Adults desperately needed

So, was Nancy Pelosi’s speech what doomed the bailout vote? Apparently not, despite John Boehner and others trying to pin it on her.  Not according to Republican Representatives John Shaddeg and Darrell Issa late yesterday.  They branded Boehner and Eric Cantor’s claims as “stupid” and “idiotic.” And today, Michelle Bachman has joined in disputing the leadership’s claim.  So, just who is it that’s being partisan?  And, more importantly, just who is the GOP House leadership these days? For day’s Paul Krugman, Princeton economist and New York Times columnist has been decrying the lack of adult supervision. Yesterday, he wrote:

What we now have is non-functional government in the face of a major crisis, because Congress includes a quorum of crazies and nobody trusts the White House an inch. As a friend of mine said last night, “We’ve become a banana republic with nukes.”

As anger built over the bailout plan, the more I read, the more I realized that most people are against it because they don’t understand the nature of the current crisis.  I’ve written here that the real crisis is the credit contraction (freeze).  That’s what precipitated the bailout plan, even though the plan itself is aimed at the underlying problem of all the bad mortgage debt. Most people can’t see beyond or behind the Wall Street portion to understand its relationship to the credit crunch.  And unfortunately, nobody has been able to rise above the noise level of the political campaign to provide the information needed to make the connection.

Economist Laura Tyson provided the most easily understood explanation to date last night on Rachel Maddow’s show.  I really like Rachel.  She’s smart as a tack, has a great sly sense of humor, and has her finger on a lot of issues, as well as the “blizzard of words” that too often obscures reality.  Anyway, here are a couple of quotes from Dr. Tyson.

You know, all along, this has been called a bailout bill. It’s such a misnomer. We are in the midst of a massive credit contraction. It’s strangling the economy. It’s making it impossible for businesses to borrow, to keep their businesses going. It’s making it impossible for students to borrow, to keep their loans going, and homeowners to stay in their homes.

And what we saw today on the stock market, that shows what the market is anticipating.

 Dr. Tyson went on to describe in pretty stark detail what a credit freeze means to Main Street, not just to people who have investments in the stock market.

You know, what people should be concerned about is their income and their jobs, because the credit contraction means that employers, companies, cannot continue operations at their current levels. They cannot get the credit they need to keep their operations moving. The greatest danger now is a real economy recession. Stock markets can go up and down over time, retirement accounts can go up and down over time. The key thing is to get the economy safe from what looks like to be a bit of a serious recession.

I personally think that all these folks are underplaying things when they talk about recession, serious or otherwise.  What’s really at stake is a whole-scale global depression.  But I also understand the need not to create panic.  At that point the conversation between Rachel and Dr. Tyson turned to leadership.  And here, perhaps, is the biggest take-away from the entire exchange, when Dr. Tyson said,

You know, I always thought of leadership as being partly educational, partly explaining to people.

So, as people struggled to wrap their heads around the enormity of the situation, most were swamped by anger and frustration not with useful information.  

The President’s speech last week served only to heighten fears.  Rather than try to educate, to truly lead, he opted once again to use fear for political gain, both for John McCain and in all likelihood to try to salvage what little may remain of his legacy.  I’ve never claimed to be an expert. I did take macroeconomics — several decades ago.  I certainly can’t claim the level of expertise a Harvard MBA should afford him!  But, even if he had tried to educate us, would anyone have bothered paying attention to him at this point? 

I do wish that Speaker Pelosi had waited until after the vote to correctly place responsibility for the current mess largely (though not entirely) at the feet of the Bush Administration’s policies and their underlying economic philosophy.  Her timing gave the GOP an opening to slip in a knife attack to try to cover the fact that they couldn’t muster the votes.  On the other hand, she did manage to bring attention to how severely fractured the GOP coalition really is.  Perhaps more and more Americans will come to see that their real interests do not lie with the radicals who have hijacked the GOP and we can get back to deciding elections on the basis of the real issues and not the wedge ones that have served only to hold the GOP together for a few additional election cycles. Who emerges as the real leaders of the GOP will be telling and whether there are some in that party for whom putting country first is more than a slogan.

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I’m mad as hell

As I watched the House defeat the proposed bailout, and the stock market plummet, I wondered.  I understand people’s anger at Wall Street and their anger that Main Street is being asked to pick up the pieces.  I share it.  But rejecting the plan seems fraught with even greater dangers.  Do we REALLY want the bottom to fall out of the economy the rest of the way?

Clearly, lawmakers were influenced by their constituents’ concerns.  But at what point do you put country first — ahead of your own political future?  It would appear that not enough of our elected “leaders” were willing to do that.  Sometimes leadership involves sacrifice, and this close to an election, sacrifice can be hard to come by.  Too many of them wanted the other guy to do the right thing so they wouldnt’ have to pay the political price back home.  That’s not leadership.  That’s cowardice.

Nobody wants to volunteer to lose their job.  The election is less than 40 days away, and all the members of the House are up for re-election.  So now, of course, the finger-pointing begins.  We can expect partisan blame galore, regardless of where the truth lies.

 It’s a gross oversimplification to think that the only people being hurt (or that the only people that should be hurt) by failure to pass bailout/rescue legislation are those nasty greedy guys on Wall Street and the corporate CEOs with their golden parachutes, regardless of the quality of their performance. We all get hurt by this.  If you own a home, your property value is declining in much of the country.  In some places it’s tumbling.  And if there are foreclosures in your neighborhood, you can expect to see an additional $3000 decline in your home’s value for each foreclosed property.  Similarly, if you have a 401(k), an IRA, or are one of the lucky ones to still have a defined benefits pension plan, what happens on Wall Street affects you directly.  The Dow has already lost over 25% of its value over the last year, and there’s no end in sight at this point. Interest rates on bank deposits and CDs will continue to fall as banks try to tighten their economic belts.   It’s not just brokerage houses or investment banks or insurance companies who get hurt. They’re only the immediate target. 

But as the credit freezes up, businesses large and small will feel the effects.  Some, perhaps a lot, will fail, throwing more people out of work.  And those that manage to stay afloat may respond to tighter credit and reduced consumer demand by reducing benefits and laying off people.  Higher unemployment rates translate to even higher numbers of foreclosures.  And so it goes. 

So, I’m angry.  I’m angry at Wall Street. I’m angry at corporate boards of directors who reward CEOs for their bad business practices and who enable their greed.  I’m angry at the hired guns — those who lobby for ever increasing de-regulation.  I’m angry at investors who are more interested in the next quarterly report than in the long-term.  I’m angry at a system that corrupts the legislative process to the point where Main Street is viewed as the suckers who will ultimately get stuck with the tab. I’m angry that the corporate media doesn’t live up to its responsibility to ensure an honestly informed electorate. I’m angry at politicians and political parties who use wedge issues to get people to vote against their own self-interest.  I’m angry at clergy who ignore the parts of scripture where it talks about caring for the less-fortunate among us and warns about the dangers of wealth blinding us to reality.  I’m angry at those in government who put special interests or their own self-interest above those of We the People.  I’m angry at an administration that lied and fear-mongered and failed to lead. I’m angry at voters who celebrate ignorance and incompetence, and who vote on the basis of who they’d rather have a beer with. In fact, I’m mad as hell.  And I’m not going to take it anymore!

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Negotiating a compromise — now that’s a good thing

A couple of final thoughts about the bailout…

• Text of what Congress will vote on has been posted here.
• The individual tab doesn’t sound nearly as bad as the aggregate.  It’s actually less than $2300 per person.  When stacked up against what your 401(k) or pension or IRA or stock portfolio or your kid’s college fund has probably lost over the last few months, it’s a bargain.  The per household cost of a full-blown depression would have far surpassed that figure as well.
• Experts are beginning to agree that the final cost probably won’t be the full $700 billion. So that cuts the $2300 figure down even more. 
• The absolute power and lack of accountability or oversight in Paulson’s original draft made it dead on arrival, especially in an election year. 

About the only thing Thursday’s White House meeting accomplished in the final analysis was to put pressure on people in both parties to compromise on a final solution.  And negotiation and compromise are what characterize a functioning legislative body.  If that can be carried forward, we’ll all be far better off.

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Intriguing possibilities

There’s an intriguing conjunction between the GOP’s addition of private insurance as the solution to the current financial sector crisis and their idea of privatizing health insurance.  It’ll be interesting to see how the insurance concept fits into the overall bailout plan. Seems Hank Paulson has his doubts as to whether it’s feasible to expect troubled firms to be able to obtain insurance.  

And therein lies the crux of the conjunction.  One of the main concerns for many Americans about McCain’s health care proposal is that people with pre-existing conditions are priced out of the market.  If you are obese, are on an expensive medication to manage a chronic condition, or have a less than perfect health history, the likelihood of being able to obtain private insurance at any price is questionable. And if you can find someone to insure you, the cost will be high, as will deductibles and co-pays, with lower lifetime benefit limits. Given the following information from the Centers for Disease Control on obesity alone, that leaves a whole lot of Americans in the lurch. “In 2007, only one state (Colorado) had a prevalence of obesity less than 20%. Thirty states had a prevalence equal to or greater than 25%; three of these states (Alabama, Mississippi and Tennessee) had a prevalence of obesity equal to or greater than 30%.”

It’s interesting to note that members of Congress benefit from a taxpayer financed health insurance program.  I can’t help but wonder how many of them would find it difficult to obtain private insurance.  Certainly John McCain’s health history would prove challenging.  But he’s also eligible for another taxpayer funded health care system — Medicare.  So, I imagine he uses his congressional plan as his “medigap” coverage — to cover the 20% of costs that Medicare doesn’t cover.  In either case, his health care coverage is 100% taxpayer funded.  He just thinks the rest of us should rely on private insurance.  Must be nice.  I wonder if he’s ever even considered the irony inherent in that.

I have a perverse hope that the insurance part of the bailout plan proves totally unworkable.  Not because I want to see the taxpayers have to fund the whole thing, but because it just might prove the insanity of throwing all Americans into the private health insurance system as it currently operates. 

Obama’s healthcare plan calls for people to have a choice as to which system would work best for them.  Should people like their current plan, they could keep it, except it would cost them less.  For the rest of us, there would be additional options to provide coverage that’s affordable while remaining comparable in quality to the care Congress enjoys.

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And the conversation continues… UPDATED

As promised, here’s the continuation of an earlier post.  At one point during our exchange, Chris said, “I still hope that one of these days, people will realize that respectful and ethical discourse between differing opinions is the only way to properly govern…but, I guess that’s just the idealist in me.” I totally agree, even though these days I seem to be flipping back and forth between idealism and cynicism.

In response to Chris’ comment, I said:
Here’s the problem as I see it. There are two aspects to the problem. The mortgage meltdown is part of it. The freeze you’re proposing would mean in effect nationalizing all the entities that own US mortgage paper. A lot of those securitized mortgage derivatives were sold overseas. So it’s a global problem. We don’t have the laws to enforce a freeze. I suspect such a freeze would create a true panic. And that would bring down the entire system. We’d be plunged into a global economic depression. Don’t forget that China holds half a trillions of dollars of paper. Should they decide we’re toast economically and call in their chits, we’d all be taking crash courses in Mandarin.

The other major issue, also with global implications, is the credit crunch, which actually precipitated the rush to a bailout. Most businesses, large and small, depend on lines of credit to smooth out the normal ups and downs. The credit crunch makes credit much more expensive. As credit tightens, businesses struggle and fail. Higher unemployment and reduced private sector spending ripple throughout the economy. Ultimate result of a credit freeze is a depression. In fact, that’s one thing that separates a recession from a depression. Easy credit means more debt – for people, businesses and government. Necessary but needs to be used wisely.

I think Bush’s meeting and McCain’s injecting himself into the mix was political grandstanding. He brought a campaign aide with him, NOT a Senate aide like Obama did. That’s when things blew up. Coincidence? Perhaps. But given his history, his political philosophy, and his penchant for drama, it’s questionable. [See previous post.]

You might want to take a gander at a couple of columns from the Washington Post. Eugene Robinson and E.J. Dionne aren’t buying McCain’s explanation as “non-political” either. Nor are the folks on CNN. Unfortunately, the people who get all their news from Fox get a very different take on whether it was a stunt or a brilliant move. Jon Stewart nailed the comparison.

Turns out the list the Sen. Shelby was waving around came out of the Chicago School of Business — the intellectual home of disaster capitalism. You’ve heard me mention Naomi Klein’s Shock Doctrine. Her thesis is that these folks look for and even precipitate disasters, then go in while people are in shock and set up their own brand of extreme laissez fairecapitalism, along with a fascist style of governance. They wouldn’t be able to succeed if people weren’t in shock. It’s classic neoconservative economics, except that they call it neoliberalism.  So far the US has resisted it, at least domestically.  But the current situation is ripe for them. And a lot of the other pieces are in place to make it happen here — some of Bush’s national security directives, for example.

The reality is that we (both Dems and Repubs) have been keeping this thing going for quite some time, probably since Reagan. Deregulation is part of it, but we’re wallowing in debt. National, local and state government debt, but the huge amounts of consumer debt has kept the economy afloat. We’re hardly a producing nation any longer — unless you count all these exotic financial instruments “products.” [Ok, I know that’s a bit of an exaggeration, but let’s face it, we’re not producing tangible products like we used to.] It’s been more like a giant Ponzi scheme, and the house of cards is about to collapse. Paulson’s original proposal was extreme — too much concentrated power with no accountability or oversight — but the general principles that had been agreed to, until McCain rode in like the Lone Ranger, looked reasonable. As Paul Krugman says, we need some adults. Paulson needs adult supervision. The question is who can provide it.

I don’t think they need a final agreement immediately.  A set of basic principles would probably be enough to calm the markets.  So they’d have time after that to fill in the details. If somehow McCain and the Repubs manage to pull off a victory, all bets are off.

The other thing is that the bailout won’t cost as much as the pot of money on the table. It’s basically the working capital. They’re talking about buying loans at discount, refinancing/restructuring them, then re-selling them, hopefully at a profit. In the meantime, you’ve kept people in their homes and made the money from their payments. As the institutions you’ve bailed out get healthier, their stock value improves, and since you own an equity share, you’re making capital gains when you sell your shares. And finally, since you’re the government, you don’t have to pay taxes on the revenue! One of the proposals I heard today was that the feds would make only half the money available without additional Congressional approval. That would tend to “encourage” efforts to get the loans healthy and sold so they could re-use the money as needed.

One of the proposals is to create a quasi-independent “corporation” like the RTC. Buying up loans was what the RTC did during the S&L mess in the late ’80s and early ’90s. Eventually most of those loans were sold off. Some had to be written off — mostly the crony ones — but they were the minority. And even though they were relatively loans, they were a very small percentage of the grand total. But people are going to take advantage when there aren’t adequate regulations or enough inspectors. You’d think we’d learn!

Chris came back with:

You’d think we would learn…not just from our own experiences as a nation, but from the experiences of others. For instance, Sweden went through a similar crisis (although, in many ways, much more of one than ours) in the 90’s. What worked for them as a bailout was to buy the bad loans from the banks that gave them at a reduced (or at least current market value) price. The plan from Paulson (from what I understand) says NOTHING of buying these loans at current market value, but in fact states that we should buy them based on what their market value would be when the market recovers and the businesses that issued them have recovered from this fallout. To me, that is pure BS! Why in the hell should we, as taxpayers, spend more for these loans than the private sector would to bail these institutions out? And if we are going to do so, why shouldn’t that expenditure be one that pays off the individual loans to the point where they are brought back within market expectations? In essence, my question is: why are we bailing out the “golden parachute” holding major corporations instead of bailing out the individual homeowners? Granted, there is the argument that we cannot “reward those who made the bad decision to take on more debt than they could handle”. But what about the argument that we cannot reward those who intended to make a profit by giving loans to people who, according to all former “regulated” conditions, could not handle them? Even if we demand no golden parachutes and changes in leadership and new regulations on these corporations, are we not simply sending a message that “well, if you’re a poor person who was told ‘you’d be better off paying this rent money into a home that you haveequity on, and now we can finance you’, it’s still your fault for getting into this bad loan, but now we’ll bail out the corporation that gave you the bad loan”. Oh, but by the way, you’re still screwed, and we’re not about to help you out, because that would be sending a bad message that people can make irresponsible decisions, and end up not paying for them? Unless, of course, you are a major financial corporation, in which case, you can make bad decisions that everyone ELSE ends up paying for, including those now homeowners who should never have been given the financing they got in the first place? It just seems to me that it would be cheaper and easier to bail out the individual bad loans to the point that people CAN be held accountable as opposed to bailing out the entire bad loan industry. Somehow, I can’t quite wrap my head around this one.

So, I responded:
Given that many Americans view Sweden as socialist, I doubt their solution would be considered politically viable — at least not publicly. But what you describe as the essence of their plan is what worked here for the S&L mess, except that calling the agency the Resolution Trust Corporation made it sound more like a private sector entity. It eventually was folded into the FDIC.

I share your concerns about the bailout. But doing nothing and just letting it all collapse isn’t an option. The stakes are way too high. I just don’t see a viable alternative. The AIG deal is a loan, and we’ve bailed out companies with before with loans. Lockheed and Chrysler come to mind. Those loans were paid off. The difference here is that we also now own 80% of AIG.  So, the feds essentially control the company. AIG has lots of valuable assets. Theirs was a liquidity problem. The cash infusion let them keep running, and the first thing the new “owners” did was to fire the CEO. And the FBI is investigating AIG, Fanny, Freddie and Lehman. There may be arrests, trials and jail time for their CEOs… as long as they don’t drop dead like Kenny Lay did. I still think the feds should have gone after a good chunk of Lay’s money, but I wasn’t sheriff, so I didn’t get a vote on that one.

The dollar amount of Paulson’s plan is eye-popping and completely mind-numbing. Section 8 of the draft plan was clearly unacceptable to everybody except Paulson/Bush. It clearly wasn’t going to fly. So it’s gone — unless the disaster capitalists somehow prevail, in which case we’re all totally screwed. I truly don’t see that happening without some sort additional huge disaster or a coup.

Here’s the text of the original proposal. I don’t see anything in it that speaks to purchase price conditions. And assuming the process is more open than originally proposed, your concerns aren’t likely to materialize.

USA Today listed the key elements of the principles that apparently had been agreed to before McCain showed up:
1. Authorize $700 billion for the government to purchase troubled assets and buy equity in distressed financial firms. Require the Treasury Department to make rules to prevent excessive compensation for executives whose companies benefit from the rescue.
2. Establish a strong oversight board with authority to halt the program, a special investigator general to monitor it, and regular government audits.
3. Require the government to renegotiate mortgages it acquires under the program with the aim of helping borrowers keep their homes.

4. Phase in the money for buying troubled assets, with $250 billion available immediately, $100 billion to be released if the Treasury secretary certifies it is needed, and the last $350 billion available with another certification, but subject to a congressional vote to block it.

One thing that both parties realized early on was that the taxpayers wouldn’t stand for golden parachutes. In fact, there’s been talk of limiting exec pay for the participating companies to $400k — same as Bush makes. I’m thinking that would fly well on Main Street and not give the Wall Street types much room for argument that didn’t sound selfish.

It just really pisses me off that McCain chose to try to play hero to try to save his campaign. Another instance of not putting country first. I’m not sure who initiated the idea of the WH meeting yesterday — Bush? McCain? — but it’s pretty clear that’s when things blew up. Reports says that McCain had very little to say — in other words, didn’t contribute ANY leadership. Meanwhile, Obama demonstrated both leadership and a command of the problem, peppering Paulson with questions, seeking still more and newer information on the situation and on his thinking. Of course, that’s in addition to having been in frequent contact with him well before the meeting, when he might actually be able to do some good.

The blow-up proves just how tenuously the GOP is holding together. It’s been cobbled together with several mutually incompatible factions for quite a while, and this may actually be its death knell. Heard someone saying last night that the bailout deal may negate any benefit the Palin nod had. McCain pulled in the social conservatives but is about to lose the fiscal ones. The latter group may opt to write in Paul or vote for Barr instead. The social conservatives will continue to drool over Palin — unless they’re also fiscal conservatives. They might just decide to stay home.

——————
I didn’t see this one until after our email exchange, but here’s an interesting alternative to the Paulson plan, even with its probable modifications.

The GOP’s plan calls for more deregulation. That’s gotten us into a mess every time. I can’t fault McCain’s suggestion to review the existing regs and consolidate them and the “oversighters” into something coherent. But MORE deregulation? No way, no how, NOT! The other key component of the GOP plan calls for private money to solve the problem. The LA Times has been all over this whole story. They’re reporting that credit has all but frozen. Banks aren’t even lending to each other, and other credit is so pricey that it might as well be unavailable. Given this, one must wonder just where all that private capital would come from.

So, as of Saturday, Sept. 27, there still isn’t an agreement.  I remain very concerned about the implications of taking on more debt bailing out the institutions that got us to this point.  The GOP plan is seriously flawed. Doing nothing isn’t an option.  I just don’t see any viable alternatives.  A fine mess we’ve gotten ourselves into.  I guess all I can hope for is that Congress will put enough teeth into the plan so we taxpayers aren’t left hung out to dry and that those administering whatever solution do as good a job fixing things as the geniuses who got us here did in screwing things up.

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So, it WAS a stunt…

Ever since McCain announced he was suspending his campaign to rush to Washington (some 18 hours later) to save the day on the bailout talks, I smelled a rat.  Today, it turns out I was right. Confirmation came from none other than Eric Smith, a top aide to Rep. John Boehner of Ohio.  Smith, said Republicans revolted over what they saw as an attempt by Democrats to jam through an agreement early Thursday and deny McCain an opportunity to participate in the agreement.

Country First?

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Continuing the conversation…

Last night Chris commented on my previous post.  I know Chris, and he and I continued the conversation with several email exchanges.  He’s a very bright 20-something with education debt, who’s trying to make ends meet as he gets established in his career.  He represents a lot of his peers in that he’s concerned about the implications of the proposed bailout on his generation. He seeks out information from a variety of sources — NPR, CNN, The Daily Show, The Colbert Report, and blogs.  Note that none are print media.  I’ll be stringing our conversation together, editing it  for continuity and will update this post later.  His views are worth considering.

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Superman to the rescue? Not exactly.

Last night after all the speeches, announcements, statements and interviews ended, I pondered what I had witnessed during the day.   There were contrasts, both in style and in stubstance.  But my personal “Holy $700,000,000,000, Batman!” moment was learning that Candidate McCain didn’t contact the Chairman of the Senate Banking Committee about the crisis or the bailout plan until yesterday, just as he was preparing to don his own super hero cape and swoop down to save the day.  Yesterday! Not two months ago, not two weeks ago.  Not ten days ago, when the noise level on the financial turmoil grew to painful levels. Not over the weekend when Sec. Paulson released his 2 1/2 page “make me master of the universe” document.  Not even Monday or Tuesday when it was clear that Congress wouldn’t go along with it as written and while they were working nearly around the clock to craft some reasonable protections.  One can’t help but wonder which crisis concerns Candidate McCain the most.

To be fair, McCain is in a bit of a pickle.  He can’t dump his entire economic philosophy and wish away a 26-year voting record without looking like a total political opportunist. Dumping his principles wouldn’t sit too well with his Wall Street buddies and lobbyists.  But along Main Street, there is plenty of anger, and there are a lot more voters on Main Street than on Wall Street.  And that is showing up in the polls.  Issue #1 is the economy, and when things aren’t going well, the party in power usually gets the blame.  People want to toss the bums and try a new team.  Some months ago, Candidate McCain admitted he didn’t know much about the economy, and his responses last week proved it. 

So what’s a guy to do?  Counter the grandmother of all bailout plans with an equally stunning announcement that he’s suspending his campaign. Cancel the debate — or at least postpone it until Oct. 2.  How convenient is that! Oct. 2 just happens to be the scheduled date of the VP debate. Meanwhile, it is becoming painfully obvious that Sarah Palin is a long way from being up to speed on the issues of the day.  So, Candidate McCain proposes a ride into Washington on his white house horse to save the day. Act like the hero.  Fortunately, that scenario was so blatant that most people see it for what it is — political grandstanding.  Remember Chris Dodd’s comment that he finally heard from Senator McCain the same day Candidate McCain announced he was suspending his campaign?  Father Andrew Greeley‘s column on McCain’s grasp of the financial crisis should be required reading for all voters, along with this.

On the other hand, Barack Obama, despite his supposed lack of experience, is looking, sounding, and acting far more presidential than his opponent.  He has been in almost daily contact with the key players in the negotiations.  He is pushing for accountability, transparency, taxpayer protections, oversight, no golden parachutes — the things that are important to most Americans.  He proposed a joint statement calling for setting politics aside and being Americans first and foremost as the Congress seeks a solution.  And his public statements about the state of the crisis have, in general, been crafted to inform without further raising anxiety levels.  When asked about cancelling or rescheduling the debate, Senator Obama pointed out that the American people deserve to hear what each candidate offers in terms of ideas and plans.  He mentioned the nexus between the economy and national security/foreign policy — the topic of the first debate.  And he correctly pointed out that a president has to be able to handle more than one thing at a time. That, my friends, is putting country first.

It appears that Congress has reached agreement on the “fundamentals” of the plan.  The protections that Americans were demanding have been included.  Final passage is expected before the markets open on Monday.  Not surprisingly, the meeting at the White House was little more than a photo op.  And the debate is back on. 

[UPDATE: Well, seems perhaps the initial reports were a bit premature.  A deal may be close, but isn’t in the bag quite yet.  And so, despite Gov. Haley Barbour (R-MS) anticipating a great debate, Candidate McCain isn’t ready to join in just yet.  To his credit, he has been meeting with hesitant Republican lawmakers, trying to get them on board. Let us hope that whether the final vote takes place today, tomorrow, or over the weekend, he’ll see the wisdom in showing up Friday night in Oxford.  The visual of an empty podium would be hard to spin when so many American want the debate to occur on schedule. They could do what VP’s are supposed to do and send Sarah Palin instead…. ] 

[UPDATE II: Seems this wouldn’t be the first time McCain has fled a debate.  Meanwhile, Obama is offering to change the format of the Ole Miss debate to a town hall meeting.  Stay tuned…]

[UPDATE III: Just about the time it seems it can’t get any weirder, we learn that as of Tuesday, Candidate McCain hadn’t managed to read the 2 1/2 page Paulson proposal.  Gee, maybe if he knew how to use The Toobs, he’d have been better informed.  I read it on Sunday. And the more we learn, the more it sounds like McCain must have left his Superman outfit at the cleaners. Let’s see if I have this right.  He calls Bush to suggest a bi-partisan meeting at the WH. Both candidates fly in. The meeting happens, and SURPRISE! it gets really partisan. Funny thing about what happens when the cameras show up.  So, rather than agreeing on the fundamentals of an agreement, we’re back to square one. The markets were up today on the expectation of a deal.  Anyone want to take bets on what’ll happen Monday if there isn’t one?]

Perhaps the most important lesson to take away from all this is that when ordinary Americans holler loud enough, we can drown out all those lobbyist millions.  That all this occurred just weeks before a national election can’t be underestimated.  The effect of our voices is inversely proportional to the time until we vote. But just maybe all that community organizing that has gone on at the grassroots level over that past 18 months is working.  People are feeling increasingly empowered to speak up and demand our leaders be accountable to us.

Over the past several weeks, a real community has developed over at  Mudflats . Most of us found AKMuckraker when we were trying to answer the question, “Sarah WHO?” Mudflats proves that when people of good-will find each other, amazing things can happen.  We’ve learned that there are hundreds of others spread across the nation and the globe, who value intelligent conversation on important topics — thus the genesis of this blog.  I’ve railed over too much of my adult life that the United States is becoming a nation that celebrates ignorance and mediocrity.  More on that another time.

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We all need calming!

So, Fed chair Ben Bernanke says it’s essential to calm the markets.  That’s undoubtedly true so that credit doesn’t seize up completely and throw the US into a full-scale depression, taking the rest of the world along for the ride.  I’m certainly not pleased with the idea of borrowing another $700 billion to try to bring that calm, even if Steven Pearlstein’s estimate of a total cost or even profit of closer to $200 billion is correct. 

I’m glad to see that members of Congress on both sides of the aisle reject the initial draft of the bailout plan, favoring some controls and oversight before writing the check.  I hope those GOP members who recommend doing nothing aren’t driven by politics rather than principle.  And I’m glad the FBI is investigating some of the clowns who ran the outfits whose failure brought us to the brink. I’m waiting to see them perp-walked into the Federal courthouse and then the Federal pen, their golden parachutes shredded.  I’ll admit that I took pleasure in the lack of enthusiasm even the GOP showed for Cheney’s latest attempt at thumbing his nose at the very idea that Congress should have a say in things.  Giving one person, of either political party, absolute control over $700 billion is absurd, particularly under what’s left of our Constitution.   I’m still waiting for someone in the current administration or the conservative movement to acknowledge that their economic philosophy is in any way at the bottom of this crisis.  And until they do, I remain skeptical that we won’t decide, at some point in the future, to repeat this experiment in unregulated capitalism again.  We’re like that mouse in the science experiments that keeps going back to the food, knowing full well that the price for a bite to eat is an electric shock.  The mouse keeps hoping that next time he won’t get jolted, but the urge to eat is too strong.

So, I expect that within a few days, a few weeks at the most, Congress will pass some sort of bailout.  I wish it hadn’t come to that. But we don’t get a do-over this time around.   All we can do is try to calm the waters, impose enough controls to restore sanity, and discredit the entire philosophy to the point where never again rears its ugly head.

But, way back in the dark recesses of my head, I wonder if this isn’t the final act in the parade of disaster capitalism.  If you haven’t read Naomi Klein’s Shock Doctrine, it’s definitely worth it, but don’t say I didn’t warn you…

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Greed, human nature, and Sim City

Suddenly we’re hearing a lot of talk in Washington and from the McCain campaign about greed.  How those greedy folks on Wall Street led the rest of us down the primrose path, and how now they want us to bail them out.  It’s more than a little bit ironic that so many of those same folks who are quick to jump on the no-more-greed bandwagon are the ones who spent years touting the benefits of deregulating the finance sector.

While I didn’t get much fire and brimstone growing up, or even guilt-inducing sermons about the evils of sin, I did get a pretty strong message that we are our brother’s keeper.  The Bible I read talked a lot about poverty and how wealth can blind people to the needs of others.  After all, one of the Ten Commandments is a prohibition against coveting things that don’t belong to us.  I find it impossible to think that God was telling us not to be jealous when the greedy are so busy accumulating things (money as well as posessions) at the expense of the rest of us. 

If nobdy were greedy or coveted things that don’t belong to them, we wouldn’t need laws against robbery, burglary, theft or larceny.  Think about it.  We humans put laws and regulations in place because we understand that people don’t always behave perfectly. We understand that there are aspects to human nature against which we need to protect ourselves and others.  We see what happens when civil society crumbles and the legal restrictions crumble along with it.  Then we see both the best and the worst in human nature emerge, if only briefly.

But somehow, we seem to think that unfettered capitalism is immune to the foibles of human nature.  So periodically, we experiment with it again.  And  after a while — ten years, twenty years — things run amok.  We’ve been on a longer run this time around.  This version of the experiment has held sway for most of thirty years, nearly a full generation.  So it’s had plenty of time to run more amok than in some of the previous iterations. 

Scientists rely on the repeatability of their experiments to test their hypotheses.  Seems to me the hypothesis that unfettered capitalism is universally beneficial has been proven false.  Sure, there are some purists who contend that we’ve never had totally unfettered capitalism.  But I keep waiting for enough data so that next time they can just run computer simulations to see what happens. 

Remember the computer game Sim City?  It was one computer game I actually enjoyed.  But I always lost.  Somehow, I’d get things messed up and my city either stagnated and died or it burned to a crisp because I tried to grow it too fast and couldn’t afford to build enough fire stations.  Finding that perfect balance was totally elusive.  And one reason I couldn’t find it was that there was a dose of chaos theory or unpredicatability built into the system.  Those pesky Sim people just didn’t always behave themselves.  And in the version I played, you couldn’t adopt laws and regulations to make sure they did.

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