Category Archives: Politics

Bush II and His Faith-Based Bailout

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Where is the Decider President? He sent his creepy surrogate, Dick “Rasputin” Cheney, slinking around to urge members of congress to support the bailout plan, but where is George?.  I suppose Bush II is lying low to avoid casting the long shadow of the GOP on this banking train wreck.

But it’s just so striking; in the run up to the largest business bailout in the history of the solar system, Secretary Paulson’s boss is strangely absent. No frank and heartfelt talk with the American people. All the Bush administration can do is to attempt to hustle congress into a mysterious plan. Take our plan on faith- we know what we are doing.

No details have been released to the citizens regarding how this number, $0.7 trillion, was arrived at. Is this large sum actually large enough? How does the country recoup this outlay?  Is the stated urgency related to the election?

Citizens must learn to save more cash and be smarter about the terms of the mortgage they sign. We must consider that our banking system is much like the municipal water system- it’s integrity must be scrupulously maintained and those who manage it must be held accountable for its operation.

Update:  Bush II will make an announcement to the nation this evening. I wonder if there will be any folksy anecdotes?

Drill Baby Drill!! The GOP Call to Arms.

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I recall sitting on the sofa watching the 2008 GOP convention and hearing the intoxicating refrain “Drill Baby Drill”. It was like the sensation of sitting in the dentist chair with my brainstem bathed in cool nitrous oxide vapors and face numbed with lidocaine.  I found myself tumbling head over heals in a mild, drooling, narco-twilight state while my twitching eyeballs attempted to focus on McCain.  My fellow citizens had drummed themselves into an enchanted war dance and gathered to hear Colonel Kurtz, but without the banana leaves.

Then I snapped out of it.  Drill baby drill. This was not just a work order or a requisition for drilling staff to please set up a few drilling rigs in the morning. This was an exhortation to rip those smirking tree huggers from their stations, pulp the trees to make a paper dunce cap for Pelosi, and call in the Air Force to oversee saturation drilling of the continental shelves, and do it pronto!

“Drill baby drill ” was a catch phrase along the lines of “Damn the torpedoes! ” or “somebody get a rope! ” Its conception and use was a masterful bit of applied propaganda- A figurative running of the liberals out of town on a rail.

But what was lost in the excitement were the pragmatics of oil production. You need to boost refinery capacity to increase the supply of refined fuels.  And, what oil company is going to attempt to flood the market in a bid to drive down oil prices? What oil company is going to step in and provide cheaper crude to US refiners so that they can, dutifully, distribute cheaper gasoline when the global market price is so high? Only the dumb ones. Do they think that Santa Claus runs Exxon?

I thought GOP’ers were market savvy, laissez faire devotees swingin’ the big stick of Ronnie Reagan tough love? What has happened to these people?

Seems to me that oil in the ground is like money in the bank. Why are we so anxious to deplete North America of its supply??  What about pulling back on demand to counter the high prices? That is the one big stick that consumers have in the market.

Are B-Schools Paying Attention to this Fiasco?

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The dam burst of banking disasters and federal bail-outs of firms “too big to fail” has brought to light the fragility of our banking and investments system. Like a tropical depression that forms in the eastern Atlantic ocean and gradually feeds on the warm waters and moist air until it makes landfall as a rampaging storm, the combination of greed, financial deregulation, and enthusiastic liquidity on the part of the Fed has now spun up into a full fledged economic storm.

In an essay posted on CNN.com, Columbia Professor Joseph Stiglitz, among others, points to some causes of the present calamity on the banking and financial businesses. Stiglitz says-

“One can say the Fed failed twice, both as a regulator and in the conduct of monetary policy. Its flood of liquidity (money made available to borrow at low interest rates) and lax regulations led to a housing bubble. When the bubble broke, the excessively leveraged loans made on the basis of overvalued assets went sour.” 

“The new “innovations” simply hid the extent of systemic leverage and made the risks less transparent; it is these innovations that have made this collapse so much more dramatic than earlier financial crises …”

The mess that taxpayers and investors are left with is the result of greed and recklessness on the part of elite “business leaders” in conjunction with Federal officials only too anxious to deregulate and discount. This is not a failure based on physical reality. It is a failure based on greed and poor judgement. It rests on a morally shallow and sadly misguided philosophy that mere acquisition of currency is reason enough for being and is the sole measure of success.

As a start, it is my hope that the Deans and faculty of our business schools can summon some kind of movement to reform their admissions standards and refine their ethics curricula.

Perhaps certain finance practitioners need to be trained and certified in a manner similar to actuarial professionals?  Seems to me that the people who launch financial instrument schemes with the potential to collapse an economy should be at least as well trained in risk management as an actuary.

A firm proposing a financial instrument for sale to the public should be required to prepare a mathematical model with macroeconomic inputs to model the potential for instability. The kind of discipline needed to do this modeling could help people refine the fund structure so it remains manageable in a broader range of economic conditions. This would also provide for a real transparency to regulating agencies and possibly even investors.  But most importantly, if you want to model it, then you have to understand it. And that is part of what has been lacking.

Palin Delivers to RNC Smugfest

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Until last night, I thought that an Obama win was uncertain only by how big the margin would be. After listening to the speech by VP candidate Palin, I’m not so sure now.  Palin delivered what can only be regarded as a superb speech in terms of a crisp delivery and scrappy rhetorical barbs. With the best speech writers PAC money can buy, and with a large dollop of natural Ability, she delivered at the big event. Check out Mudflats for a fun post.

The St. Paul event center was packed to the rafters with plump, pasty-faced plutocrats and a few blond Barbie-Doll delegates within easy camera range. Conventions are engineered specifically for television and both the DNC and RNC have talented empressarios to put on a memorable show.

No matter what you think of any of the candidates, it is bound to be an interesting home stretch to election day.

I have a dream too!

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I have a dream. I dream of a time when election crazed talking heads find some new metaphores. I dream of a time when networks lengthen the news sampling interval from 5 minutes to something greater. I dream of a time when microanalysis of the faintest political nuance is recognized for what it is- gossip. I dream of a time when broadcast news people understand the concept of signal to noise ratio.

Finally, I dream of a time when people focus on the core of MLK’s dream- nonviolence- rather than the attention deficit parroting of the 4 words for the sake of loftiness.

Self-Imposed Complexity and the Ratchet Principle

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The portfolio of laws that American citizens are subject to seems to grow without bounds. Every year our congress drafts a new collection of laws to submit to the process of enactment. State legislatures, county and city governments all are able to add new rules and constraints on our degrees of freedom. As if that weren’t enough, people willingly move into convenant controlled communities where they sign away basic freedoms like the freedom to choose house paint or to leave the garage door open.

We are gradually fencing in all of the free space where conduct is unregulated. Our Nanny State leaders are scaring the bejeebers out of us through defense initiatives and dire warnings about what could happen if terrorists took an interest in disrupting industry and infrastructure.

Our town of 6,000 has to comply with Homeland Security requirements by fencing in the town water tank in a certain way.  Some terrorist could poison the water. In fact, that fiend would probably be a psychotic local citizen bent on retribution, not a Shiite saboteur in sandals. Collectively, we are at much more risk from fellow citizens than from foreign bad guys. Perhaps that is the hidden agenda.

Citizens are turning over priceless freedom artifacts in exchange for promissory notes claiming to protect the bearer. Once we give up degrees of freedom in the conduct of our lives, we can never get them back. Govennment will not refund units of control.  As we increase the complexity of our world through an ever increasing statutory web of control, we forfeit degrees of freedom. It is like a ratchet. You can click forward, but there is no going back.

New subject. Read Jim Kunstlers post “Reality Bites“.

Bacevich on Consumerism and the Imperial Presidency

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While I have been struggling in my usual caveman way to express my frustrations with our national governance, whom should I stumble into but Andrew J. Bacevich, Boston Univ professor of history and international relations, who has been working on this matter for some time. Bacevich has written a book called The Limits of Power: The End of American Exceptionalism.  This exceptionally articulate fellow was recently interviewed by Bill Moyers on public television. 

His thesis comes down to the notion that American demand for consumer goods and credit has resulted in a kind of consumer imperialism. To facilitate this “domestic disfunction” or “crisis of profligacy”, the executive branch has acquired an excessive reach that exists only by the wither and atrophy of congress. By fiat of the executive, and the mumbling consent of a passive congress, our military adventures have distracted Americans from an examination of our continuous and undisclipined consumerism and indebtedness.

Georgia on my mind

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I’m glad that the USA is able to scold CCCP Russia for its invasion of Georgia from our lofty position on the moral high ground. I suppose that the irony of our warning to Russia could be discounted as the delerium of a petroleum besotted empire in decline. While it may not be that bad yet, we certainly have been driven by our political leaders to a remote location in the desert and abandoned.

Western Civilization classes of the future will note that the inability of the USA to constructively engage post-communist Russia was perhaps one of the greatest opportunities lost of the 20th Century.