Month: September 2008

Bad Money

by digby

If you didn’t get a chance to see Bill Moyers’ Journal last night on the financial crisis, take the time to watch it if, like me, you are trying to work your way through the details and get a sense of the scope of the problem.

He interviews Kevin Phillips at length about his prescient book Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism and it very interesting, if slightly scary.

Here’s just on exchange:

BILL MOYERS: So who do you trust anymore? I mean, you write in your book that the most worrisome thing is the extent of official understatement and misstatement, the preference for minimizing how many problems there are and how interconnected they are.

KEVIN PHILLIPS: Well, just to give you an example of how many there are, Alan Greenspan has finally decided to admit, you know, this may be one of those once-a-century biggies. Well, what makes it fascinating is that I sometimes use the description “seven sharks.” There are seven sharks in the tank with the economy.

And the first is financialization because we’re so dependent on this industry that’s sort of half lost its marbles. The second is that you have this huge buildup of debt, absolutely unprecedented anywhere in the world. The third is you’ve now got home prices collapsing. The fourth is you’ve got global commodity inflation building up.

The fifth is you’ve got flawed and deceptive government economics statistics. The sixth is that you’ve got what they call peak oil where the world is, to some extent, running out of oil. So it’s not just commodity inflation, it’s a shortage of oil. And then the last thing is the collapsing dollar. Now, whenever you get this sort of package in one decade, you got a big one. And when Greenspan says it’s a once a century, I think it’s another variation but on a par with the Thirties.

Yikes.

Phillips correctly says this is the consequence of a bipartisan experiment in fake laissez faire. But as Joe Conason point out, regardless of “partisan” affiliation, it is a consequence of modern conservatism’s prevailing orthodoxy:

Now that we’re all about to take on hundreds of billions or perhaps a trillion dollars in new public debt to redeem the nation’s super-smart corporate financiers, there is one thing I hope we can expect in addition to postponing the apocalypse. Will they all please shut up about the wonders of the unfettered free market and the horrors of big government?

For decades, the investment class and their mouthpieces in the conservative movement have been telling Americans that if only we repealed all those musty old New Deal rules and programs, then we could enjoy unprecedented prosperity. Repeated endlessly by the think tanks, magazines and academics of the right-wing machinery, this message eventually drowned out the reality-based ideas of the American liberal tradition. Although those were the ideas that had actually built this country over the past century, they were erased from public consciousness by a combination of amnesia and propaganda.

Amazingly, many and perhaps most Americans failed to perceive the deceptions in that propaganda, even after a series of horrific experiences with right-wing ideology run amok. We have been here before, after all — or at least we have been somewhere that looked a lot like this, and not so long ago.

If the conservative movement survives this with their free market fundamentalist cant intact, then we really will know that the post modern epistomology they’ve introduced these last few years has become so pervasive that even an economic crisis can’t penetrate it. And that scares me more than the crisis itself.

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Republicans And Their Goons

by tristero

There is still this bizarre perception among many Americans that Republicans are only a political party, not a gang of thugs in dreary ties. Chris Bowers begs to differ and I think he makes a damn good point:

An investigation is indeed necessary, but I am already pretty sure about what happened:

In August, protesters at the 2004 RNC successfully won police brutality lawsuits against the New York City police department.

So, a few days later, the Republican Party indemnified the St. Paul police for up to $10 million in the event that charges of police brutality would be brought against them.

Then, at the convention, the police went out and illegally beat up $10 million worth of progressives, including progressive media. It was a free beating for them.

In short, the Republican Party paid for $10 million of thuggery against progressives…

Basically, with no cause, police ran over and beat up some members of the progressive media. They did it because the money they will lose from civil suits over the matter has already been paid. So, of course the charges were dropped. There were no real charges. It was beating, paid for by the Republican Party, pure and simple.

There used to be a word for a political ideology that turns love of country into a vicious, fanatical nationalism. Their used to be a word to describe a political philosophy that elevates to the point of obsession a politician’s charisma over the substance of her/his ideas. There once was a word for a state that suppressed dissent and free speech by incarceration and violent beatings.

That word today is America.

h/t, Duncan.

Once, Just Once…

by tristero

It would be nice not to read a variation of this every single goddamm day:

Can McCain sell himself as a Wall Street reformer? His record shows the opposite, but the Republican has come out swinging, and Obama needs to fight back.

But no. Over and over again, we read how Democrats have foregone the attack, Republicans go for the jugular, then Democrats are so slow to react they wind up playing catch up and “need to fight back.”

Then, the polls show a tie – a tie, mind you, between a candidate who is knowledgeable, articulate, rational, and smart and one who is ignorant, tongue-tied, hot-headed, and dumb as a post. Then, a whole bunch of people come up with a whole bunch of elaborate reasons why a tied race is to be expected, is actually a good thing, the inevitable thing, and will inevitably turn around “as the Republican attacks turn voters off.”

The currently unfolding financial disaster has provided this country with yet one more supremely stark example of the sheer incompetence of Republican rule, as if 9/11, Bush/Iraq and Katrina weren’t enough (to name only three). And Democrats are playing defense?

In case you haven’t noticed, our politics are very weird.

The Deregulator

by dday

Nobody’s buying this reinvented John McCain singing the glories of government regulation of the financial markets and vowing to get the bad guys off Wall Street, are they? If they are, could you have them peek at this, from an article McCain wrote THIS MONTH for a trade publication?

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

McCain’s been a free-market fundamentalist for a long time. Or at least his advisers are; there is no economic battlefield you can bomb so he likely takes a laissez-faire attitude toward his own opinion as well as the markets at large.

As if the health care system weren’t already immoral enough, McCain wants insurance companies to come up with the same kinds of attractive “innovative instruments” that the banking industry was free to do, unencumbered by any oversight. Maybe they can create “MRI default swaps” or “collateral knee surgery obligations” or some other fun packaged security that could be sold to China. After all, why shouldn’t they have a say over whether or not you get your medication?

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Going For The Gut

by digby

I can’t honestly say that I’m prescient about much of anything, but I have said from the day she was nominated that her attitude toward animals was a serious weak point for Palin. It wasn’t about regular All American hunting. This was about her not caring if the polar bears drown and supporting aerial wolf hunting, which takes her way into the outer boundaries of the anti-environmental and gun culture. She is far from being mainstream on a whole host of issues, but this is one that creates a visceral, emotional reaction and shows just how extreme she really is.

It looks like that disturbing wolf hunting ad moves voters:

A new national focus group among 312 self-reported Democrats, Republicans and Independents, revealed that after viewing a new ad by the Defenders of Wildlife Action Fund regarding “Palin’s Wildlife Record”, there was moderate movement among all parties toward Barack Obama.

The study was conducted by HCD Research and the Muhlenberg College Institute of Public Opinion (MCIPO) on September 15, to obtain Americans’ perceptions of a new ad which questions Governor Sarah Palin’s record in regard to wildlife in Alaska.

“The ad which focuses on Governor Palin’s record regarding the treatment of wildlife in Alaska seemed to strike a chord with voters,” commented Glenn Kessler, president and CEO, HCD Research. “The recent ads from both parties have had little impact among voters. This is the first ad in over a month that seems to have broken through,” he added.

Among the study findings:

The ad earned Barack Obama a Political Communications Impact Score (PCIS) of 29.4 and John McCain received a score of 5.9, resulting in a net score of 23.5 for Barack Obama. The scores can be compared to a mean score of 9.3 for previously tested Obama ads and 7.5 for previously tested McCain ads. To date, the total mean score for all previously tested ads is 8.3

The most prevalent emotional responses reported from voters were “angry” and “disturbed” after viewing the ad.

It’s one thing to be a frontier gal who hunts moose in Alaska for food. But most people instinctively get that there’s something fundamentally wrong with this:

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Society of the Pwned

by dday

This has been a great week for the ownership society. Not only do we all own an insurance company, but now we’ve got ourselves hundreds of billions in bad debt. I don’t know what to do with it all first.

Kevin Drum writes the post I was about to write, about the other way you could have gone about righting the ship.

…if Uncle Sam can afford to spend a trillion bucks or so rescuing Wall Street, it would be nice if they could spend a trillion bucks shoring up all the poor saps losing their homes because they can’t make the payments on those option ARMs they were talked into buying during the boom years. We could do it if we wanted to, and the risk wouldn’t even be appreciably different from the Wall Street bailout. The feds would have to make distinctions (just as they will with overleveraged banks), and some homeowners would qualify for a rescue package while others wouldn’t. The ones who qualified would get loan relief, which most of them would eventually make good on, in the form of restructured financing. People would be helped, the subprime crisis would get attacked at its roots, and although it would cost a lot of money up front, in the long term the price might end up being fairly modest (by present-day brobdingnagian standards, that is). Moral hazard is an issue, but no more than it is for the bank bailout.

That’s exactly correct. If you stepped in to bail out homeowners and pay off their restated ARM rates, suddenly they would have more money to spend in retail. The “illiquid assets” that these banks were holding would suddenly have value. The market would go up across sectors because consumer-based businesses would see more robust growth. The economy would expand and the people would see the fruits of it instead of the bankers who mad bad bets in the first place. It may sound unfair, but I don’t think anybody would compare it unfavorably to what we’re seeing today.

There’s a chance that this wouldn’t work so smoothly, of course. But the real point is that it doesn’t get considered. And that’s because the new President and Vice President are the Treasury Secretary and the head of the Federal Reserve. They, like many economists, essentially view financial crises from the standpoint of the banks and the stock market, instead of those poor souls who put their hard-earned money into them. What’s more, Paulson used to run Goldman Sachs, and even if he isn’t collecting money in stocks from them, he has relationships with those who are.

There is no voice for taxpayers in a situation like this, and so nobody should be very surprised when taxpayers are left with all the burden at the end. The elites snap their fingers, shrug their shoulders and try again with the full backing of the federal treasury, and the workers see nothing but debt as far as the eye can see. This has been the reality in our country for all but only those few years after the Depression, after a global meltdown that could not be stopgapped. The big money boyz are a lot more sophisticated about protecting their own fiefdoms these days, but that doesn’t mean they can survive forever. They went to the edge of the cliff this week, and this temporary reprieve doesn’t mean they won’t fall over.

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Fictional Swingers

by digby

So, it looks like the Religion Industrial Complex managed to place another bit of propaganda in the NY Times.

Here’s Perlstein:

No one ever went broke underestimating the intelligence of front page articles in the New York Times. The excrescence entitled “Abortion Issue Again Dividing Catholic Votes” appearing in the September 17 Times (the same number featuring Institute for America’s Future’s full-page ad) opened by introducing us to Matthew Figured, a Sunday school teacher at the Holy Roman Rosary Roman Catholic Church in Scranton, Pennsylvania—a member of the classic swing voting bloc in a classic swing city in the classic swing state of Pennslyvania, a town where, it’s not unreasonable to believe, thousands of voters are on the bubble between voting for the Democrats because of Central Pennsylvania’s mounting economic anxieties, or the Republicans because of the Central Pennsylvania’s long-standing cultural anxieties. This Matt Figured, for one: he’s an economic liberal, down the line. But after his local bishop “plunged into the fray, barring Senator Joseph R. Biden Jr. of Delaware, the Democratic vice-presidential nominee, from receiving communion in the area because of his support for abortion rights,” the Sunday school teacher began leaning McCain. “People should straighten out their religious beliefs before they start making political decisions,” the Sunday school teacher explains to the Times . How well the Democrats honor Catholic voters’ antipathy to abortion, runs the article’s argument, may just determine the outcome of the presidential election. You would never know reading this article, though, that there is no objective basis for this conclusion whatsoever. The underlying narrative is simply made up, a figment of pundits’ fervid imaginations, fed by right-wing propaganda.

read on …

I’m sure this is part of the Times’ recent commitment to being useful idiots for social conservatives. But at least they could get the basic facts straight before they distort their meaning — as kind of a gesture to respectable journalism, if nothing else.

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Nonpartisanship For Dummies

by digby

President Bush unctuously lectured the nation this morning about how this crisis calls for non-partisanship — and Obama very generously complied. Meanwhile, McCain is out there lying again, taking Rove’s advice and trying to blame Obama for the Republicans’ failures:

During an appearance on Hannity and Colmes on Wednesday, Rove outlined what he thought would be the best counterattack for McCain to launch the opposition’s way: mainly, tie the current financial and housing market crisis to the Democrats and play guilt by association with Obama.

[…]

A day later, McCain echoed Rove’s advice. On Thursday evening, the Senator’s campaign released an advertisement declaring that Franklin Raines was an Obama economic adviser. “Shocking,” declared the ad, citing the mismanagement that occurred under Raines’ reign, as well as his large compensation package. Shocking, indeed. The Associated Press and other news outlets reported hours later that the claim was not honest. Raines had even told a senior McCain aide, in a private email, that he was not an Obama adviser.

Nevertheless, Rove’s charge made its way into Friday’s speech as well, where McCain criticized Obama again for turning to Raines, but also for initially tasking Jim Johnson, another former Fannie CEO, with heading his vice presidential search committee.

It was, it seems, shades of Rove.

“This CEO, Mr. Johnson, walked off with tens of millions of dollars in salary and bonuses — guess for what? — for services rendered to Fannie Mae, even after authorities discovered accounting improprieties that padded his compensation,” McCain declared. “Another CEO for Fannie Mae, Mr. Raines, has been advising Senator Obama on housing policy (chuckles); this even after Fannie Mae was found to have committed, quote, “extensive financial fraud” under his leadership.” Like Mr. Johnson, Mr. Raines walked away with — guess what? — tens of millions of dollars.”

What a pile of fetid, rotting compost.

I don’t think anyone besides kool-aid drinking GOP base voters will buy this, but you never know. McCain sounded like a cheap huckster this morning, trying to say that the man he has relentlessly belittled for being an empty suit is simultaneously pulling the strings that led to an epic financial crisis. I don’t think it tracks for anyone who isn’t reflexively tribal. You can say that both parties failed or you can say that Democrats are no better, but to try to pretend that they led this rapacious deregulation bonanza is truly laughable.

He also slammed Obama for having Raines involved in his VP search, which doesn’t seem like such a smart idea considering what his braintrust running mate said about Fannie and Freddie the other day:

“The fact is that Fannie Mae and Freddie Mac, they’ve gotten too big and too expensive to the taxpayers,” she said. “The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.”

Of course, she’s very reassuring on these mattersgenerally:(video)

Lemme tell you somethin’ that’s goin’ on right here in our nation that needs some shakin’ up and some fixin’…

Seriously, Maverick, STFU. Country first, remember?

Update: for all of you who think that when I wrote “Aunt Millie” I was disrespecting older women who preferred Hillary Clinton — get a grip. I was talking about a fictional Republican relative who has been brainwashed into thinking that Democrats want to raise taxes on everyone. It could just as easily have been Uncle Fred, or cousin Milton fergawdsake.

Honestly — this is getting ridiculous.

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Russian Roulette

by digby

Last night as I was reading all the econ blogs screaming “wtf,” I came across the news that the Russian stock market had been forced to close for a couple of days due to its own volatility. The markets are all global, so they never operate in complete isolation anymore, but this seemed rather newsworthy to this admittedly naive layperson. So it was with interest that I read this about the Russian market in the New Republic this morning:

There’s a saying oft heard in Russian schoolyards: “Go ahead and spit at me. Fill your mouth with shit and spit at me.” It may be an indelicate way of suggesting that one should cut off one’s nose to spite one’s face, but it provides some insight into why Russia’s economy, which grew by eight percent last year, has suddenly melted. The failures on Wall Street linked arms with falling oil prices to wallop a Russian market that, due to a combination of internal factors, had been sliding all summer. On Tuesday afternoon, trading on Russia’s two exchanges, the RTS and MICEX, was shut down after they plummeted 12 and 18 percent, respectively. Wednesday morning, weary Russian brokers gingerly tried their luck again, but after six and three percent downturns, the exchanges will remain shuttered till Friday.

A double digit loss is a devastating shock for any market, but Russia’s stock market has lost over half its value since the start of the year. In the first part of the year, investors were already jittery about the Kremlin’s meddling in the business world. And then things got really bad in August. Remember August? That was when Russia could not resist using Georgia’s attack on South Ossetia to retaliate with such force that the West could only marvel at Russia’s lack of discretion. When Putin responded to Western criticism, he was so defiant that Leonid Radzihovski, a columnist for the liberal online political journal Ezhednevny Zhurnal, characterized his government’s diplomatic position as: “If America wants it so much, let it come and make up with us.”

The whole world is in turmoil due to a variety of factors, not the least of which is that some major powers are currently being run by a bunch of macho jackasses. This is a big problem that is easily solved by voting — for intelligent, thoughtful, modern leadership that recognizes that the world is too complicated and too interdependent to be run by chest beating and schoolyard demonstrations of “strength.” The stakes are awfully high. Let’s hope the US, at least, wises up this time.

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Black Kettle

by digby

Limbaugh is so upset about the fact that Obama is turning back racial progress, that he’s writing op-eds in the Wall Street Journal about it. I’m not kidding:

I understand the rough and tumble of politics. But Barack Obama — the supposedly postpartisan, postracial candidate of hope and change — has gone where few modern candidates have gone before.

Mr. Obama’s campaign is now trafficking in prejudice of its own making. And in doing so, it is playing with political dynamite. What kind of potential president would let his campaign knowingly extract two incomplete, out-of-context lines from two radio parodies and build a framework of hate around them in order to exploit racial tensions? The segregationists of the 1950s and 1960s were famous for such vile fear-mongering.

You can picture the smirk on his face as he wrote it.

One might have thought that no major newspaper would even think of printing such disgustingly hypocritical nonsense, but one would have thought wrong. Because Limbaugh is cleverly using the language of the left to make a mockery of the cause of civil rights, it’s considered a-ok.

Limbaugh is a racist. He was fired from ESPN for making a racist statement on television, fergawdsake. But that’s the point — it’s so outrageously hypocritical, and is done with such confidence, that it leaves his adversaries sputtering. How do you deal with people who don’t even acknowledge the concept of hypocrisy?

It’s pure in-your face, know-nothing bullying, essentially defying all challenge and saying that truth, logic and reason are no longer operative — and daring you to say differently. It simultaneously degrades the real argument, creates a false equivalence and dog whistles to other racists that these topics are now up for grabs. It’s very powerful.

Just so nobody thinks Limbaugh has even the tiniest, baby leg to stand on:

LIMBAUGH: U.S. blacks — young U.S. blacks believe in politics, according to a new study. “Many U.S. blacks are as confident” — and we’re talking about the clean ones here, folks, I must stipulate this — young, clean U.S. blacks — “believe in politics. Many young U.S. blacks are as confident as their white and Hispanic peers that they can use politics to make things better, but a majority of young blacks feel alienated from today’s government.” Why would that be? The government’s been taking care of them their whole lives. Why would they feel alienated from — maybe “today’s government” means the Bush administration.

That’s the tip of the iceberg.

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