Through the looking glass

The American public has pulled an Alice and stepped through the looking glass into an upside-down world of morality and justice. Unaware, and insidiously we have accepted, and rewarded, criminal behavior if it is of grand scale, while continuing draconian punishment of criminals if their offense is of minor scope, affecting only a few.

Examples: AIG , Merrill, Goldman Sachs, Countrywide Bank, etc. The financial whiz kids at those firms devised financial instruments based on inflated valuations, false appraisals, and in complete avoidance of sound risk management principles. These were marketed to investors, banks, pension funds, foundations, etc,
without recourse. The purchasers were induced by AIG, which sold them Credit Default
Swaps. Those guaranteed face value reimbursement if the investment lost value, usually as a result of default by the borrowers.

For reasons already known, the investments lost most of their value, damaging the capital structures of the banks which had purchased huge amounts, exposing AIG to claims far beyond their capacity to pay. Failure to pay the claims could result in bankruptcies and collapse of the entire banking and credit structure of the nation.

The whiz kids who designed and marketed those toxic assets and credit default swaps should be punished for the fraud they committed and the enormous losses they caused. RIGHT? Almost half the world's paper wealth has disappeared. Instead they have received enormous bonuses as an inducement to stick around and unravel the chaos they caused and identify the co-conspirators (so they can receive bonuses?)
and victims, before they take off for a luxurious European vacation. But a poor, laid off worker, who in desperation snatches a purse or sells a joint, faces 10 or more years in prison.

The moral is "if you are a big enough scoundrel and thief you will be rewarded beyond your dreams. Just don't be small scale in your plundering."

A doleful anniversary

Today marks the sixth anniversary of the Iraq war, a day on which the U.S. abandoned
all reason and went to war to break Iraq as it was, and make it over into a western style Jeffersonian democracy. We now own it and are stuck with it. We now recognize our illusions and are groping to salvage a trace of positive outcome in a morass of conflicting interests among the Iraqui ethnicities.

We forgot the lessons of all wars. War STINKS. It makes heroes out of kids by tearing their bodies to shreds, and depriving them of their future, and the future they could give to their families, community, and nation. It turns them into legal killers and dulls their souls against the horrors around them so they are forever
scarred in body and mind. And for what? Are there any winners in war? Certainly not humankind, or the dead and maimed,the children deprived of fathers and mothers, parents deprived of a son or daughter, wives and husbands left bereaved and devastated. Yes, there are victors, but no winners. We honor the heroes, but the fact that we do so testifies to our failure of statecraft, and as "intelligent" creatures. Victory is never worth the noble lives it took to gain it!

And now, on to AFGHANISTAN where we once again
forget the lesson of war to our peril.

The more things change.........

As a tireless worker and supporter of the Obama campaign I expected that he, unlike all the previous candidates elected, would keep his campaign promises to change the way Washington does business, and to eliminate pork from the bloated federal budget.
I saw him as the outsider, a knight in shining armor, mounted on a white charger, slaying the dragon of corruption in congress.
By accepting a congressional budget containing an estimated $7.7 billion in pork, he has turned from knight to page, mounted on a donkey, carrying the baggage of the corrupt congress. His justification for the turnabout is that he has to bribe congress so that his next huge bailout request will get a favorable reception.
That is a delusion. Having successfully rolled the President this time, when the next bailout bill comes to them, congress will demand another bribe in the form of even more pork.
In this case even the appearance didn't change.
I believe that the President underestimates the support the majority of our citizens would give him for a firm position on a pork free budget. The $7.7b would save a lot of homes from foreclosure, repair a great many run down schools, raise teacher salaries, reduce class sizes in the early school years, and perform many other tasks which are vital to our economic recovery.
With sadness I contemplate ending my support of the President.

KILLING THE GOLDEN GOOSE

Getting ourselves out of the recession-depression we are in will require major sacrifices from all segments of society. But from the debates in the Senate, it appears that the Repubs would prefer to solve it on the backs of the middle class and blue collar workers, leaving the financial wizards who created the mess untouched, and bonus richer.

We can't reverse globalization, or undo outsourcing. Manufacturing will always find the lowest cost venue, which is now in the heavily populated Asian region. To attempt to compete against a national policy of "development at any price", as in Asia, we would need to create a permanent underclass of American workers. In our consumption based economy that would be a solution worse than the problem.

Our strengths that made us the 20th century world leader were innovation by well educated individuals, entrepreneurship, a work ethic, high workplace productivity, and the drive to leave the world a better place for our offspring. That was easy when large parts of the world consisted of Third World countries. They were our market, not our competition.

By permitting our educational system to decline, starving it for funds, and treating teachers as useful baby-sitters, we have frittered away our relative advantage. Products and services that were exclusively ours are now available in Asia. To make them here we import engineers and designers from there. Yet Congress is wrangling over a stimulus package from which they eliminated aid funds for education and funds for hard pressed states, whose own deficits make it necessary to reduce support for education at all levels.

How can we, average Joe or Jane, get through the swamp of partisan politics, to inform our Congress that enough is enough with neglect of education?

New Day, New Nation, New People?

In the wake of the euphoria of the peaceful transition to a new administration,there are many shoals and rapids through which the ship of state must navigate. The hull is leaking, the crew is disconsolate and bewildered, and the passengers are in a panic. The previous captain belittled charts. He set his course by gut feelings, convinced that the seamasters of old were wrong in believing the earth was round. Now the new, inexperienced, captain must patch the hull, inspire and revive the crew, and calm the passengers, while steering a course through unknown waters back to a safe shore. All of that with a disabled engine and torn sails.
The folks in port are waiting for the ship bearing their loved ones. Will they organize a flotilla of boats to tow the ship to port,or will they be bystanders and rely on one man to save the day?

Confidence?

The current mantra to explain our deepening recession/depression is that the public has lost confidence that the the market will solve the problems it created. Therefor, even those still employed have stopped all unnecessary spending. Coupled with an almost total constriction in the credit markets, this is a near fatal blow to our consumption based economy.
During the great depression, one of the mechanisms which was used to alleviate the unemployment problem was the CCC---Civilian Conservation Corps. Millions of men and women were employed by the government on public works projects, which made permanent contributions to the infrastructure and well being of the nation. We could use three C's again: Competence, Certainty, and Confidence, in that order.
If the public sees that the politicians it elected mean what they promised, and are proceding competently to tackle the problems in the economy, not with idealogy, and not for the benefit of the well off and well connected, a sense of certainty that things will get better will gradually grow. As jobs are created again Confidence will
rise again. We will return to the optimistic, "can do" American spirit that made us the economic engine of the world. But, along with the three C's must come the realization that never again will a giant, free wheeling economy such as ours be allowed to function without a traffic cop and a set of rules and regulations which will prevent it from derailing again in the next market cycle. A totally free market is a vulnerable market.

Recession or Depression?

By any name the economy is on a slide down a slippery slope, with no brakes on the sled. Underlying the descent is FEAR, but that fear is rational and justified. Ours has evolved into a consumption economy based on easy credit. To sustain such an economy we must have high employment, high wages and ever increasing but controlled inflation in asset values. In the last decade government policy has undermined all three of those requirements.
The outsourcing of our industrial production, encouraged by the administration under the assumption that lower production costs increase volume, eroded the blue collar
segment of our population. This drove down the bargaining power of labor, leading to higher unemployment and lower wages.
Promoting easy credit for consumption led to a massive accumulation of debt and the almost complete disappearance of savings. Speculation in real estate and a mortgage industry that completely abandoned good risk management in exchange for quick and easy profits, laid the groundwork for the collapse of the over-inflated housing market. This eroded the asset base of the financial institutions and resulted in the drying up of credit.
To turn all this around will require time, which we don't have during our free fall. The new administration will need to be bold; to take huge risks, and to do
things which would be imprudent in other times. And they must be quick! That may be the rub. The Republicans in the Senate will resist the amount of spending required, under the guise of deficit control, and in the hope of discrediting the new administration. It will be our responsibility, the middle class of voters, to hold their feet to the fire and force them to act for the public good.