Friday, October 31, 2008
Thursday, October 30, 2008
Referring to Paul Pierson at Crooked Timber he answers 1978. It's what I mean when I write about the Reagan Revolution. I think he is right. I am just not sure why it happened that way. Go read Drum and Pierson.
Pierson is right (Or so I think.) The deregulations began in the late 70's, and so did the tax revolt represented by Proposition 13 in California. What caused those events?
If you can explain it, leave a comment. Or if you disagree. But any disagreements need to account for the deregulation of airlines and the truck businesses. Why then?
My bet is that there are a number of factors, including the backlash to the Civil Rights Movement, the backlash to Nixon's resignation and the backlash to the opposition to the Vietnam War. These social attitude factors were probably combined with and used by very wealthy individuals who objected to taxes on wealth (inheritance tax, taxes on capital gains, and progressive income tax) as well as to the regulations of financial institutions.
Add to that the social conservatives of the the Christian Coalition who became a critical part of the Republican Party in the 1980's and who completed the alliances that made up the Reagan Revolution. The evangelist Christians never liked the birth control pill, and abortion was anathema to them. Roe vs. Wade was a major issue that combined them politically. The extremely well-financed Discovery Institute has become a very powerful force.
These appear to me to be the combination that has been the Republican Party since 1978. This would make a great history dissertation. It would also quickly become a book.
But I haven't done the historical research that would confirm these speculations. As I say, let me hear from you , both agreements and disagreements.
Wednesday, October 29, 2008
Those who have too much of the goods of fortune, strength, wealth, friends, and the like, are neither willing nor able to submit to authority....On the other hand, the very poor, who are in the opposite extreme, are too degraded....Thus arises a city, not of freemen, but of masters and slaves, the one despising, the other envying; and nothing can be more fatal to friendship and good fellowship in states than this: for good fellowship springs from friendship; when men are at enmity with one another, they would rather not even share the same path. But a city ought to be composed, as far as possible, of equals and similars; and these are generally the middle classes.From Aristotle. Twenty-three hundred years ago Aristotle recognized this truth. Why do modern conservatives not understand it? A democracy and a successful economy both require a strong and economically healthy middle class. Greatly unequal income leads to a plutocracy, or as I have frequently written before, the Latin American model of society in which there are about ten percent very wealthy and 90 percent poor or struggling.
....Thus it is manifest that the best political community is formed by citizens of the middle class, and that those states are likely to be well-administered in which the middle class is large, and stronger if possible than both the other classes, or at any rate than either singly; for the addition of the middle class turns the scale, and prevents either of the extremes from being dominant. Great then is the good fortune of a state in which the citizens have a moderate and sufficient property; for where some possess much, and the others nothing, there may arise an extreme democracy, or a pure oligarchy; or a tyranny may grow out of either extreme — either out of the most rampant democracy, or out of an oligarchy; but it is not so likely to arise out of the middle constitutions and those akin to them.
The absence of an effective progressive income tax system and a strong inheritance tax leads directly to the Latin American model of society. The Latin American model fails both as a democracy and as an economy. Politically it becomes a plutocracy in which society is ruled by the wealthy because most power is held by members of wealthy families.
An even greater problem is that a plutocracy with a small middle class has a great deal less total wealth to distribute. Consider the basic macroeconomic equation.
Total Demand = Consumption + investment + government expenditure.
Consumption is about 70%, investment is about 20% and government is the difference, about 10%.
Gross Domestic Product is the same as total consumption. Everything that is produced is consumed at some price. And the goal of producers is to have their goods consumed. Producers plan to produce the amount of goods and services which will be consumed, and so they look primarily at consumers when they plan to produce and invest what is needed to do so. That's 70% of the markets. The consumers reliably spend most of their income on consumption. They are the primary market producers plan to produce for.
Some producers produce investment goods to supply the producers who supply consumers. These investment goods add to total consumption, but the planners who spend those investment goods base their planning on anticipated consumption. Since consumption is 70%, much of investment is also based on anticipated on that 70% if consumption, with a factor built in for changes in anticipated consumption. That is, if consumption is expected to increase, investment will increase based on that anticipated increase in consumption. Unfortunately, if consumption is expected to decrease, then investment will also decrease. So investment spending is largely based on anticipated consumption spending.
Investors spend their money unpredictably, based on how they think they can get better returns in their investments. Those expenditures are too unpredictable to be planned for, so the consumption of investors does not guide other investments. It is not part of the consumption that investors use to guide how they spend money. The key point is that only the 70% of GDP that is consumption predicts future expenditure, and that prediction of future expenditure is the key to how well the economy will function. Assuming constant government expenditure, if investors withhold investment, the economy will drop. If they increase investment, then the economy will increase.
Consumers are mostly the middle class. The poor are too poor to spend much. The middle class still spend most of their income on consumption items, but they can spend on education, health-care and business training. The more well-off consumers will also save money and invest it, but only the more well-off middle class will do so. They don't have that much investment money to spend.
The wealthy are investors. They don't have to spend most of their income to survive. Instead they spend what they need and want to spend as consumption, then invest the remainder to add to future income.
[h/t to Kevin Drum as he riffs off of Andrew Sullivan's sudden revelation. ]
Tuesday, October 28, 2008
Ah yes, us loony bloggers, fighting for universal health care, to protect social security, to keep our government from unconstitutionally spying on us, and to promote a sane foreign policy that doesn't unnecessarily cost us blood and treasure. You know, loony things supported by a majority of the (apparently also loony) American people.The bloggers represent America. The loonies are the ones who live inside the Washington D.C. village and think they know what is best for the rest of us.
Here's what too many people still don't understand -- there's nothing loony about the netroots. This isn't fertile territory for the McKinneys and Kuciniches of our party. This is fertile territory for the Howard Deans of our party -- sensible, pragmatic progressives who aren't afraid to be Democrats. Why? Because we're the nation. We're not clustered in DC and NYC, we're spread out over all 50 states, and we know better than anyone what it takes to win in our own backyards.
We didn't rally around Webb, Tester, Schweitzer, Trauner, Brown, Massa, Burner and so many other moderate Democrats because they were little Kucinich clones, but because they were perfectly suited for the states and districts they seek to represent. It's that simple. Howard Dean wasn't an anomaly. He was our ideal.
We are not the elites, we are America, and we're situated squarely in its ideological center. We proved it in 2006, and we'll prove it again next week.
Then Atrios (Duncan Black) describes how the near future is gong to work out after the election next Tuesday:
Enjoy The FightMost of the current Republican will do exactly that. They are going to move to the extremist crazy side at first. The reason is that they believe that they are losing because they were not sufficiently extreme. And they will tarnish the Republican brand even further, until moderates will start popping up and appealing to voters and defeating the crazies.
I think Beltway people on both sides are surprisingly bad at, well, politics. They tend to view things through the concept of the political spectrum as dictated by the Villagers, unaware that people in the rest of the country, aside perhaps from political junkies, don't really see things that way. It isn't actually Cokie Roberts' world.
Back in the days when Democrats were DOOOOOMED to be out of power for 3000 years, or whatever, the basic liberal blog critique of Democratic politics wasn't that Democrats needed to move sharply to the left, though on some issues they should somewhat, both on the politics and the merits. The basic critique was that they needed to distinguish themselves from Republicans. "Not as evil as them" just wasn't quite compelling enough. Highlight the differences, rather than blurring them. Don't run from issues like abortion because voters already "know" you're the babykiller who's going to make everybody gay marry. Lead by showing leadership. Stop running against the party. Improve the brand.
Bush and this bunch of Republicans have completely fucked the Republican brand. Social conservatism (ban abortion and contraception, stone gay people) just isn't popular enough nationally, and they've (for a second time) destroyed the idea of Republicans as "fiscal conservatives."
Conservatism will be alive and well in the next Congress, as the blue dogs will find common cause with Republicans trying to resuscitate their brand and thwart an Obama administration. Wars and bailouts of rich people will still be free, of course, but money for sick kids will be "fiscally irresponsible." Our best hope is that Republicans fight to out-crazy each other enough to tarnish themselves enough that even the blue dogs might not want to get near them.
How long will this take? I'd say about two elections. Losers don't last too long, and they will rather quickly be replaced by Republicans who can win elections. They will abandon the extremes, especially the extreme social conservative, Neo Conservative and Libertarian positions.
I do expect Democrats to do well this election, but they better not consider it a long term mandate. It won't be. It'll only last until the looniest of the Republicans destroy themselves and get replaced by more sensible Republican politicians.
Today Terry Gross interviewed Robert Draper. Here is her podcast of the interview "The many faces of McCain."
Monday, October 27, 2008
A rash of new job data show the labor market is now the worst it's been since the two prior recessions in 2001 and the early 1990s. One of the starkest indicators is that the number of people who have been unemployed for 27 weeks or more reached two million in September. That's 21% of the total unemployed, and approaching the prior peaks of about 23% in 2003 and 1992. The prospects of these job seekers grow dimmer as layoffs spread beyond the financial, home-building and auto industries.This is the key indicator right now. Unemployment is headed sharply downward and will continue for the near future for certain. There is no indication that anything will slow this downward direction any time soon.
Also in September, companies saw 2,269 mass layoffs -- in which at least 50 people are let go at once -- more than at any time since September 2001. And while the unemployment rate is at a five-year high at 6.1%, a broader measure of weakness that includes people who have stopped looking for work or whose hours have been cut to part-time is 11% -- the highest in 15 years.
What worries many economists is that labor markets usually reach their weakest point after a recession has ended. During the so-called "jobless recovery" following the 2001 recession, jobs continued to be shed after it was officially declared over. But the current weakness comes as the country heads into a recession that is now forecast to be deeper and longer than previously thought.
"No one thinks we are anywhere near the bottom of this, and we're already rivaling these other recessions," says Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think tank in Washington.
Sunday, October 26, 2008
The first slaves were sold into Virginia along with indentured servants in the 17th century. The purchaser bought the individual by effectively paying their ticket to the U.S. It was an investment in labor.
at first. The difference between slaves and indentured servants was that a slave had a black skin and indentured servants did not. When such a person skipped out on the owner before completing the contract it was clear which one was the slave, but the indentured servant was a lost investment in labor. Guess what the social system and the legal system did to protect the purchasers? Slavery of Black-skinned people became economically successful for some strange reason while indentured servitude sort of trailed off. But then in 1791 the Dominican slaves revolted and killed off almost every French person on the island of Haiti. Slave owners everywhere lived in fear of their slaves from then on.
The Southern plantation owners needed a labor force they could force to work for subsistence wages and move at will when the cotton growing land wore out. During the first half of the 19th century Cotton was the major single international commodity, much as oil is today. This was a major spur for British industrialism. The only way for Americans to get rich growing cotton was to farm it using slaves because the work was too difficult to hire labor at fair rates. In Texas any hired white laborer simply left to start his own farm on free land. Only slaves remained for plantation farming - and only plantation farming for the international market made a farmer wealthy.
A side effect of that, particularly in the older slave states, was that white labor was always competing with slave labor that worked at subsistence pay rates. The plantation owners played off the slave labor against the white labor, and the exchange was White Supremacy. Every White man was required to belong to the militia, and the primary purpose of the militia was to prevent slave revolts. White Supremacy didn't pay any better, but it proved to be a major social step up for white men.
People know what they are worth in the market because they look at what their next door neighbor earns. The system that holds labor rates down is not obvious. But White Supremacy is obvious. So the fact that a white guy was required to carry a gun to church on Sunday for fear of a slave revolt made the white guy superior to the Black guys. It was not clear to White Yeoman farmers that this was the situation created by the plantation-owner class, but it was. Before the Civil War, most of the wealthy individuals in the U.S. were southerners.
An interesting side note is that every white male attending college was required to study military science in the South because they were all part of the militia to protect their society from slave revolt. This is in part the source of the superior military capability of the South in the Civil War. But this was a form of keeping the wealthy in control of the society.
Public education was started primarily in the North, as were most of the earliest public colleges and universities. That, too, is a way of protecting the wealthy class. Make higher education a requirement of joining the upper class and make it expensive.
After the Civil War, the fact that the Yankees had destroyed the Southern culture was considered the fault of the Blacks, the carpetbaggers and the scalawags. But Congress was still controlled largely by the Southerners, so (with the assistance of President Andrew Johnson) local segregation laws were established.
Sharecropping replaced slave based plantations (not nearly as profitable as slave-based plantations.) The new wealthy elites became those who owned the company stores that sharecroppers were required to buy from. Usually these were people who still owned the land that was farmed. For cases when the segregation law wasn't enough, there were the terrorist night-riders and a sharp increase in lynchings. Voting by Blacks was effectively eliminated by law and terrorism. White Supremacy became more important than economics.
Industrialism and WW II were the big changes that revised the South. But the Southern social system permitted long-term congressional and Senate terms that more competitive parts of the U.S. did not. The South kept national power because of Congressional tenure.
We are still working our way out of this disastrous social system.
Yep. Palin is already being blamed for McCain's failure to win. Did she really believe that her presence would turn a disaster into a success? Why did she think they selected her?
Several McCain advisers have suggested to CNN that they have become increasingly frustrated with what one aide described as Palin "going rogue."As Digby points out:
A Palin associate, however, said the candidate is simply trying to "bust free" of what she believes was a damaging and mismanaged roll-out.
McCain sources say Palin has gone off-message several times, and they privately wonder whether the incidents were deliberate. They cited an instance in which she labeled robocalls -- recorded messages often used to attack a candidate's opponent -- "irritating" even as the campaign defended their use. Also, they pointed to her telling reporters she disagreed with the campaign's decision to pull out of Michigan.
A second McCain source says she appears to be looking out for herself more than the McCain campaign.
"She is a diva. She takes no advice from anyone," said this McCain adviser. "She does not have any relationships of trust with any of us, her family or anyone else.
"Also, she is playing for her own future and sees herself as the next leader of the party. Remember: Divas trust only unto themselves, as they see themselves as the beginning and end of all wisdom."
...it does take a real diva to accept a job for which you are completely unqualified and then blame the people who chose you for failing to properly prepare you for the job.Apparently Sarah Palin was chosen because she was so dumb that she would accept the strange idea that putting her on a losing ticket would convert it to a winning one. That really wasn't in the cards. What her presence has done was keep the fund raising for a failed Presidential campaign going to the end. But the presence of Sarah Palin was never going to make the McCain campaign into one that wins the Presidency.
The presence of Sarah Palin has two effects. First, it jacks up the fund raising for the end of the campaign and makes the McCain campaign appear competitive towards the end of the campaign. Second, it provides both John McCain and the conservative movement with a scapegoat for why McCain has failed to win the Presidency. The conservatives will blame Palin for their loss, while they continue to try to sell the (failed) conservative ideology.
Sarah Palin wasn't chosen for Veep and not given preparation. She was chosen because she was not prepared. She is the designated scapegoat for the conservative movement.
Saturday, October 25, 2008
Friday, October 24, 2008
With despair rising even among many of John McCain’s own advisers, influential Republicans inside and outside his campaign are engaged in an intense round of blame-casting and rear-covering — much of it virtually conceding that an Election Day rout is likely.The civil war developing within the McCain campaign has been clear for a while now. a previous post entitled The fracture points of the upcoming Republican civil war describes additional details.
A McCain interview published Thursday in The Washington Times sparked the latest and most nasty round of finger-pointing, with senior GOP hands close to President Bush and top congressional aides denouncing the candidate for what they said was an unfocused message and poorly executed campaign.
McCain told the Times that the administration “let things get completely out of hand” through eight years of bad decisions about Iraq, global warming, and big spending.
The candidate’s strategists in recent days have become increasingly vocal in interviews and conference calls about what they call unfair news media coverage and Barack Obama’s wide financial advantage — both complaints laying down a post-election storyline for why their own efforts proved ineffectual.
These public comments offer a whiff of an increasingly acrid behind-the-scenes GOP meltdown — a blame game played out through not-for-attribution comments to reporters that operatives know will find their way into circulation.
Top Republican officials have let it be known they are distressed about McCain’s organization. Coordination between the McCain campaign and Republican National Committee, always uneven, is now nearly dysfunctional, with little high-level contact and intelligence-sharing between the two.
“There is no communication,” lamented one top Republican. “It drives you crazy.”
At his Northern Virginia headquarters, some McCain aides are already speaking of the campaign in the past tense. Morale, even among some of the heartiest and most loyal staffers, has plummeted. And many past and current McCain advisers are warring with each other over who led the candidate astray.
One well-connected Republican in the private sector was shocked to get calls and resumes in the past few days from what he said were senior McCain aides — a breach of custom for even the worst-off campaigns.
...One well-connected Republican in the private sector was shocked to get calls and resumes in the past few days from what he said were senior McCain aides — a breach of custom for even the worst-off campaigns.
“It’s not an extraordinarily happy place to be right now,” said one senior McCain aide. “I’m not gonna lie. It’s just unfortunate.”
“If you really want to see what ‘going negative’ is in politics, just watch the back-stabbing and blame game that we’re starting to see,” said Mark McKinnon, the ad man who left the campaign after McCain wrapped up the GOP primary. “And there’s one common theme: Everyone who wasn’t part of the campaign could have done better.”
“The cake is baked,” agreed a former McCain strategist. “We’re entering the finger-pointing and positioning-for-history part of the campaign. It’s every man for himself now.”
A circular firing squad is among the most familiar political rituals of a campaign when things aren’t going well. But it is rare for campaign aides to be so openly participating in it well before Election Day.
It's not just the McCain election that is being recognized as close to lost. Other recent events demonstrate how badly the Congressional races are going:
Wednesday, October 22, 2008
[ h/t to TPM. ]
Why is there such an apparent bad feeling between McCain and Palin? Consider this example of Palin's total misunderstanding of what the vice President does.
[ h/t to TPM. ]
Palin is a real drag on McCain's popularity - as she should be. McCain's judgment in choosing Sarah Palin is highly questionable.
Monday, October 20, 2008
The Reagan Revolution was based on an alliance between the small government - total deregulation - free marketers; the NeoCons; the southern opponents of the Civil Rights Movement; and the Social conservatives. (There was overlap between the last two groups.) That alliance was held together in 1988 by Bush 41 because he was the direct descendant of Reagan, but he didn't keep the social conservatives in 1992. That loss, plus Ross Perot combined with the economic downturn in 1992 allowed Clinton to win that election in 1992. Clinton then won reelection in 1996 based on incumbency. But in 2000 Bush 43 brought back the social conservatives, which was a key element in "W's" narrow win. Essentially Bush 43 recreated the Reagan coalition. The margin of Bush 43's win in 2004 was his incumbency. But he had no legacy that passed the social conservatives to any Republican candidate in 2008. The big split in the Republican Party was and remains that between the social conservatives and the rest of the Republicans. The old Reagan alliance collapsed during the Republican Presidential primaries in 2008.
The social conservatives would not accept Giuliani (pro-abortion) or Romney (Mormon) under any circumstances. Nor did they find McCain acceptable, though he was not so repellent as Giuliani or Romney. Huckabee was the candidate for the social conservatives, but he never got close to a majority of the Republican voters. McCain was more acceptable to the non social conservative side of the Republican Party than Romney or Giuliani, so he ended up with the nomination by default. But McCain himself was going nowhere until he chose Palin (after the social conservatives vetoed Lieberman.)
Now we are coming down to the crunch, two weeks before the election. The McCain camp has essentially offered the social conservatives anything and everything they want (Palin was the key), so the social conservatives are beginning to come on board. But that capitulation to the social conservatives has lost the moderate Republicans totally. That explains the Colin Powell endorsement of Obama.
In essence the Republican Party of the Reagan alliance (the moderate and right-wing Republicans combined with the Christian Coalition) has collapsed. But it's a lot more complicated than just a far right and moderate right disagreement. It's basically the social conservatives demanding control of the Republican Party and the rest of the Republicans refusing to give it. The extreme right and the moderate right analysis is just part of the "rest of the Republicans." It does not explain what is happening to the Republican Party at all.
The civil war within the Republican Party is going to be between the social conservatives and the rest of the Republicans. Neither side will accept dominance by the other, and without the two combined the national Republican Party will not be able to win the Presidency.
The coming Republican civil war is going to be interesting. Unless something or someone unexpected comes out of the woodwork, the Republican Party is set to go into a perpetual minority status.
Sunday, October 19, 2008
McCain's evolution from war hater to aggressive NeoCon who invariably proposes that U.S. military conduct regime change.
He [McCain] first gained attention as a freshman congressman in 1983 by breaking with the Reagan administration to oppose an extension of the U.S. troop deployment in Lebanon.But then in the 90's McCain came under the influence of the NeoCons.
McCain also resisted the use of ground troops to end the 1990-91 Iraqi occupation of Kuwait, arguing that U.S. airpower could drive out Saddam's forces. He opposed invading Iraq — which at that time had chemical, biological and nuclear arms programs — because U.S. troops "couldn't tell a Shiite from a Sunni" and Saddam would be turned "from the bum he is" into a "hero" of the Arab world.
Two years later, McCain sponsored a resolution demanding that the Clinton administration immediately withdraw U.S. forces from Somalia after 18 U.S. troops died in a battle with al Qaida-training fighters depicted in the film "Blackhawk Down."
"The American people did not support the goals of nation building, peacemaking, law and order, and certainly not warlord hunting," McCain said in an Oct. 14, 1993, Senate speech on Somalia.
In the same speech, he decried as "baloney" the notion that a withdrawal would diminish U.S. prestige and insisted that Congress had the constitutional power to pull U.S. forces out of unpopular foreign conflicts if the president wouldn't.
The following year, he demanded that U.S. troops leave Haiti. "In Haiti, there is a military government we don't like," The New York Times quoted him as saying in July 1994. "But there are other governments around the world that aren't democratic that we don't like. Are we supposed to invade those countries, too?"
Yet when it came to Iraq, a far more formidable challenge than Somalia or Haiti, McCain embraced the neoconservative belief that a U.S. occupation would foster peace and democracy throughout the Middle East. He also backed the U.S. military's lead role in Iraqi reconstruction, argued that a withdrawal would weaken U.S. stature and, contradicting his statement on Somalia, asserted that only Bush — not Congress — had the authority to order a pullout. (More here and here.)
McCain's apparently ideological shift began after Haiti. His conversion coincided with his becoming president of the New Citizenship Project, a neoconservative advocacy group that was founded in 1994 by columnist Bill Kristol.McCain really appears to be a person who is most influenced by the last person he spoke to on the subject of the use of military force, and the NeoCons have made sure that they surround him in his campaign staff. It isn't like he made his shift away from war-hater as a result of 9/11. His change occurred much earlier, after the American invasion of Haiti. It's not clear what caused the shift in his attitudes, but whatever it was it has been consistent.
The group initiated the Project for A New American Century, led by Kristol and Robert Kagan, a former State Department official who now advises McCain's campaign.
It was a leading voice of neoconservative security policy and an advocate of using force to topple Saddam's and other anti-U.S. regimes. Its founding members included Vice President Cheney, former Defense Secretary Donald Rumsfeld, former Deputy Defense Secretary Paul Wolfowitz and other key Bush administration officials who pushed the Iraq invasion.
The committee, whose directors included Randy Scheunemann, now McCain's top foreign-policy adviser, was a key advocate for the 1998 Iraq Liberation Act, which McCain co-sponsored. The act funneled millions of dollars in U.S. aid to Chalabi's Iraqi National Congress and other opposition groups, and made "regime change" the U.S. policy. (More here and here.)
Initially an opponent, McCain became a strong supporter of the 1996 U.S.-led intervention in Bosnia, although some conservatives and U.S. military commanders questioned the country's importance to U.S. security. He also backed NATO's 1999 intervention in Kosovo, lambasting the Clinton administration for a restrained bombing campaign against Serbia, and urging NATO to mount a ground invasion, as well.
Air strikes "needed to be, from the beginning, massive, strategic and sustained," McCain said in an April 1999 speech. "No infrastructure targets should have been off limits. And while we all grieve over civilian casualties as well as our own losses, they are unavoidable."
Responding to the 9/11 attacks, McCain called for unleashing the "full fury of American power" against al Qaida and other radical Islamic groups and urged the Bush administration to make civilian casualties a secondary consideration.
"We cannot allow the Taliban safe refuge among the civilian population," McCain wrote in The Wall Street Journal on Oct. 26, 2001, of the U.S. intervention in Afghanistan. "We must destroy them wherever they hide."
His willingness to tolerate civilian casualties has proven to be off the mark.
Thousands of civilian casualties in Afghanistan and Pakistan over the past seven years are now recognized as a key reason for the Taliban's resurgence, as popular outrage has brought the insurgents fresh support, recruits and propaganda windfalls.
McCain also argued against fighting terrorism with "half measures," even at the cost of destabilizing pro-U.S. regimes in the Middle East. He insisted that using massive force would convince Islamic extremists and ordinary Muslims that resistance was futile.
"We must change permanently the mindset of terrorists and those parts of Islamic populations" who did not believe that the United States was prepared to "wage a relentless, long term, and, at times, ruthless war," he wrote in the October 2001 Wall Street Journal column.
McCain also used the 9/11 attacks to justify the ouster of Saddam. On Oct. 29, 2001, he said on CNN that there was "very clear" evidence that Saddam had played a role in the 9/11 attacks. There was no such evidence. As soon as there's a government of "some kind of minimal viability" in Kabul, "the next step is Iraq," he said.
In January 2003, as U.S. forces were fighting in Afghanistan and massing to invade Iraq, McCain proposed a unilateral U.S. attack on North Korea if other nations failed to join the "aggressive, multilateral isolation of" the isolated Communist regime.
"Spare us the usual lectures about American unilateralism," McCain wrote in Kristol's magazine, the Weekly Standard. "We would prefer the company of North Korea's neighbors, but we would make do without it if we must."
McCain has since shifted his posture, and he now backs negotiations to end North Korea's nuclear weapons program.
He's also shifted his position on Iran's defiance of U.N. demands to suspend its uranium enrichment program, which many experts believe is intended to make nuclear weapons.
After rejecting direct talks with Tehran, he now says that he'd hold them at the secretary of state level. He also advocates tougher international sanctions, including limiting sales of gasoline and other refined petroleum products to Tehran, a step that Bush and the European allies have ruled out as too harsh for ordinary Iranians
McCain also wants to slap financial sanctions on Iran's central bank, which Bush and the European Union have resisted, and he's refused to rule out the use of force.
"There is only one thing worse than a military solution," he said in a December 2006 speech, "and that ... is a nuclear-armed Iran."
McCain is not a man who should be trusted with the powers of the Presidency to start a war without anyone around to stop him.
The story that becomes clear is that Dick Cheney arranged to have himself chosen Vice President by George W. Bush, and from that position has spent the last seven-and-a-half years working to create a Monarchical role of"Commander in Chief" for the American President in which the President is the supreme decision-maker with almost no limitations by any other institution including Congress and the Courts. Except for earlier reports by Gellman this story has also completely escaped the notice of the American media.
The following is an except from the review of "Angler" by Steve Clemons.
Richard Cheney has sculpted the vice presidency in a way never seen before. He revolutionized an office that has turned many of its occupants into obscure eccentrics—one that Benjamin Franklin referred to as “Your Superfluous Excellency.” Cheney refused to do state funerals. Instead, he rerouted the in- and outboxes of power in the White House and turned himself into the nation’s most consequential political force. Whether George W. Bush approved or not, his VP animated most of the controversial policies that will define for decades the Bush II presidency. [Snip]This looks like a book that explains a great deal of the inner workings - especially the series of blunders - of the Bush White House since January 2001.
Cheney was put in charge of finding Bush’s VP, and he positioned himself for selection. He uncovered, through an exhaustive questionnaire process, the most private and intimate details of the lives of the other candidates. No one vetted Cheney, though, so nobody had anything on him. He had the goods on everyone else, and he got the nod from Bush.
The curious way in which Cheney maneuvered himself onto Bush’s ticket is one of many disturbing stories in this new and brilliantly researched account of Cheney’s adventures as Bush’s “No. 2.” Barton Gellman, Pulitzer-winning Washington Post journalist, examines the nuts and bolts of Cheney’s power apparatus. He shows how a mere vice president engineered a massive expansion of presidential power, knocked back the constitutional authority of Congress and the judiciary, helped launch an illegitimate war, developed a system for spying on America’s citizens, oversaw White House-sanctioned torture, and pushed official secrecy to unprecedented levels. We see how Cheney punctured America’s mystique as a benign and respected nation—how he shattered the moral, economic, and military pillars of American power. [Snip]
Gellman ... records previously unknown anecdotes about the inner workings of the administration and Cheney’s take-no-prisoners approach to winning policy battles. While Bush and members of his inner circle like Karl Rove seemed to be obsessed with the political machinations of their work, Cheney had a deeper purpose behind his crusades. For him politics and political gamesmanship, seduction, and intimidation were all about changing the nation’s policy course—all about principle. Cheney['s]... heart and soul were invested in the most important and controversial aspects of the Bush presidency, the policy areas he cared about most—terrorism, intelligence, national security, energy, environmental policy, tax and budget issues.[Snip]
Cheney and his abrasive lawyer David Addington wanted to bring on governmental crises and tensions with Congress in order to demonstrate the dominance and infallibility of presidential power, which they defined as the “unitary executive.” In Gellman’s framing, Cheney saw 9/11, discussions with energy lobbyists, and even torture policy as mere vehicles for asserting his vision of a near monarchical presidency.
Angler leads its readers to think that, even without 9/11, Cheney would have found triggers to justify his imperial expansion of presidential powers and official secrecy, his pugnacious disregard for international law, the huge defense spending increases, the war against Iraq—or whatever nation would show that America was an irresistible force—and the massive tax cuts. Gellman argues that Cheney was never an apostle of neoconservatism. He didn’t have a burning desire to establish democracy in Iraq. For Cheney, John Bolton, Addington, and others, Iraq was but a means to an end—a tool to expand presidential prerogatives. The same does not necessarily apply to Scooter Libby, a leading neoconservative thinker who strongly favored the invasion for ideological reasons.
This book is simply one of the scariest stories ever written about contemporary America. Cheney and Addington essentially hijacked the bureaucracy of national security and put themselves in the cockpit of government. In chapter after chapter, we read how Cheney set about constructing a secretive system of government and policymaking in which he was accountable to almost no one. We see, for instance, how Cheney pushed through the second round of tax cuts—a move that made even Bush uncomfortable—and how he undermined Christine Todd Whitman, then administrator of the Environmental Protection Agency, over laws regarding air quality. [Snip]
Cheney’s maneuvers, his angling inside the wide berth that Bush gave him, eventually created so much blowback from colleagues inside the administration and Congress that his office began to slide off its rails. Gellman relates a telling incident involving this reviewer and the vice president on the subject of North Korea, when it appeared that Cheney was unaware of President Bush’s intention to ask Congress to remove North Korea from the terrorist watch list. (I was not the source of this information: the New York Times reported the encounter between Cheney and me on its front page.) At an off-the-record forum, I asked Cheney about the possible change toward North Korea. The question was simple, but Cheney froze, staring at me for an awkwardly long time. He refused to answer, then left the stage. Gellman suggests that Cheney, who for years had been wired into every key national-security decision and able to paralyze nearly all policies with which he disagreed, had been left out—“not read in,” according to the lingo—of the policy-making process, the very tactic his team had so often used against their rivals.
Cheney was also frustrated on the Iran front, increasingly convinced that his team was losing in the interagency process to State Department officials R. Nicholas Burns, Condoleezza Rice, and Defense Secretary Gates. He felt his hawkish, more militarily focused strategy was being undermined by advocates of diplomacy. In a Salon article on Sept. 19, 2007, “Why Bush Won’t Attack Iran,” I disclosed that a senior member of Cheney’s team had said that the vice president was considering ways to “tie the president’s hands” and outflank those delaying a confrontation with Tehran—a policy that Cheney felt amounted to appeasement. Clearly, the Angler’s influence was declining. Some sources suggest that Cheney still wields great power and has of late been winning his battles again against Rice, Bellinger, Gates, and others. But he is certainly a long way from his halcyon first years in office, when he had virtually nothing stopping him.
[highlighting mine - Editor WTF-o]
Here's a question this review triggers. A great many people have anticipated that Bush will create some form of "October Surprise" between now and the Presidential election in order to get McCain elected President. But if Cheney has been the primary motivator of so many of the White House activities, is Cheney either interested or in a position to cause some kind of international incident in the next two weeks? What is the relationship between McCain and Cheney?
I have written a great deal about the Reagan Revolution, its underlying conservative ideology, and the manner in which the Reagan Revolution has led directly to the present credit crisis and Recession. Gellman's book, Angler: The Cheney Vice Presidency, suggests that behind the scenes of - and perhaps even mostly unrelated to - the current economic crises there has been a very different mechanism for many of the disasters that have been created by the Bush administration. I suspect that this book will be the basis for a lot of the defenses created by conservatives to avoid blame for the disastrous state that America has been brought down to. It won't wash. Dick Cheney and his acolytes have been a key element of Republican dominance for the last three decades and especially so since 2001. The Conservatives who will be wanting to distance themselves from him are the same ones who linked arms and supported his actions in lockstep, just as the social conservatives have. Conservatives are driven as much be social cronyism as they are by their myth of ideology. They just don't like to look at that aspect of being a conservative.
A Review of a book is supposed to sell people on the idea of buying and reading it. Steve Clemon's review has succeeded.
Rejected Republican Conservatives react by exposing their Fascist - McCarthyite roots. They provoke a backlash
This has always been an undercurrent of Republican campaigns, but in their desperation they are now making the Fascist - McCarthyite campaigning their primary effort to defeat Obama. It is resulting in a massive backlash against the conservatives. A prime example of the Fascist - McCarthyite rhetoric was Republican Congresswoman Michele Bachmann's rant on Matthew's Hardball the other day.
The reaction to Bachmann's extremist rant was swift. Steve Benen explains:
While many have condemned Bachmann's embrace of what can fairly be described as bordering on fascism, many of those offended by Bachmann have also thrown considerable support to Bachmann's opponent, former state transportation chief Elwyn Tinklenberg. The Democrat posted an item to Daily Kos last night, talking about the outpouring of support his campaign has received since Bachmann's shocking comments.Bachmann's rant is not an isolated case. The McCain campaign has begun a series of extreme robo-calls targeted at voters in swing states that even the New York Times has taken notice of. While McCain campaign spokesman Tucker Bounds is reported as defending them saying, “These calls are based on hard facts," they have received bipartisan criticism. One notable critic is Maine Senator Susan Collins whose spokesman Kevin Kelley stated "These kind of tactics have no place in Maine politics. Senator Collins urges the McCain campaign to stop these calls immediately." Yet the McCain camp has focused much of its entire campaign on Obama's alleged connection to Bill Ayers because of Ayers' connection with "The Weatherman" four decades ago. Today America is facing an economic crisis that closely resembles the Great Depression, and yet the Republicans and the McCain camp want to focus on Ayers.The last few hours have been nothing short of astounding. Since Congresswoman Michele Bachmann appeared on MSNBC's Hardball earlier tonight, there's been a deluge of support unlike anything we have seen. [...]
Our phones haven't stopped ringing. Many have called in to say they're sorry they can only send money and wish they could be here to help.
What kind of help are we talking about here? Tinklenberg raised over $488,000 in just 24 hours. That's pretty impressive.
The reaction to the incompetence and extreme nastiness displayed by the McCain camp is showing in the "dollar campaign." According to the Associated Press:
WASHINGTON – Barack Obama raised more than $150 million in September, a stunning and unprecedented eruption of political giving that has given him a wide spending advantage over rival John McCain.This money has allowed Obama to spend four times as much as on TV advertising as the McCain camp.
The Republican voter suppression efforts (such as this effort to intimidate newly registered voters in Ohio and this effort by the politicized Department of Justice to investigate the voter's registration efforts of ACORN.) are being widely reported. Again, the conservatives cannot win over the voters, so they are trying to stop them from voting.
The ability of the Obama campaign to raise unprecedented amounts of money is one example of the backlash against the conservatives. Another is this morning's announcement by Colin Powell on Meet the Press that he is going to vote for Barack Obama.
The Presidential campaign based on issues, never seriously engaged by the McCain camp, ended with the worsening of the credit crisis demonstrated by the failures of the major Wall Street investment banks and the Wall Street bailouts several weeks ago. McCain has not seriously addressed either the credit crisis or the no longer deniable Recession. The only Republican conservative campaign in October has been the Fascist - McCarthyite attacks on Obama that exposes the core nature of the Conservative ideology that has dominated American politics since 1980.
The backlash to the failure of the Reagan Revolution is already clear in the Presidential money campaign and the abandonment of support for McCain by prominent Republicans like Colin Powell. Much of this is currently a result of the extremist nature of the McCain campaign, but the current extremist nature of the McCain campaign is a result of the recognized failure of the Reagan Revolution and the conservative ideology.
It's going to be an interesting 16 days until the election. But that's just political froth. For two more weeks we will focus on the election, but after that the real fun is going to start. We are going to have to face the reality that the Reagan Revolution has created.
Friday, October 17, 2008
Just this week, we learned that retail sales have fallen off a cliff, and so has industrial production. Unemployment claims are at steep-recession levels, and the Philadelphia Fed’s manufacturing index is falling at the fastest pace in almost 20 years. All signs point to an economic slump that will be nasty, brutish — and long.So what can be done for the economy?
How nasty? The unemployment rate is already above 6 percent (and broader measures of underemployment are in double digits). It’s now virtually certain that the unemployment rate will go above 7 percent, and quite possibly above 8 percent, making this the worst recession in a quarter-century.
And how long? It could be very long indeed.
Think about what happened in the last recession, which followed the bursting of the late-1990s technology bubble. On the surface, the policy response to that recession looks like a success story. Although there were widespread fears that the United States would experience a Japanese-style “lost decade,” that didn’t happen: the Federal Reserve was able to engineer a recovery from that recession by cutting interest rates.
But the truth is that we were looking Japanese for quite a while: the Fed had a hard time getting traction. Despite repeated interest rate cuts, which eventually brought the federal funds rate down to just 1 percent, the unemployment rate just kept on rising; it was more than two years before the job picture started to improve. And when a convincing recovery finally did come, it was only because Alan Greenspan had managed to replace the technology bubble with a housing bubble.
Now the housing bubble has burst in turn, leaving the financial landscape strewn with wreckage. Even if the ongoing efforts to rescue the banking system and unfreeze the credit markets work — and while it’s early days yet, the initial results have been disappointing — it’s hard to see housing making a comeback any time soon. And if there’s another bubble waiting to happen, it’s not obvious. So the Fed will find it even harder to get traction this time.
It should be clear to the most extreme free market ideologues right now that the free market is frozen in place. we call it "the Credit Crisis." What that means is that no one who has money to lend dares lend it to someone who needs cash to operate their business because the lender has no clue which potential borrower is going to go bankrupt tomorrow morning and default on tonight's overnight loan. There is no free market solution to this problem. Worse, while the credit crisis freezes borrowing, the real economy goes into a downward spiral that feeds back into the very pressures that have frozen lending.
The solutions to the current economic problems are Keynsian. John Maynard Keynes laid them out in his 1936 book. Tax cuts will not work because there is no consumer demand for businesses to sell to because consumers don't have the money to buy with, and especially because consumers with good sense are not going to borrow money to jack up consumption spending this time around. The fear of economic collapse already prevents that. So - back to Krugman for the solutions:
In other words, there’s not much Ben Bernanke can do for the economy. He can and should cut interest rates even more — but nobody expects this to do more than provide a slight economic boost.This is ideologically very unpalatable to the Bush administration conservatives, which is why they have done so little that is effective to head off or ameliorate the current recession.
On the other hand, there’s a lot the federal government can do for the economy. It can provide extended benefits to the unemployed, which will both help distressed families cope and put money in the hands of people likely to spend it. It can provide emergency aid to state and local governments, so that they aren’t forced into steep spending cuts that both degrade public services and destroy jobs. It can buy up mortgages (but not at face value, as John McCain has proposed) and restructure the terms to help families stay in their homes.
And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.
The conservative ideology has to be thrown aside. It has caused the current economic problems, and it will only make them worse.
Thursday, October 16, 2008
I hope he enjoys his 15 minutes of fame.
- Joe owes $1,182.98 in back taxes in Ohio.
- Joe doesn’t believe in Social Security. "Social Security is a joke. … I don't need another set of parents. … Let me invest my money," he said.
- Joe is actually called Sam, and is registered to vote as Samuel Wortzelbacher. “We have his named spelled W-O, instead of W-U,” Linda Howe, executive director of the Lucas County Board of Elections, said in a telephone interview. “Handwriting is sometimes hard to read. He has never corrected it in his registration card.”
- Oh, he maybe is related to Charles Keating. What? No, that cannot be true, because that is insane.
- But he is definitely not a licensed plumber. “He’s basically playing games with the world,” Thomas Joseph, an official at Local 50 of the plumber’s union, based in Toledo, told the Times.
The chart originated at the web site Calculated Risk.
Paul Krugman makes a very important point about the rescue actions that Paulson and the administration are trying to set in place. They have acted too late to keep the economy from going into recession. Here's Krugman's exact quote:
This reinforces a point I’ve been trying to make: even if the rescue now in train succeeds in unfreezing credit markets, the real economy has immense downward momentum. In addition to financial rescues, we need major stimulus programs.What follows is my impression.
Paulson hadn't figured out that the credit crisis that was destroying his beloved Wall Street banks was going to require that he and the Bush administration take over those banks until the British government showed him the way and Paulson watched the market reaction. Even then he did so begrudgingly and with caveats which will probably make it slower and less effect than the bail outs the European bankers are conducting. At least that is what the European reaction to Paulson's actions predicts.
Paulson isn't going to initiate any stimulus actions until it is too late for them to be effective, either. He is a conservative banker who creates and sells deals, not an economic theorist who has a broad understanding of how the economy works and what it takes to change it. The difference in thinking between the two disciplines because obvious when the original "Paulson Proposal" was offered and it became clear that it was a bankers' proposal which no significant economist supported and many actively opposed.
Tuesday, October 14, 2008
Now actually this is quite ahistorical - as you would expect from an American. History in America is what happened last week, and last year never happened. But the renown British historian Erick Hobsbawm points out in his excellent book "The Age of Empire" that the first Great Depression occurred between 1873 and the mid 1890's. Sine America was still an agricultural economy with relatively little international trade outside cotton, this has generally escaped notice in America. But by WW I America had entered international trade in a big way, besides which there are still people around from the 1930's who can argue the severity of the Depression of the 1930's, so the earlier one Great Depression gets no real press.
Still, who am I to actually argue with the great comedian Jon Stewart?
Besides, Stewart's follow up to the above video, Clusterf#@k to the Poor House - The Decabox, is really outstanding comedy.
One pundit on one screen isn't enough? Add another - and another - and another - and another - and...
Is the Decabox enough? Do we need even MORE pundits
Please! Don't ask the unthinking TV "news" executives. This is another idea they don't need to hear. They won't think. They'll just try it!
They are TV executives, after all.
Oct. 14 (Bloomberg) -- Nouriel Roubini, the professor who predicted the financial crisis in 2006, said the U.S. will suffer its worst recession in 40 years, driving the stock market lower after it rallied the most in seven decades yesterday.Paulson made it clear today that he is being forced into recapitalizing the banks instead of just buying off the toxic loans, and he hates it. PRI's "The World" reports that Europeans have real doubts as to how effective the American actions to prevent/alleviate the credit crisis will be because of the slow and ideological reaction from Secretary of the Treasury Hank Paulson.
``There are significant downside risks still to the market and the economy,'' Roubini, 50, a New York University professor of economics, said in an interview with Bloomberg Television. ``We're going to be surprised by the severity of the recession and the severity of the financial losses.''
The economist said the recession will last 18 to 24 months, pushing unemployment to 9 percent, and already depressed home prices will fall another 15 percent. The U.S. government will need to double its purchase of bank stakes and force lenders to eliminate dividends to save them from bankruptcy, Roubini added. Treasury Secretary Henry Paulson said today he plans to use $250 billion of taxpayer funds to purchase equity in thousands of financial firms to halt a credit freeze that threatened to drive companies into bankruptcy and eliminate jobs.
``This will be the first round of recapitalization of the banks,'' Roubini said. ``The government has to decide to intervene much more directly in the provision of credit and the management of these companies.''
As Ezra Klein says, Pauson is not going to come out of the current crisis with much of a reputation for effective decision-making.
To say Hank Paulson has not done a good job during this financial crisis may be going too far. Since no one else has held this job during this period, there's relatively little compare him to. Maybe others would have made worse mistakes. But we can certainly say that he's proven eminently fallible. His decision to let Lehman Brothers collapse now looks like a catastrophic error. As Dani Rodrik says, "As bad as things were, what caused credit markets to seize up was Treasury Secretary Henry Paulson's refusal to bail out Lehman Brothers. Immediately after that decision, short-term funding for even the best-capitalized firms virtually collapsed and the entire financial system simply became dysfunctional." And Paulson made that decision over the objections of others, like Timothy Geithner, head of the New York Federal Reserve.Banking is a highly technical business. Political ideology is a risk bankers can afford only during very good markets. The political "free market" ideology as bought into by Alan Greenspan (an Ayn Rand Libertarian) and by Henry Paulson has led directly to to the current credit crisis because in large part Greenspan, depending on his Libertarian ideology, refused to apply the Federal Reserves' powers to regulate underwriting standards used by banks to issue mortgages. Similarly the bank bail-out bill demanded by Paulson only three weeks ago was inadequate because - for ideological reasons - it did nothing to recapitalize the banks. Neither of these poor decisions made for ideological reasons were the only reasons why the American and the international banking system are failing, but those decisions are strongly implicated in causing and delaying effective preventive regulatory reactions to keep the collapse from getting much worse than it had to.
Whether it was Lehman's collapse that turned a crisis of liquidity into a crisis of capitalization, Paulson also didn't see that capitalization had become the nature of the crisis. The powers he now promises to use to recapitalize the banks were powers he didn't want. He wanted to buy assets and address a liquidity crisis. He didn't include -- and in fact opposed -- a provision for the possibility that capitalization was the problem. Democrats gave him capitalization powers because they were listening to economists like Jamie Galbraith and Nobel prize winner (it's so fun to say that!) Paul Krugman. Now those powers are central to his strategy and public statements.
When the honest history of the worst recession since the Great Depression of the 1930's is written it will begin with a statement "The predictable working out of the anti-regulation philosophy embodied in the Reagan Revolution led directly to the massive Recession that started in 2008."
An economy cannot be based on primarily banking and finance. Those functions are themselves derivative of the underlying real economy. This was proven first by the British Empire and now again by the collapse of the American Empire. America's effort to outsource or abandon the real economy and replace it with banking and finance as the leading functions of the economy have now failed. Only bankers, Libertarians and conservative deregulators should be surprised.
The prove it we are now going into the worst Recession in four decades or more.
Over at Hullabaloo Tristero has posted both the video of the interview and his discussion and dissection of what was said. It is quite fascinating, something that should be reviewed repeatedly and learned from.
David Frum is a master rhetorician. The video shows David Frum at his best, making incendiary accusations and then in pulling every rhetorical trick in the book avoiding being pinned down and taking responsibility for what he says. It also shows Rachel Maddow carefully avoiding the many rhetorical and emotional traps Frum sets and turning them back against him. Tristero then carefully explains what happened. I can't add to what Tristero wrote.
This video and Tristero's explanation of what was happening in it is one of the most educational things I have seen in a long time. Go read it and watch the video.
Monday, October 13, 2008
Until this month, the man who is widely credited with starting the cyberwhisper campaign that still dogs Mr. Obama was a secondary character in news reports, with deep explorations of his background largely confined to liberal blogs.Andy Martin can be written off as an energetic paranoid delusional nut job, but those who use him to attack Barack Obama, like the corrupt FOX news, have their own agendas.
But an appearance in a documentary-style program on the Fox News Channel watched by three million people last week thrust the man, Andy Martin, and his past into the foreground. The program allowed Mr. Martin to assert falsely and without challenge that Mr. Obama had once trained to overthrow the government.
An examination of legal documents and election filings, along with interviews with his acquaintances, revealed Mr. Martin, 62, to be a man with a history of scintillating if not always factual claims. He has left a trail of animosity — some of it provoked by anti-Jewish comments — among political leaders, lawyers and judges in three states over more than 30 years.
He is a law school graduate, but his admission to the Illinois bar was blocked in the 1970s after a psychiatric finding of “moderately severe character defect manifested by well-documented ideation with a paranoid flavor and a grandiose character.”
Though he is not a lawyer, Mr. Martin went on to become a prodigious filer of lawsuits, and he made unsuccessful attempts to win public office for both parties in three states, as well as for president at least twice, in 1988 and 2000. Based in Chicago, he now identifies himself as a writer who focuses on his anti-Obama Web site and press releases. [Snip]
He prepared to run as a Democrat for Congress in Connecticut, where paperwork for one of his campaign committees listed as one purpose “to exterminate Jew power.” He ran as a Republican for the Florida State Senate and the United States Senate in Illinois. When running for president in 1999, he aired a television advertisement in New Hampshire that accused George W. Bush of using cocaine.
FOX used Andy Martin as the source of a so-called documentary on Barack Obama without mentioning anything about his history as a failed lawyer, perennial candidate for election, the fact that a federal judge found that he had so abused the federal courts that he has been declared "a vexatious litigant" who can no longer file legal actions without prior approval of the courts. Mr. Martin's violation of that court order led to the dismissal - with prejudice - of his law suit against Media Matters for allegedly slandering him by writing that Mr. Martin is an anti-Semite. In addition, Andy Martin was declared in contempt of court for filing the law suit in violation of the previous court order declaring him a vexatious litigant.
Andy's so-called research has no support outside his fevered brain, but FOX News could not find other negative material to us to attack the Democratic candidate for President. So FOX went with the rantings of an individual previously determined to possess a “moderately severe character defect manifested by well-documented ideation with a paranoid flavor and a grandiose character.”
It's not like FOX was unaware of this history of Andy Martin (originally named Anthony Robert Martin-Trigona.) Wikipedia has an extensive entry on Andy Martin, one easily available to anyone with a computer and the ability to Google. FOX pretends to be a news organization. They knew or should have known Andy Martin's history before using him as the source of their broadcast.
It is well-known now that there are lies, damned lies, and then below that can be found the the fevered propaganda swill of FOX TV. Their use of the baseless ramblings of Andy Martin to attack Barack Obama are a clear example of the garbage that is the stock in trade of FOX.
Sunday, October 12, 2008
RANKINGSThis is a very interesting report. Reuters describes the methodology here:
8. New Zealand
10. Malta 11. Hong Kong
15. South Africa
130. East Timor
131. Kyrgyz Republic
SOURCE: World Economic Forum Global Competitiveness Report 2008-2009.(For the full World Economic Forum report click on: here )
The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).Presumably the banks within each country are similar to each other, and the banks between countries have greater differences then the similarities of the banks within each country. The methodology of this survey clearly assumes that banks are characteristic of their respective countries. There is no way to verify or disprove this assumption based on a survey of the opinions of executives.
The survey clearly has two other drawbacks that can be discerned even in this Reuters report. First, the rankings are based on the opinions of executives. While executives can be expected to know how well they are treated by the banks, they are customers rather than bankers. Banks will conceal facts from their customers.
Second, using customer opinions makes the survey outcome-based. The report does not provide any explanation of why the banking systems get the scores they do. What are Canada and Australia doing that Libya and Algeria are not? Presumably the banking systems in the better countries are regulated better than those in the worse banking system. What is the nature of the improved regulation? The pdf file of the original report does ask the executives what factors the executives attribute the different results are caused by. But since these are presumably not bankers their opinions are not necessarily accurate.
It is an interesting report, however. Just rather limited.
It's pretty clear now that Obama is going to win the race for President. Polls show that he currently has over 270 electoral votes and probably well more. It's not guaranteed, but it is a good bet. So Thomma has discussed with Charlie Cook, Stuart Rothenberg and Larry J. Sabato what is going to happen to the Senate and the House races.
The Democrats took control of the House in 2006 as part of the reaction against George W. Bush and presently control it by 235 Democrats to 199 Republicans with one vacancy. Cook, Rothenberg and Sabato all concur that the Democrats will add somewhere between 15 and 30 more House seats this Fall. It's the Senate that gets interesting.
Twelve Democratic Senators are running for reelection, with only Mary Landrieu of Louisiana is some danger of losing her seat.
There are 18 Republican Senators running for reelection.
Five Republican Senators decided not to run for reelection.
|31||Allard, Wayne- (R - CO)|
|32||Craig, Larry E.- (R - ID)|
|33||Domenici, Pete V.- (R - NM)|
|34||Hagel, Chuck- (R - NE)|
|35||Warner, John- (R - VA)|
So what seats are the Democrats likely to pick up? (33) New Mexico and (35) Virginia are almost certain to go to the Democrats. Other threatening Democratic pickups are (28) Alaska, (31) Colorado, (17) Minnesota, (30) Mississippi, (29) New Hampshire, (27) Oregon, and possibly even (24) Kentucky and (20) North Carolina. Then even (15) Georgia is not out of the range of possibility with Saxby Chambliss ahead by a mere 3 points.
That's eleven possible pickups for the Democrats. Charlie Cook pointed out several days ago that when there is a sweeping change of party election as this one is shaping up to be, there is a tendency for all the contested seats to go to the same party. Ten wins and no loss in Louisiana would provide a filibuster-proof Democratic Majority in The Senate even if (as seems likely) Independent Party Senator Joe Lieberman changes party and joins the Republicans.
I wouldn't make anything close to an even money bet that the Democrats will get the net ten Senate seats this election, but I certainly expect it to be more likely than if you just took the odds on each race and combined them.
We can hope, can't we?
The real problem is that the world has been awash with with money created largely by bank lending through highly leveraged loans backed by financial assets that were created through the same highly leveraged process and whose value has been measured by mostly trades in mostly unregulated markets. When Bear Stearnes would borrow $30 along with $1 of their own money to buy financial instruments based on a few assets also leveraged 30 - 1 the whole set of transactions are based on borrowed money with no real margin for default. Also, the underlying assets are being highly overvalued because of all the bank-created money being used to buy them.
The highly magnified amounts of bank-created money has chased a relatively constant amount of real assets, like homes and commodities, creating financial bubbles that even further increased the amount of bank-created "wealth" and further jacked up the bubble prices. Because 70% of all loans in the global banking system come out of the very highly leveraged, unregulated and uncontrolled "Shadow Banking System" there is no protection for either the banks or the values their trades create in the case of loss of confidence in the system that results in a run on the banks. The Shadow banking system does not have access to the lender of last resort - central governments - when a bank run starts.
Then add poor underwriting and accounting lies to the unrealistic prices created by leveraged money bubbles, and the result is that no one knows what the underlying real assets are worth to begin with. The mortgage brokers creating the sub-prime mortgages were in many cases creating fictional mortgage documents that had no relationship to reality. The investors finally formalized this fact when they created the Alt-A so-called "Liar Loans" which required no verification of documentation. The equivalent action during the Dot Com Boom was to imagine a plausible story for a company, create a stock offering, and sell it as the next new Dot Com Company with no real research behind it.
The massively magnified amounts of bank-created money are looking for investments, and as the various other bubbles collapse the investors trying to invest their money are going into commodities like oil and gold. The result there is again a massive run up in prices for the commodities. Again, frequestly the investors have been borrowing money to add to their own money so that they can pay more for the commodities. Where do they get the money to borrow? The same unregulated banks who have been creating or trading the fictional mortgages and other credit documents for years.
Nouriel Roubini has been accurately describing the American and world economic situation for the last couple of years, and he continues to be quite pessimistic. Here, in his article entitled The world is at severe risk of a global systemic financial meltdown and a severe global depression, he describes what is happening at present:
The US and advanced economies’ financial system is now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof. There is now the beginning of a generalized run on the banking system of these economies; a collapse of the shadow banking system, i.e. those non-banks (broker dealers, non-bank mortgage lenders, SIV and conduits, hedge funds, money market funds, private equity firms) that, like banks, borrow short and liquid, are highly leveraged and lend and invest long and illiquid and are thus at risk of a run on their short-term liabilities; and now a roll-off of the short term liabilities of the corporate sectors that may lead to widespread bankruptcies of solvent but illiquid financial and non-financial firms.
On the real economic side all the advanced economies representing 55% of global GDP (US, Eurozone, UK, other smaller European countries, Canada, Japan, Australia, New Zealand, Japan) entered a recession even before the massive financial shocks that started in the late summer made the liquidity and credit crunch even more virulent and will thus cause an even more severe recession than the one that started in the spring. So we have a severe recession, a severe financial crisis and a severe banking crisis in advanced economies. [Snip]
The crisis was caused by the largest leveraged asset bubble and credit bubble in the history of humanity were excessive leveraging and bubbles were not limited to housing in the US but also to housing in many other countries and excessive borrowing by financial institutions and some segments of the corporate sector and of the public sector in many and different economies: an housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble are all now bursting at once in the biggest real sector and financial sector deleveraging since the Great Depression.
At this point the recession train has left the station; the financial and banking crisis train has left the station. The delusion that the US and advanced economies contraction would be short and shallow – a V-shaped six month recession – has been replaced by the certainty that this will be a long and protracted U-shaped recession that may last at least two years in the US and close to two years in most of the rest of the world. And given the rising risk of a global systemic financial meltdown the probability that the outcome could become a decade long L-shaped recession – like the one experienced by Japan after the bursting of its real estate and equity bubble – cannot be ruled out.
And in a world where there is a glut and excess capacity of goods while aggregate demand is falling soon enough we will start to worry about deflation, debt deflation, liquidity traps and what monetary policy makers should do to fight deflation when policy rates get dangerously close to zero.
At this point the risk of an imminent stock market crash – like the one-day collapse of 20% plus in US stock prices in 1987 – cannot be ruled out as the financial system is breaking down, panic and lack of confidence in any counterparty is sharply rising and the investors have totally lost faith in the ability of policy authorities to control this meltdown.
This disconnect between more and more aggressive policy actions and easings and greater and greater strains in financial market is scary. When Bear Stearns’ creditors were bailed out to the tune of $30 bn in March the rally in equity, money and credit markets lasted eight weeks; when in July the US Treasury announced legislation to bail out the mortgage giants Fannie and Freddie the rally lasted four weeks; when the actual $200 billion rescue of these firms was undertaken and their $6 trillion liabilities taken over by the US government the rally lasted one day and by the next day the panic has moved to Lehman’s collapse; when AIG was bailed out to the tune of $85 billion the market did not even rally for a day and instead fell 5%. Next when the $700 billion US rescue package was passed by the US Senate and House markets fell another 7% in two days as there was no confidence in this flawed plan and the authorities. Next as authorities in the US and abroad took even more radical policy actions between October 6th and October 9th (payment of interest on reserves, doubling of the liquidity support of banks, extension of credit to the seized corporate sector, guarantees of bank deposits, plans to recapitalize banks, coordinated monetary policy easing, etc.) the stock markets and the credit markets and the money markets fell further and further and at an accelerated rates day after day all week including another 7% fall in U.S. equities today.
When in markets that are clearly way oversold even the most radical policy actions don’t provide rallies or relief to market participants you know that you are one step away from a market crack and a systemic financial sector and corporate sector collapse. A vicious circle of deleveraging, asset collapses, margin calls, cascading falls in asset prices well below falling fundamentals and panic is now underway.
At this point severe damage is done and one cannot rule out a systemic collapse and a global depression. It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging market economies to avoid this economic and financial disaster. Urgent and immediate necessary actions that need to be done globally (with some variants across countries depending on the severity of the problem and the overall resources available to the sovereigns) include:
- another rapid round of policy rate cuts of the order of at least 150 basis points on average globally;
- a temporary blanket guarantee of all deposits while a triage between insolvent financial institutions that need to be shut down and distressed but solvent institutions that need to be partially nationalized with injections of public capital is made;
- a rapid reduction of the debt burden of insolvent households preceded by a temporary freeze on all foreclosures;
- massive and unlimited provision of liquidity to solvent financial institutions;
- public provision of credit to the solvent parts of the corporate sector to avoid a short-term debt refinancing crisis for solvent but illiquid corporations and small businesses;
- a massive direct government fiscal stimulus packages that includes public works, infrastructure spending, unemployment benefits, tax rebates to lower income households and provision of grants to strapped and crunched state and local government;
- a rapid resolution of the banking problems via triage, public recapitalization of financial institutions and reduction of the debt burden of distressed households and borrowers;
- an agreement between lender and creditor countries running current account surpluses and borrowing and debtor countries running current account deficits to maintain an orderly financing of deficits and a recycling of the surpluses of creditors to avoid a disorderly adjustment of such imbalances.
At this point anything short of these radical and coordinated actions may lead to a market crash, a global systemic financial meltdown and to a global depression. At this stage central banks that are usually supposed to be the "lenders of last resort" need to become the "lenders of first and only resort" as, under conditions of panic and total loss of confidence, no one in the private sector is lending to anyone else since counterparty risk is extreme. And fiscal authorities that usually are spenders and insurers of last resort need to temporarily become the spenders and insurers of first resort. The fiscal costs of these actions will be large but the economic and fiscal costs of inaction would be of a much larger and severe magnitude. Thus, the time to act is now as all the policy officials of the world are meeting this weekend in Washington at the IMF and World Bank annual meetings.
Thursday midnite update: A few hours after I had written this note the market crash that I warned about is underway in Asia: the Nikkei index in Japan is down 11% and all other Asian markets are sharply down. This reinforces the urgency of credible and rapid policy actions by the G7 financial officials who are meeting in a few hours in Washington and the need to also involve in such global policy coordination the systemically important emergent market economies.