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Walldon in New Jersey ---- Marketingace in Pennsylvania ---- Simoneyezd in Ontario
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Thursday, January 21, 2010

What is a Democrat, anyway?

It's hard to argue with this. It's also hard to imagine Mr. Nice Guy Obama calling it the Bush Recession. One of the best things I've read.

The President's steadfast refusal to acknowledge that we have a two-party system, his insistence on making destructive concessions to the same party voters he had sent packing twice in a row in the name of "bipartisanship," and his refusal ever to utter the words "I am a Democrat" and to articulate what that means, are not among his virtues. We have competing ideas in a democracy -- and hence competing parties -- for a reason. To paper them over and pretend they do not exist, particularly when the ideology of one of the parties has proven so devastating to the lives of everyday Americans, is not a virtue. It is an abdication of responsibility.

What happens if you refuse to lay the blame for the destruction of our economy on anyone -- particularly the party, leaders, and ideology that were in power for the last 8 years and were responsible for it? What happens if you fail to "brand" what has happened as the Bush Depression or the Republican Depression or the natural result of the ideology of unregulated greed, the way FDR branded the Great Depression as Hoover's Depression and created a Democratic majority for 50 years and a new vision of what effective government can do? What happens when you fail to offer and continually reinforce a narrative about what has happened, who caused it, and how you're going to fix it that Americans understand, that makes them angry, that makes them hopeful, and that makes them committed to you and your policies during the tough times that will inevitably lie ahead?

The answer was obvious a year ago, and it is even more obvious today: Voters will come to blame you for not having solved a problem you didn't create, and you will allow the other side to create an alternative narrative for what's happened (government spending, deficits, big government, socialism) that will stick. And it will particularly stick if you make no efforts to prevent it from starting or sticking. . . .

So in that sense, the story of health insurance played right into the story that lies behind the looming tsunami that swept away Ted Kennedy's Senate seat and will sweep away so many more Democratic seats if the Democrats draw the wrong conclusions from this election. The White House just couldn't seem to "get" that the American people could see that they were constantly coming down on the side of the same bankers who were foreclosing people's homes and shutting off the credit to small business owners, when they should have been helping the people whose homes were being foreclosed and the small businesses that were trying to stay afloat because of the recklessness of banks that were now starving them. Americans were tired of hearing Obama "exhort" bankers and speculators to play nice as they collected their record bonuses for a heckuva job in 2009. It took him a year to float the idea of making them pay for a fraction of the damage they had done, and at this point, few Americans have any faith that a tax on big banks will ever become law or that the costs won't just be passed on to them in new fees.
The White House has squandered the greatest opportunity to change both the country and the political landscape since Ronald Reagan. It should have started with a non-watered-down stimulus package big enough to stop the bleeding in the job market -- and a smack-down of any Republican who dared to utter the word "deficit" after 8 years of reckless, unpaid Republican spending. It should have followed with stringent regulations on Wall Street and protection of homeowners and small businesses instead of with a jobs creation program inside the administration for failed bankers and failed regulators. A stimulus -- including a jobs program -- strong enough to prevent the hemorrhaging of 700,000 jobs a month and a muscular approach to the bad actors who had crashed the economy would have gotten the public firmly behind the President and the Democrats, demonstrating to the average voter that they have a choice between one party that's on their side and another that's not. Instead, the White House just blurred the lines between the parties so the average American couldn't tell the difference.

With all its efforts to tack to the center, the White House missed the point. The issue isn't about right or left. It's about whose side you're on. In Massachusetts, the voters believe they know. It's now up to the President and his party to convince the American people otherwise.

I'm going to hazard a thought for further elaboration later. The Democratic Party is now dominated by professional elites. It has lost ordinary working people as the driving force of the party as unionism has declined. The difference between the Democratic leadership and the corporate elite represented by Republicans is that the former went to Harvard Law School or the Graduate School in Economics or Political Science, and the latter went to Harvard Business School. They carry on friendly arguments at Washington cocktail parties, but marry each others' brothers or sisters. Yeah, the Democrats say they care more, and some of them do, and they do have to pay lip service to the actual representatives of real working people, but that conservative elite is a source of money for the Democrats, too. There is no fire in the belly -- when push comes to shove, they really don't give a shit about the people who are devastated by Republican ideology. Not enoughb, anyway, to risk an unpleasant situation at a DuPont circle get-together.

If you want to think more about this, go look at the bios of Obama's White House staff and cabinet. They are all Ivy League. Could that have something to do with a perception that the Ivy Leaguers from the B-School were running financial institutions that were too big to fail.

Oh, excuse me, I'm playing the class card, aren't I? We only let the right-wing tea party people get away with that. It's beneath us.

Friday, January 15, 2010

Democrats badly need to be seen as economic populists again

AP reports that Senator Dodd may be giving up on the Consumer Financial Protection Agency that Omama proposed, with the observation that Dodd no longer needs to promote "populist" legislation because he is not running for re-election. (Kevin Drum reports.) Dodd may not need to advance populist legislation, but he ought to understand that the Democratic Party needs it desperately -- at least the economic version, as opposed to Glen Beck ersatz cultural populism.

Actually, as the Democratic base correctly recognizes, the country needs it desperately, too: we have let the media Villagers use "populism" as a pejorative for far too long. The result has been stagnant wages and incomes, more poverty, the tattered safety net, and economic stagnation flowing from those failures to maintain the social contract of "The American Dream." It's not just a matter of fairness per se, but the fact the degree of fairness implicit in that historic American social contract is essential for the economic health of the country. Republican economic prescriptions have been a disaster.

If the Democrats continue to let themselves be painted as the protectors of Citibank and Goldman Sachs -- as the "bait-and-switch" party that talks about "We the People" and does little about it -- they are in deep, deep shit. If Obama's team thinks passing a watered-down healthcare bill alone will be adequate to reverse that perception as late as November 2010, they are in grievous denial.

Thursday, January 14, 2010

The blind government-haters are false libertarians

This is an extremely important article in the libertarian Reason magazine ("Five Reasons Why Libertarians Shouldn't Hate Government," William D. Eggers & John O'Leary,, January 13, 2010. It argues for an adult form of libertarianism, advocating the end of adolescent Ayn Randism that dominates those who call themselves libertarians today.

Hatred of anything and everything government is not genuine libertarianism. Instead, it should be a process that keeps searching for the best allocation between private action and collective strength. Sure, a bias towards freedom can be part of that decision, but only a central government can conduct foreign policy and mount a national defense. Only the Federal government can launch a coordinated interstate response to a natural catastrophe like Katrina. And what we are realizing finally is that only through government can we pool the health risks that everyone faces and create the assurance that nobody will ever go bankrupt due to a health problem. (Consider this: the United States of America is the only advanced country in the world where bankruptcy is the natural consequence of a major health problem for tens of millions of citizens. Every other civilized country has created a national system designed to prevent such financial disasters from ever happening to anyone.)

True libertarianism is devotion to a process, not to some imaginary utopia that never has and never will exist. Jefferson said (or is said to have said) the “government that governs best governs least.” That means it exercises restraint when it is asked to do something, not that it should not be permitted to govern at all.

Tuesday, January 12, 2010

A Bigger and More Deadly Enemy: It is our Ignorance and our Splinelessness

Rich nails it.

The Other Plot to Wreck America


THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much.

What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses.

The window for change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washington’s already limited capacity for heavy lifting, especially in an election year. The White House’s chief economic hand, Lawrence Summers, has repeatedly announced that “everybody agrees that the recession is over” — which is technically true from an economist’s perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning.

It’s against this backdrop that this week’s long-awaited initial public hearings of the Financial Crisis Inquiry Commission are so critical. This is the bipartisan panel that Congress mandated last spring to investigate the still murky story of what happened in the meltdown. Phil Angelides, the former California treasurer who is the inquiry’s chairman, told me in interviews late last year that he has been busy deploying a tough investigative staff and will not allow the proceedings to devolve into a typical blue-ribbon Beltway exercise in toothless bloviation.

He wants to examine the financial sector’s “greed, stupidity, hubris and outright corruption” — from traders on the ground to the board room. “It’s important that we deliver new information,” he said. “We can’t just rehash what we’ve known to date.” He understands that if he fails to make news or to tell the story in a way that is comprehensible and compelling enough to arouse Americans to demand action, Wall Street and Washington will both keep moving on, unchallenged and unchastened.

Angelides gets it. But he has a tough act to follow: Ferdinand Pecora, the legendary prosecutor who served as chief counsel to the Senate committee that investigated the 1929 crash as F.D.R. took office. Pecora was a master of detail and drama. He riveted America even without the aid of television. His investigation led to indictments, jail sentences and, ultimately, key New Deal reforms — the creation of the Securities and Exchange Commission and the Glass-Steagall Act, designed to prevent the formation of banks too big to fail.

As it happened, a major Pecora target was the chief executive of National City Bank, the institution that would grow up to be Citigroup. Among other transgressions, National City had repackaged bad Latin American debt as new securities that it then sold to easily suckered investors during the frenzied 1920s boom. Once disaster struck, the bank’s executives helped themselves to millions of dollars in interest-free loans. Yet their own employees had to keep ponying up salary deductions for decimated National City stock purchased at a heady precrash price.

Trade bad Latin American debt for bad mortgage debt, and you have a partial portrait of Citigroup at the height of the housing bubble. The reckless Citi executives of our day may not have given themselves interest-free loans, but they often walked away with the short-term, illusionary profits while their employees were left with shredded jobs and 401(k)’s. Among those Citi executives was Robert Rubin, who, as the Clinton Treasury secretary, helped repeal the last vestiges of Glass-Steagall after years of Wall Street assault. Somewhere Pecora is turning in his grave

Rubin has never apologized, let alone been held accountable. But he’s hardly alone. Even after all the country has gone through, the titans who fueled the bubble are heedless. In last Sunday’s Times, Sandy Weill, the former chief executive who built Citigroup (and recruited Rubin to its ranks), gave a remarkable interview to Katrina Brooker blaming his own hand-picked successor, Charles Prince, for his bank’s implosion. Weill said he preferred to be remembered for his philanthropy. Good luck with that.

Among his causes is Carnegie Hall, where he is chairman of the board. To see how far American capitalism has fallen, contrast Weill with the giant who built Carnegie Hall. Not only is Andrew Carnegie remembered for far more epic and generous philanthropy than Weill’s — some 1,600 public libraries, just for starters — but also for creating a steel empire that actually helped build America’s industrial infrastructure in the late 19th century. At Citi, Weill built little more than a bloated gambling casino. As Paul Volcker, the regrettably powerless chairman of Obama’s Economic Recovery Advisory Board, said recently, there is not “one shred of neutral evidence” that any financial innovation of the past 20 years has led to economic growth. Citi, that “innovative” banking supermarket, destroyed far more wealth than Weill can or will ever give away.

Even now — despite its near-death experience, despite the departures of Weill, Prince and Rubin — Citi remains as imperious as it was before 9/15. Its current chairman, Richard Parsons, was one of three executives (along with Lloyd Blankfein of Goldman Sachs and John Mack of Morgan Stanley) who failed to show up at the mid-December White House meeting where President Obama implored bankers to increase lending. (The trio blamed fog for forcing them to participate by speakerphone, but the weather hadn’t grounded their peers or Amtrak.) Last week, ABC World News was also stiffed by Citi, which refused to answer questions about its latest round of outrageous credit card rate increases and instead e-mailed a statement blaming its customers for “not paying back their loans.” This from a bank that still owes taxpayers $25 billion of its $45 billion handout!

If Citi, among the most egregious of Wall Street reprobates, feels it can get away with business as usual, it’s because it fears no retribution. And it got more good news last week. Now that Chris Dodd is vacating the Senate, his chairmanship of the Banking Committee may fall next year to Tim Johnson of South Dakota, home to Citi’s credit card operation. Johnson was the only Senate Democrat to vote against Congress’s recent bill policing credit card abuses.

Though bad history shows every sign of repeating itself on Wall Street, it will take a near-miracle for Angelides to repeat Pecora’s triumph. Our zoo of financial skullduggery is far more complex, with many more moving pieces, than that of the 1920s. The new inquiry does have subpoena power, but its entire budget, a mere $8 million, doesn’t even match the lobbying expenditures for just three banks (Citi, Morgan Stanley, Bank of America) in the first nine months of 2009. The firms under scrutiny can pay for as many lawyers as they need to stall between now and Dec. 15, deadline day for the commission’s report.

More daunting still is the inquiry’s duty to reach into high places in the public sector as well as the private. The mystery of exactly what happened as TARP fell into place in the fateful fall of 2008 thickens by the day — especially the behind-closed-door machinations surrounding the government rescue of A.I.G. and its counterparties. Last week, a Republican congressman, Darrell Issa of California, released e-mail showing that officials at the New York Fed, then led by Timothy Geithner, pressured A.I.G. to delay disclosing to the S.E.C. and the public the details on the billions of bailout dollars it was funneling to its trading partners. In this backdoor rescue, taxpayers unknowingly awarded banks like Goldman 100 cents on the dollar for their bets on mortgage-backed securities.

Why was our money used to make these high-flying gamblers whole while ordinary Americans received no such beneficence? Nothing less than complete transparency will connect the dots. Among the big-name witnesses that the Angelides commission has called for next week is Goldman’s Blankfein. Geithner, Henry Paulson and Ben Bernanke should be next.

If they all skate away yet again by deflecting blame or mouthing pro forma mea culpas, it will be a sign that this inquiry, like so many other promises of reform since 9/15, is likely to leave Wall Street’s status quo largely intact. That’s the ticking-bomb scenario that truly imperils us all.

The Harry Reid “light-skinned Negro” nonsense

Will someone ever step forward and counter-attack on these right-wing tempests? How about saying on national television that Republicans who keep trying to make a Federal case out of it – and the mainstream media enablers whose careers seem devoted to channeling the latest Fox New obsession – are colossal phonies who do not have the least concern with Harry Reid's words. Comparing Reid's old-fashioned but purely descriptive language (and completely accurate political observation) with Trent Lott's express endorsement of racial segregation is ridiculous.

Will liberals ever learn how to counter-attack on anything whatsoever? Liberals seem stuck in the enforced mentality of fraternity Hell Week: “Thank you, sir, hit me again.” Maybe a better chant is, “I'm sorry for making you hit me. I didn't mean it, honest.” Can a liberal ever go beyond defense against right-wing “unfairness” and hit back with greater force? Is anyone with a platform willing to shame the Big Media for carrying water for Republican agenda, or are they too afraid of losing their platform? Our side desperately needs to learn the principles of judo -- turn the enemies strength against itself – and how to work the refs.

Does the Democratic National Committee have a crack cadre of aggressive communications specialists -- a boiler room of James Carvilles -- who are ready on a moments notice to brainstorm and formulate effective responses to these weekly outbursts? It seems not. If so, why not?

Monday, January 11, 2010

More for the Progressive's Tool Chest: Class mobility

Everyone knows the U.S. Is the best country for giving a low-income kid the chance to move up the social ladder compared to where their parents were, right? Certainly, in stodgy old Europe, ancient class distinctions must be more difficult to overcome than in the U.S. Of course, conservatives love to make declarations like that. Once again, they are totally wrong. France, Germany, Sweden, Canada, Finland, Norway and Denmark have greater income mobility than the U.S. Parents' income is a better predictor of childrens' adult income here than in those countries.

Another Republican truism bites the dust.

Sunday, January 10, 2010

For your tool-chest: blaming the mortgage loan crisis on the undeserving poor is ridiculous

The mortgage loan crisis was caused by giving out mortgages to all those poor people – the Community Reinvestment Act (CRA) – who didn't deserve it, right? After all, even the radical left wing newspaper The New Ylork Times gave a platform to such an argument not long after Federal Reserve Governor Randall Kroszner destroyed it.

Let's give a probably-undeserved benefit of the doubt that this right-wing truism is not laced with a heavy dose of racism. Even with that concession, it is a total crock. Via an excellent website on economic policy matters, The Economics of Contempt, here are the facts Kroszner put forth that NYT's op-ed contributor did not bother to dig out.

“Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas. ... This result undermines the assertion by critics of the potential for a substantial role for the CRA in the subprime crisis.”

“. . . . loans originated under the NWA program [a portfolio of CRA-covered loans] had a lower delinquency rate than subprime loans.

". . . . the loans in the NWA affordable lending portfolio had a lower rate of foreclosure than prime loans.”

“[F]oreclosure filings have increased at a faster pace in middle- or higher-income areas than in lower-income areas that are the focus of the CRA.”

Hmm, only 6% of higher-cost loans, lower delinquency rate than sub-prime loans, lower foreclosure rate than prime loans, fewer foreclosures than in middle income or higher income areas. Yes, it's simply false. Be ready to tick those facts off when one of your gullible acquaintances mouths this absurd Republican talking-point.

Monday, January 04, 2010

Rush recants: loves unions, socialized medicine!

Courtesy of the Tapped and Washington Monthly blogs, check out this SEIU report on Limbaugh praising a unionized hospital and a healthcare system (Hawaii) that's considered the most progressive in the country -- and a model for the system established in the healthcare bills.

Oh, the irony! Let's see how widely this is spread in the Big Media.