I’m sick of Wall Street/Main Street. Never was a big fan of metonymy. The New Democratic Party in Canada has been using kitchen tables/boardroom tables instead. Much nicer.

Also, as the vote-down of the bailout has shown, the House of Representatives has some democratic accountability. The Senate, where the bailout vote was in the bag, does not. We should be calling them the House of Commons and House of Lords, respectively.

And the President? Please, our system has long accorded the President monarch-approximating levels of deference. We should be calling Bush the Queen instead.

Posted under Culture, Politics

Reject Subsidization of the Rich
The bailout plan, both Treasury Secretary Paulson’s original draft and the version Congress tried to pass yesterday, is a massive blank check to the wealthiest, privileged and non-productive members of our society.  It is corporate welfare at an unprecedented scale, effectively rewarding years of financial gambling and a housing bubble. Handing hundreds of billions of dollars to the same folks who have weakened our economy would be something bordering insanity, for the following reasons (and others).

Key problems with the bailout are:

• Despite rumors to the contrary, the revised bailout bill (which failed yesterday) does not put restrictions on CEO pay. And even if it did, restricting the salaries of a handful of executives in a handful of firms is not going to make this bill more accountable nor going to prevent any of this from happening again. (How much of a punishment is it to pay someone $400,000 a year?).
• Oversight of the bailout is unclear at best, and effectively absent at worst.
• Henry Paulson, the same man who insists that our economy is on the edge of collapse, whose plan included giving him unprecedented, non-reviewable power to distribute $700,000,000,000 with full immunity, was the former CEO of Goldman Sachs just a few years ago – one of the same institutions that he’s proposing giving billions of dollars to. Even if he has the best of intentions, despite having the very definition of a conflict of interests, he’s the same guy that said in early August that “We have the strongest global economy I’ve seen in my business lifetime,” How is this not a case of the crazy people running the asylum?
• The drumbeat of disaster and economic ruin if we do not immediately give a third of the U.S. annual budget to banks is eerily reminiscent of the passage of the PATRIOT Act and the vote on the war on Iraq.
• There’s no guarantee that the huge bailout will actually fix the problem!
• In the past week, we’ve seen false reporting from NPR to the New York Times to columnists like David Brooks. It is not possible to make a rational, appropriate decision in such a short period of time in such a misleading and frenetic environment.
• There’s much more to comment on (keeping this short in the interest of getting this post published).

Where do the Democrats stand on this?
Obama, unbelievably, has privately urged the Democrats to not support bankruptcy reform. This is the most fundamental component of any economic stability package, would affect the folks trying to pay their mortgages, and according to Dennis Kucinich, the Democrat Presidential candidate is opposed to it. Given that Obama’s top contributor is Goldman Sachs, with JP Morgan, Citigroup, UBS, Lehman Brothers, and Morgan Stanley in his top 16, we should not be surprised.

Some folks are bringing some perspective and courage to the debate. Marcy Kaptur (D, Ohio) gave this revealing and measured response before she cast her “No” vote. Sheila Jackson also delivered some words of wisdom on the floor of the House: “America has been diagnosed, but we need a second opinion”. And recall it was mostly Republicans which stopped the bailout from being passed. What we’re witnessing is the tug of war on politicians between the people who fund them and the people who vote for them.

What to Do!
1.) Call Your Congressperson!
This is a list of how every House Representative voted for the bailout – how did yours vote? Call your House Representative (find them here) and tell them not to pass the bailout – tell them the current bailout bill is unacceptable, and anything that they pass to address the situation must include comprehensive and wide-ranging relief for those who are paying off home mortgages.
2.) Join organizations like CODEPINK and United for a Fair Economy in calling for alternatives to the bailout, like a Bailout for Main Street.
3.) Read more, get informed, know what’s going on. The greatest problem we have right now is a dearth of information and understanding. This is not a topic that’s going to go away soon, so we better know what we’re all getting (or are being put!) into.

UPDATE: Paul Krugman offered a framework to understand the current financial breakdown on Wall Street:

1. The bursting of the housing bubble has led to a surge in defaults and foreclosures, which in turn has led to a plunge in the prices of mortgage-backed securities — assets whose value ultimately comes from mortgage payments.

2. These financial losses have left many financial institutions with too little capital — too few assets compared with their debt. This problem is especially severe because everyone took on so much debt during the bubble years.

3. Because financial institutions have too little capital relative to their debt, they haven’t been able or willing to provide the credit the economy needs.

4. Financial institutions have been trying to pay down their debt by selling assets, including those mortgage-backed securities, but this drives asset prices down and makes their financial position even worse. This vicious circle is what some call the “paradox of deleveraging.”

Posted under Economy, Politics

In a big surprise this afternoon, the Wall Street bail-out package that has been the subject of such scrutiny since originally introduced by the Bush administration (re: Secretary of the Treasury Paulson), has been shot down by the House of Representatives, in a narrow vote of 206-227 (Note: different reports have the vote at “207-226, 205-228“).  This has caused a shakeup within the ranks of the Republican party, and caused headlines like “U.S. stocks plunge as global credit crisis spreads” to start showing up on the news wire.

Now, the leadership who brought this bill are likely going to urge people that all is not lost – another bill can be reconsidered, and even this particular bill can be re-voted on.  But that’s not going to come for at least a couple of days, and we don’t know whether legislators are going to (1) succumb to their voters and further distance themselves away from a bailout or (2) come together after having made a poignant political point.

As just reported on CBS news (a special televised report), the bottom fell out when House Republicans, supposedly upset at being kept out of high-level negotiations (mostly done by the Senate) largely voted against the bill, with 67%  of those Republicans casting ballots opposed.  House Democrats, on the other hand, were recorded as voting only 40% opposed, with 60% of Democrat members of the House voting in favor of the plan.

Was this a political opportunity for House Republicans, in a very bad election environment for them, to strike a blow against Bush and the Democrats to distinguish themselves as being “for the average citizen”?  The financial crisis on Wall Street certainly presents an opportunity to take the populist road and, incidentally, the right thing in refusing to issue a blank check to Wall Street.  The question is: will Democrats follow suit and listen to their constituents, leading to a bail-out that nationalizes the banks or protects homeowners, or is this just a temporary ploy on party of the electorally-starved Republican party?

UPDATE (2:49pm EST): As news of the defeat of the bailout plan spreads, the stock market has begun to plummet, with the Dow falling 600 points in course of 30 minutes (including falling an additional 200 points when I began updating this post).  Stories such as “Stocks Tumble as Bailout Plan Fails in House” are beginning to crop up on major news outlets, and many more are likely to come. The question is: How low will it go?

Posted under Discussion Question, Economy, People, Politics

Lawmakers reached agreement on the 700 billion bailout.  Republicans held out for an the all impotent detail of insurance:

At the insistence of House Republicans, who threatened to sidetrack negotiations at midweek, the insurance provision was added as an alternative to having the government buy distressed securities. House Republicans say it will require less taxpayer spending for the bailout.

But the Treasury Department has said the insurance provision would not pump enough money into the financial sector to make credit sufficiently available. The department would decide how to structure the insurance provisions, said Sen. Kent Conrad, D-N.D., one of the negotiators.

The bailout bears the echoes of Iraq in its buildup.  Its being rushed through, with a Sunday vote by the House, and a Monday vote by the Senate.  700 Billion is a lot of debt to saddle us all with.  Especially with concern about the long term impact.  But what about the short term impact? (Angry Bear via Time Blog, Emphasis Mine):

[T]he problem is the price, in this case the premium. If it is vastly less than the probability of default, the House Republicans have found a way to throw money at bankers and financial arsonists instead of just bankers. If it is actuarily fair, it will force liquidity constrained firms to unload the securities — they could wait and hope for no default, but they can’t pay actuarily fair premiums. When you are insolvent, risk, variance, double or nothing is your only hope of survival. Thus aside from the contribution to financial arson (which I guess will be huge) the plan would also force distressed banks etc to unload mortgage backed securities at fire-sale prices. Now I don’t think the current problem is mainly due to systemic margin calls due to mark to market and capital requirements, but making that problem vastly worse would hasten the collapse of the US financial system even without financial arson.

Awesome.

Posted under Economy, Politics

When I heard McCain had suspended his campaign to work on the economic crisis, I thought he had made a brilliant move.  McCain is weak on the economy and needs to distinguish himself in a favorable light.  His suspension connected so well with his narrative of “country first” sacrifice, and reinforced his positions on the war and his delay of the convention in the face of hurricane Gustav.  I remember the conversation well.  I lamented Obama’s lack of aggression, and my co-worker agreed with me that the man needed to step things up.

Then he responded (Amanda, Think Progress, emphasis mine):

Sen. Barack Obama (D-IL) just gave a press conference responding to Sen. John McCain’s (R-AZ) suggestion that they both suspend their campaigns, postpone Friday’s debate in Mississippi, and return to Washington to deal with the financial crisis. Obama said that he would like to the debate to go forward as planned because “it is going to be part of the president’s job to deal with more than one thing at once”

That powerful and contained a statement deals a sharp blow to McCain’s sacrifice theme.  Sacrifice only works politically if you give up something important out of necessity.  It’ll backfire in a second if it looks like either the importance or the necessity aren’t genuine.

Which is why McCain’s stumble juggling David Letterman and Katie Couric is devastating (Amanda, Think Progress, emphasis mine):

As part of his plan to suspend his campaign activities, Sen. John McCain (R-AZ) today decided to cancel his appearance on the Late Show with David Letterman. McCain’s campaign reportedly told Letterman that the senator was “racing back to Washington.” That, however, didn’t happen. In his show to air tonight, Letterman shows footage of McCain sitting down with CBS’s Katie Couric for an interview at the same time he was supposed to be on his show.

You couldn’t find a brighter color to paint McCain’s campaign politically opportunistic.

Obama’s counterpoint and McCain’s dishonesty play directly to McCain’s weakness and Obama’s opposing strength at the same time.  John McCain is increasingly viewed as the precise stripe of unethical politician he once fought against.  He’s a man who goes for political points at any cost.  Barack Obama is definining himself as a politician who tries to approach problems rationally and seriously, putting the demands of the problem at hand above the political cost of doing so.

A politician’s greatest responsibility alongside governance is maintaining a connection to the people he or she represents.  The debates this friday are a central part of that, and thanks to a quick and effective response, heading in its advantage Obama.

Posted under Economy, News, Politics

“In a time of universal deceit, telling the truth is a revolutionary act.” – George Orwell.

Its deliciously ironic that subtle variations of that quote can be found throughout the web.  Even when you’ve reached through the superficial and grabbed the spirit of the truth your hands have nothing tangible to close on.  Certainty feels increasingly academic the more closely you pay attention.

Orwell’s idea matches up stunningly with the essence of Gandhi’s Satyagraha.  It essentially means “truth power”.  But saying the truth is powerful doesn’t immediately reveal its effective usage.  Often compared to a double edged sword, it does share this in common: it has a point.  To use the truth well one must aim carefully.

NancyP over at Pam’s House Blend insightfully invites us to confront conservatives with their immediate truth, framed perfectly as the question: “Are YOU better off than you were 8 years ago?”.  Paraphrasing Altemeyer (an expert on analyzing authoritarianism, emphasis mine):

Cognitive dissonance has to be extreme, and personally very uncomfortable/painful, for authoritarian followers to abandon their Authority of the Hour. Some authoritarian followers will remain loyal to their Authority despite severe personal injury (pastor schtupps follower’s wife or minor daughter or son; leader loses follower’s life savings – see Bakker or Bush 43 for that). Even for the less injured followers, the tendency is to defend the old leader by blaming subordinates (“the Leader is wise but was misled by evil advisors”).  If the follower has finally decided that his Leader has damaged him intolerably, he will treat the situation as the breaking of an (often intimate) personal relationship – an individual moral failure of that Leader, having nothing to do with policies or competence of that Leader. Thus, the authoritarian follower can claim, without the least discomfort, that the New Leader is nothing like the (now discredited) Old Leader, even though New Leader voted with the Old Leader, continues the Old Leader’s policies, and uses the same advisors.

This immediately sets the game plan and the stakes.  We need to make this election about the immediate impact of the economy, and about the Democratic party’s fiscal prowess.  NancyP notes this:

I really think that the Dems are fools for not sticking to the “It’s the economy, stupid” campaign strategy. Eight years ago we had a budget SURPLUS. Now we are looking into a large black pit without a visible bottom.

The problem is that both McCain and Obama are being mushy centrists on the bailout.  (The Caucus, NYTimes, emphasis mine):

Senator Barack Obama this afternoon urged Treasury and Federal Reserve officials to include four conditions that he and other Democrats are seeking in the proposed $700 billion federal bailout for financial firms – though he stopped short of saying he would vote against the bailout if his terms were not met.

The pressure is building as the administration attempts to equate congressional delays directly with stock market dips and plunges.  Much of congress is taking the Democratic party’s standard operating procedure of the past 8 years to heart: equivocate and compromise till it hurts (Reuters, emphasis mine):

“What they have sent us is not acceptable,” Senate Banking Committee Chairman Christopher Dodd said after a five-hour hearing on the plan. His Republican counterpart, Sen. Richard Shelby, also vowed not to “rubberstamp” the proposal.

That’s a very polite way of saying they’ll take a look at it, make very serious and thoughtful comments, and then pass it with minor modifications.  For agents of change, both Obama and McCain are surprisingly in step with the establishment when it comes to the bailout.  They are providing a united front (NYTimes, emphasis mine):

With pressure mounting on Congress to pass a $700 million bailout of financial firms, Senator John McCain struck a more urgent tone Tuesday on the need to act quickly, but he and Senator Barack Obama insisted on conditions that had to be met in the final plan.

This bill is going to pass.  Which brings us back to truth.  George Bush’s successor as “Dear Leader” is united with his opponent in supporting the most visible economic bill before the election.  Their opposition is purely superficial.  This idea of whipped supporters crawling back to their leader is one we might be tempted to cast purely on the conservatives.  But if we are honest with ourselves, and ask that very same question, we need to realize how sorely we’ve been hurting for an opposition party these past 8 years.

While the economic hardship more and more Americans face drags us all eagerly towards a cliff, asking directly “are you better off now than you were 8 years ago” is risky.  Canny Republicans can point to cringing Democratic officials and suggest they were all in it together, and gosh darn it we need a maverick.  Keep in mind that Democrats have been trying unsuccessfully to convince not-filthy-rich Republicans they are voting against their economic interests for decades.

Working with someone truly stuck in an authoritarian mindset is possible, but results won’t necessarily come quickly enough for November.  (For a start, read Cracks in the Wall parts One, Two, and Three).

If you want to effect the upcoming election (especially if you live in a swing state), your best bet is to reach out to Democrats and Independents and help them make it to the polls registered and ready November 4.

Posted under Economy, Politics