And They All Fall Down

Glad to get confirmation that my years as a financial analyst weren’t for notta. A few days ago, I wondered aloud whether it would be feasible and helpful to create a federal entity with oversight for home loan refinancing, an entity modeled on federal student loans program. Well… James K. Galbraith, the author of The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too and the son of renowned economist John Kenneth Galbraith, questions whether the bailout is necessary and proposes a new Home Owners Loan Corp., which would rewrite mortgages, manage rental conversions and decide when vacant, degraded properties should be demolished.

All five big investment banks have disappeared or morphed into regular banks. Is this bailout still necessary?

The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They’re called “loans.”

With banks, runs occur only when depositors panic, because they fear the loan book is bad. Deposit insurance takes care of that. So why not eliminate the pointless $100,000 cap on federal deposit insurance and go take inventory? If a bank is solvent, money market funds would flow in, eliminating the need to insure those separately. If it isn’t, the FDIC has the bridge bank facility to take care of that.

Next, put half a trillion dollars into the Federal Deposit Insurance Corp. fund — a cosmetic gesture — and as much money into that agency and the FBI as is needed for examiners, auditors and investigators. Keep $200 billion or more in reserve, so the Treasury can recapitalize banks by buying preferred shares if necessary — as Warren Buffett did this week with Goldman Sachs. Review the situation in three months, when Congress comes back. Hedge funds should be left on their own. You can’t save everyone, and those investors aren’t poor.

With this solution, the systemic financial threat should go away. Does that mean the economy would quickly recover? No. Sadly, it does not. Two vast economic problems will confront the next president immediately. First, the underlying housing crisis: There are too many houses out there, too many vacant or unsold, too many homeowners underwater. Credit will not start to flow, as some suggest, simply because the crisis is contained. There have to be borrowers, and there has to be collateral. There won’t be enough.

In Texas, recovery from the 1980s oil bust took seven years and the pull of strong national economic growth. The present slump is national, and it can’t be cured that way. But it could be resolved in three years, rather than 10, by a new Home Owners Loan Corp., which would rewrite mortgages, manage rental conversions and decide when vacant, degraded properties should be demolished. Set it up like a draft board in each community, under federal guidelines, and get to work…

– James K. Galbraith – A Bailout We Don’t Need – washingtonpost.com

For a review of Galbraith’s book by The Journal of Economic Issues, go to the Economist’s View, a blog by Mark Thoma, Professor of Economics at the University of Oregon. More information on Galbraith’s book can be found at:

• Global Investment Watch
• Mefeedia Podcast – The Predator State: How Conservatives Abandoned The Free Market And Why Liberals Should Too – Posted using ShareThis

 

Words of Advice from President Bartlet

What if Barack Obama turned to former President Jed Bartlet of the “West Wing” for some fatherly wisdom?

OBAMA What would you do?

BARTLET GET ANGRIER! Call them liars, because that’s what they are. Sarah Palin didn’t say “thanks but no thanks” to the Bridge to Nowhere. She just said “Thanks.” You were raised by a single mother on food stamps — where does a guy with eight houses who was legacied into Annapolis get off calling you an elitist? And by the way, if you do nothing else, take that word back. Elite is a good word, it means well above average. I’d ask them what their problem is with excellence. While you’re at it, I want the word “patriot” back. McCain can say that the transcendent issue of our time is the spread of Islamic fanaticism or he can choose a running mate who doesn’t know the Bush doctrine from the Monroe Doctrine, but he can’t do both at the same time and call it patriotic. They have to lie — the truth isn’t their friend right now. Get angry. Mock them mercilessly; they’ve earned it. McCain decried agents of intolerance, then chose a running mate who had to ask if she was allowed to ban books from a public library. It’s not bad enough she thinks the planet Earth was created in six days 6,000 years ago complete with a man, a woman and a talking snake, she wants schools to teach the rest of our kids to deny geology, anthropology, archaeology and common sense too? It’s not bad enough she’s forcing her own daughter into a loveless marriage to a teenage hood, she wants the rest of us to guide our daughters in that direction too? It’s not enough that a woman shouldn’t have the right to choose, it should be the law of the land that she has to carry and deliver her rapist’s baby too? I don’t know whether or not Governor Palin has the tenacity of a pit bull, but I know for sure she’s got the qualifications of one. And you’re worried about seeming angry? You could eat their lunch, make them cry and tell their mamas about it and God himself would call it restrained. There are times when you are simply required to be impolite. There are times when condescension is called for!

Aaron Sorkin Conjures a Meeting of Obama and Bartlet
– Maureen Dowd – The New York Times

Oh my god, my god (note, I used “god” in lower caps) is Aaron Sorkin! I love Aaron Sorkin. I LLLUUUUUUUUUV Aaron Sorkin. And I love President Bartlet. And oh my god, let righteous anger speak!

I loved that Biden said it would be patriotic for the wealthy to do their part at this time. Thank you, Biden, for having balls

Alternate Reality

I’ve been very gloom and doom. Fretting over the election. Fretting about many things. Doesn’t help that I’m reading text after text on neo-Confucian ethics, including the memoirs of a Korean noblewoman whose husband, the crown prince, was sealed into a rice chest by his father, the king, and left to die: The Memoirs of Lady Hyegyŏng, translated by JaHyun Kim Haboush. So, yes, I’ve been fretting about the moral/ethical failings of our world.

Then, I read this article.

The Year of the Cloned Candidates
By GAIL COLLINS
Published: September 13, 2008

We have been approaching this presidential race the wrong way. It’s not political science. It’s science fiction. Something is amiss in the space-time continuum.

The presidential candidates running now are not the same ones we started out with. It’s “Invasion of the Body Snatchers” all over again. We’re watching the clash of the pod people. – The New York Times

 

They're here already! You're next!

 

And I laughed. Lots. Gaffawing laughter.

Methinks I need to schedule in regular doses of the Daily Show with John Stewart.

If this were indeed a sci-fi horror flick, the kicker I’d like to add is this: the final scene takes us to a facility where the Republicans, unbeknownst to the American public, have been conducting secretly cloning experiments from stem cell lines. The final shot pans across glass pods of clones and zooms in slowly on the pod containing the protagonist’s clone. Mwahahahahahah.

 

David Frum on Equality – “Never Can Be or Should Be a Conservative Goal.”

Question to David Frum. Do you really want to assert the following on record?

Equality in itself never can be or should be a conservative goal.

The Vanishing Republican Voter: Why income inequality is destroying the G.O.P. base.
– David Frum, The New York Times

WTF?

I reread it and the surrounding passage repeatedly to make sure I hadn’t misunderstood that the author was asserting that conservatives should not prioritize equality in itself as a worthwhile objective. I didn’t misread it.

Wow, really? Somebody needs to brush up on his civics lessons:

“We hold these truths to be self-evident: That all men are created equal…”

The Declaration of Independence, 2nd paragraph

 

Well-Intentioned But Manipulated

In “The Mirrored Ceiling,” the latest post in her New York Times blog Domestic Disturbances, Judith Warner articulates incisively the gross insult and danger that is Palin’s nomination.

Palin sounded, at times, like she was speaking a foreign language as she gave voice to the beautifully crafted words that had been prepared for her on Wednesday night.

But that wasn’t held against her. Thanks to the level of general esteem that greeted her ascent to the podium, it seems we’ve all got to celebrate the fact that America’s Hottest Governor (Princess of the Fur Rendezvous 1983, Miss Wasilla 1984) could speak at all.

Could there be a more thoroughgoing humiliation for America’s women?
…
One of the worst poisons of the American political climate right now, the thing that time and again in recent years has led us to disaster, is the need people feel for leaders they can “relate” to. … it brought us after all, two terms of George W. Bush. And it isn’t new; Americans have always needed to feel that their leaders were, on some level, people like them. …But never before George W. Bush did it quite reach the beer-drinking level of familiarity… There’s a fine line between likability and demagoguery. Both thrive upon manipulation and least-common-denominator politics.”

Some of the comments to this Blog post were especially worthwhile. In particular, I appreciated Elizabeth Fuller’s comments (#5 and #387 ), as did so many others who commented, and Bill’s comment #363. They were gems. I just hope that the populace is made up of such thoughtful people who do discern the dissimulation being waged by Steve Schmidt, John McCain, Sarah Palin, and the Republican Party who, in order to put themselves in the White House, would do everything but put the country first and in fact would soil and undermine the very values upon which this nation was founded. I hope they are able to see that Sarah Palin is none other than a lipstick wearing, Alaskan iteration of George W. Bush: just as ill-prepared because they are not curious about the world in which they live, they have not dedicated themselves to challenging themselves, their hubris allows them to believe they possess all the wherewithal that could possibly be necessary to be (V)POTUS, and they lack respect for the Constitution and would violate that foundational belief in the separation of church and state.

 

Shame on the Whole Lot of You

Steve Schmidt has transformed John McCain’s campaign into an elbows-out, risk-taking, disciplined machine. – An Adviser Puts His Stamp on McCain Campaign – The New York Times

Steve Schmidt stands for all that I find problematic about politics. His modus operandi is what most people purport to find repugnant about politicking. McCain used to criticize this type of “win at all costs, including stretching the truth so much that it bears little resemblance to itself” politicking. That McCain who was critical of dirty politics, I actually liked.

Must we resort to this to win? Are we that base? To stoop to such demeaning strategies and to devour such meat with frightening voracity that we make a pack of laughing hyenas appear civilized?

This criticism is not limited to Steve Schmidt and whichever likeminded Republicans.

Dems! Whatever happened to being the change you want, of wanting a more elevated, diginified political engagement?

Palin’s Teen Pregnancy

I personally don’t care about Bristol Palin’s pregnancy. What I object to is the hypocrisy, not just of the Palin family but of the claim that it is a subject inappropriate for public debate.

On the one hand, of course, it is entirely a private affair; however, it was made a public affair a long time ago by those who insisted on abstinence before marriage, who cast judgment on anyone who had pre-marital sex, who sneered at teen pregnancies and particularly those of black teens, who supported policies that either rendered it impossible to terminate unwanted pregnancies or eroded public forms of support for girls/women and their unplanned offspring who lack the kind of support that Bristol fortunately has, etc.

A Republican Party I Would Respect

What can be done to salvage the Republican Party? … It’s leaders obsess about what they call the decline of its “brand,” in itself a mark of a party invested more in marketing than in principle. Rep. Tom Davis, former head of its congressional campaign committee, concludes that, “If we were a dog food, they’d take us off the shelf.” – Off the Shelf by Robert Borosage – The Huffington Post

Borosage here proposes that the Republican Party return not to Ronald Reagan but to Ike. His description of the Republican Party under Ike is of a party I can not only live with but actually respect.