come home (or don’t, in which case they become someone else’s cows) The Fed is

• watering your currency,
• destroying what little credibility the dollar has left,
• making every single thing you own worth less,
• shooing off any foreign interest in financing our astounding national debt
• and getting the Washington Post to present it to you as an aggressive step to address the crisis.

Does anyone ask any questions, or do Tse and Irwin just jot it all down in their notebooks?

Bernanke and Co. are doing this treasonous damage to the American economy in order to keep the Dow Jones Industrial Average up in the vicinity of 12,000. Their reasons have nothing at all to do with the integrity of markets. That went down the drain decades ago.

They are doing it to protect the assets of the CEOs on top, keep the hedge-fund shenanigans in play and let President Bush flee his office with the myth intact that he is not actually President Hoover reincarnated.

The Dow Jones industrial average of 30 blue-chip stocks responded to the morning announcement by jumping 250 points within the first moments of trading and ended the day up 416.66 points, or 3.5 percent, to 12,156.81. 

Another rabbit will have to be dragged out from yet another hat. At $100 billion a month, rabbits are easily come by.

But while the Dow's percentage gain was its steepest since 2003, the rebound in trading still left markets below where they'd been just a week ago. Nor did the move by the central bank address the underlying weakness of the economy triggered by widespread exposure to failing subprime mortgage loans, though the initiative did blunt the immediate threat: a run from even the safest high-grade bonds.

Underlying weakness. There you have it, you intrepid reporters. Even a blind pig occasionally finds a peanut and Tse and Irwin have found theirs, but misnamed it. Failing sub-prime mortgage loans should more properly and accurately read 'fraudulently packaged and mis-represented hedge-fund derivatives.' These bonds have already been declared AAA. The so-called (by crooked bond rating companies) safest have failed.

Now it gets complicated, but only slightly. In the rest of the world—that strange and romantic, dangerous and chaotic place outside America—the value of the dollar has dropped by half during this administration. Your
house, car, savings and hopes are all worth half what they were six years ago . . . and no one told you.

The Cliff Notes are that galloping federal debt ($3 trillion increased to $9 trillion), a savings rate that is less than zero, a huge buildup of personal debt, tax giveaways to the rich, an unfunded war and oil prices goosed by that war ($31 suddenly up to $104 a barrel) have made us a bad bet for the loaning of money.

Unfortunately, our thirst for debt is $1.5 billion a day. Uncle Sam has become a profligate uncle. Somebody has to come up with the dough or else the world is going to make us turn in our credit card.

Mostly, it’s been the Chinese. But understand this. A $100 Chinese investment in ten-year U.S. Debt, paid into our Treasury in 2000, is now only worth $50 and there are still two years to go on the loan. Foreign investors are less and less willing to fund us at that kind of loss, especially when they can buy us up at bargain-basement prices—as the Chinese and Dubai princes have been doing.

So much for blind pigs and peanuts, at least for the moment.

Until Tuesday, the central bank had been unable to reverse the downward slide of the U.S. economy despite a series of interest rate cuts and other steps to introduce liquidity into the system. The series of cuts to the federal funds rate had threatened to stoke inflation and, by driving down the value of the dollar, contributed to price rises in oil and other imported commodities. But these moves had done little to restore the confidence of banks, which have increasingly tightened the credit they offer to businesses and home buyers, even those with excellent credit.

Bingo. What might have restored confidence would be federal indictments, lengthy trials into the lending conspiracy and prison terms for some $100 million executives. Unfortunately for them, the prison terms would have been fairly evenly distributed among the CEOs of mortgage banks, investment banks, bond rating firms and hedge funds. Thanks to Bernanke, those are the very co-conspirators who are celebrating having just dodged the bullet of accountability.

The peanut again. This time under a shell in an economic shell-game (noun; A swindling sleight-of-hand game; victim guesses which of three shells a peanut is under).

All this was choking off already anemic economic activity. The government reported last week that the economy shed jobs for the second consecutive month. Consumer spending has softened, corporate profits have flagged, and both residential and commercial real estate have displayed new signs of stress.

In the past week, the vicious cycle accelerated. Bankers demanded that hedge funds and other investors holding troubled securities put up more cash to back them, prompting a sell-off of high-grade securities such as those issued by the mortgage giants Fannie Mae and Freddie Mac, to raise the money. Some investment funds, like one run by Carlyle Group of the District, could not meet these margin calls, and they defaulted. Rumors of trouble at one of the largest Wall Street banks, Bear Stearns, and speculation that other banks would soon disclose new, staggering losses, added to the mounting panic.

Some call it a vicious cycle, others characterize it as chickens home to roost or the horse gone after the barn door is closed. We have destroyed American agriculture by abandoning it to corporate interests, but the metaphor of the barnyard has not yet left us.

So the Fed moved Tuesday to auction up to $200 billion in Treasury securities, which will be available to large financial institutions if they put up collateral including highly rated mortgage-backed securities. The aim was to make Wall Street firms more confident about buying and holding these mortgage investments and provide an outlet for them. This could free up money for banks to lend.

Choke that one down, if you are able. Here you are (pretending to be an investor), holding junk bonds that were presented to you as AAA bonds. It said so right on the investment documents (a fraud by the bond raters) and here they are today, not worth a fart in a whirlwind (a compounded fraud, perpetrated across state boundaries, making it a RICO offense).

The Fed Chairman, Ben Bernanke, is going to take them off your hands--as collateral--for billions of dollars. You laugh hysterically and put the money under the mattress. This is supposed to make you more confident about buying and holding these mortgage investments, but you’re not fool enough for that, thank you very much. As for freeing up money, that’s safely under your mattress until your heart rate slows down and you venture forth yet again.

Helping liquidity? Forget about it, this shell game is about helping greedy investors who have done exactly as greedy investors are supposed to do—lost their investment.

After the announcement, the market for these highly rated mortgage securities showed signs of improvement.

I’ll just bet it did.

Economists and analysts largely praised the move, saying it goes further in directly addressing current problems than simply cutting a short-term interest rate, which adds to inflationary fears.

"They may have hit the right spot in the marketplace where the help was needed," said Bill Tedford, fixed-income strategist at Stephens Capital Management.

Cutting short-term interest rates is inflationary, but somehow printing $1 trillion a year is not. And Bill is right. They hit Bear Stearns exactly in the right spot, that spot that keeps them from going bankrupt as they deserve to do.

"The mortgage market has just been locked up," said Craig Elder, fixed-income senior analyst at Robert W. Baird & Co. "I'm not sure if it solves all of the problems, but I think it should free up a considerable amount of liquidity."

What we have (thus far) failed to lock up is the crooks and liars who created this mortgage market.

In announcing the program, the Fed also extended agreements with central banks in Switzerland and the European Union that allow them to borrow billions of more dollars from the Fed and inject this money into their financial systems.

What, me worry? Hey--it’s party time. Does the NATO Alliance extend to bailing out millionaires and billionaires? Unfortunately, Tse and Irwin had only analysts and strategists available for interview. Their analysis was understandably a little on the ‘wasn’t our fault’ side and their strategy leaned heavily on the ‘money under the mattress solution’ before the pension trusts find out their money is under that other shell.

Do not leave this Conversation With the Clueless without watchingThe Last Laugh--George Parr—Subprime on YouTube. It is not to be missed and explains the whole sorry mess in a mere nine minutes.

Enjoy.

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Media comment;

• Guardian-UK-Federal Reserve leads world central bank move by injecting $200bn
• Reuters-Economy.com says Fed action helps but not enough
• Wall Street Journal-Euro Hits Another New High As ECB Hints at Holding Rates
• Reuters-US STOCKS-Wall St slips on rethink of Fed plan, oil over $110
• The Age-Australia-Did Bernanke do it for Fannie Mae?