Saturday, September 20, 2008

Scary Stuff -- (the political lamp is lit!)

First off, if you go blog-trawling, here's one I find very cogent, by my friend Russ Daggatt, former owner of the Seattle Sonics, on the financial crisis.

This list of “factoids” is especially devastating, such as the clear conclusion that Obama’s fiscal plan would result in 1.2$Trillions less debt than McCain’s. Or that US Troops overseas donated 6x more to Obama; our troops and prefer his Iraq plan by 30 pts.

But Senator McCain is good at distilling his philosophy to simple one-liners. Last month “We must eradicate evil.” Last week: “We must eliminate greed!” Dang. The man is ambitious. Will he alter human nature with gene-splicing? Or wires in the skull?

But it gets better. McCain’s plan for the health care industry: ”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.”

Banking deregulation as a model for health care reform. Now that’s a winning campaign theme.

And better, still. Last week, the neocons became the biggest socialists in U.S. history, far and away surpassing FDR. As economics expert Daggatt puts it: “The US has performed the greatest nationalization in the history of humanity. By nationalizing Fannie and Freddie the US has increased its public assets by almost $6 trillion and has increased its public debt/liabilities by another $6 trillion.

“The US has also turned itself into the largest government-owned hedge fund in the world. By injecting a likely $200 billion of capital into Fannie and Freddie and taking on almost $6 trillion of liabilities from them, the US has also undertaken the biggest and most levered leveraged buy-out in human history, having a debt to equity ratio of 30 ($6,000 billion of debt against $200 billion of equity). This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China.

“So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).


Only it turns out, that was nothing! Today, Paulsen & Bernanke have announced plans to effectively create a National Mortgage Agency, assuming the bad debts accrued by a hundred thousand crazed gamblers, thieves and CEO-jerks who ought to be on a big chain gang, right now.

*** Only, by emphasizing buying the securities from banks, this bailout primarily benefits Wall Street. An alternative - lending directly to stressed homeowners, so that they won’t default at all - would help Main Street. It would stop the wave of foreclosures, keep homes off the market, and keep the federal government out of the business of managing millions of empty houses. Yet, somehow, that would be more socialistic. ***

But let’s reiterate the key point here, because it is time to rub it in the faces of your conservative friends, who refuse to lift their heads, when their country needs them to wake up! Not only has 95% of our national debt been squandered under Republicans, who always favor monopolists and let small business languish. Not only do the stock market, the economy, investment, production and business startups always do better under democrats. But the GOP has now led us into the biggest act of nationalization of business and outright socialism in American history, ever, making FDR look like a Adam Smith.

---
Oh, but who will they pick as scapegoat? It appears that McCain has zeroed in on one man -- albeit a deeply culpable one, Christopher Cox, head of the Security and Exchange Commission, whose principal job it has been to ensure that the skilled civil servants under him did nothing to impeded the greed festival. Well, before we have his head on a platter, let’s learn a little about this fellow.

My friend Joe Carroll offers this timely bit:

"Remember that the head of the SEC for the last 3 years has been Chris Cox, the former Orange County Republican congressman who instigated the famous 96 investigation of Gore (that led to larger penalties being recommended against the Republicans than the Democrats), and also the famous "Cox Report" (which was as full of innuendo and unproven charges as most claims by Joe McCarthy). I think that the Cox Report was the main factor that led to the 1999 redefinition of ALL spacecraft and support systems as munitions requiring State Department export control. My strong suspicion is that he did that to get at Bernie Schwartz of Loral, who was more dependent on Long March launches than anybody else in the US, and was on the board of governors of the Democratic party. That change has hurt far more than Loral. Cox's trademark is a naive single-minded focus on one issue, which leads to serious "friendly fire" damage to his friends and/or the rest of the country."Possibly Cox has learned from his experiences, and has been a good SEC chief. But I suspect not. In fact, I suspect that the melt-down is occurring now rather than after the election largely because fixes engineered next year would not be as generous as fixes engineered now."Fortunately, there may be time for some serious investigative reporting between now and election day."

Sure, he’s culpable. But the key fact is that he’s no isolated case. Was Cox ever even remotely qualified? Remember “Brownie” - whose qualification to run the Federal Emergency Management Agency was having run a few horse shows? What this typifies is the way major positions in the Bushadmin were selected entirely for the basest possible political reasons.

(Side bet! Has Bush promised to pardon Cox, in exchange for stoic silence? Someone tell him that Henry Waxman can offer a much better and more reliable deal, if he’ll squeal right now! In fact, the Wax-man may be one of the most important men in America, because of his power to offer immunity to singing henchmen.)

But far more telling is John McCain’s eagerness to let one human sacrifice suffice! Plus some vague arm-wavings about “reforming the mess in Washington.” But, again, this is not an isolated pustule! Look at the swarm of advisors surrounding McCain. Throw a rock in any direction and you’ll likely hit somebody just as culpable as Cox. And that is the thing that really should concern us.

----
All right. We’ve spoken of Senator McCain’s domestic policy advisory staff -- filled with lobbyists, aristocratic socialists and the same gang of thieves that brought us to this noxious state of affairs. But what about foreign policy? What about Senator Foreign Affairs’s War Cabinet?

OMG any group of “advisors” that includes John Bolton and Bill Kristol.... there are ten thousand implications, including the clear fact that the same Washington insiders that McCain rails against will stay in charge of foreign policy. But there is one fact, above all, that even neocons will have to admit. If John Bolton and Bill Kristol have anything to do with US foreign policy, their “up yours, foreigners!” attitude will finish off any alliances we had left. (Alliances? Neocons don’t need no stinking alliances!). Yup. we’ll start any McCain administration right off without a single reliable friend on the planet other than Albania.

Of course, the most prominent – (McCain’s top foreign policy advisor) – is probably the most radical of the bunch. Randy Scheunemann was a core participant in the lobbying, plotting and organized campaigns of deception that led America to war in Iraq. He was a close collaborator with Ahmad Chalabi through the 1990s. He helped draft the Iraq Liberation Act, which created the new funding stream for Chalabi's Iraqi National Congress. At the start of the Bush administration he signed on as Don Rumsfeld's 'consultant' on Iraq at the Pentagon. And then when the administration started cranking up the machinery for the propaganda campaign in favor of war he went back on the outside to form and lead the Committee for the Liberation of Iraq, to lead the press and lobbying campaign to make sure the war got started on schedule.

Remember, US intelligence later found evidence that Chalabi, in addition to foisting a bunch of bogus intelligence and lying informers on the US and pocketing a lot of US taxpayer dollars, had provided highly classified US intelligence to Iran. Scheunemann worked closely with Chalabi for years in his efforts to get the US into war with Iraq. He was also a go-between between Chalabi and McCain.

Again, this has to be pulled back from the arm-waving incantations, at which the neocons are masters. They mesmerize fear-drenched Red America with smoke and mirrors about how we've "won" in Iraq (as that country rapidly becomes a satrapy of the Iranians. (Indeed, I'm glad we'll leave Iraq a bit improved) No, the issue is simple: winners and losers.

Hammer home the obvious. Which four nations are vastly better-off after eight years of Republican US leadership?

Iran
Saudi Arabia
Russia
China.

Which once-dominant world power has plummeted in power, strength, influence and by every conceivable measure?

The United States of America.



Oh, here’s a final, disturbing thought. Of the cabal of outright crazy foreign policy monsters surrounding John McCain -- nearly all of whom are deeply loathed by the foreign service professionals, by our military officers and by our allies -- by far the most rational is Joe Lieberman. Brrrrrrr.

132 comments:

David Brin said...

ooops! Russ corrected me:

"I now a former owner of the Seattle Sonics (NBA – not Seahawks)."

All the better!

Anonymous said...

The Bailout act seems to give the Treasury Secretary nearly unlimited, unaccountable powers for no-bid contracts for the next two years:

"Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act."

also, from Sec. 2.

"(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;"

This is an unprecedented transfer of power from Congress to the Executive... Seems they had this bill waiting for just such a financial crisis. Shock Doctrine, before your very eyes.

David Brin said...

Someone clarify for me. This all seems aimed at soothing Wall Street and our international creditors. Socializing losses while never going after any of the now-private gains. Buying all the failing mortgages -- and putting government in the position of having to bill people and evict them from their homes, then expensively maintaining the empty houses.

But would not similar effects be achieved... plus helping Main Street... if we simply lent enough money (against 20 year bonds) to people with sub-primes, to let them meet their current debts and stay in their homes?

Wouldn't it also be simpler and -- well -- less socialist? Am I missing something?

tacitus2 said...

The bailout is indeed a most "unrepublican" thing to do. Two possibilities exist.
1.The current administration has collectively gone insane.
2.There was something very, very frightening behind a door that was starting to open.
I favor the second explanation.
Even the democrats are making only minor partisan points over this.

I have read as much as I can on the topic, and I am by no means a rookie investor.

It appears to me to be another manifestation of living beyond our collective means. Ludicrously inflated real estate prices create phoney assets to balance our short sighted spending.

And it is politically a big winner. Lets combine the appeal of pro-business plus the appeal of a home for all blue collar voters!

Incidentaly, opensecrets.org is a fine, apparently nonpartisan source of info. Here is some info on recent newsworthy companies.

Biggest recipients of donations from Fanny and Freddy?
Senators Dodd, Obama, Kerry in that order. McCain is 62nd on the list.

Biggest recipients of donations from Lehman Bros?
Sens. Clinton, Obama, Schumer,Dodd.

Dodd btw is Chairman of the Senate Banking, Housing and Urban Affairs Committee.

AIG? No detailed list I could find, but for the 2008 election cycle their donations went 66% Dem and 34% Repub.

Now, some of these amounts were not huge by the standards of the campaign overall,Lehman gave Obama $395k and McCain $144k.

But this was not just 'cause they liked 'em. It was for past services rendered or future services hoped for. And to a real extent, this is just earnest money, sort of the equivalent of a chaste kiss because mom and dad might be watching. The real action comes later, I imagine in the form of board positions, donations to Pres. libraries, jobs for your friends.

Its a mess, folks.

But maybe its better we start getting a few shocks now, this kind of stuff only gets worse over time.

Tacitus2
(note, I am by no means excusing Bush or the administration, it happened on his watch)

Woozle said...

tacitus2: OpenSecrets looks like a killer site! I'd heard of it, but hadn't actually tried to use it.

Do you have links to the pages showing the FM/FM and Lehman donations to the folks you mentioned? Just looking at Fannie Mae, I don't even see Obama -- though I do see Lehman on Obama's donor list...

David Brin said...

Ouch. That is the first aroma of influence-buying I have heard of re: Obama. $350k????? that is a ton of money. That figure can't be right.


In any even, one whiff does not overcome the fact that there's no sign of any quid pro quo. ever. and the chief folks BHO owes are those who sent in $20. In fact, have you sent in your $20 yet?

ANY of you? (Other than Stefan, whose probably mortgaged his house. The guy takes civilization very personally. ;-) Seriously fellows. The moment is now.

But no, Tacitus, there is a third theory. The kleptos have learned. The best time to lay seeds and set back doors in place for their NEXT raid is while people are furiously trying to clean up this one. It's what they did after the S&L. And every other scandal.

You can be damned sure this "cleanup is designed foremost to safeguard their ill-gotten gains and secondly to leave the window unlatched for next time.

tintinaus said...

Checking out Obama's top contributors and their history of giving over time, it looks like business as usual. You give money to both, but you give more to the guys you think will win next time. All of the doners with history(except for Time/Warner and Goldman Sachs) have at one time or another given more to one or the other parties depending on the political wind.

Travc said...

A new "National Mortgage Agency"... so an agency that can buy mortgages from banks (and now non-bank banks), freeing up assets for further lending. Sounds like a reasonable idea, but we should give it a more catchy name like Fannie or something...

Who privatized Fannie and Freddie? Can we imprison or at least exile them to a small island now? They may well be dead... so I guess defiling their graves might be the best we can do.
--

Anonymous, thanks for the info on the bailout act... scary stuff.
Do you have a link?
--

Dr Brin, I think you are indeed correct about the effects of bailing out the homeowners more directly. In fact, over a year ago some folks (even in congress) were arguing for various measures to this effect. Instead of just paying off the homeowners, allowing judges (and/or arbiters) to renegotiate mortgage terms was one good idea.

Such renegotiation powers would have made the mortgage backed debt holders eat some losses, but would have stabilized the asset values and returned liquidity (since there would actually be a rational value everyone could more or less agree on).

Even if the government bought all the mortgages before renegotiating them, the cost was estimated at about what we are facing now (before the new National Mortgage Agency idea). The amount of eventual losses would be pretty much guaranteed to be lower since the vast majority of those renegotiated mortgages would actually have been paid off eventually.

Our current course of action is looking more and more to be unbelievably stupid. It could just be an emergency amputation because we waited too long... but if we still refuse to address the infection (the wonky mortgages and resulting foreclosures combined with 'exotic instruments'), then... well a massive scam to loot the treasury becomes the least implausible theory.

BTW: Obama was one of those seriously arguing for these sorts of bottom-up bailouts (along with more sane regulation) over year ago.

PS: Looking at contributions to politicians from corporations is tricky. You have to remember that the contributions are actually from individuals in employ of the company (the company itself can't directly contribute). So those contributions are a mix of honest individual donations and donations on behalf of the company (technically illegal, but they happen)... the mix/ratio depends a lot on the culture of the company and who within the company gave how much. (A handful of 'maxed out' contributions is much more suspect than a lot of smaller contributions.)

William_Shatner said...

I was just reading Daggat, and was going to recommend him here. The best laugh all week; "It's inspiring to know that John McCain has a plan to end greed. I just hope it doesn't distract him from his mission to defeat evil."

And Rush Limbaugh, daily, makes quips that Obama thinks he is Jesus. You know, Jesus just attempted to present some great ideas of hope to the masses, he was also a do-gooder hippy with a "yes we can attitude," so perhaps Limbaugh is confused with Obama actually promoting Christian ideas -- I'm sure Rush is unfamiliar with this behavior.

Jesus never said he would defeat evil and greed (well, at least according to the Gospel -- if the NSA could help us out with more intel on that, it would be great). I think McCain is slightly more mighty than a Messiah.

William_Shatner said...

Brin said...

But would not similar effects be achieved... plus helping Main Street... if we simply lent enough money (against 20 year bonds) to people with sub-primes, to let them meet their current debts and stay in their homes?
"


This would NOT help the wall street firms. The difference between what is happening now and the previous Republican Great Depression (before that, they called themselves the Whig party, and nobody had a concept of Depression), is that the Robber Barons will not feel the pain.

Not only do Robber Barons get away with not paying for their "mistakes" -- they also never, ever get prosecuted.

I really hope this time we can. I'm going to be all over Obama if he just wants to move on and let the country "heal" -- screw that. I want the heads of people sitting on pikes in the market. I want rich people to remember with fear like they remember the French Revolution. The "law and order Right" always talks about punishment in the Prison systems as "deterrence." You know, deterrence works when people plan ahead -- unlike meth heads holding up a convenience store.

I think deterrence and tough love can work on the elite much better. They seem to learn from their mistakes. Yeah, next time steal more and don't leave witnesses -- that will be the lesson they learn if we don't prosecute these SOBs.

The ONLY way to fix our capital system is CEO's going to prison -- it would restore confidence in our financial markets. Which is the FIRST problem that needs fixing. Because nobody is going to invest in America if they pay for these failures with funny money.

William_Shatner said...

From; http://market-ticker.denninger.net/archives/586-Welcome-To-The-USSA.html

"
"The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.

Making matters worse, according to Mr. Pickard, who helped write the original rule in 1975 as director of the SEC's trading and markets division, is a move by the SEC this month to further erode the restraints on surviving broker-dealers by withdrawing requirements that they maintain a certain level of rating from the ratings agencies."

Yep - the SEC was not only involved but basically caused this mess.
"


So let's put Goldman Sachs and Morgan Stanley in our dead pool.

David Brin said...

Krugman on the proposed deal:

http://krugman.blogs.nytimes.com/2008/09/20/no-deal/

tacitus2 said...

www.opensecrets.org It is a somewhat cumbersome site.

rather than link specifically I would encourage you to browse. The "heavy hitters" section shows who the biggest donors are and who they like. Most of the recent stuff on Lehman and the Fannies comes through the news and analysis section. Look under the article titled Brothers Grim.

btw, had a beer, ok, more than one, with a very partisan democrat friend tonight. We laughed, agreed that it was a very historic election, and wished the best for whoever wins. And had another beer.

Tacitus2

Stefan Jones said...

Surprise surprise! Banking industry lobbyists are already trying to make the bailout as painless to them as possible.

Helping people handle their exorbitant mortgages? No! A thousand times no! That would be rewarding the undeserving fools who got us into this position!

The bankers and shlock-mortgage salesmen and the MBAs who spun heavily leveraged castles in the sky . . . why, they're like the boys on the football team! Agressive go-getters whose eye is always on the prize! They're our boys! Part of our team!

And they make one mistake after winning season after winning season, and you want to punish them? You got no goddamn team spirit, you book-reading liberal commie! Shame! Shame!

* * *

"Other than Stefan, whose probably mortgaged his house."

Heck, I rent! All my co-workers got big houses when they were transferred from the Bay Area to Oregon. I put off a decision . . . and man, after hearing about what they go through to keep things neat and tidy and non-leaking, I'm really glad. My monthly rent has gone up only $98 after six years.

The $500 I sent to the Obama campaign is two months of what I'm saving toward my next car. I buy cars with cash; I had my last one 13 years!

Stefan Jones said...

Something I have to share, that reinforces why I'm glad I rent, and the insanity of our housing industry.

I live on the border of a "new urbanism" community. Upscale homes (townhouses, single-family, and duplexes) and boutique retail built next to a light rail line. A good idea, in theory.

I walk my dog through the area every day. When I moved in six years ago the duplexes were just being completed. Now, they are being stripped down to the particle board to get at the rot within.

There are whole buildings being stripped like that. They're fancy looking and nicely appointed, but they were put up hastily with contract labor. The proper moisture barriers weren't put in, and mold and cracks followed.

The homeowners in this area were lucky to have bought from a developer who was still around to be sued.

* * *

I used to roll my eyes and sneer a bit when a writer in the Whole Earth Review used the word "sustainability." It seemed so twee and precious!

Sustainability is something we should be thinking about right now.

We can't go on this way. It isn't working.

zorgon the malevolent said...

Guys...

Nobody here seems to grasp the magnitude of what's going on.

The Wall Street implosions so far have been small change. A few trillion. Fannie Mae and Freddie Mac, 5 trillion, AIG, about 1 trillion, the rest, less than a trillion.

That still leaves 516 trillion dollars of leveraged unregulated credit default swaps and other exotic derivatives out there hanging over the economy. We're talking about a shadow economy here that's much larger than the ordinary economy we see. It's kind of like cosmology, where the visible matter we can see through telescopes makes up only 4% of the universe.

One small sign of the changing state of the globe's "sole superpower" is that, even before banking institutions started to tumble off walls like so many Humpty Dumpties, the International Monetary Fund, that dominatrix of global capital, was planning to pay Washington a working visit. This is the sort of thing you expect, with great trepidation, if you're Haiti, or Pakistan, or Malawi, or Argentina on the brink of financial meltdown -- but the United States? Nonetheless, according to NPR's David Kestenbaum, "The U.S. Treasury says America has now agreed to get a stability assessment from the IMF. The announcement didn't get much attention, but officials at the IMF expect to start examining U.S. finances in the next couple [of] months."
Link.

This is huge. For the IMF to do a "stability assessment" on the U.S. financial system is unheard of. That's the sort of thing you do with Zimbabwe or Zaire. Not the biggest economy in the world.

Here's the reason for that stability assessment:

Credit default swaps are not standardized instruments. In fact, they technically aren't true securities in the classic sense of the word in that they're not transparent, aren't traded on any exchange, aren't subject to present securities laws, and aren't regulated. They are, however, at risk – all $62 trillion (the best guess by the ISDA) of them.
Fundamentally, this kind of derivative serves a real purpose – as a hedging device. The actual holders, or creditors, of outstanding corporate or sovereign loans and bonds might seek insurance to guarantee that the debts they are owed are repaid. That's the economic purpose of insurance.
What happened, however, is that risk speculators who wanted exposure to certain asset classes, various bonds and loans, or security pools such as residential and commercial mortgage-backed securities (yes, those same subprime mortgage-backed securities that you've been reading about), but didn't actually own the underlying credits, now had a means by which to speculate on them.
If you think XYZ Corp. is in trouble, and won't be able to pay back its bondholders, you can speculate by buying, and paying premiums for, credit default swaps on their bonds, which will pay you the full face amount of the bonds if they do actually default. If, on the other hand, you think that XYZ Corp. is doing just fine, and its bonds are as good as gold, you can offer insurance to a fellow speculator, who holds the opinion opposite yours. That means you'd essentially be speculating that the bonds would not default.
You're hoping that you'll collect, and keep, all the premiums, and never have to pay off on the insurance. It's pure speculation.
Credit default swaps are not unlike me being able to insure your house, not with you, but with someone else entirely not connected to your house, so that if your house is washed away in the next hurricane I get paid its value. I'm speculating on an event. I'm making a bet.
The bad news is that there are even worse bets out there. There are credit default swaps written on subprime mortgage securities. It's bad enough that these subprime mortgage pools that banks, investment banks, insurance companies, hedge funds and others bought were over-rated and ended up falling precipitously in value as foreclosures mounted on the underlying mortgages in the pools.
What's even worse, however, is that speculators sold and bought trillions of dollars of insurance that these pools would, or wouldn't, default! The sellers of this insurance (AIG is one example) are getting killed as defaults continue to rise with no end in sight.

And this is only where the story begins.
What is happening in both the stock and credit markets is a direct result of what's playing out in the CDS market. The Fed could not let Bear Stearns enter bankruptcy because – and only because – the trillions of dollars of credit default swaps on its books would be wiped out. All the banks and institutions that had insurance written by Bear would not be able to say that they were insured or hedged anymore and they would have to write-down billions and billions of dollars in losses that they've been carrying at higher values because they could say that they were insured for those losses.
Link.

Dr. Brin's suggestion that the government just gives new loans to the people with all the foreclosed houses sounds superficially reasonable, but once again it illustrates why he shouldn't discuss economics. Because it's not that simple.

A lot of money was lost on foreclosed houses -- money lost by the banks who loaned it, and equity and down payments and mortgage payments lost by the people who bought those houses and then defaulted when the balloon payments kicked in even though their houses had plummeted in value.

But that's just the tip of the iceberg. A whole lot more money was lost by banks and hedge funds and other giant financial instutitions who used CDSs and CDOs and all kinds of other exotic financial derivates to bet on those houses. In effect, the big financial institutions were using the housing market like a stock market -- they created all these exotic CDS and CDO and other derivative instruments, and then placed big bets on them after running up huge margins (in effect -- actually, the CDSs were highly leveraged, but it has the same effect as buying stocks on margin).

As long as the housing market kept booming and interest rates stayed low and globalization kept rolling along creating greater efficiencies in American companies, the U.S. economy could show great numbers on paper and the bank's mortgage loans looked fabulous...on paper.

But it was unsustainable. The housing markets all around the country eventually wound up pricing so much of the population out of the ability to buy a house that loan officers had to create dodgier and dodgier paperwork to get people who were less and less able to afford a house into those houses. At the same time, globalization as it is currently being mismanaged outsourced and downsized so many middle class jobs that eventually the U.S. economy hit a brick wall and the average family's income dropped so much that the pool of buyers for all those homes dried up.

In effect, it was a giant Ponzi scheme. The people who got into the real estate market flipping condos early did great. They made huge amounts of money. But in order to keep it going. house prices had to go higher and higher and the U.S. economy had to keep showing better and better numbers -- and the only way to do that was to keep outsourcing until the middle class got so eroded it could not longer support the U.S. economy.

This gigantic government-backed bailout isn't designed to pay off all the exotic derivatives that have gone bad. It isn't nearly large enough for that. This bailout is designed to comfort the global financial markets and unfreeze interbank lending. Without that, the entire world financial systems locks up and flames out because nobody would be willing to make even overnight loans to other financial institutions for fear of losing their money.

Time will tell if it works.

For those who worship and adore free markets, this is Benjamin Graham's "Mr. Market" in all its psychotic frenzy. Graham pointed out that Mr. Market never gets it right -- Mr. Market always wildly overreacts, or foolishly discounts valid information. Mr. Market always either insanely overshoots fair value, or bizarrely undershoots it. In the real world, Hayek was foolishly and ignorantly wrong because investors don't act rationally. The market is not a good method of pricing assets because investors crazily overlaue them on the way up, creating bubbles in which assets are absurdly overpriced, and then investors go berserk hysterically undervaluing assets on the way down, creating crashes in which assets with real value become effectively worthless because everyone is too scared to bid for them out of fear of what's hidden on the balance sheets.

Investors aren't rational calculators who impartially give a sensible valuation for goods and services. They're irrational and investors act out of wild greed or hysterical panic, ignore valid information and go berserk based on subtanceless rumors and crazy hunches. Right now the rumours are flying that perfectly good solid companies and assets are not actually worth anything, and this has paralyzed the entire financial system with fear. This bailout is a psychological prop designed to soothe the irrational fears of the banks and soverign wealth funds and currency markets that make up the foundation of the world financial system. We don't know if it'll work yet.

The preliminary evidence indicates that the initial confidence in the Efficient Market Hypothesis might have been misplaced. It is observed that financial equilibrium models based on EMH fail to depict trading operations in the real world.
Link.

B. Dewhirst said...

It is certainly time to rub someone's nose in something...

Are you sure you have the right nose?

After all, some people have been saying "really existing capitalism" has been about socializing risk and privitizing profits (for a wealthy minority) for some time now...

Travc said...

Zorg, I don't think Dr Brin ever implied that stabilizing the housing market from the bottom up would solve the whole shadow-economy mess. I know that is not what I've been suggesting.

What it would do is pretty much what the big bailouts are doing... increase liquidity of assets by stabilizing the value of those instruments that have been blowing up most dramatically.

Fixing the shadow-economy (I prefer the term vapor-assets) will take regulations and transparency. We want to do this slowly if possible so it takes down as little of the real economy as possible as it deflates.

The mortgage renegotiation/refinance idea is just another, more ethical and effective IMO, way of trying to put out the fire has started... we do most definitely need to clear out all that gasoline soaked brush piled up on top of the economy still... Either letting it burn or using a bulldozer would end up destroying everything underneath though.

PS: Zorg, man, you could have just as easily included all that good info and your POV without sniping at Dr Brin. Come on, try to be a bit less pointlessly aggressive please.

David Brin said...

Indeed, the ponzi arrangement of leveraged bets was NOT at all what I was talking about. The present proposal before Congress is to buy up the questionable, but tangible mortgages themselves. NOT (if I am following correctly) all the leveraged wagers.

(If it is the latter, then Paulson should be strung up by his thumbs.)

My point is that those tangible and real mortgages can be saved by directly helping the defaulting homeowners, who would accept a bond obligation to repay if and when either (1) they can or (2) the next time the assets appreciate substantially.

In theory, a patient government might even profit from such a bet, so long as operating costs are low and it does not have to manage foreclosed properties. In any event, a great many bets would also do better.

Above all, the banks would regain viable assets... while being stuck with sub-prime rates of return, as they OUGHT to be.

Travc said...

OMG:
anonymous posted:
Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.


Which comes from this NYTimes article. It is apparently a leak, but looks legit.

It is really terribly sad that Poe's law now apparently applies to the government.

No way in hell this should be agreed to.

Jester said...

" *** Only, by emphasizing buying the securities from banks, this bailout primarily benefits Wall Street. An alternative - lending directly to stressed homeowners, so that they won’t default at all - would help Main Street. It would stop the wave of foreclosures, keep homes off the market, and keep the federal government out of the business of managing millions of empty houses. Yet, somehow, that would be more socialistic. *** "

I can't begin to express how much I wish people would start calling this devil what it is.

Wisdom or folly, bailing out homeowners would be socialism.

Making risk public and profit private is....Fascism.

This is like clinging to calling the Chinese government Communist.

Rob said...

It ought to be possible to

a) renegotiate failing loans with a borrower, if the borrower was evaluated on "teaser rate" numbers rather than the higher regular rate, finding a way for him to afford the mortgage. Then they continue paying on the loan, wait off the market slump in housing... and pay the government all of the proceeds past break-even.

b) Contracting out foreclosure proceedings ought to be possible, with the contractor collecting a percentage fee on the auction sale for handling things for the government. I think this is already how banks do it, so the infrastructure is firmly in place.

Or, y'know, just holding the property in forfeit, and charging *rent* to the otherwise displaced defaulter, with severe penalties if he trashes the home he lost. Then, noone has to move out.

Point is, there are piles of ways for the government to hold some "bad debt", and help people see their foreclosures or refinances through until the market recovers. Seen with a longer view, the hedge could even pay down some war debt...

But, yeah, the guy who thought an undocumented loan was a good idea, or financing to 100% of value, that guy needs to be imprisoned for awhile.

matthew said...

Since we are talking so much about what Congress is proposing giving to Sec. Paulson, I will post the entire text, not a link. Please read it carefully (OK, I know many of you already have, but for the rest...)



LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as __________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.




I *do* feel it imperitive to contact my Congeressmen. Please do so if this scares you as much as it scares me.

zorgon the malevolent said...

travc and Dr. Brin:
Buying up the defaulted properties, or those properties in danger of default, won't do what you think it'll do. It won't save those properties or the financial system. Here's why:

First, many of those defaulted properties were bought by "flippers" who had no intention of living in 'em for 30 years. Flush with cash from their last flip, they dumped a down payment into the property (or sometimes no down payment at all) then stuffed away enough cash in a sock drawer to pay for 6 months worth of mortgage payments. The flippers were sure that they could re-sell the house or condo for a profit before the 6 months were up.

But then the houses dropped in value and the flippers couldn't sell. Now, even if the government bought that mortgage and re-valued the house to its true lower current value and renegotiated a new mortgage at a much lower interest rate, the flippers still won't want to pay the mortgage payments. Because each flipper probably "owns" 10 or 15 properties, and why the hell would they want to pay mortgages on all those properties for 30 years? Besides which, the flippers can't afford to pay all those mortgage payments anyway -- like a car dealer who pays GM or Ford monthly payments for all those new cars on his lot, they can make their payments only as long as the product sells. If people stop buying houses, as they have now because the public is terrified that house prices are only going to drop further (and they will -- the public is right!), then the whole scheme grinds to a halt. So the 30% or 40% of the outstanding defaulted mortgages due to flippers can't be saved no matter what we do. Those buyers weren't really buyers. No mortgage payment is low enough to induce 'em to keep paying mortgage checks.

Second, revaluing the defaulted properties is alone sufficient to slam all the banks and reinsurance companies into the red. So even if the gummint did take over and revalue all the defaulted houses and renegotiate all the busted mortgages, it still wouldn't help stop the spreading cancer in the housing industry. That cancer is due to the widening difference between what the loaning bank carried the defaulted property on their books as, and what those defaulted properties are actually worth. As long as there's a gap between the two numbers, the cancer spreads, banks still show a loss on their books, reinsurers go belly-up, credit default swaps lose 40 times whatever the mortgage was worth, and the whole financial system gets further underwater.

Third, way too much housing was built. Much of the construction over the last 5 years was built solely for purposes of flipping. It's was pure speculation. The U.S. population isn't growing nearly fast enough to fill those empty new houses, and the clampdown on legal immigrants together with the crackdown on illegals from south of the birder means that U.S. population growth has slowed to a crawl. Even if all those vacant new houses got paid off and their loans were back in the black on the books, they're still superfluous. You've just wayyyyyyy too many vacant properties out there. That will depress the housing market no matter what else happens because supply far exceeds demand, and a gummint buyout won't help.

Fourth, outsourcing continues to erode middle class disposable income. Net savings for the middle class are now negative. As long as outsourcing continues, the housing market is dead in the water. Even legit owners who unwittingly bought overvalued properties do get fired or their companies move 'em to another city, and what happens to the overvalued property then? Without new buyers, it stands vacant, but the bank can't take it over without showing a big loss on its books. So more and more of those overvalued houses would stay vacant as time passes, fruther degrading the value of the overvalued neighborhood.

If we try to shut down outsourcing with punitive tariffs, the U.S. economy slows and people get laid off and can't pay their mortgages, so you're in a Catch-22.

The only way to make a dent would be to do something truly wacky. If the government were to buy up all those vacant speculative houses at full bubble asking price and then burn 'em down, that would do something. It would be bizarre. That's Great Depression era stuff, like paying people to dig ditches and then fill 'em up. That's just wacky behavior.

Another possibility would be if the government passed a law saying all recently constructed housing has the market value it was initially overpriced at, and if the government then loaned money to pay off all those artificially overpriced houses at a negative interest rate so the people who've gone broke could afford to keep paying the mortgages. That's really bizarre. That's Twilight Zone stuff. We haven't seen anything that crazy since Nixon instituted wage & price freezes back in 1970. And anyway these kinds of artificial constraints on markets never work, for obvious reasons. Everyone knows those $650,000 San Diego houses aren't really worth that much, even if the government passes a law saying they are. A typical $650,000 San Diego house is really worth about $250,000, max. I know people in San Diego who own 'em, and that's what they bought 'em for 4 years ago, and what's they're really worth, in moany cases they're old Convair factory housing from 1958 adme out of ticky-tacky. Those homes were never worth anything like $650,000 and never will be during our lifetimes.

It would be like the government passing a law saying that snow doesn't fall in winter. Aside from being nutty, it's obviously not true and as a result it just won't work.

William_Shatner said...

Zorgon --
I kind of doubt all this mortgage debt is from Flippers. If they have limited equity, they can walk away. This is a lot of people with Arms and Interest only -- but still they have skin in the game.

>> This new rule really pisses me off;
"Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."


Why don't we just hand the entire country over to the Secretary and call him emperor? They've totally failed to guard the Bank -- we shouldn't be giving these people a machine gun.

>> Does anyone remember when you never heard the world 1 Trillion? I mean, at the turn of the century, a billion was a lot of money. I don't make much more in 2008 than I did in 2000, yet somehow the play money out there has mushroomed. Does anyone have any way to understand these numbers? I mean, it has to be devaluing the assets of the average citizen, because the shadow economy is so much larger than the GDP.

Travc said...

jester, lets not get into a semantics/definition war. Unfortunately terms like fascist, socialist, communist, ect have different meanings among different 'schools' (and most of us aren't even well versed in any such school).

We can communicate well enough if we include sufficient context.

BTW: I have been harping against calling the bailouts 'socialism' or 'nationalize' in the context of pointing out the possible upside of the government actually taking some real operational role in the public interest... not really objecting to the actual wording.
--

Zorg,
Flipping is tangential to the basic argument being made. All it means is that the actual real cost is higher (more mortgages won't eventually be paid off). BTW: Where did you get that 30-40% figure? It sounds absurdly high (but I'm not a realtor.)

Your second point is also, well crap. How much loss the banks/whatever have to book is entirely dependent on how much the government buys (or backs) the mortgages for.

Again, keeping the big shitpile from completely bursting into flames may end up requiring buying debts at an over-valued price. But that is true for the uber-bailout-of-doom scheme being floated now (read Krugman).

Excess housing and outsourcing are even more tangential than flipping. We aren't talking about a mass refinance / bottom-up bailout as a panacea to fix everything! It is being put forward as a more moral and arguably more effective immediate band-aid/tourniquet.

Funny thing, compared to the bailout on offer Dr Brin's idea does a hell of a lot more to help the wider economy/middle class.

Getting out of the bigger mess will be a long and painful process with no simple (or wacky) fix. Regulations (and enforcement) are needed to bring back discipline and de-leverage in a controlled manner. We also need to back away from the "turn on the taps" single answer monetary policy. I'm sure there are many other steps that need to be taken... I don't want to wrack my brain for a huge list just now.

Travc said...

William,
I'm pretty sure I first heard "trillion" in the 80s with respect to the US national debt when it was shooting up under the 'wise paragon of conservatism'.

I prefer 1e12 myself, though tera as in "Terabucks" has a nice ring. We could call a debt reduction campaign the "war on tera"! :p
Million-million is just weird.

Woozle said...

Key points of the situation, with links to more in-depth articles, are at En Tequila Es Verdad.

I wrote a hasty email to my representative about the situation, asking if he knows who I need to pound on about this.

There does seem to be an emerging consensus (in the non-right-wing blogosphere, anyway) that this is the mother of all robberies.

William_Shatner said...

@travc,
A Million x Million is probably a good way to understand a trillion for most people. If you have a million dollars -- you aren't necessarily rich anymore, but you've put behind financial worries. Unless you are Donald Trump and that's the rent on your condo.

Anyway, if the current bailout is 2 Trillion (it will be more -- just boiling the frog here and everyone will act surprised), that that is 2 million millionaires.

The wealth transfer that will occur for retirement, is $49 Trillion -- or 49 million, millionaires. That's more people than we have in the country. That is probably the upper limit of this mess (I think Zorg has overvalued the planet -- but who knows, really).

But, this should make people understand, how diluted THEIR wealth is. Printing money is worse than taxes, because you don't take care of the issue based upon what you can afford, or feel the pain now. We are about to feel everything since Reagan.

What they will try to do, is discover "personal responsibility" and the NeoFascists will try and say that it is the responsibility of borrowers who do not have finance or mortgage licenses, to determine if they can pay. You know what happens when a man takes candy from a baby? They don't blame the baby. But in the world where the robber baron can do no wrong, Mexicans are blamed when Tyson foods hires them -- because how dare they want a better life? When their own government is quasi criminal, and their family hungry -- why do people expect Mexicans to appreciate a conservative talk show hosts outrage over their "crimes?"

I remember listening to Neal Boortz two years ago. He was intimating that "urban people" need to look at Mexicans for inspiration. Look at how hard they work, look at what they put up with -- if you could just shut up, and be as they are, the world would be great. As I expected, when Mexicans started getting old enough to WANT THINGS, and not be able to put up and shut up, and -- oh, by the way, my corporate masters have determined there will be huge unemployment real soon to keep wages low -- hey, we don't NEED YOU ANYMORE. Bastard. These are all the most selfish bastards ever. Now the Mexican entrepreneurs are "illegal alien criminals" -- whatever gets people fighting amongst themselves and not looking at the real divide -- up vs. down.

We are in a class war and we are losing. 100% of the effort by Bernanke and Paulson will be -- as Brin said, to protect the thieves and to leave the door cracked open so they can go back and steal again. More disaster capitalism.

They've made this mess really big, so that we will agree that "drastic action must be taken." The Bailout of AIG was necessary -- why? To protect us from a global economic melt down. Now if you were certain it was coming -- because you've been working your damndest to make it happen, the bailout of AIG is just a life boat for the Robber Barons.

As I've said in a previous post -- 3 of 5 financial houses that had their ability to leverage double have already gone under. Actual adults allowed this to happen -- adults who should know better. They might as well have set the timer on a bomb. This is financial terrorism at its worst and FDR's greatest mistake was that he didn't hang everyone on wallstreet who attempted to take over the government. Google "War is a Racket" if you want background on that.

William_Shatner said...

Again, the proxies for the elite like Bernanke and Paulson, see this as a supply-side economics issue. Supply side economics is a farce and so is all the crap that we've heard from Conservatives for 50 years now. Read Adam Smith and forget those that came after.

If you do NOT bail out the home-owners --- who is going to buy any of this crap in the near future? Will bailing out AIG mean that people buy insurance (I know, they were underwriters)? There will be no market for any of this stuff. With no market, where will this money go? Into offshore accounts. The bailout is merely to replace the cash of the Robber Barons that is in jeopardy of being harmed by their own failed business model.

THE ONLY solutions that will work, start with the middle class. Without people able to buy products, and insurance products and all this stuff that makes the economy hum -- you can never GIVE enough money to the businesses to make them invest. It doesn't matter if banks close -- they don't do anything but move around paper -- someone will eventually buy that debt, because god forbid, some Kleptocrat lose your debt as easily as they lost your investments.

Anonymous said...

"As I've said in a previous post -- 3 of 5 financial houses that had their ability to leverage double have already gone under. Actual adults allowed this to happen -- adults who should know better."


Nope. Democrats in general, and more particularly Clinton and Obama are to blame for this.

I bet you think I'm kidding, right?

Nope. Just remember the template:
[whatever this big problem is] is Democrats'/Clinton's/Obama's fault.

I can't believe so many here keep forgetting that simple principle.

Oh yeah I almost forgot. Why it's Democrats'/Clinton's/Obama's fault:

"About Nancy Pelosi. She says the Democrats share absolutely none of the blame for the current financial goings-on. She's wrong. In fact, she's lying because she knows here statement to be untrue. I'm going to unload on this when I get back, but here's your primer:

1. Almost all of the financial problems we see today are based on bad mortgage lending. That would be lending money to people to buy homes who didn't qualify for a loan.

2. The Democrats, under Clinton, strengthened a government-created monster called the "Community Reinvestment Act." This law was then used by "activists" and "community organizers" (like Obama?) to coerce lending institutions to make these bad loans ... millions of them.

3. Now we see what happens when political "wisdom" supplants good loan underwriting. When private financial institutions are virtually forced to make loans to people with a bad credit and job history .. this is what you get. Enjoy it."

This was quoted but not sourced by a "kewaynco" in the top post at:

http://tinyurl.com/4haxjv

William_Shatner said...

Anonymous.
Um, I think you found the wrong blog. The one you want where everyone trades witty comments to see who can piss the farthest is Digg.

The Government lending to low income applicants has a default rate of 3%. Just over the national average of about 2.6%.

People with reasonable fees can actually pay. This isn't about people not paying mortgages -- it was about the flipping of these "sucker loans" that the lenders bundled with other loans and sold. Then ran up the value with leverage. This bubble bursting is all about deregulated capital markets.

But I don't want to debate you. I'll admit defeat to your alarming display of insight -- I don't want to cheapen your prose with my awkward ramblings. I think other web sites are much more worthy of your intellect and it is wasted here.

Stefan Jones said...

Oh, please.

As late as a few months ago the conservative peanut gallery, and not a few pundits, were lauding subprime loans as a remarkable innovation bringing the joys of home ownership to the little people.

Now that the shit has hit the fan they're scrambling to reassemble the shambles of their ideological snow fort.

This is why I think it is futile to go after "ostriches." The ones who aren't the some of the people who can be fooled all of the time will figure out things on their own. The rest prefer the view from their head-holes.

Woozle said...

I don't think Anonymous was agreeing with the stuff s/he quoted. The delineation (who was saying what) could have been clearer, but there was a nice shiny coat of sarcasm on top.

David Brin said...

By the way, do all of you guys give this blog Digg and Del.icio.us ratings?

It's kind of like sending in that $100 bucks this month. The least you can do.

Like dropping by
http://open.salon.com/user_blog.php?uid=4802&view_sort=recent

...and increasing my numbers there, too.

Or (best of all) going viral on some of our postings here...

BTW... while $ to Obama is good, he needs it less than this bunch:
https://www.democrats.org/page/contribute

These are the contributions that will partly go to changing Congress and statehouses (where the real action is.)

Of course, if you REALLY care... go to your local Congressional candidate and volunteer. He or she is the focal point for community outreach and get out the vote. (Or go to a neighboring district that's actually contested.)

I still believe in ostriches... and the top priority has got to be to get them to watch Friday's debate.

zorgon the malevolent said...

Clinton and Obama are of course to blame for all this, since as everyone knows they've been frimly ensconced in the White House and in control of Congress for the last 8 years. With diabolical cleverness, they used Saddam's WMD sarin attacks against our troops in Iraq as cover to distract us from what they were doing. Fortunately, both Clinton and Obama were injured by the explosives they set in the controlled demolition of the Twin Towers, so they weren't able to destroy democracy and free markets as energetically as they would have wished.

But let's remember the true victims of this financial crisis.

“A lot of those people will have to sell their homes, they’re going to cut back on the private jets and the vacations. They may even have to take their kids out of private school,” said Frank. “It’s a total reworking of their lifestyle.”
He added that it’s going to be no easy task.
“It’s going to be very hard psychologically for these people,” Frank said. “I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he’s ever done.”


Oh, the pain! The agony!! The unthinkable hardship!!!
Link.

zorgon the malevolent said...

"HAVE WE REACHED THE END OF BOOK PUBLISHING AS WE KNOW IT?"

Link.

Boot said...

I finished Globalization and its Discontents recently. Who has some recommendations for me?

zorgon the malevolent said...

Now that you've finished Joseph Stiglitz's demolition of the gigantic global Ponzi scam misnamed "globalized free trade" (it isn't, it's just mercantilism 2.0), the next book on your list should be The Twilight of the Nation-State: Globalization, Chaos and War by Prem Shankar Jha and Eric Hobsbawm.
Link.

You might also want to take a look at Common Wealth: Economics For A Crowded Planet by Jeffrey Sachs, and The New Asian Hemisphere: The Irresistible Shift Of Global Power to the East by Kishore Mihbubani.
Link1
Link2

If you haven't read David Landes' The Wealth and Poverty of Nations and Jared Diamond's Guns, Germs and Steel, you'll probably get a kick out of those too.

Travc said...

Boot, until someone writes something better on the topic, I'll continue to shill for The Authoritarians... which has the benefit of being free and online as well as excellent ;)
--

I've been trying to formulate an argument that the Dems are simply more pragmatic... but haven't gotten it down to anything elegant much less pithy yet.

Even the DLC and Rubin are not nearly so blindly ideological with FIBM as the GOP. The Dems also have a much broader 'base' with actual different POVs being argued.

Anyway, I wish I had a good way of putting this idea. I think it would be a compelling argument. Even if you don't have the same general POV as the majority of dems, they are simply less fundamentalist/extremist and less likely to push an ideological party-line to the point it makes no 'common sense'.

Sociotard said...

Dr. Brin, to what degree do you think that it is acceptable for Americans to push the ideals of the Enlightenment and turn other countries into parts of the NeoWest?

I ask because of a fairly interesting thread I've been following on another forum. On it, an Israeli American expatriate was explaining his views on Israel. I'll post clips of his comments for your perusal:
Dear me: the ugly American.

It is how things work, and America's day as an unchallenged, global hegemony is looking at its last 50-60 years. A world power, sure, but not the only game in town. If you want to breed anti-Americanism and shift your allies towars your emerging competitors, the sure way to do is being evangelical about Americansim. You can have my Torah when you pry it from my cold dead hand, and until you put troops on the ground here you can go to hell. Even then, We got rid of the British empire and given a decade or so, we could boot you, too.

I kid you not. The one way to get me to burn my American passport is for America to attempt to push its Constitution and Bill of Rights on Israel.
------
You can keep your constitution and bill of rights - I'll keep my Torah. I'm willing to bank on the miracle of Jewish longevity, and our sacred bond with the God of Israel. He's stood us in good stead longer than any of those who have come and gone from our land.

Mark my words: if you try to impose your way on us you may succeed for a time, but in the end, we'll watch you go the way of the dodo, too.
----
Several American political science professors have used the term [civil religion] to describe the reverence Americans have for their own founding documents - the Declaration of Independence, the Constitution, and the Bill of Rights. And while you may not be able to see it because you're in the fishbowl looking out - American's are positively religious about those documents, not to mention evangelical. I mean, come on, look at how insistent people in this thread are that Israel conform to American Enlightenment or be rejected.
--------
What you've said is American Truth.

What you are expressing is civil religion tinged with evangelism.

Hint: our respective weltenshuang are at odds.

Jewish truth: the God of Israel exists, Moses is his Prophet, the Torah is Truth, and the Jewish people were commanded to forge a society that lives by that Truth and to be "a holy nation." They were also commanded to "be a light unto nations" and to be a "nation of priests."

So, in the spirit of sharing and friendship, since you told me "the truth," I'll return the favor: Israel is a Jewish state. Its survival is predicated on its being true to its own Truth - not yours.
-----
I want a Jewish State. Not a State of Jews. A Jewish State.

I want Jewish Law. Not British Colonial Law (we've got that). Not American Law. Not Chinese law. Not Mexican Law. Not Muslim law. Jewish Law.

I want our traditional Written code (Torah) and our traditional common law (Talmud-Halacha) to be the basis for our system of jurisprudence.

I want a constitutional monarchy with a role for the Scions of David.

I want the Third Temple on the Temple Mount.

I want a Sanhedrin in the Chamber of Stone.

And yes, I believe its God's will that it be so.


Did you think I believed "its not really God's will, but let's do it anyways?"

Is it so hard to fathom that someone believes what he says that you sound doubtful - seems like?

Do you honestly believe a God-fearing, Torah-loving Jew would contradict the most implicit, basic premises of his faith?

What about a secular socialist authoritarian government with a thin veneer of democratic rhetoric it sells to the West while actively perpetuating a system that engenders tyranny of the minority, is designed to keep the power elite in the driver's seat without accountability, actively engages in cronyism, is rife with corruption, openly discriminates against religious citizens in terms of employment in direct contravention of its own laws, bans sephardic jews from having multiple wives and levirate marriage for Jews while allowing non-Jews to carry out those exact customs, bans Jewish practices it finds "uncomfortable," limits the available number of radio and television tenders far beyond what is required and actively refuses to allow political opponents to bid on them, and orders police officers to use excessive force to deal with dissenters engaged in non-violent civil disobedience? Would that be a government that shares your values because... at least it isn't religious?

You see, you're very smug about "Israeli Law" (below), but you have no idea how twisted and oppressive the system created by the secular zionists actually is. Americans dance through the tulips spouting this "only democracy in the middle east" crap. I'm an American. What I see is a system wherein parties that function like the old soviet worker councils are tenaciously doing everything in their power not to allow democracy to run its course. But then, a lot of these parties were born on kibbutzim that had a picture of stalin on the wall that they referred to as "abba olam" - father of the world. How is that for respect for Jewish heritage? How is that for a democratic role model?

One of my favorites: "referendums are anti-democratic!" Israel is only a democracy in the loosest sense of the word - and once you've had some experience with it, you come to realize it only looks like a western democracy from the outside. Once you scratch the surface you find something else - and it aint pretty.

And yet, a religious Israel would be a bad thing (TM).

For the simple reason that its "religious."

Even if it was fair with non-Jews.

Even if there is a stronger culture of dignity of the individual in Jewish religious world than the secular Israeli world.

Even if it was closer in spirit and more liberal minded than the democracy America set up in Iraq.

I don't think you have a clue what a religious Jewish state would look like, or how flexible our common law is, or how much room for difference of opinion there is in the orthodox world - we have an enshrined tradition of it. Large swaths of what people see is extraneous local customs that does not carry the force of law. Its just peer pressure. There are basic minimums, of course, but ours aren't as onerous as you might think. Your notion of a "strict" religious state is probably more high falutin' gun-totin' wild west mullah gunfighters seeing religious justice done than mine.

Second, you seem to forget yourself. The 1st Amendment ends at your borders. Judaism has mechanisms for dissent in place, as well as for free speech. It has some limits, but so does your own system. Hell, in many European countries some religious sects and "offensive" political expressions are illegal and I don't hear you whining about them. So long as the government that does it is secular mums the word, eh?

And what is more, if a law gets passed in your legislature you would expect that while people have a right to dissent, that lawlessness - or actively preaching defiance of the law - would be dealt with. Sure, you have a Constitution and Bill of Rights laws are held up to. So do we: The Torah. Its the founding stone of our way of life - and it contains a strong notion of fundamental human rights. Its not identical to yours, but then, the Europeans have a different notion of those things, too. But we're religious, so we're big oppressors.

And you also seem to have glossed over the demographic trends I noted. The Conservative and Reform movements, for all the money they have spent, have made very little inroads into Israeli culture. In fact, the Baptists have done better (and they are pretty darned disappointed, too). Want to take a guess, why? Because they aren't movements that appeal to Israelis. They aren't movements that appeal to Jews who are their own sovereign masters.

They are movements of the diaspora. They are movements born of peer pressure to conform to the dominant culture in a land that isn't their own. They are movements of people who are embarrassed about traditional, historic Jewish identity and practice. They are movements that compromise so that their adherents can so to their gentile neighbors: "See, I'm a good Roman! See, I'm just like you!" And while the secular left in this country does this politically with the west, they don't represent the average Israeli. The average Israeli doesn't have these neuroses. An Israeli is master in his own land. An Israeli will do or not do, but if he's going to do, he's going to go to an Orthodox rabbi to ask the question. He knows authenticity when he sees it - and he knows bullpuckey when he sees it.

And Israeli polity is increasingly religious. At present 18% of Israelis identify as being secular, 35% identify with orthodox Judaism, and the rest define themselves as "traditional," which means they pray in orthodox synagogues when they pray, eschew leaven on passover, keep basic kashrut, fast on yom kippur, but don't regard themselves as particularly religious. Some, especially sephardim, also keep family purity laws, or some level of sabbath observance, though half of them are liable to make the traditional blessing over wine, eschew work, and flip on the soccer match. And that critical center demographic generally supports the idea of more Jewish principle and practice on a national level. And, when you look at birth rates the secular have a negative birth rate, the traditional have a positive birthrate, and the orthodox are booming.

I'm not going to sugar coat this for you. What dissenting interpretations? In America? They can stay in America and dissent all day long. They can even come here and dissent, insofar as they follow the basic tenants of Jewish society (the essential don'ts). There is plenty of debate, and an entire spectrum of observance, in the orthodox world. There is, short of criminal and civil infractions, a tradition of encouraging rather than forcing the ritually deficient. And even among the religious who want a Torah state, there is a general locus of opinion that we will have to start with the public sphere, allow the secular have some latitude, treat the non-Jewish minorities as millets with full protection of law (and the halacha gives them legal standing and protections), and let demographics and time sort the rest out.

William_Shatner said...

David Brin said...

By the way, do all of you guys give this blog Digg and Del.icio.us ratings?


Where is your Digg button? I've been on digg, and other than attempting to submit a few stories, I don't know how to just promote a site.

You are on my top ten list for discussion groups. I come here after wading in the muck for some sanity. If I don't agree -- at least there is something I can learn. It's not so fun on digg when I'm the smartest person in the room and I'm getting dugg down by someone who got high ratings for "I like boobs."

William_Shatner said...

href="http://digg.com/business_finance/Treasury_Now_Wants_to_Bailout_FOREIGN_Banks"

Paulson wants to use our money to bail out foreign banks. Now, in the Supply-side economics fantasy realm, this makes sense.

This will make the right ballistic -- if not everyone else. I have to wonder what they are thinking or are they just desperate. I would have saved this for last -- just before the point when I helicopter out of the country with Marines guarding my exit as the citizens come to my castle with torches and pitchforks.

>> IN my view of economics, Labor and Markets are superior to capital. You can throw all the money you want into this bank or that -- but no money is coming to America if nobody can afford a loan. Give Ford money to build a 50 ton bus -- there is nobody that is going to buy it.

Anyway, just an FYI. It's kind of odd to see things actually spin out of control in real time. I've been trying to talk my mother into pulling her investments -- she's heard from too many experts who've been sipping from this economic trough for too long. They cannot conceive of this system failing them.

>> But seriously, this move by Paulson is scary. Bush is working to give him Emperor powers by edict -- and he is doing a move that is sure to drive the America First crowd crazy. So it will be much harder to make the Fed our rulers. It is a sure sign that they don't believe McCain will have a chance of winning the election. Plan B will be another war before the elections.

I've always thought that we would never see elections in 2008 -- it's really strange to see your nightmares come true. I really hope I'm wrong.

Dr. Brin, are their any signs of hope in this -- tell me I'm crazy.

David Brin said...

Sociotard, that Israeli expressed one point of view. But get ten Israelis -- or any ten Jews -- into a room and you get ten theologies and philosophies. Look, these are the people who - while Christians were forcing their brightest boys to go celibate -- were marrying all the daughters of their richest families to scholars. Argument is in the blood. Hence, not a single statement that fellow made would go undisputed by his next door neighbor.

In Heart of the Comet I talk about what would happen if the Temple were ever rebuilt -- as many fundamentalist "friends" of Israel are eager to see (in the expectation it will lead to the end of the world -- go figure!) Most Israelis would fight to the death to prevent a single stone from being laid! This fact confuses the heck out of those fundie supporters!

As for the author of that tract, he is yet another bright fool. American social and democratic values have three pillars and one of them is the Judaic experience. Fundamentally, the non-Christian belief that the world, while imperfect, is valuable and improvable. True, democracy itself came from other pillars. But the belief in the accountability of all men...

.......

It is time for a democrat to say -- "We will pay tangible money for tangible things. We will not use taxpayer money to buy your failed wagers. We WILL use taxpayer money to buy temporary equity in the homes of a million Americans. Equity that they will not have to pay back right away, freeing them to meet their payments and ease this crisis. (Banks holding these mortgages will have to meet us half way, giving up $2 of equity for every dollar the treasury ponies up.)

This way, the taxpayer will actually be buying something. True, he or she may lose some of this money, if the house prices never rise. But we will be laying down a basic principle. We are not in the business of buying the losses of men who sneered that "government should be run more like a business."

Fine. This 'bailout" is an investment. We're going to buy the good stuff.

David Brin said...

Guys.

In 2 weeks I will come online and ask you all to speak up. And tell us how you've stepped up.

Robert said...

There is an extensive article on this currently over at Daily Kos. It talks about various stages of the economy and in a conspiracy-esque commentary about the Shrub administration basically suggests that the Shrub and crew were busy dismantling things so that Wall Street could get as much money out of us as possible.

Still, it's a good read and should be rather fascinating for most of you. I must warn you though, it's fairly dense and quite long.

------

It appears that Obama, Pelosi, and others are saying "Hell No!" to the bailout plan. Basically, if Wall Street wants the bailout... then CEOs are not going to get reimbursements (slashed golden parachutes), regulations will be installed, and efforts to keep people in their homes must occur. Basically? No blank check.

I also have heard it said that Obama wants to tax the rich in order to assist the bailout, rather than the middle class. So... the rich being forced to pay for their own bailout. If we can force it through, it would be delicious delicious irony, yes? ^^

Robert A. Howard, Tangents Reviews

Travc said...

While we are going for those 'crazy socialist' ideas... here's one to consider.

The SEC has the duty to set accounting standards and complete financial review/oversight over every public sector company... (not that they have actually been doing their job.)

Why don't we just socialize/nationalize corporate accounting and cut out the (too often lying) middle-man?

Hell, accountants are already a guild like lawyers and doctors who have a public duty and take an oath. Why not just make them actual government employees and make that a bit more explicit (and effectively enforced).

Stefan Jones said...

Tax the rich?

Yes. And not just because it would be justice.

We need to collect more in taxes, not just to cover the bailout, but to reduce the deficit and debt. Inflation is way, way more dangerous than higher taxes.

We can call the increases the "Iraqi Liberation Fund" and the "Fatcat Insolvency Fee"

David Brin said...

!!!!!!!!

http://www.theonion.com/content/video/bush_tours_america_to_survey?utm_source=EMTF_Onion



I HATE the fact that our civilization will depend on whether one brilliant but untested young feller from Illinois can spot-on perform perfectly in a few debates. Heck, even Lincoln lost to Douglas, and we survived. But Everything hangs on Obama not blowing it.

That's not a system. It's a crap shoot!

tintinaus said...

William, the comment that was reported here(Aus) was that Paulson said that he thought other nation's reserve banks may need to have bail outs as well, if their finance sectors caught the US virus.

tintinaus said...

David you may be happy to know that "The Age Online" has as it's banner headline at the moment "Obama climbs as McCain fumbles over economy" and reports the latest Gallup poll that gives Obama a 5 point lead (50-45)when a week ago McCain led 47-45

zorgon the malevolent said...

sociotard:

What Dr. Brin calls "the ideals of the Enlightenment," or words to that effect, really aren't the ideals of the Enlightenment. They're a rich and complex combination of rules of thumb and basic principles that have been tried and found to work over roughly the past 400 years.

These rules of thumb + basic principles aren't being adopted worldwide because anyone is evangelizing 'em. They're getting adopted worldwide because they work.

It would be better to call these rules of thumb + basic principles "pragmatic liberal secular open society with the rule of law and civi society and transparency plus respect for the rights of the minority." Except that's too big a mouthful.

These principles and practices don't really date from the Enlightenment. Some of the earliest and most important of 'em date from around the early 1600s: Francis Bacon's stress on the crucial important of testing hypotheses instead of using pure reason dates from his Novum Organum of 1620, while the conclusive break to a secular society with a firewall twixt religion and governance dates from Cromwell's overthrow of Charles I in the 1650s. The replacement of representative government for direct Athenian democracy became the norm between the 1650s and the 1790s, while advocacy of transparency and accountability dates all the way back to the Magna Carta. A focus on pragmatic problem-solving arose after the bad example of the French Revolution and dates to the 19th century, along with concepts of universal suffrage and the protection of rights of minorities. Free market capitalism became popular following Adam Smith's evangelism in the late 1700s, while regulation of markets in the modern sense only appeared in serious form following the 1906 Panic in America. Science-driven technological innovation dates larges from the two world wars, while the concept of supercharging economies with universal public education and free public libraries remains a mid-19th century innovation.

But put together, all these concepts are now recognized as pretty much essential to a dynamic modern economy. Even societies which profess to vehemently abhor America's social beliefs, such as representative democracy, nonetheless use these rules of thumb and basic principles. China offers a good example. Even societies which profess extreme hostility to most Western values, such as the Kingdom of Saud, have found themselves forced to adopt an ever-increasing list of the above practices, as for example the extreme westernization found on the campuses of new Saudi universities.

Moreover, adopting some of these secular liberal pragmatic practices tends to force the adoption of the rest, so the whole set of practices tends to come as a package. It's hard to maintain a modern educational system while oppressing women, for example, so societies that adopt Western-style freedom of education tend to eventually develop Western-style women's rights. Likewise, economies can't compete globally in technology without transparency and accountability, and this tends to leak over into other areas of societies that adopt accountability for business and science. In China, for example, increasing accountability in the business sector has led Chinese citizens to sue the Chinese government for infringing on their rights, with some success.

One caveat: when I use the term "free market," this includes the full range of modern economies from Japanese-style Frierich-List-type heavily socialist capitalism, to middle-of-the-road Canadian-style free market capitalism with some tinges of socialized services in health care and gun control, to full-on wild west free market capitalism as in the glory days of America (current American capitalism does not have a free market, but rather makes use of crony kleptocracy), to oddball cases like Singapore and Malaysia and China with their strange mix of autocracy and free markets. All these societies use markets and recognize most of the basic principles of modern capitalism as essential for competition in a global market. However, there are significant differences in implementation of free markets and capitalism between these societies. Malaysia and Signapore, for instance, use stringent capital flow controls, while Korea grants virtually no rights to non-Koreans, the Japanese use a form of "corporate socialism" to place redundant workers in make-work jobs rather than firing 'em, and so on. But these are all still basically capitalist market-oriented economies.

The point is that the Israeli fellow seems to have confused evangelism for American empire with boosterism for modern secular liberal open society. The world has recoiled violently from American imperial ambitions, and continues to reject Pax Americana and other imperalistic fantasies promulgated by power-maddened American intellectuals like Richard Perle and Henry Kissinger and Bolton and Cheney and the rest.

But the world continues to adopt the secular liberal open society principles that have been codified in Europe & America over the last 400 years, because they work. Moreover, as mentioned, each of these modern practices or rules of thumb tend to support the rest, so a society that adopts some (like transparency and accountability, market capitalism, the rule of law) tends to develop the others (women's rights, minority rights, pragmatic problem-solving, science-based technological economy, the scientific method, secular firewall twixt church and state).

Some have objected to Brin's advocacy of free market capitalism probably because of misunderstandings. As I understand it, Brin is not advocating that the current American system of capitalism be exported worldwide. Right now, today, America is mired in crony kleptocracy. We want to export the basic principles of a market economy, not the corrupted version America has adopted since the election of the senile sociopath Ronald Reagan in 1981. Also, Brin is not advocating export of a global American empire as I understand it, in the way that Paul Wolfowitz has done. Brin proseyltizes for global adoption of basic principles like an open society, accountability, minority rights, the scientific method, and so on.

So a strong distinction should be made between near-hysterical acolytes of American empire like Francis Fukyama who proclaim that the American system we have today represnts the end of history and the ultimate pinnacle of human evolution, and more pragmatic reasonable advocates of general modern principles of the scientific method and an open society, like Karl Popper or Hannah Arendt or Carl Sagan or David Brin.

The Israeli guy is right about evangelism like Fukuyama's in favor of the corrupt kleptocratic militaristic empire we have right now. That stuff is toxic and the world is rightly shunning it. In fact, America appears perched on the tipping point of turning into a gestapo police state inside America and a genocidal murder-for-resources global protection racket outside America. That's so unacceptable both to the American population as well as the rest of the world that if it continues, we're likely to see an armed uprising against it in America's streets.

The Israeli guy is wrong, however, about evangelism for the basic principles of an open society and the scientific method and accountability. America doesn't have to evangelize for this stuff. It just works. Given a contest between secrecy and openness, the open society wins every time in business and education and science and technology. That's just the observed reality on the ground. We've learned that over the last 400 years. Likewise, open societies prove much more dynamic and adaptable than closed rigid totalitarian systems. The shock of Commodore Perry's encounter with Japan proved that, ditto China's more recent adoption of an ever longer list of Western secular pragmatic open society practices for the sake of their economy.

It's also important to note that Brin's position is not simple-minded Fukuyama-esque Western triumphalism. These modern secular pragmatic scientific-method open society principles and practices are not restricted to any given culture. Just because the West originated many (not all) of them does not mean that we in the West will continue to remain atop the global economic and educational and scientific pyramid. Those nations which best make of these principles and practices will dominate the 21st century. There's no guarantee at all that this will be America or Europe.

Moreover, there are significant differences in the flavor of market economies: different societies use a different recipe for accountability or pragmatic problem-solving. South Korea is admirably accountable if you happen to be a citizen, but if you're a guest worker, South Korean employers have no obligation at all to pay you your wages or provide you with any of the services stipulated in your employment contract. In Japan, there's a long list of things non-Japanese can't do, services they can't purchase, items they can't buy, places they can't live, and so on. In Germany, however, you really have to pay what you owe to creditors, or you get taken to court and within a couple of weeks all your belongings are out on the street for court-ordered sale. In America, by contrast, the average person pretty much doesn't have to pay any creditors if they don't really want to. An American can stiff the cable company or the phone company or other companies for many hundreds of dollars and there is basically no resourse for those creditors. It's more expensive and more difficult to take an American to court than it's worth. So there's a wide range of different types of capitalism worldwide: they differ in important ways. Some societies choose more socialized services like health care and a less dynamic entrepeneurial business environment, while other countries like America choose zero health care (if you get sick, you die or at best lose your home and your car and wind up on the street homeless) but an extremely fertile entrepeneurial environment.

So when the Israeli guy talks about evangelism for American values, let's not get confused that we're talking about evangelism for no national health care. That's a peculiar feature unique to American capitalism: it's not shared by most other advanced economies worldwide.

Dr. brin:
With respect, it seems highly unlikely that our civilization will depend on Obama's performance in the debates. As I've predicted pretty much from the start (going by political scientist John Bolz's forecasts in Washington Monthly this month, not available online, alas), presidential elections are by and large referenda on the economic performance of the last 8 years.

As we've seen, the economic performance of the chimperor and his corrupt cronies has been so dismal over the last 8 years that the election is pretty much a lock for Obama. Polls at www.firethirtyeight.com have moved back to 311 electoral votes for Oabam, with the upward trend continuing, and regardless of his performance in the debates, the overarching issue of the economy will continue to weigh heavily on this election.

Unless the Good Witch of the East magically appears and sprinkles fairy dust over the American economy and the Dow skyrockets to 15,000 and all that mountain of corporate and private debt magically vanishes in a puff of smoke and employment suddenly soars and the average wage takes off into the stratosphere, Obama is going to win this one running away in electoral votes. The popular vote is likely be a squeaker, but not so the electoral map. Pay attention to general trends rather than individual polls. Individual polls are all over the place. But the trends are solidly away from the status quo and swing overwhelmingly toward Obama as well a Demo sweep of House and Senate.

travc:
Suggesting that accountants become impartial government employees shows your naivete. Evidence shows that the overwhelming plurality of all American businesses today are artifacts of creative accounting which in reality make either no real money, or much less revenue than claimed. "Mark to market" accounting is so prevalent in America that discerning a U.S. corporation's true profitability nowadays requires perceptions verging on the extrasensory. This is no accident. It makes the U.S. economy look dynamic and energetic. If we removed all the creative accounting shenanigans and phony accounting scams, the U.S. economy would be revealed as the anemic lackluster bottom-hugging flounder of the economic ocean it really is, much less dynamic and energetic than, say, Latvia or Patagonia.

That would be very bad for both Wall Street and the politicians, because the main justification for all America's brutal and sadistic anti-labor practices like lack of national health care, and the routinely savage police beatings of striking workers (which continues today) is that, sure, American free market capitalism is harsh...but it makes up for it with its dynamism. In reality, the American economy has never been very dynamic, not over the last 100 years of recorded economic statistics. Claims that America has an unusually productive economy are a giant scam.

Of course, I'm not just making an empty claim here: I'm citing studies which prove this historically. Permit me to quote Bill Gross, the world's most revered bond fund manager, in his 2002 report "Dow 5,000":

The two primary components of this 6.7% real return [in the stock market over the last 100 years] were 1) a beginning dividend yield of 4.2% and 2) rising valuation (P/E's going up). Real earnings growth, or its twin, real dividend growth, comes in a poor third. Over those same 100 years, real dividends managed to grow at only .6% as seen in the "DMS" chart below.

Ninety percent of the market's real return then came from factors other than earnings growth. Most of it came from the initial dividend yield.

And so dear reader, in an attempt to keep this simple and help you to plough through what can get most complicated, the primary element in determining how a stock market is priced - whether it's cheap or expensive - is its yield. At 4.2% in 1900, the market needed an additional 2.0% annual push from a tripling of P/E ratios over the century to get near that 6.7% real return. Earnings growth was a pathetically small factor. How could that be? As Peter Lynch said in a recent CNBC interview when asked about the future of the stock market, "Well, since WWII corporate profits have grown about 8 or 9 percent a year…I don't see why that won't be different the next 50 years," implying that stock prices would do the same or more. The problem is, as Peter Bernstein points out in an August 2002 research piece entitled The Trouble With Earnings, at least 50% of the earnings growth over the past 40 years has been earnings of the "mystical" kind - pro forma, operating, phonied up. Those "earnings" didn't flow through to dividends. In addition a goodly portion of Lynch's 8-9 percent - and the faster portion it turns out - has come from newly created companies that are not even listed and available for purchase by outside investors. The balance after subtracting 4 percent inflation… has been near the .6% real growth of the past 100 years or the 0.8% of the past 50 years. You are being hoodwinked America. You pays your money and you gets…you gets…a dividend yield and a little bit of dividend growth: 0.6% real over the last 100 years.

Link.

Tony Fisk said...

A similar tune to David's, also from 'The Age':

US invests in lifestyle preservation

The Democrats are almost certain to push for a part of the package that helps ordinary Americans, whether it be more help for people trapped by subprime loans or a second stimulus package.

After all, asking taxpayers to stump $2000 each for Wall Street is a big deal. It has raised complaints about why it's fine to expand the federal deficit to bail out Wall Street, but it was not appropriate to do so to pay for a national health scheme.


But, I dunno. Watching that onion clip... can America cope with another presidency so soon after the last one hit? (ooooh! That *is* a worrying thought!)

Everything hangs on Obama not blowing it.

Is this a side-effect of gerrymandering: all power coming to rest in the hands of the executive?

Still, I believe people see further through issues than the pundits who cry 'process is boring' give them credit for.

Is this the end of publishing?

Probably (I believe it's one of the reasons David has been branching out in recent years). I like books, but the hard copy publishing model doesn't cut it when you want access to reference material.

Well then, is this the future of publishing?

Closer, but not quite. I rather think that something like Kindle mixed with this is.

Bear in mind that the number of bytes needed for the content of the average book is less than a typical anti-virus update (fewer bytes, but much better fare ;-).

zorgon the malevolent said...

Neither travc nor Brin seems to get how real economies work. This bailout plan won't help, Brin's proposed bailout plan won't help. This thing has to work its way out and it'll take time. A long time. Many years.

Prediction: the current taxpayer bailout of Wall Street will not solve the underlying problems, and will only serve to prolong the economic pain and lengthen the time needed for recovery.

When [Japan's] real estate bubble burst, leaving a trail of bad real estate loans, officials flooded the economy with cash only to see banks hoard the money instead of lending it out. The result has been a series of recessions and persistent deflation for more than a decade.

``Although the government tried to debase the yen by printing a lot of government bonds, the economy went into a standstill,'' said Cheah, an official at the Monetary Authority of Singapore from 1991 to 1999 who manages $2 billion at AIG SunAmerica Asset Management in Jersey City, New Jersey. ``The banks used the money to buy safety. I see a repeat happening here. The banks will use it to buy Treasuries.''

While U.S. bonds tumbled on the plan to buy soured mortgage-related assets from financial institutions in the most far-reaching federal intrusion into markets since the Great Depression, they still ended the week little changed.

To investors such as Cheah, that's a clear sign the economy is facing many of the same risks that have afflicted Japan. The yield on the benchmark 30-year Treasury bond, which stands to benefit the most of any government maturity from a drop in inflation expectations, fell to 3.89 percent last week, the lowest level since the U.S. reintroduced the security in 1977.
(..)

``The current U.S. situation is the same as Japan's case,'' said Hiromasa Nakamura, senior fund investor at Tokyo-based Mizuho Asset Management Co., which oversees $36.5 billion as part of Japan's second-largest bank. ``The economic slowdown and credit crunch are creating a downward spiral.''

Link.

Travc said...

My wacky socialize accounting idea may not be so great (or necessary if the watchdogs do their jobs). But how about another one...

So rental properties are going into foreclosure at alarming rates... screwing over the people who actually rent.

If the government is going to be buying up the mortgages (and effectively the properties) anyway, why lot let the renters take control of the property? The way I imagine it, a rental property in forclosure could be sold (at a very reasonable rate under a long term mortgate) to a not-for-profit coop formed by and run by the renters. The renters would have to pay rent to the coop, and the coop would turn around and make mortgage payments.

Enforcing accounting rules and oversight would be tricky, but solvable IMO.

Wouldn't work in every case and there would be failures of course, but the successes would be so cool!

Travc said...

Zorg said:
It would be better to call these rules of thumb + basic principles "pragmatic liberal secular open society with the rule of law and civi society and transparency plus respect for the rights of the minority." Except that's too big a mouthful.

Bravo! Very well said.
(And nice that you didn't take a gratuitous swipe at anyone in the process.)

Can we have some sort of naming contest for this mouthful?
I vote for hijacking/extending "Open Society".
--

For the rest of 'good' Zorg's tour-de-force... I'd add one thing.

Open societies really do have a single meta-principle underlying them. It is given different weight, but all acknowledged that pragmatic empiricism works (apologies if I am abusing the terms, you can grok what I mean.)

Perhaps in its most pure form, is the foundation of the philosophy of science. Applied at a grand scale, all those cultural/societal/governmental/structural differences are a huge potential strength. An open society eventually adopts or adjusts their 'way of doing something' when they see another open society doing it better. Slow and in fits and starts, but nearly inevitable *progress*.
--

To the slightly less good Zorg (next post)...
Repeat: We are not talking about fixing everything with some master plan. I think I have a fair grasp of economics, certainly I know enough to realize how little I and everyone else really knows.

You are right, this will take a long time and a lot of pain to work out. We are talking about steps which may make that pain a bit less acute and less focused on people who can withstand it the least.

If you are certain that the ideas Dr Brin and I mentioned would not *help*, please do explain. Previously you just said how they would not solve the underlying problems, which is attacking a strawman.

PS: I was inspired to get into evolutionary biology because of an economics course (and the excellent prof). If that seems odd, then you probably don't grok how real world economic systems work very well. However, I think you (Zorg) probably see the connection... Paulson probably not so much ;)

Travc said...

Zorg,
One more thing, the socialized accounting idea was off target, but not for the reason you offer... in fact, eliminating 'creative' accounting practices and bringing valuations back down to reality levels IN A CONTROLLED FASHION is the point.

Why it is wacky is that the accountants aren't the right point. It is the auditors. And the rules in existence, if they were actually used and enforced, basically make the auditors de-facto government employees.
(Someone in the business on another forum spelled out all the gory details for me.)

So the mechanisms are pretty much all there already, but have been left unused (or even abused) for political and kleptocratic reasons.

Anyways, the idea, wacky and politically untenable it may be, is to imagine a way to deflate the shadow economy. We agree completely how huge and unreasonable it is. (Which you really should know since I've said it numerous times and thanked you for the data-dump specifics.)

Robert said...

So... the best economists are Darwinian in nature, while Paulson believes the economic system was created on the Eighth Day out of whole cloth by God, and said "It was Good"? ^^

Rob H.

zorgon the malevolent said...

Travc asked me to explain why Brin's and his suggestion of having the government buy foreclosed houses at current prices and then renegotiate loan terms to the owners won't work.

I'll go through this once, and not again. If you still have problems or questions with basic accounting, you should study books on basic accounting. Here's one. Here's another.

[1] Banks carry loans on their balance sheets as assets. If the loan goes into default it stops being an asset and gets removed from the bank's balance sheet. If a loan gets renegotiated to a lower value, as can happen if a debtor runs into trouble and can't pay the full original amount, the asset (loan) declines in value on the bank's books.

Banks are required to carry a certain ratio of liquid assets (cash) to illiquid assets (loans, various forms of collateral, etc.) in the bank's portfolio. This is done in order to prevent liquidity crises in the bank. A bank must have a certain amount of cash on hand so that if some of the illiquid assets (loans, principally) become non-performing, the bank can handle a run caused by public perceptions of problems. A run occurs when too many depositors withdraw their cash deposits from the bank at once. No bank has, or can have, the full amount of cash on hand required to hand out actual money if all the depositors liquidate all their assets and ask for cash. However, banks reasonably assume that all (or even most) depositors will not simultaneously liquidate all their desposits, money market accounts, etc., and ask for cash.

When a bank is perceived to be in trouble, however, many more depositors than usual begin to withdraw their deposits and ask for cash. A bank is perceived as being in trouble when the value of the assets on its books suddenly declines sharply.

[2] There exist only 2 possibilities with Brin's suggestion: either (A) the government could buy all defaulted housing at the original inflated value and then give the current owners of the properties new loans at much lower interest rates; or (B) the government could renegotiate the loans for the defaulted properties by writing down the value of the loans to reflect the true current market value of the houses, which is much lower than the original inflated value of the loans, and then renegotiate the loans with the defaulting homeowners at much lower rates.

Neither of these solutions will work. Here's why:

[3] Falsifying a bank loan application is a federal felony (18 USC 1010 and 18 USC 1014), carrying a penalty of up to 30 years in federal prison and a fine not to exceed one million dollars.

In order for the government to buy foreclosed properties at their original inflated prices, loan officers and property assessors would have to sign off on those inflated values. When the real estate bubble was on the way up, no one really knew the genuine value of those houses. People were buying and selling houses for that inflated amount, so an argument could be made that the inflated original assessed value was the real value. Now that the real estate bubble has popped, however, it has become entirely clear that those original assessed values were wildly inflated.

As a result, today no assessor or bank loan officer can sign off on a government loan which buys bank foreclosed properties at that inflated value without committing federal bank fraud.

[4] If the U.S. government were to try to get around this problem by passing a law saying (in effect) "We, the United States government, are for the purposes of this bailout, suspending normal accounting rules and eliminating federal bank fraud penalties in assessment and statements from bank loan officers which knowingly falsify the assessed value of these foreclosed properties," every bank that got bailed out in this way would become financially toxic. Such banks would immediately be identified and redlined as "One of those banks that government allowed to fraudulently revalue its foreclosed properties." Because those banks would be publicly identified as having fraudulent transactions on their books, no other financial institution would want to have anything to do with those banks, and they would still collapse. Moreover, a massive run on those banks would drain all their liquid assets and cause them to implode. At the same time, all the foreclosed properties would instantly become unsaleable and financially radioactive. Every realtor in America would instantly identify those foreclosed homes as having been fraudulently revalued for phony overly high assessments by the federal government, and no buyer would ever want to buy any of those homes.

So the homeowners wouldn't benefit in the long run unless every foreclosed homeowner never sells or tries to borrow money on his government-repurchased home for the next 30 years. For example, any rental property so overvalued could not get insurance, because no insurer will insure a fraudulently overvalued property. That's just one of many such consequences of fraudulent and deliberately overvaluing a property. There exist many more. For example, people who own rental properties typically roll over those properties (sell them) and plow te proceeds back into a new larger property in order to avoid capital gains taxes -- in such transactions, the owners typically profit off the rents and increase in the property value, while avoiding for as long as possible paying any capital gains on the property's actual value. If property owners do this enough times, they can live richly off the income streams from their properties without ever paying capital gains on the value of the properties they own.

This wouldn't be possible if a property was overvalued because it couldn't be insured or pass the assessment required for the new sale. Moreover, such tax schemes depend on taking devaluation write-downs of rental or other commercial properties on federal income tax, and that can't be done if the property is fraudulently overvalued. In that case, IRS auditors would challenge the tax return and eliminate all such tax breaks, rendering such commercial or rental properties unattractive to investors to own.

[5] If, on the other hand, the U.S. government were merely to take the (B) solution and write down the loans and then buy those foreclosed properties and give the foreclosed homeowners new loans at the lower written-down amount, then the loans for each of those houses suddenly get revalued on the banks' books. This results in a sudden massive drop in the bank's assets, which would cause a huge bank run, once again causing the bank to implode and collapse. Once again, no other financial institution would want to have anything to do with those banks, because everyone would now know that the loans carried on that bank's books were wildly overvalued, and this would lead to serious questions about how many of the bank's other assets were overvalued.

[6] Moreover, doing any of this (either solutions (A) or (B)) would instantly wreck the creditworthiness of the United States government because our government would in either case be involved in massively revaluing hugely devalued assets. This is nothing less than accounting fraud on a massive scale. If the U.S. government gave its blessing to this (either by allowing banks to get away with writing down wildly overvalued assets by selling 'em to the U.S. government at a lower value, or by buying those wildly overvalued assets at their crazy valuations), the U.S. government would instantly become a suspect bottom feeder guilty of sleazy creative accounting practices, or of approving sleazy creative accounting practices.

This would reduce foreign governments' willingness to purchase any U.S. government financial instruments -- because, after all, if the U.S. government was willing to give its blessing to cooking the books for banks who made crazy house loans, or if the U.S. government were willing to actually try to support those crazy valuations by buying the homes at those wildly inflated prices, what other financial scams is the U.S. government willing to engage in?

The United States of America currently depends on the willingness of other countries to loan it 70 billion dollars per month in order to maintain our current international balance of payments. Without that willingness by other countries to purchase our federally backed financial instruments, our balance of payments collapses and America is no longer able to pay for all the goods and services we purchase for other countries, which is currently a sum much greater than other countries pay for the goods and services we produce.


BOTTOM LINE:

There ain't no simple solution. You can't whisk this home forelosure problem away just by buying back the defaulted houses. Entirely aside from the fact that many of the defaulted loans were bought and/or built by speculators who only intended to flip 'em, and aside from the fact that a much larger debt overhang of CDSs and CDOs whose values are derived from the values of the mortgages of those defaulted properties currently threatens the world financial system, even if we ignore all that, the scheme still won't work.

People who don't understand basic accounting will lunge forward to describe everything I've said as "crap" and "drivel." They're lying. Banks loaning out money is not a simple process, and has complex ramifications. Ultimately it depends on large-scale intangibles, like the willingness of depositors to believe in the solvency of the bank, and the ability of property assessors and bank loan officers to correctly deduce the "real" value of real estate in a fluctuating market, and most important of all, the faith of other financial institutions in the accuracy and reliability of a particular bank's accounting practices.

Once any of these intangibles gets wrecked, you cannot un-ring that bell. Passing a law or engaging in financial chicanery, either with or without the blessing of the federal government, will not restore faith by other financial institutions in the validity of a bank's accounting procedures once they've been proven dodgy. Moreover, that lack of faith will carry over like a plague to the collateral involved in that financial chicanery -- meaning, to the foreclosed houses themselves. Nothing can prevent that. So even if the banks get liquidated and shut down, the foreclosed houses would become financially radioactive and unsaleable. Since essentially no one stays in the same house for 30 years nowadays, and since the average turnover for houses is around 3 to 5 years depending on the market, this would only kick the can down the road to the next buyer, perhaps 3 to 5 years out, so the crisis would still be there.

Once the taint of fraud touches any part of a financial institution, all its assets become suspect. Playing accounting games with new federal loans will not stop that process. You can't pass a law legislating belief, and that's what you're really trying to do here. Confidence cannot be inspired by accounting games or government bailouts. Indeed, a government bailout in the midst of a financial crisis typically worsens the perception that things have gone badly wrong. And unless you change perceptions and create confidence, the foreclosed houses and apartments adn strip malls and office buildings, the loans the banks made on 'em (whether they get paid off by some federal accounting gimmick or not) and the banks themselves, become the financial equivalent of Ebola virus.

Nouriel Roubini currently has an article in the Financial Times titled The Shadow Banking System Is Unravelling," which goes into more detail on that side of it. What I discuss above doesn't even deal with that -- the shadow banking system Nouriel discusses is arguably a much bigger problem for our financial system than the foreclosed properties.

Robert said...

There is one solution for that, Zorgon. It would make the banking industry shriek and the Republican party go into grand mal epileptic seizures, but it would deal with this little situation. And I can state it in two wee lil' words: Eminent Domain.

The government seizes all of the defaulted properties, pays what it states is the value of those properties, and then utilizes these properties either as rental properties or as resale to people who are better able to afford them.

People would call it socialism and claim it's wrong on many levels... but hey, it would take the foreclosed properties off the hands of banks without worrying about the banks being accused of fraud or the like. The difference in property values? The government determined the property had a different value than the bank did. The government does this all the time with eminent domain (and people go to court over it, often to fail).

The banks would get liquid assets, be able to claim losses on their taxes, and no longer be bogged down by all those properties. And it would also allow these properties to re-enter the market, either as rental properties that make the government money, or for sales... and while property values may drop further and the government may suffer losses in this "investment" seizure, it probably wouldn't be to the order of $700 billion.

Rob H.

Boot said...

Let me try to understand it with numbers.

SaverSam puts $100 in a bank. BankerBob lends out this $100 to HousebuyerHal for a property inflated to value $100. Interest would have let the bank get $120 back so Bob could pay back Sam while collecting wages/benefits. Due to recent events the Hal’s House is worth $70. If Hal walks away, BankerBob can’t pay back SaverSam. If the government buys Hal’s House for $70, BankerBob still can’t pay back Sam. If the government buys the house at $100, it must tax everyone to make up the $30 + whatever BankerBob took for wages/etc.

We can’t let those responsible (TheBobs) suffer because this kind of stuff has become such an underlining pillar of our banking system that no one can get their money back.

Is this the situation as you see it Zorgon?

Anonymous said...

Hi, I'm a long-time lurker, first time poster. I'm arguing with an ostrich on my local news blog about Iran, Saudi Arabia, China and Russia being better off now than 8 years ago. Can anyone help with some clickable resources supporting the position? I'm not having much luck with 'the google.' Thanks in advance, and thanks to all of you for many great resources in the past. Unfortunately, most of my ostriches have burrowed even deeper, but I'll keep trying!
---Aaron in Grand Junction, CO

B. Dewhirst said...

Russia has a first strike weapon on their doorstep in Poland, China's major trading partner is going down the tubes, and Iran has unfriendly armies along all of its borders (and electing Bush led to their electing a bigger nutter in Acmadinijad (spelled wrong, doubtlessly.)

We're lifeboat captain because we've got the pistol, but we're ordering people to bail water into the boat...

tacitus2 said...

Regards Iran, Saudi etc.
If you look narrowly at the current day, and define success as lots of money coming in, yes they are doing pretty well. I would add Venezuela and Canada to the list. Basically, if you have oil you are among the economic "haves" right now.

But there are caveats all over the place.

China is a net importer of most everything except their specialty, cheap labor. High energy prices bite them deep, as does a lessened world economy. Most of what they make we don't really need. And some observers think they have created a major ecological wreck in their country.

Iran has money, but a leadership out of step with their populace. The place is currently run by veterans of the Iran-Iraq war, which had an impact on Iran much greater than most western observers can comprehend. The biggest demographic group in Iran is under 21, and they don't give a rip about this. They want Western stuff. Move aside, geezers.

Saudi Arabia has always fudged on their oil reserves. It is a country where much of the wealth goes to a cabal of princes. Meanwhile the population grows and ferments. Work ethic is zip. Someday the Wahhabis and the princes will have to fall out.

Russia has fallen the farthest (just not in the last 8 years, take a longer time frame). When the USSR imploded they lost their national pride, their satellite republics (which had the best economic prospects), much of their military. Life expectancies are falling in Russia, thanks to alcoholism, smoking, poor public health infrastructure. God (or maybe Marx) knows what toxic wastes they have percolating through their groundwater.

I think a good part of the oil bonanza ends up in the private accounts of the oligarchs, ayatollahs, princes and Party Chairmen. It does not by itself make a nation into a great power.

Americans are not accustomed to harsh times. President Obama growing argula lettuce in White House victory garden is gonna look pretty silly.

But if we have decent relations with Canada and Mexico we have the resources, manpower and expertise to tell the rest of the world to, ahem, attend to their own business, if it comes to that.

Tacitus2

William_Shatner said...

We need to stop ANY MOVE to bail the bankers out. The fundamental problem is that we are dealing with ENRON 2.0 -- and there is no amount of money that will make these people honest, or discover that their ideas about economics are wrong. Paulson and Bernanke, once again, BushCo friends, cannot solve this because they would have already done it. An intelligent adult should have been able to see the problem.

The Flim Flam Deal; (from Urbansurvival.com);
"...
As you know, the current plan proposed by the Treasury - and now being rushed through approval is designed as follows:
_Financial Institution with 'bad paper' will be able to sell their paper to the government.
_The government will then sell this paper to other investors at whatever discount they need to in order to 'keep the system alive'.
_The buyers of this paper from the government have no incentive to bid up prices because the farther the asset valuation falls, the more money the bankers will make.
_Ultimately, the public will fund the difference between the current valuation of the instruments and however low these same investment bankers can drop their bids.
 
Obviously, this is an absurdity because under Game Theory, the lower the bids are when the government sells, the higher the yields on these debt instruments. 
 
What's worse, an instrument sold my one firm, such as hypothetically Goldman Sachs (or more likely the Goldman Sachs Asset Management group) could ultimately be  purchased from the government bailout agency purchased by Morgan Stanley.  At the same time, a hypothetical  Morgan Stanley\asset  sold to the government could ultimately be picked up - dirt cheap - by the same Goldman group selling their hypothetical paper.
"


>> My simple take is that these companies Elite will take their money out as we put ours in -- then they get to scoop them up on pennies on the dollar, as the taxpayer takes another hit on the devalued asset. They get to sell it at a price nobody would pay, as if they were a business in good standing. Then they buy it back and tisk, tisk about their risk.

The Republican plan is total capitulation, and the Democratic plan is merely Christmas, but you have to go an an allowance and pay half the price of the bicycle. The Democratic plan is by far better, and it does not make the Fed have the unchecked power of the purse (hand over Congress). If you stuck a gun to my head -- I would go with the Democratic plan, if you gave me a choice with the Republican plan, I'd take my chances with the bullet.


>> Let the damn financial system collapse. If there is anything of value, it will be sold at market prices. The end of the world would be their quick fix. Supply-siders are going to see that pumping up the banks will save it -- marketplace reality will mean that the banks will see that nobody will be getting loans from them, and find a more profitable place for the money -- like the Cayman islands. If no relief goes to the borrowers -- there is no market and the money will just fade away.

Of course the remedy for that will be using Social Security and Medicaide because WE can't afford these anymore. WE can afford to bail out Billionaires, however.

It would be really nice to be Hank Paulson's nether region, because his ability to no-bid buy all these contracts from the Robber Barons is going to making him so many new friends.

>> Now, this speech in 2002 from Barack Obama -- you tell me if he wouldn't be better than McCain; http://usliberals.about.com/od/extraordinaryspeeches/a/Obama2002War.htm

David Brin said...

Here's an article by a neurologist about how to get people to change their minds about which candidate/political party they support: http://www.salon.com/env/mind_reader/2008/09/22/voter_choice/?source=newsletter

=====

John robb's globalguerrillas blog has quite a posting today about turning the u.s. government into a "hollow state."
See
http://globalguerrillas.typepad.com/globalguerrillas/


It fits with my own long expressed worries that Pax Americana has been systematically undermined and dismantled by the very neocons who most loudly claimed to be supporting it. Just as American capitalism has been looted and reamed by the deeply anti-competitive "capitalist" aristocrats who most fervently howled about sacred "markets."

We have re-entered the era of the Big Lie. Goebbels is laughing... while Barry Goldwater is spinning in his grave.

Of the five nations that have done well, in recent years, Brazil is good news. China is iffy. The other three -- Iran, SArabia and Russia -- are deeply hostile powers who have risen higher while America has declined in every conceivable way, under GOP rule that could not have harmed our nation more had that been the central goal.

And yet, I have to tell you who has let us down. I do not blame rapacious faux-capitalists for being predatory looters. I do not blame Redstate fanatics for being know-nothing idiots. I do not blame the neocons, for being stark, jibbering insane. These are classic historical types who have guided past nations to destruction. But human nature is what it is. The Enlightenment and constitutional government and the LAW were designed to create balancing forces that should overcome such classic failure modes.

No, I blame the very people who have been the worst victims of the neocons, kleptocrats and dogmatists. The people who were supposed to balance them with reason, skill, professionalism and attention to our greatest weapon -- the law. I am talking about our civil servants and officers, who swore oaths to protect the United States of America against all enemies, foreign and domestic.

For years - before anyone else ANYWHERE raised the issue - I have been talking about the way the civil servants and the U.S. Officer corps have been abused, chivvied, harrassed, diverted, bullied, corrupted, and sometimes even killed, in a systematic program to eliminate competence from the government of the United States -- the one thing that the raiders and fanatics had most to fear. For just as many years, I have expected, confidently, that enough of these skilled and dedicated people would remember their oaths, talk to one another, compare notes, realize what was going on... and find a way to fullful those oaths -- and earn their pay -- by ripping the veils off of the cabal, revealing the monsters for what they are, and saving the Republic.

I was called silly and paranoid. Yet, the actual decline of America has exceeded my most dire predictions. The only thing that I got wrong was my firm expectation that the professionals would rise up, somewhere along the way and do their jobs. Overcome the relentless efforts of the political hacks who were appointed over them, and blow the whistle.
But, except for the Generals and Admirals Revolt, that got Donald Rumsfeld fired and admiral Mullen appointed to CJS -- (God bless the US Navy!) -- and a couple of IGs stepping up -- and a couple of FBI stings... what have the professionals actually done for their country?

Did SEC bureaucrats go past that horrid shill, Christopher Cox, slipping statistical extrapolations to Henry Waxman? Did the Army issue a definitive report on the demolition of all measures of readiness? Have assistant US attorneys ignored their fanatically incompetent bosses in order to lure henchmen into the open? Where are the mass resignations?

Have the CIA and FBI counterintelligence services activated the anti-subornation protocols, revealing sleeping-with-the-enemy coincidences and revolving doors that would long ago have triggered screaming alarm bells, if the enemy had been communism or nazism? Oh, you and I wouldn't officially know, if they had. I admit it. But - in our guts - you and I also know they haven't.

Sorry if I sound bitter. But these are the people I blame, for the mess we are now in. I was the very first to speak up about them and their suffering. And now I say to hell with them! With a few exceptions, they have proved to be dullards and cowards. Every bit the cretinous bureaucrats that the right wing has always called them.

I had been writing to Obama, asking him to "speak up for the civil servants." I don't think I'll bother anymore.

If America is to be saved, we'll have to do it the old fashioned way. From the ground up.

David Brin said...

Generally good post, Z+. (Welcome back.)

Thanks for the interesting article about the new, co-ed university in S.A. Alas. "Liberalizing" the R'oil House is an oxymoron. This is precisely the sort of Potemkin gesture that would be set up, in order to continue the illusion that the article was written to convey. Look up the word Potemkin.

Likewise, that country is one of the winners of the last 8 years because it has taken in 3 $Trillion of our money while our leaders deliberately sabotaged every possible effort to achieve energy independence. (Our average mileage rates are higher than when Bush entered office.) Also, not one effort has been taken to trace the real roots of 9/11.

Russia is so vastly stronger than it was 8 years ago, that it would take a flaming loony or a gopher not to see it. They were a joke and now top all the lists of GDP growth. Propelled by high oil prices, they intimidate all our friends in Europe and are rebuilding their military rapidly.

The mullahs of Iran are a BIG winner. When Bush entered office, the mullahs were in deep trouble. Reformist President Khatami was rallying the liberals and students and it seemed that soon, the huge and rich expatriate Iranian community would be re-connected with the homeland, adding huge momentum for reform. Oh, and they were terrified of Saddam.

Today, oil prices are high and Iran is building its military and atom programs, without being hindered in the least by Bush. Condi Rice has managed to drive all the students and reformers into the arms of the Mullahs.... and the Iranian Islamic state now virtually controls Iraq. Iraqi PM Maliki has made it clear, while visiting Tehran, that he considers those Shiitre brethren to be the leaders of the region -- and he intends to kick out the Americans in a year. So much for gratitude. So much for "victory."

Anyone who calls China anything but a "winner" is a rationalizing dope. What delusions enable a person to see 7% growth rates and stunning construction of a modern, industrial and military and space power... with reserves of tens of trillions... and make excuses "they're not so tough...."?

Sure, they have vulnerabilities. They may have a crash when we stop buying. But they have unambiguously been HUGE winners across the last ten years.

Travc said...

Zorg,
You are still bayoneting a strawman. I could quibble with some of the over-generalization and slippery slope 'instantly doom!' invocations... but what's the point?

You should turn your attentions to the plan(s) being debated in congress. So far, they are much less likely to 'work' by your logic than what Dr Brin and I have been suggesting... (Which one last time is intended to just *help*.)
--

Rob H. Not so much "good economists are Darwinian"... good economists see the economy as a large complex (hopefully adaptive) system, where macro is just the collective effects of pretty poorly understood micro behavior.

David Brin said...

Actually, I'm relieved. I thought Z had more in his quiver, but every single objection was about perception. As if those same metrics aren't going to dissolve anyway. Not one had to do with tangible realities.

In fact, buying failed wager securities is a stupid way to achieve the same thing as propping up ma & pa in their homes with payment subsidies. Giving the $ to Wall street instead of Main street is simply dumb, on the basis of fundamentals.

tacitus2 said...

David, David, David.

In your sort of response to my post you have managed to call me:
a flaming loony
a gopher*
a rationalizing dope and
delusional.
An impressive theatrical turn, all while mostly ignoring my points.
Russia is on the rise. In another decade or two they might climb out of the hole they fell into when the Wall came down. My bet is not.
China is doing well right now, but has economic peril ahead that rivals ours.
Iran, well, always a special case.
Really, this habit of calling names ill becomes you. I realize that you do not mean it in a personal sense, you are just passionate about what you believe in. But it makes you no friends, converts no "ostriches" (I allow that one because I call you the same affectionately from time to time).
Is this degree of abrasiveness really necessary.

Anyway, I will be off line for a while, and did not want you to think I was sulking. I think there is some kind of satellite TV where I will be, but no internet.

Enjoy the debates, kids.

I suggest preloading with some dramamine, the spin coming off this baby could make a rock vertiginous!

Respectfully as always.

Tacitus2

*guilty as charged here, born and raised in Minnesota

David Brin said...

Tacitus... I apologize. Sincerely. I read your missive, then slogged my way through Z's encyclopedia... and finally got around to answering what I recalled vaguely, while completely forgot the context. I was NOT meaning you, personally or metaphorically.

You are always welcome here. We need you & your questions.

Minnesota? THOUGHT there was something inherently likable about you!
Never met even one Minnesotan I did not like.

tacitus2 said...

David

All is forgiven. Although I enjoy much of Zorgon's work it sometimes also leaves me a bit disoriented.

For anybody interested in the interaction between campaigns and the blogosphere there is some interesting stuff at http://mypetjawa.mu.nu/archives/194057.php
This is a partisan site, to be sure, but the techniques used to scrutinize this bit of Dem skullduggery could be used equally well to examine other flavors.

Enjoy

Tacitus2

Ptolemy said...

Resuming "old fashioned" Zorgon duties, here's some good news.


http://blog.wired.com/wiredscience/2008/09/gene-therapy-bl.html

tintinaus said...

On this blog I operate on the "Glaze Factor". Once my eyes start to glaze over I scroll down to the next post.

JadedSage said...

David,

First off, I love your work. I have read your books for many years now and have recently discovered you are a liberal. Made my day. I just had to copy an e-mail I got along with my response. I hope my fellow left wingers will get a kick out of my retort. Enjoy:

E-mail from Right Winger:

I wish Osama wouldn't act he was above the fannie mae and freddie mac colapse. If he wants to be president why doesn't he stand up and show some leadership. He was directly in the middle of it. How ironic we still haven't heard his economic proposal yet, he is waiting to see what the fed is going to do. That's the leadership we need, hey Hussein, you can't vote present on this one, you have to stand up and give us your proposal. Oh, I forgot, lets raise taxes further which will only inhibit growth even more, that's why we haven't heard anything on this. I know I know he is going to give a tax break to 95% of Americans but what I can't figure out is how that is even possible since 40% don't even pay taxes. Let's call it what it truly is, he is going to give that 40% a tax rebate which he took from the wealthy in America. Correct me if I'm wrong, but that is a socialist move and a redistribution of wealth. America is founded on capitalism, not socialism. In response to your you-tube on president bush reading to kids during the 911 attacks, how do you want him to respond so as to not scare the kids. Also, I don't get why you liberals want to lose the war so bad, you made a comment in reference to "the blotched war on terrorism", last time I checked we are winning the war, and haven't had an attack on America soil for 7 years. I wouldn't call that the blotched war on terrorism, looks like the surge worked and of course we are winning, no thanks to Obama who didn't want the surge, and can't admit now that it is working. Again, the difference between the two candidates, one is calling for the surge even though his politcal career might be on the line, and the other is voting against it because it's the popular thing to do with his party. Give me a break and be a man and show some damn leadership and backbone. God help us if he wins, it will be a step backwards for the good old USA. Give me a break, you might not like President Bush, but damn let's make sure we elect a "true American" and not a fake like Barry Soetoro. aka Barack "Hussein" Osama opps Obama.

My response:

Hussein? Really? Wow, i guess you lost any ability to reason once you resort to such lowly partisan name-calling. I'm sorry but once you reach that level you become irrational. You Republicans are all always harping on people rising above their birth. You have a guy who has done that and then some and you belittle him because his dad happens to be born Kenyan. Why don't you just call him nigger and get it over with?

I don't blame Obama one bit for not rushing into the financial crisis. McCain, as is typical, jumped in saying one thing and then a few days later takes the complete opposite view. Get your facts right, understand the issue and then make a rational decision. That is how liberals opperate. If Gore would have won in 2000 he would never have gone into Iraq.

About Bush, who cares whether he scares a room full of kids. You give a reason why you must leave and you go lead the nation, something the man has been incapable of for seven years now. Look at the current crisis. What does Bush do? He comes out into the Rose Garden like a coo coo clock and says a few words and retreats back in. Nice leader you elected there...twice. Your party sucks. It sucks so bad McCain did not even refer to it in his acceptance speech at the RNC. Your policies have failed. The party that once spoke about personal responsibility have now, with the current crisis privatized profits and socialized losses. Take that one in for a moment. There is your socialism. You and your lame party have become the socialists for the wealthy. Nice going.

Terrorism. We are not winning the war on terror. If we were OBL would be dead and Afghanistan would be peaceful. The fact that we havn't been attacked is and never has been an indicator of victory. There are 2.9 million Muslims in the US. If a small fraction of these wanted to do harm to the US don't you think they could? We haven't been attacked because most Muslims respect what America is. Most would love to live here and if they get that opportunity they take advantage of their good fortune. Most Muslims just want us out of the Middle East. That was even OBL main issue. Those who attacked us on 9-11 simply got lucky at a time when our defenses were down.

I am thankful the surge worked. And I don't mind saying Obama was wrong about it but the surge worked not just because we added troops. In fact we were damn lucky AQI overplayed their hand otherwise you could have added 100,000 and it wouldn't have made a difference. But Obama was right about the most important issue and that was invading Iraq. The invasion was ignorant and should never have happened. If anyone thinks it was worth it then they live in some delusional hole. That place is not worth $1 trillion and 4300 of America's finest and i hate to tell you but there will never be anything like victory in Iraq. I have lived in the Middle East and democracy is fleeting. Over there they call it Iraqracy. Do your research and look into the challenges, you will see what I mean.

Let's talk about McCain, shall we? True American? More American than Obama? Last night I heard him interviewed on 60 Minutes. He spoke of how he found religion in the box in Hanoi. How this changed his life. Well, when he came home he found his wife crippled from an auto accident. A woman who had waited for him loyally for six years while his fate remained uncertain. What did this religiously devoted man do? He cheated on that woman with a monied heiress. Her name is Cindy McCain. Where are all you Clinton bashers now? Hypocritical party. In Obama you have a family man who loves his children, loves his wife. A man who earned his way to Harvard and became the head of the Harvard Law Review. Compare that to McCain who finished at the bottom fifth at Annapolis. Are you Republicans just so shallow you can't see through the bullshit and have to elect stupid people? It is like a damn broken record with you people. Wave the flag and throw the blinders up. And I see you have McCain in your FFL name now. Since when has McCain become your conservative standard bearer? McCain can't speak, he is not very bright and he was complicit in the erroding of Wall Street's oversight and now he is even trying to steal Obama's change mantra. He picks a running mate not based on abilty but for political expediency. It seems to have some effect for Republicans but it doesn't suprise me for they elected Bush twice. They didn't even invite the guy to the RNC...unheard of in the political history of this nation. It is a sad indictment on this nation this election is even close. It just shows me how ill informed and gullable most people are in this nation. Give me a smart Black man with a middle name Hussein anyday over a slow thinking, wife abandoning man whose phoney smile should tell you everthing one needs to know. McCain...God help us.


Kipp
www.jadedsage.com

David Brin said...

Welcome to the fight, jadedsage. But I wouldn't waste my breath on that guy. It is your quasi-reasonable and decent, but deluded Uncle who might listen.

Oh, "victory" in Iraq? The Maliki government have signaled they will kick us out in one year and become close allies with Iran. They aren't even shy about it! Ask if that qualifies as a victory condition.

JadedSage said...

Hey,

How do you know my uncle?!?!?

Thanks for the invite. Love your site.

Kipp
www.jadedsage.com

Stefan Jones said...

If you need to argue with someone who thinks Obama is somehow responsible for the Wall Street meltdown because he got campaign contributions from Freddie and Fannie, you can point out that McCain's campaign adviser consulted with them to the tune of TWO MILLION BUCKS.

Terrified said...

Why we must do everything we can:

http://english.pravda.ru/opinion/columnists/21-09-2008/106413-worldusa-0

zorgon the malevolent said...

Dr. Brin:
To follow up on tacitus2's plaint, you do have a habit of calling people names. "Fool," "looney," "monsters," and so on.

This site maintains a higher level of discourse than most others, and name-calling lowers the tone here. You can do better.

Please consider using incendiary langauge against the arguments people employ, rather than against the people themselves. Saying "That argument is foolish" maintains a more collegial tone than saying "That person is a clever fool." Even better, simply wield blunt yet neutral language: "That argument systematically contradicts the observed facts" hits as hard, but creates less animosity.

It's possible to call someone a liar without offending hi/r: "Your claims appear to intentionally contradict observed reality." That's a fancy way of saying "You're lying your ass off, bubba," but because of its neutral tone, tends not to offend people.

Please also consider laying out specifics when rebutting an argument. One citation of a peer-reviewed journal article is worth a thousand inflammatory retorts devoid of specific references.

If someone has linked to (say) five different peer-reviewed scientific journal articles to support a claim, responding "That's crap" without no further specifics not only lowers the tone of discourse, but creates an impression of anti-intellectual no-neck contempt for knowledge more reminiscent of sinkholes of deluded folly like Little Green Footballs or Hindrocket or Powerline or Instapundit than a serious discussion forum like this.

That said, folks, Dr. Brin is passionate about what he believes, and since he's right about 80% of the time, don't take it personally if he calls you a fool. Brin encounters people so much less smart than he is on a daily basis that he probably gets tired of having to slog his way through the dumbness. So when Brin blows up, it's probably only the heat of the moment, and you may well be wrong -- shucks, I've been wrong plenty of times and made a ton of foolishly false and ignorant statements on this forum. That's life. We're all imperfect. Don't take it personally, folks. And Dr. Brin, please don't take it personally if folks like me occasionally disagree vehemently with your ideas. We still respect you.

David Brin said...

Yipes! Pravda is till out there, all right. And in that great old style we came to love. Yeesh.

FOLKS! Go to
http://open.salon.com/user_blog.php?uid=4802

Where I posted one of my best old essays about a jiu jitsu maneuver for Obama. Visit! Comment! Digg it!

David Brin said...

Aw Zorgon, like you should talk.

Still, yes, this is one of the best places on the internet. You got that right ;-)

JadedSage said...

Terrified,

And I thought Pravda was dead. Hell, while I was reading your link I started shaking and reaching for my vodka. I wish they would be a little more subtle in their views. I get the feeling they don't care much for us. Heck, they link Biden with the Bush administration. That is a big stretch.

Kipp
www.jadedsage.com

Tony Fisk said...

'The Truth' is out there.

....wa-a-ay out there!

David Brin said...

oooog! while we're looking at "journalism"...

http://daggatt.blogspot.com/2008/09/worst-president-ever.html

On January 17, 2001, The Onion famously ran this faux story:

Bush: 'Our Long National Nightmare Of Peace And Prosperity Is Finally Over'
January 17, 2001

One for the predictions registry...

David Brin said...

Diggs, comments, friends!

http://open.salon.com/user_blog.php?uid=4802

Tony Fisk said...

It would seem that a few people from both sides of the house are sniffing Bush's bailout package and wrinkling their noses.
Link

While most are anxious to find bi-partisan ways of getting behind the bail-out, others are critical of what they see as a waste of taxpayers' money, correspondents say.
...
Contentious issues include limiting compensation for executives of rescued firms, wider help for American homeowners at risk of losing their homes and demands for oversight.

"The Bush Administration has called on Congress to rubber stamp its bail-out legislation without serious debate or efforts to improve it," said US Senate Majority Leader Harry Reid. "That will not happen," he said.

Richard Shelby, a senior republican on the Senate Banking Committee, also hit out at the plan.

"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.

tintinaus said...

While normally not the place for breaking political news the gaming website Kotaku has a piece about an Xbox Live survey that gives Obama 43%, McCain 31%, undecided & other 13% each.

Obama or McCain - Who's Leading In Xbox LIVE Survey?

Robert said...

I have to say, Dr. Brin, that Zorgon actually is right about this. In many ways, this is a glimpse into your professional self. Name-calling diminishes you and your work as a whole. As much as it might rankle at times... try to stay above it. Just ask yourself, "What Would Obama Do?" ;)

Jester said...

Can anyone tell me why this wouldn't "work"?

State floats bond. State offers to purchase homes from banks at 50% of value.

State gets Cities/Counties to revise zoning. State knocks down some houses to recreate something that resembles real neighborhoods, with retail space for corner stores and bridal stores and used book shops.

State issues mortages FHA style. Mortages - sound and reasonable 30 year fixed mortages - pay off the bonds. Sales tax revenue backs mass transit bonds.

Screw the Banks, and screw the Federal Government.

Why not?

Yes, I know that none of this fixes the underlying problem of psychopaths playing the same games with our Currency (Bernake, Paulson, *cough*), or puts Bush's 5 trillion back in the treasury.

However, the only way we can remotely begin to deal with the issue of exurban sprawl is mass transit and livable neighborhoods.

Anyone familiar with the great sprawl of 65 cities known to the rest of the country as "Los Angeles" also knows that once upon a pre-war time, people lived 20 miles from Downtown L.A. and rode the street-car to work daily...except for much of the merchant class...who walked three blocks to open their hardware store or barber shop.

'Round here, plenty of such communities still exist...but people are driving in from Pasadena or Monrovia instead of taking Mass Transit. Those who can afford it mostly prefer such communities to living in the exurban McMansions 15 minutes from a loaf of bread or a gallon of milk.

There just isn't room in the urban core to squeeze in the population of the Exurbs...and private industry has no interest in turning them into more sustainable communities.

It wouldn't kill the whole flock problems, to be sure, but how does that stone not kill at least a few birds?

Possibly an overly California specific solution...but CA is home to something on the order of a third of the foreclosures.

--------------

Dr. Brin is ussualy pretty darn civil when folks are civil to him, even when they're passionate and strongly disagree.

I did say ussualy :)

Travc said...

On the whole name calling thing...

Don't be too sensitive, Dr Brin is a Techer after all ;) (ok, inside joke)

Seriously, being blunt or even rude at times can be a sign of real respect. If I said Dr Brin was being an idiot and went on to explain some point of disagreement (or visa versa), that isn't an insult in my book.

Saying Dr Brin (or Zorg or whoever) *is an idiot* is different. That is a blanket insult.

Can we institute a Caltech social rule here? If you think someone is insulting you, give them the benefit of the doubt and assume they are just being socially inept. If they keep it up after you point it out, then you can get pissed.

Just my $0.02

Woozle said...

Shorter version of a musing I posted in the comments at En Tequila:

First this: The 3rd Infantry Division’s 1st Brigade Combat Team (how many soldiers are we talking about, here?) is being moved back to the US and placed "under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks" beginning October 1. (October Surprise, anyone?)

Which led me to the paranoid thought: What would be the most damaging thing Bush could get away with ordering them to do?

How about seizing internet data centers? (The longer version spins out this scenario in more detail.)

The Wall Street bail-out plan apparently includes language allowing seizure of any industry or business as deemed necessary for "financial stability"; certainly internet service qualifies.

Concluding thought: we need some kind of local activism corps, so that we aren't headless in the event of such a seizure. I know Dr. B has mentioned locally-based organizations for dealing with emergencies, but I don't know if they're set up to consider the possibility that our own government might be working against us, much less to work out contingency plans if this should happen.

Any thoughts?

Woozle said...

Oh, and I almost forgot (ostrich-waking seems to pale in significance these days, but I suppose one mustn't give up hope):

Can anyone find (or provide) a rebuttal of this? My ostrich actually seemed interested in hearing counters to it, and indicated that he wasn't necessarily "in the tank for McCain" (whatever that means). A crack in the impermeable shield of decisiveness? Or perhaps he's just egging me on...

tacitus2 said...

(still in electronics range)

Woozle

You can't really "counter" that article, it represents someone's opinion. And it contains a fairly high truth ratio in my view, and likely that of your conservative friend.

Obama as a calculating product of Chicago machine politics? Yep, and the sooner everyone gets over this whole Obama as messiah, complete with halo'd photos on Newsweek cover, the better.

But I won't let you go away empty.

Truman.

A case with some conservative resonance could be made that Obama is the equivalent of Harry Truman.

-tossed into the Oval Office with relativly little experience.
-product of a fairly corrupt political machine, but not too much visible dirt attached.
-narrow electoral victory.
-likely to be quickly tested by world's bullies.

Truman did fairly well under the circumstances. If you can get your mind around the notion of a working mom having skills usefull on a leadership level you have to admit that a man capable of rising up from a very complex political system (albeit still a somewhat corrupt one), could have a few smarts that might come in handy.

And the icing on the cake. As a conservative I sort of feel that we need to get some nonsense out of our political system. Four years of Obama might be necessary for us to move on to other, better things. After Truman came Eisenhower.

Of course, if your state is not "in play", quit trying to influence a vote. Work on looking ahead to the outcome. If you can say sincerely, "I would consider it my duty to support the elected president of the United States", he could only do the same.

Amusing as I find the political game, this is about leading our country in the end.

Tacitus2

Gilmoure said...

Article: A free-wheeling new Muslim culture grows in Dubai


Here Galal, 24, drinks beer almost every night and considers a young Russian prostitute his girlfriend. But he also makes it to work every morning, not something he could say when he lived back in Egypt.

Everything is up to him. Everything: what meals he eats, whether he goes to the mosque or a bar, who his friends are.

"I was more religious in Egypt," Galal said, taking a drag from yet another of his ever-burning Marlboros. "It is moving too fast here. In Egypt there is more time. They have more control over you. It's hard here. I hope to stop drinking beer - I know it's wrong. In Egypt, people keep you in check. Here, no one keeps you in check."

In Egypt, and across much of the Arab world, an Islamic revival is being driven by young people for whom faith and ritual are increasingly the cornerstones of identity. But that is not true in the ethnic mix that is Dubai, where 80 percent of the people are expatriates, with 200 nationalities.


Is this the future of the Middle East or just an extremity that will be absorbed back into the more traditional society?

Is interesting observation that some find Dubai easier to practice their religion.

In this environment, religion is not something young men turn to because it fills a void or because they are bowing to a collective demand.

That, in turn, creates an atmosphere that is open not only to those inclined to a less observant way of life, but also to those who are more religious. In Egypt, Jordan, Syria and Algeria, a man with a long beard is often treated as an Islamist - and sometimes denied work. Not here in Dubai.

"Here, I can practice my religion in a natural and free way because it is a Muslim country and I can also achieve my ambition at work," said Ahmed Kassab, 30, an electrical engineer from Zagazig in Egypt who wears a long dark beard and has a prayer mark on his forehead. "People here judge the person based on productivity more than what he looks like. It's different in Egypt, of course."

zorgon the malevolent said...

Woozle:

I'll take a shot. It's actually pretty easy to debunk these claims.

The Obama that emerges from its pages is not, Mr Freddoso says, “a bad person. It’s just that he’s like all the rest of them. Not a reformer. Not a Messiah. Just like all the rest of them in Washington.”

Really?

What's the first thing Bill Clinton did straight out of law school? He ran for office. What's the first thing Hillary Clinton did straight out of law school? She got a job with the best law firm in Arkansas.

What's the first thing the drunk-driving C student did straight out of law school? He started an oil company with money from his daddy's friends.

What's the first thing Dick Cheney did straight out of law school? He went into politics.

What's the first thing Barack Obama did straight out of law school?

He worked for peanuts as a community organizer helping poor people get asbestos removed from their rotting tenements.

Can someone explain to me how this makes Obama "a product of Chicago machine politics"?

What, there's some kind of hidden fabulous fortune in organizing food banks? People get rich doing that? Obama squirreled away a bunch of bars of gold bullion by "helping poor blacks agitate with the city government to get benefits for their communities such as job banks and asbestos removal." (According to Wikipedia's entry on Obama's early career. Link. How does that work, the poor black people people on welfare are so grateful for getting part-time minimum wage jobs, they bribe Obama with nuggets of platinum and diamonds to carry out their secret radical agenda? Oh, I get it, after all the asbestos removal, the poor black people living in tenements held a secret ceremony and swore Obama to a blood oath to take over the Oval Office and deliver America's defenseless white virgins to them in the general black uprising, is that it? Those are the IOUs Obama has amassed in his years immersed inside that filthy Chicago political machine?

Is the guy who wrote that book drunk, high, or did he just suffer severe head trauma in an automobile accident?

Obama wound up running for state senate. Right. So where, exactly, are all the IOUs Obama accumulated? There are...like...zero. What does Obama owe? Very little. And how much is a state house seat worth, anyway? This is not a big-ticket position we're talking about.

Then Obama winds up running for the U.S. senate -- except he's unopposed, until one of the craziest personalities in all of U.S. politics steps in to contest the seat, good old Alan Keyes. Okay? People? Alan Keyes? This is the guy who thinks we need to shut down the I.R.S. And you're wondering why Obama won that Senate race?

So I ask again -- where are all the IOUs? What kind of dirt do the Chicago machine pols have on Obama? What, they had to rig Obama's 2004 senate race because all those people were going to vote for Alan Keyes so he could shut down the IRS and get rid of the Federal Reserve system? I mean, people, Alan Keyes is the kind of politician who's so far out on the fringe of American politics, they practically have to strap him onto a loading dolly and wheel him out in a straitjacket with a hockey mask fastened to his face.

Folks, a dead dog would win against Alan Keyes. He's as far out as they come. Alan Keyes is the guy who said (and I quote) "the Constitution has now been destroyed, and it lies in ruins unless we recapture the understanding that underlies it and revive it, before it's too late." And what was Keyes talking about there -- the legalization of torture? No. The abolition of habeas corpus? No. A White House lying us into an illegal war of aggression? No. Alan Keyes refers to the decision to pull Terry Schiavo's life support tubes. That's what has "destroyed the constitution of the united states," according to Alan Keyes.
Link.

People, you don't need to eat a whole egg to know it's rotten. Once you bend down and sniff a dog turd and conclude, "Well, it smells like a dog turd," and once you rub it in your fingers and conclude, "Well, it feels like a dog turd," you don't need to lick it to conclude, "Wow, this even tastes like a dog turd, so it probably is a dog turd." This book is a dog turd. It's just the latest smear job, the old Whitewater witch hunt updated for the early 2000s. Same song, different words. Throw enough sh*t at someone and sooner or later, some of it will stick. Create enough smoke and eventually, everyone will believe there's a fire.

Look at the evidence, people. The evidence is that Obama made a bunch of money -- off his book. That's how Obama made his money. His 6 million bucks? That's where it came from. It came from the book he wrote. Obama owns one house and one car. He didn't get his millions from lobbyists, he didn't go on junkets, he didn't go cozy favors for his buddies in the defense contracting community, he didn't marry a billionaire heiress, Obama wrote a book. A really inspiring superbly well-written book. That's how he got his money.

So I ask again: who does Obama owe? Where are all the IOUs? How is Obama the "product of Chicago machine politics"?

The guy worked as a community organizer, he ran for the state house, he ran unopposed for the U.S. senate (except, at the end, by a nut job nobody in his right mind would ever vote for -- Alan Keyes is the black G. Gordon Liddy, fer cripes sake!), and then he made a bunch of money by writing a book.

So how does this work? Obama is now under the thumb of...the publishing industry? What, the bookbinders have got him where they want him, and he owes them big-time? Is that it?

Please.

The claim that Obama is somehow deeply immersed in "Chicago machine politics" and owes big favors to a bunch of sinister shadowy figures in the Windy City is the most ridiculous claim I've heard since a homeless guy tried to convince me that the earth was hollow and filled with Nazis and grey reptoids. Examine the facts. Obama is just about as untouched by politics as you can possibly get.

If he'd been in Washington for 15 years, 20 years, sure. Folks, this is a first-term senator here. he's been in Washington for two years. TWO YEARS. The guy hasn't even gotten to the halfway point in his first term as senator. Where does Obama accumulate all the shadowy backroom deals and sinister markers from guys sitting in Eero Saarinen chairs while stroking white cats? Obama hasn't been in Washington long enough for that. 22 months isn't long enough to sell your soul. Obama was a junior senator in his first time, nobody would buy even if he had tried to sell his soul.

Let's dissect this smear job in some more detail to see just how sleazy it is, how devoid of facts, and filled with baseless innuendo.

He was a staunch backer of Richard Daley, who as mayor failed to stem the corruption that has made Chicago one of America’s most notorious cities.

Translation: Chicago has corrupt pols in it, and Obama supported a politician who tried to clean the place up but didn't succeed.

Well, big whoop. How does that reflect badly on Obama? Explain that to me.

That's like saying I'm a murderer because one of my friends is a lifeguard who failed to save a drowning swimmer. Hello! Can't we get any sleazier withe vacuous smears here, folks?

Moving on, we have:
Nor did he lift a finger against John Stroger and his son Todd, who succeeded his father as president of Cook County’s Board of Commissioners shortly before Stroger senior died last January. Cook County, where Chicago is located, has been extensively criticised for corrupt practices by a federally appointed judge, Julia Nowicki.

Translation: Obama didn't have the power to go up against a guy who was a big wheel in Chicago politics because he was still a freakin' first-term state senator.

Once again, big whoop. This is like saying Bill Clinton is corrupt because as Governor of Arkansas he didn't remove Ronald Reagan's corrupt administration form the White House during the Iran Contra scandal. Earth to smear artist...earth to smear artist...Bill Clinton didn't have the power as governor of a nothing state to go up against Saint Ronnie no matter how obviously and flagrantly corrupt Reagan was, just as Obama didn't have the power as a piddling little first-term state house incumbent to go up against one of the bigger guys in the whole state of Chicago.

And this makes Obama somehow corrupt...?

The full extent of Mr Obama’s close links with two toxic Chicago associates, a radical black preacher, Jeremiah Wright, and a crooked property developer, Antoin Rezko, is also laid out in detail.

Obama sat in the back pew at Wright's church. To get street cred. And exactly what was so "toxic" about Wright? Let's see...he claimed...America is a racist country! Oooh! Oooh! Horrible! Toxic! Unacceptable! Let's lynch the uppity nig -- eh, well, you get the idea.

Rev. Wright has not said anything that has not been said or is not being said in bars, poolrooms, barber shops, hair salons or anywhere more than three black people gather.

And don't fool yourself. It's not just the black urban poor, those without jobs, education or hope, who express these comments. Many members of the black middle class have the same sense of history; the same sense of anger.

And it ain't illegal to be angry.

Rev. Wright is not the first black minister to condemn this country for its racist practices.

The Rev. Martin Luther King did more than proclaim a dream. He called out America for what it did and was doing to people of color all over the world (slavery, discrimination, the Vietnam War). He did it in a more sophisticated way, but his message was the same.

But Rev. King did not call for black people to burn the flag, to destroy property, to kill white people or to leave the country. And, as far as I can determine, NEITHER HAS REV. WRIGHT.

Rev. Wright is not leading nor advocating a revolution. He is just venting...

Link.

Jeez. And this means Reverend Wright is somehow "toxic"? Wright suddenly turns into a Stokely Carmichael clone with three nude white women behind him handing him grenades and an AK-47 because Wright has the audacity to point that America is racist country...?

And Obama is standing next to Wright with a giant Afro and a bowie knife in his teeth and a bone through his nose and a pair of belt-fed M60s under his arm while he snarls, "Kill whitey!" ...All because Obama attended sermons at Wright's church...?

Remember that quote I cited a while back about how Cardinal Richelieu gloated "Give me six lines penned by a man, and I will find something in them to hang him with." Well, here we are, folks. Obama sits in a pew a couple of times, and suddenly he's guilty of conspiring with a wacko black preacher who never talked about his crazy claims in church.

Let's flip the script and see how it goes if we turn the tables: the author of that smear job published his book at the same publishing house that also publishes diet books of dubious value and sleazy exploitive true crime books. So that must mean the author is a con man who rips off fat people and vampires money out of the victims of hideous crimes!!!

Folks, this kind of smear by association is the lowest kind of Joe McCarthy tactic. I'm surprised this author didn't track down some crooks who rode in the same elevator as Obama on one occasion, and trumpet that as proof that Obama has ties to organized crime.

Listen -- I'm not enraptured by Obama. His FISA cave-in was disgusting. I don't like a lot of Obama's policies. He says he's going to increase the military budget, which is insane, and he proposes to send U.S. troops into Pakistan unilaterally, which would collapse Pakistan into yet another failed state and provide a wonderful haven for terrorists -- except this time, the failed state has nuclear weapons.

So I'm not a huge fan of Obama.

What I do realize, however, is that in 2008, the political spectrum is no longer split between liberals and conservatives. It's split between sanity and insanity. John McCain's proposal to give the rich more tax cuts and invade Iran is batshit insane. Obama has a bunch of bad policies, but at least he's not stark raving nuts.

You want corruption? McCain was the worst of the Keating Five. Why hasn't anyone written a book about that? McCain's chief economic adivor, Phil Gramm, wrote the bill deregulating investment banks that started this whole goddamn financial meltdown. Where's the book about that?

Somehow, no one has time to write any books revealing the dirt on Phil Gramm or the Keating Five or the thirty-odd lobbyists around John McCain, some of whom made millions by lobbying against financial oversight of AIG, which is now bankrupt and kaput. But people have all the time the world to write books digging up the lurid details of all the dirt behind Obama's sleazy efforts to...get the city of Chicago to remove asbestos from poor black peoples' tenements.

At this point, about the only thing I can think of to say to a low-down rotten slime job like this, is the old classic from the Watergate transcripts: [EXPLETIVE DELETED].

SteveO said...

Gosh - you guys have got to read George Will's latest column. I am stunned. He takes the obligatory swipes at the Democrats, but he eviscerates McCain.

"Under the pressure of the financial crisis, one presidential candidate is behaving like a flustered rookie playing in a league too high. It is not Barack Obama."

...snip...

"It is arguable that, because of his inexperience, Obama is not ready for the presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?"

zorgon the malevolent said...

It gets even more amazing. Arch-far-right indignatrix Michelle Malkin has now lost it completely, she rails against Repubs and the current denizens of the White House in her latest column.

...It is September 19, 2008. And this is a Republican White House presiding over the Mother of All Bailouts. Every step along the way since stimuluspalooza began last summer, we’ve heard that every bailout step was just a one-off. Each step was supposed to calm the markets. Each new government intervention and allocation of taxpayer dollars was supposed to achieve “stability.” Each new package of goodies rewarding irresponsible behavior and bad financial decisions was supposed to prevent new ones.
None did. And now, here we are.

This is your Bush legacy — not Pelosi’s, not Reid’s, not Obama’s: A ginormous bailout of every last, failing, panicked financial institution’s illiquid assets that may reach into the trillions — TRILLIONS – when all is said and done.


Link.

I immediately placed an urgent person-to-person phone call to Hell. Satan picked up, but he couldn't talk because his tongue was stuck to the flagpole.

Gilmoure said...

Zorgon the malevolent said...

Satan picked up, but he couldn't talk because his tongue was stuck to the flagpole.

Beautiful, man, just beautiful.

Travc said...

Dr Brin... The Salon article on "voter choice/psychology" is really excellent.

Just wanted to say thanks for the link, repost it, and encourage everyone here to actually go read it!
--

Zorg, some on the far right have woken up to the disaster which is Bush, and even turned on McCain as he is revealing himself to be an empty suit with a bad temper.

Others, like Malkin, are pissed because the kool-aid is running low.

David Brin said...

Yes, Z+ is at his best, right now. Dang. Check the phase of the moon. Let’s track it guys. Tongue stuck to flagpole... har!

I looked in on George Will, in case his turn on McCain meant that this smarmy rationalizer had finally decided to set his inarguable intellect to work for the civilization that’s been good to him, at last. Well... he reaches the right conclusion, but spoils it, along the way, by defending Christopher Cox, the unqualified but profoundly monstrous political hatchetman who Bush appointed to head the SEC. Never mind, I’ll accept Will on our side. But warily.

From the ridiculous to the sublime. Remember the old expression: “If you’re so smart, why ain’t you rich?” Well, here’s a smart guy.

See a fantastically prescient look back to what the World’s Greatest Investor, Warren Buffet said about the mess we are in, describing derivatives and the trading activities that go with them. ”We view them as time bombs, both for the parties that deal in them and the economic system.”

Buffet went on to call them “economic weapons of mass destruction.”
http://daggatt.blogspot.com/2008/09/financial-weapons-of-mass destruction.html

This was predictable, folks. And the CEOs who walked away with $450 Million retirement bonuses - at minimum - should be forced to give the money back.

--------

Oh... for the record, my “insults” were very generic. Yes, too much. But “only a dope can’t see that” is really kind of mild stuff.

------

tacitus, Truman and Ike were great. But please bear in mind this. Richard Nixon fundamentally transformed the Republican Party, and only part of that was the “Southern Strategy.”

But even Reagan and Bush Sr. believed in satiability. That the theft should be limited to levels the cattle could bear. And that only a few agencies (e.g. the EPA) should be topped by appointees dedicated to preventing the agency from functioning.

What we have seen since Gingrich and especially the last 8 years, is a different philosophy. Every institution, from the Army to the SEC to the IRS must be systematically corrupted.

Here’s the thing though. When Palin replaces McCain, it will no longer be the thieves in charge. They made a real mistake here. The theocrats who they have long pandered-to are actually very very dangerous to them .

-----
Thanks Zorgon. But I have to go beyond defending Obama. It is simply a bald-faced and jibbering-delusional lie to claim that democrats and republicans are morally equivalent or equally corrupt. Or even in the same general territory, or side of the same planet, when it comes to corruption.

PROVE IT!

No, wait, republicans spent a BILLION dollars, much of it in taxpayer funds, and FOURTEEN YEARS, co-opting and re-assigning FBI agents away from protecting us (before 9/11, an act of outright treason), looking everywhere for that purported Democrat/Clintonian corruption. And they found none.

Let me put that to you plain. You may cite a few anecdotes and implications. An aroma, here and there. But after all that, not a single Clintonite official was convicted or even indicted for malfeasance of office. A negative proved, at last, by thorough and fruitless search for a single positive.

In contrast, Gopper crooks drop like flies, even despite relentless obstruction by every organ of the US government. (And the thing they fear most is unleashing of the prosecutors, in January 2009 -- watch for the Pardon Tsunami!)

I declare the “they’re all the same” emperor to be naked. It’s a flat out falsehood. Dig it. The facts are plain. Democrats = 99% honest. Republicans = venal, corrupt and absolutely reliable to do the wrong thing. It really is (with a few exceptions I could name) as simple as that.

And I am a registered republican who admired Barry Goldwater.

David Brin said...

Oops. here's the Buffet article... from 2002!

http://daggatt.blogspot.com/2008/09/financial-weapons-of-mass-destruction.html

William_Shatner said...

In case people have not prepared for financial apocalypse;
The main issue here is NOT the mortgage lending market. This would be like blaming gambling at the racetrack on the ponies -- the real business here is gambling. The Derivatives Market is gambling for the wealthy. Some ponies win and some lose -- is it only greedy lower class ponies that lose? According to the Right Wing Spin, this is the only issue. Greedy ponies that didn't make first place, so the Ponsi scheme betting on the outcome collapsed.

Now, you can place a bet on the weather, or wether or not mortgages go up and down, or whether the bet on the weather goes up or down. So, the shortfall in packaged up bad loans is nothing compared to the bets on the bets on the bets on the loans going up, down and sideways. They've got derivatives that are NOT based on real things.

Indeed, we should bail out some of the borrowers -- because this will help create a market. But it doesn't matter if the ponies win or lose -- it's that most of the value of the Derivative bets isn't there. Maybe someone traded it, and somehow it is depended upon as real money -- I really can't say. One way you can use your bet as something you can trade on is called Structured Monetization, where you can bet against your bet, and then you are covered for fluctuations. Maybe the fly in the ointment is a divide by zero error (more here; http://www.derivativesstrategy.com/magazine/archive/2000/0900fea1.asp ).
Like stockholders, structured monetization trades come in different shapes and sizes. One versatile, popular product is the zero-cost, or costless, collar plus loan. If a stock is trading at $100, for instance, a client could buy a put at, say, $90, and sell a call at $112 or whatever strike price will generate enough premium to cover the cost of the call-perhaps $110 or $115. By locking in the value of the position to the range between the put and the call, the client will have effectively secured his wealth and can then borrow against 90 percent of the put strike times the number of shares being hedged.

Maybe you can do that more than once, and then use the revenue to make another "Bet" -- then Monetize that Bet, and repeat the process, if you are a really clever person, and want to risk $1 Million to make $1 Billion. I'm not sure what the limits are because how does anyone track what you originally derived your derivative of your derivative on? Not being an expert here -- but I could see how such a scheme wouldn't even work in a fantasy game online.

But this is what makes money for the super elite, and sucks our money into it like a tornado. Offshore dollars and derivatives is the strange cloud of "value" that can never really come out of the cloud, except as an extreme deluge. It is an alternate reality where the value of a loaf of bread and a days work are not a factor. MONEY makes money.

The production output of all the countries in the world is estimated to be $60 Trillion per year (the US accounts for $15 Trillion). The derivatives market is playing with 1000 times 1 Trillion Dollars. These people who play with money based upon our labor, apparently think that the games they play are worth more than all the work done in the world. Good luck cashing out those chips.

@Travc; you can now put on your calendar when people will start using the word; One Quadrillion Dollars. BIS 2007 valuation of the world's derivatives was a mere $516 trillion. They''ve been piling on this disaster that they knew was coming THIS DAMN YEAR. People think 9/11 theories of how so many people can be involved in a complex conspiracy are impossible. Here is the biggest bank heist in history -- beyond any imagination, and it was hidden in plain view -- or at least on a website that required reading. http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid=%7BB9E54A5D-4796-4D0D-AC9E-D9124B59D436%7D


This King Paulson bailout is merely to get the economy past November 4 so that McCain will get in office. That's it. What they want to do with such a failed state -- the hollowed out country (as I've been calling it for a while now), should be a great topic for speculation. Warren Buffet calls Derivatives "Weapons of Financial Mass Destruction."
Derivatives can only come out 4 times a year. So that is why we haven't seen a run on this. I suspect the bailout will only be to trade Taxpayer money for Bankster money, so that they can get out of town before this thing blows up.

William_Shatner said...

Of course, we all knew this -- White House Admits to Planning Bailout for Months;
http://www.dailykos.com/story/2008/9/23/124453/470/612/607556

But the world is moving on beyond our little financial troubles...

When it rains, it pours;
Russia sends warships with Nukes into the Caribbean;
http://www.timesonline.co.uk/tol/news/world/europe/article4804157.ece

Massive amounts of methane are leaking from Arctic sea floor, expected to increase rates of Global Warming;
http://uk.news.yahoo.com/itn/20080923/tuk-methane-escaping-from-arctic-sea-bed-dba1618.html

I'll try and find some good news stories to not be such a downer. Maybe discounts on Cisterns and Solar Panels...

B. Dewhirst said...

I've actually found an inspiring take on the present financial difficulties which some of you will probably appreciate as much as I have, albeit for different reasons.

Douglas Rushkoff is guest-blogging at Boing Boing, and he's got some interesting ideas about "crisis as opportunity" with regards to this present mess...

Ron Paul goldbugs and property-as-thefters alike should find it diverting, at least:

Print your own money and financial melt-up.

(For more on LETS, see itswiki entry. Unless I'm mistaken, this incorporates a transparency-based suggestion that Dr. Brin first made in his The Transparent Society.)

Travc said...

Sorry, I have to vent or my brain is going to explode:

The bailout plain is premised on keeping the credit market going at breakneck speed. The root problem is that the credit market is insanely overheated!

If the plan doesn't explicitly dial down the credit market, then I say we let it 'seize-up' (which it will not completely do anyway.)

The children have eaten too much candy and gotten sick... so give them more candy! *sigh*

David Brin said...

This is another version of "privatizing social security."

Both endeavors aimed to improve outcomes for those who already held securities, by adding fresh purchasers and "greater fools" to buy up their bad wagers.

Unambiguously, the real winners of privatizing SocSec would have been the existing owners of stock -- to a large extent, the rich. But at least these millions of new buyers would be allowed to make some self interested decisions. Some would win a bit.

(Though, at this point the democrats would be fools not to raise that central Republican plank, and point to how much folks would have lost, by now!)

But the new scam is far worse. There is no fig leaf for this, the greatest act of socialism in US history. And all of the assets that they want new buyer -- greater fools -- to buy are dogs!

Also: the "emergency" rush is incredibly similar to the rush to war, in 2003. Think about that.

In 2003, Bush-Cheney-Rumsfeld-Powel said "We are the same gang who coddled both Saddam and bin Laden for years and propped Saddam back into power, in 1991 -- hence trust us as experts how to get rid of him..

In 2008, Bush-Cheney-Paulson-Cox say "We are the same gang who created this mess, ignoring every warning -- hence trust us as experts how to fix it.

That should be the number one refrain. No fix unless the commission recommending it includes people like Warren Buffet, who saw this mess coming and warned against it.

William_Shatner said...

@Travc,

After a little more reading, I discovered where our friend Zorgon was getting his outlandish numbers; The Derivatives Market.

Please go back and read my previous few posts,... Dr. Brin also linked to an article by the one honest Capitalist, Warren Buffet; http://daggatt.blogspot.com/2008/09/financial-weapons-of-mass-destruction.html

>> We are talking $1,000,000,000,000,000 -- excuse me if I lost track of the Zeros -- that is a trillion dollars.

The Housing "crisis" is what they bet on in the Derivatives market-- but that doesn't stack up to the real problem. The "Bank Bailout" is a red herring for this larger problem.

The $700 Billion is just to get us to November, so that Republicans can get elected and help the Robber Barons stay out of prison. That is their #1 Goal. So if they have to start a war with someone, get something else blown up -- they will do it. And I think you need to go back and read my last few posts about WTC Building 7 on Brin's previous thread. There were a lot of records and investigations that kept a lot of rich thieves out of the poor house/prison.

>> The more you think about what they've done and how they hid it -- and that it has been done to us numerous times,.. you will broaden your horizons about what is possible.

William_Shatner said...

Dang, sorry, I messed up again on that number.

I meant to say that it was 1000x $1Trillion, or a Quadrillion dollars that is going to blow up in the Derivatives market.

It was a mere half a Quadrillion in 2007. I guess, once the got to ridiculous numbers, the Iraq war, the corruption, kind of lost meaning,... I wonder if this was the disaster that kept the Democratic congress mesmerized, so that they said; "Hey, we won't press charges as long as you keep this as far from us as possible." Either that or it is Theory #1, that Rove/NSA got dirt on everyone with domestic spying.

Stefan Jones said...

When they make a movie about these times, the director would be well advised to include interstitial bits from The Daily Show.

Bits showing the major players lie, spin, and smug about how great things are.

Contrasted with how the same people are/will react to the monstrous bailout.

William Kristol, who a few months back appeared on Stewart's show to report from an alternate reality about how well the economy was doing, is suddenly shocked, shocked!

Tony Fisk said...

Andy Stern (SEIU) wants you to sign a petition voting 'No' to the bailout.

(To be fair, is there anywhere that wants people to vote 'Yes'?)

zorgon the malevolent said...

AWAITING YOUR CORRESPONDENCE - IMPORTANT BUSINESS MATTER

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gramm, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

Link.

zorgon the malevolent said...

2008 REPUBLICAN PLATFORM

"We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself. We believe in the free market as the best tool to sustained prosperity and opportunity for all."
Link.

Tony Fisk said...

!!

...Does Nigeria have an extradition treaty with the US?

(My verification for this is 'bhywo', which sounds sufficiently swahili-ish to suggest that even blogger is getting in on the fun!)

Point about tracking what they said then and now... the rats appear to be abandoning the Titanic. If the american public would be just so good as to throw them their lif jackets...

Tony Fisk said...

Do you remember that scene in 'Nineteen Eighty Four' where a rally in support of the war with one bloc switches in mid-rant to support for war with the other bloc?

Subversives apparently hacked the protest banners.

Sounds like something similar happened to the Republican platform.

Tony Fisk said...

Economic meltdowns, humanity going extinct in thirty years, flagpole splinters.

Well, just to put things in perspective, spare a thought for the erstwhile habitants of star system BD +20 307:

US astronomers discover inter-planetary collision

Tony Fisk said...

Aha! A distraction! Just what you need when you don't want too much scrutiny of the Bailout hearings (epic, indeed!)

Palin bars, then admits reporters to UN meetings

Travc said...

William, the 'money' which underlies the derivatives and other shadow/vapor assets is credit. I'm not focusing on dodgy mortgages on this, but given the context I should have been more clear.
I wasn't try to speak precisely... "vent" should have been a clue.

All the tangible capitalized assets in the world amount to maybe $150 trillion. The shadow economy is a grand illusion. Wall Street should drop the 'bulls and bears' icons and start using a pink unicorn.

SteveO said...

@ Travc

An invisible pink unicorn

It looks like both Republicans and Democrats are pushing back on this crazy bill. Maybe saner heads will prevail.

Tony Fisk said...

Carrying on the old tradition set by nursery rhymes:


The Oyster and the Unicorn,
were crying in their beer.
'Dear Oyster', wept the Unicorn,
'Please bail me out of here!'
Well, a few gave them the thumbs up,
some more gave the thumbs down.
But most gave them the finger,
and drummed them out of town!


(I had originally thought a purple lion, but since the belief system of the IPU includes a purple oyster, and it scans...)

An eerie bit of synchronicity: today is Earth Overshoot Day

Cliff said...

Well then, folks, it is obvious that you have a far more profound grasp of the current situation than I do.
I have been unable to assign any sort of proportion to the factors involved in the crisis. So my question is this: what are your recommendations for survival?
Is it time to prepare for full anarchy? Should I expect martial law and a Krystalnacht around November?
Or is it sufficient just to hunker down, lay low until the worst blows over? (Although that may take years.)

Travc said...

Cliff, I'm starting lean towards the 'let Wall Street fail' option. Brokers and investment bankers will be jumping out of windows, but the majority of assets which aren't fictional in the first place will probably survive... hell, there is a good argument that they will thrive after taking a short collateral-damage hit.

The voices calling for cooling down and not jumping into rash 'solutions' which may well turn out to be bigger than the immediate problems are sounding pretty sane.

NoOne said...

Rather than only focus on negatives, I'd like to point out a possible long-term upside due to the events of last week.

Prior to last week, it was next to impossible to have a conversation with "You want to regulate a free market?" type of (loony) friend. Folks, that has officially jumped the shark. In the long run, we are more likely to see a new alignment of (non free market loony) libertarians and (non {insert-type-of} loony) progressives. We may in fact see a more straightforward fight between oligarchs (forced to come out of the closet) and this emerging progressive/libertarian alliance. And that has to be a good thing, right?

B. Dewhirst said...

NoOne, I'm afraid you underestimate the power of the dark side... um, I mean... elite propaganda.

"We've" been "socializing" risk and privatizing profits for quite some time now...

Robert said...

I originally asked this on Daily Kos, but let's face it; their attention-span is quite short, and with threads developing hundreds of responses in minutes, the likelihood of someone with actual knowledge in economics answering is about non-existent. Not to mention the fact there are a number of rather intelligent and well-educated individuals who visit this blog.

There have been comments from people against the bailout and not giving Wall Street any money at all. I'm curious as to the short-term, mid-term, and long-term repercussions if this Bailout Package is rejected outright. By that, I mean not even giving them $150 billion to play with, but rather to tell Wall Street "you made your bed, now sleep in it."

What would fall first? What would the domino effect be? Is there anything that could be done to minimize the damage to the rest of the economy but allow this specific diseased segment of the financial industry to wither and die on the vine?

I look forward to your responses.

Rob H.

Gilmoure said...

Another option is the Swedish Solution; have the government require the institutions to write down their losses before coming to the government for a handout and to also pony up stock to the government, in return for help? I mean, they've already done this with Mac/May and AIG, why not with the rest? Once things stabilize, the government can sell of the stock and get some of bailout funds back.

Robert said...

An interesting article appeared on Daily Kos from Allan Meltzer, a professor of political economy & public policy at Carnegie Mellon University, suggests we shouldn't bail out Wall Street. He mentions that we are currently seeing corrections in the market underway as we speak, and also mentions that because AIG was waiting to get a better deal from the government, it turned down three purchase offers.

The article also mentions that the Chilian market had a worse crisis in 1982, and they worked through it. Thus it seems this might be a huge smoke game attempted by the Neocons to scare Congress into the biggest mistake of their lives... and it's not quite working out the way the Neocons hoped it would. If it does at all.

Rob H.

Rocky Persaud said...

Sounds like stipulation...

At 8:30 this morning, Senator Obama called Senator McCain to ask him if he would join in issuing a joint statement outlining their shared principles and conditions for the Treasury proposal and urging Congress and the White House to act in a bipartisan manner to pass such a proposal. At 2:30 this afternoon, Senator McCain returned Senator Obama’s call and agreed to join him in issuing such a statement. The two campaigns are currently working together on the details.

Stefan Jones said...

Easy solution to the methane leaks and increased CO2 emissions:

Sell the atmosphere to Halliburton, who can clean things up in exchange for a yearly breathing fee from each adult human.

See? Privatization works!

Robert Prior said...

bootc, I'll throw in a recommendation for three Jane Jacobs books. In order:

Systems of Survival explores ethics, business, and government

The Nature of Economies continues from it, and adds ecology (and ecological accounting) to the mix.

Dark Age Ahead looks at hidden knowledge, and the cost of society of letting it lapse. Rather like John Ralston Saul's The Unconcious Civilization (also worth reading) but less philosophical and more succinct.

David Brin said...

Thanks Rocky!

See next thread

Anonymous said...

an on-call federal response force for natural or manmade emergencies and disasters

I thought that was one reason for the National Guard?