The Millennial Generation

All of my life I have heard about "the Greatest Generation". How Americans came together, sacrificed, and achieved great things together. None of those stories focused on the divisions between Americans; just the mission and the struggle.

Look at the world surrounding us today. What more inspiration do we need to rise to our challenge? So that our grandchildren will speak of us, the Millennial Generation (the Millennials?), with similar reverence. Because we made a difference and laid the foundation for a new prosperity and peace. Because we stood up.

How will we be be remembered?

The FOX Behind the Curtain

Pay no attention to the man behind the curtain, scream the Fox News commentators! In a recent caricature of actual news, the FOX network chose Garry Trudeau for particular derision in its ongoing attempts to stoke "us versus them" mentality with its viewers. The comic, published on Sunday, October 12th(1), is Trudeau's attempt to take conservative "family values" punditry to task for what he sees as its hypocrisy regarding unmarried sex and pregnancy, working mothers, and divorce as they pertain to the current Republican nominees. FOX however, shamelessly turned the tables on Mr. Trudeau. Failing to show the introductory frame of the cartoon where radio commentator Mark Slackmeyer says "Have you been wondering why Republicans have suddenly stopped talking about 'family values'?", the network recast the cartoon as an attack by liberals (or THEM) on the very values that THEY have claimed when refusing to condemn unmarried mothers, working mom's, or Bill Clinton. As always, the network cleverly uses the language of propaganda in the story; morphing the cartoon's single author into the faceless "THEY" of the collective liberal monster. And rather than address the question of hypocrisy within the Republican party that was raised by the cartoon, FOX instead concludes that liberal values now "lie in ashes" and then finishes by imploring justifiably outraged viewers to get out the vote in response. Funny or f*^ked up? Your call.

(1) http://news.yahoo.com/comics/uclickcomics/20081012/cx_db_uc/db20081012;_ylt=Ara4_o9MoOrv3Rt6bT1g877V.i8C

A Climate of Violence

Recently, there has been much discussion about the virulent anger directed at Senator Obama surfacing at Senator McCain and Governor Palin's campaign events. Senator McCain's response to the justifiable concerns raised by such outbursts has been conflicted. While he has received due praise for countering the most outrageous statements of two participants at a recent town hall style rally, he did this while Governor Palin and his political advertising campaign simultaneously accuse Senator Obama of acting treacherously out of "blind ambition" by putting "political ambitions in front of doing what's right for our troops" and "palling around with terrorists" and lying about it. These are inflammatory attacks, and cannot reasonably be considered "legitimate criticism of Senator Obama's record".

There is a huge amount of anger in the base of the Republican Party, fomented for years by incendiary rhetoric from pundits like Rush Limbaugh and Michael Savage. To these rabble rousers, people who disagree with them are un-American, socialists, criminals, or even traitors. The McCain campaign has given this type of rhetoric a mainstream foothold, and it is no coincidence that McCain followers are expressing fear of Obama and connecting him with terrorism and Islam. When a luminary such as Rep. John Lewis decries the climate of violence that he perceives to be growing in our country, all American citizens regardless of their political affiliations should be concerned. It is real and dangerous, as Rep. Lewis knows firsthand.

Does Sarah Palin Believe Iraqi Politicians Can't Read?

On Friday, the Alaska legislative panel released it's report concluding that Governor Palin abused her power and that claims made to law enforcement officials of fearing for her family's well being due to her former brother-in-law, “were not bona fide and were offered to provide cover for the Palins' real motivation”(1) The second conclusion is likely the most damaging since the Palin's central defense has always been they were just trying to protect their family.

Governor Palin's response? To cry partisanship and to resort to sensationalized revisionist history. Her new claim, for which she “pray[s] to God that people have enough time to let this register with them and start again, connecting the dots, and understand the contrast between the tickets”(2) is an accusation that Senator Obama somehow “put political ambitions in front of doing what's right for our troops”!(2) How did Senator Obama commit such a heinous act you ask? Apparently by holding discussions with Iraqi politicians regarding a very popularly held belief within Congress and the American people that a Status of Force agreement impacts Congressional legislative power regarding scope and duration of military conflicts. As a member of the Senate, Mr. Obama has been public and clear on his belief that Congress must be involved in such an agreement regarding our soldiers in Iraq.

And this happened four months ago during one of the most publicized foreign trips by a politician in history. Where was Senator McCain's, or frankly anybody's outrage then? They didn't miss anything or make new campaign ads because Senator Obama was acting responsibly within his stature as a United States Senator. And politicians in Iraq, having access to newspapers, would have been quite aware of Senator Obama's position before ever speaking with him.

It is pure unabashed political theater for Governor Palin to remake this non-story into a brazen attack and raw meat for her committed followers. It is sensationalized revisionist history, and a transparent strategy.

(1) http://news.yahoo.com/s/ap/20081011/ap_on_el_pr/palin_troopergate;_ylt=Aia7Hug2ET71btuDSHK.54ys0NUE
(2) http://www.cnn.com/2008/POLITICS/10/10/campaign.wrap/index.html?iref=werecommend

You Can't Have it Both Ways

Conservative pundits continue to place the blame for our economic meltdown on Fannie Mae and Freddie Mac. According to their logic, it was the Democrats failure(1) to regulate them that caused this crisis. So, by this logic, it was a failure of regulation that caused the crisis. But these are the same people that continue to argue that deregulation is the answer! How can you argue to remove regulation on one hand and place blame on too little regulation on the other? You can't have it both ways.

(1) Note that the Republican caucus was in control of both houses of Congress for 12 of the last 15-years

You Can't Fix What You Want Broken

In the recent vice-presidential debate, Governor Sarah Palin criticized the Federal Government, saying "unless you're pleased with the way the federal government has been running anything lately, I don't think that it's going to be real pleasing for Americans to consider health care being taken over by the feds". With this statement, Gov. Palin parroted a common conservative mantra that the government is the problem not the solution, while asking the public for the opportunity to lead that same institution. This creates an inherent paradox. How can you fix something you don't believe in?

During the Clinton presidency, while there were legitimate debates about government policies, few would argue that the government was working admirably by historical standards. This was largely due to the Clinton era National Partnership for Reinventing Government. This program, focused on "transforming the culture in major agencies with the most public contact to be more results-oriented, performance-based, and customer-focused"(1) resulted in a plethora of improvements in government function. During this time, government appointments were more likely to rely upon professional qualifications and merit rather than political patronage. Even candidate George W. Bush during his 2000 run for president famously complimented FEMA under James Lee Witt, "James Lee Witt of FEMA has done a really good job of working with governors during times of crisis". Of course, Mr. Witt was a career emergency management professional appointed due to merit not patronage.

While anti-government rhetoric gained its most populist foothold during the "Reagan Revolution", in the years of the Bush Administration, the anti-government ideology espoused by Grover Norquist has found purchase in the highest levels of the Federal Government. Regulatory agencies have been compromised by political appointments selected from the industries that the agencies regulate, with obvious conflict of interest ramifications. Staffing decisions regarding the rebuilding efforts in Iraq and Afghanistan have been made based upon political affiliations. Even the justice department has been compromised by political considerations. In short, the years of Republican dominance have left a federal government with a track record of poor performance that draws references to the HMS Titanic or the Hindenburg. The conservative revolution has become a self-fulfilling prophecy.

So the question is, who would you choose to fix an ailing government and financial system? Somebody whose political future depends on the failure of the very institutions they are asking to lead? I hope not.

(1) History of the National Partnership for Reinventing Government, http://govinfo.library.unt.edu/npr/whoweare/appendixf.html

The New Scapegoat? Fannie and Freddie

The Republican's weekly strategy meeting resulted in a clear consensus: government coddling of Fannie Mae and Freddie Mack has resulted in the current crisis on Wall Street, and it is the Democrats fault. This sounds good, but quickly fails the reality test. And frankly, there is plenty of blame to go around.

Fannie and Freddie are not responsible for so many Wall Street firms taking massive over-leveraged risks with exotic financial instruments called "Derivatives"; referred to as "weapons of financial mass destruction" by Warren Buffett in his 2002 annual letter to shareholders. It is now clear that financial speculators based risky investments on these incomprehensibly complex securities including Collateralized Mortgage Obligations (CMO), Auction Rate Securities (ARS), and the pseudo-insurance Credit Default Swamps (CDS), without having the ability to accurately value them.

There has been a massive failure of regulation on the "shadow" banking system since Ronald Reagan installed the deregulation philosophy deeply into the Republican Party and body politic of the United States. Created over the last 20-years, a largely unregulated system of "broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders"(1) is now failing due to the lack of structures implemented on the conventional banking system following the Great Depression. Christopher Cox, a committed free-marketer and the chairman of the Securities and Exchange Commission, recently announced that voluntary regulation of the financial industry "does not work", and members of both parties have talked about regulatory systems that were "asleep at the switch".

Prior to the September 2008 bailout, Fannie Mae was a publicly traded, stockholder owned firm, independent of the Federal Government since 1968. Freddie Mac was also a private corporation, although government chartered. These entities participated in the same subprime loaning frenzy that dominated the lending industry: from 2001 through 2007 the subprime portion of the total mortgage portfolio in the United States rose from under 3% to 13.7%(2). During the same period, subprime loans rose from 15% to 48% as a proportion of all new loans being written(3). In the past month, both Wachovia the fourth-largest U.S. bank, and Washington Mutual, the nation's largest savings and loan, have failed due to bad bets on the mortgage market. Clearly, the vast profits being made on the subprime mortgage market led to industry wide extravagance, not limited to Fannie and Freddie.

Right-wing talk radio personalities such as Rush Limbaugh have rushed to place the blame for the financial crisis on Democrats. However, Republicans held majorities in the House and Senate since January of 1995. Democrats did not take control of Congress until January 4, 2007. Therefore, while several prominent Democrats made public statements against increased regulation of Fannie Mae and Freddie Mac proposed by the Bush Administration prior to 2007, it was the majority Republican caucus that failed to pass regulatory reform. And it was Republicans that spearheaded the Gramm-Leach-Bliley Act of 1999, and the Commodities Futures Modernization Act of 2000, that exacerbated the regulatory vacuum. Additionally, the Executive Branch of our government has considerable regulatory power, should it care to use it. No impartial observer would suggest that the Bush Administration had much interest in regulating anything during its time in power.

But, in case you were thinking that it was strictly a Republican idea to deregulate the financial markets, the Clinton era treasury secretaries Robert Rubin and Lawrence Summers were supporters of the regulatory reform bills mentioned previously. And let's look back to the 1998 bail out of Long Term Capital Management (LTCM), a massive failed hedge fund. That disaster should have been a warning that our financial system was spiraling out of control. Things only got worse from there as the market for an alphabet soup of Derivatives, and massive over-leveraging only increased. So who was the president and who was the Chairman of the US Federal Reserve when LTCM failed you ask? Bill Clinton and Alan Greenspan.

There is enough blame to go around. Now, perhaps our government could help solve the problem that both parties helped create.

1 The shadow banking system is unraveling, Nouriel Roubini, September 21 2008, The Financial Times.
2 Sub-prime mortgage market -Some facts and data, Peter Possing Andersen, Danske Bank, March 2007
3 Subprime Mortgage Problems: A Quick Tour Through the Rubble, by Ronald D. Utt, Ph.D., WebMemo #1881, http://www.heritage.org

WORTH REPEATING

I saw the following entry on the web site of the Atlantic (http://marcambinder.theatlantic.com/archives/2008/10/the_fanniefreddie_talking_poin.php), responding to this same issue. I thought it was worth repeating here:

FWIW [for what it's worth], I'm a registered Republican who mostly loathes FNM [Fannie Mae] and FRE [Freddie Mac], and I think this [blaming Fannie Mae and Freddie Mac] is wildly dishonest. No clue if it will be effective, but anyone repeating it is either a grifter or a mark.

1. FNM/FRE market share collapsed during the peak bubble years when the worst loans were being made. Probably not a coincidence.

2. FNM/FRE portfolios have performed vastly better than those of lenders like Ameriquest, Long Beach (WaMu), Aurora (Lehman), Option One (H&R Block), First Franklin (National City and then Merrill Lynch). They could have survived w/o a bailout; they just couldn't have served their stated purpose without one.

3. GSE defenders always argued that, in their absence, the private lenders would run amok in the good times and flee the market in bad times. Given that total GSE market share was over 80 percent in the first calendar quarter, it is hard to dispute that any more. (GSE critics were correct in arguing that running a book that big with such little capital would inevitably result in a gov't backstop.)

Posted by dbblg | October 8, 2008 1:28 PM

Who lost the Cold War?

Let's just assume that President Reagan intentionally pushed the country into massive deficit spending to challenge the U.S.S.R. to meet our spending levels, thereby forcing it into bankruptcy since our economic power was superior. The patterns of government and consumer spending that were reinforced during the 1980's were then a strategic vision. If this was so, then these patterns should have been immediately reversed at the "victory" over the U.S.S.R. and its subsequent collapse. Instead, those patterns continued until the U.S.'s profligate ways forced it also into bankruptcy. Therefore, it was the victorious strategy that won the Cold War that has led to our current financial collapse. So who "won" the cold war? Nobody. It resulted in the bankruptcy of both combatants.