Wednesday, September 24, 2008
BUSH SPEAKS: "HOW DID WE EVER GET IN THIS MESS? WHERE HAVE I BEEN?" James S. Henry
Last night on national television, Comrade Bush presented his own miniature 14-minute "Cliff Notes" version of the roots of the current US financial crisis, and a heart-rending appeal for the most generous act to date of his Administration, the $700 billion blank-check Wall Street bailout.
By now the man has established a bit of a pattern -- customarily trying to scare us all into granting him unlimited powers, while arguing that there is simply no alternative to whatever bitter pill he happens to be pushing at the moment.
You are of course free to believe him if you like. Hundreds do.
These include things like, at a minimum, (1) equity investment and warrants for taxpayers, to provide some upside returns in proportion to the risks we are taking on any purchases of bank assets; (2) stronger oversight; (3) more assistance for the millions of Americans who are experiencing home foreclosures; (4) compensation ceilings, clawbacks, and stiff progressive tax rates on incomes over $1 million and estates over $10 million, to offset the cost of all this; (5) a Financial Products Safety Commission; (6) a new Treasury-backed competitive insurance market for mortgage securities, available to banks and homeowners; (7) expanded FDIC reserve fund rather than buy "toxic" bank securities up now, set up an -- since all the "I-banks" are commercial banks now, anyway; (8) a new installment of the 1932 Pecora Commission, complete with subpoena power, to investigate the origins of the crisis and hold people accountable.
(For more details, here is the testimony that Dr. Brent Blackwelder, Friends of the Earth, and I submitted to Rep. Frank's House Financial Services Committee yesterday: BAILOUT.pdf)
Even more important, the President's central claim that there is no alternative to this bitter pill is a triple whopper with cheese.
As the IMF -- not our favorite institution, but it does know a thing or two about recapitalizing broken banking sectors -- has suggested just this week, long-term "swaps" of mortgage-backed securities for government bonds could be used to clean up the banks' balance sheets while completely sparing taxpayers the risks of a huge loss on the $billions of toxic assets we'll soon be owning.
There are also numerous other approaches to broken-banking sector restructuring that have been employed by governments all over the planet in more than 124 banking sector crises since 1970 -- for example, in Chile, Korea, Germany, Mexico, and Japan.
Doesn't anyone else find it odd that none of this expertise is being put to use?
Or that, with losses on complex derivative and structured securities at the core of this debacle, and thousands of "quants" from MIT and Wharton on Wall Street, we cannot design some simple security vehicles to help taxpayers reduce their personal or collective exposure to its potential costs?
Perhaps Bush & Co. are not familiar with the IMF or the World Bank/ IFC's "Capital Markets Group." Perhaps Secretary Paulson never bothered to understand the first thing about derivatives and options during his 32 years at Goldman Sachs.
Their staffs are not especially busy at the moment -- indeed, 15 percent of the IMF's professionals are being laid off, so they may have some time to help out.
We've been assured by the Bush Administration, however, that the IMF's assistance is not really needed at this point.
"What are we," Bush asks, "Some sort of two-bit corrupt, debt-ridden plutocracy that can't manage its own affairs?"
Indeed, the President, Secretary Paulson, and a weird new assortment of bottom-feeding Wall Street investors (Omaha's Warren Buffet, Tokyo's Nomura Holdings and Mitsubishi UJF), and, of course, those who are still left on Wall Street itself are in a white heat to get this deal done, and are trying to create a stampede.
They are also clearly not interested in improving the bailout. They just want our money -- and a loosey-goosey, behind-closed-doors process for distributing it that hasn't even been designed yet.
Unlike US taxpayers, Buffet, who is reportedly investing $5 billion in Goldman Sachs, was saavy enough to get preferred shares and warrants for his money -- worth up to 8 percent of the premier bank's share.
At that rate, just think how much Wall Street real estate our $700 billion would buy -- if only Paulson and Bernanke and the US Congress would follow in Buffet's footsteps and insist on some equity and warrants in exchange for a bailout.
Meanwhile, Bush has the temerity to intermeddle (once again) with the orderly conduct of a US Presidential election, by inviting the two leading Presidential candidates to the White House just to help him close the deal with Congress. (Ralph Nader and Bob Barr are reportedly already camped out in the White House basement.)
As if Secretary Paulson and Chairman Bernanke were not already the world's consummate sales team!
Of course both Obama and McCain will accept the President's hospitality -- they have no choice.
So both have now been roped into making this deal happen.
Alas, it probably will -- minus almost all of the possible improvements noted above. The largely symbolic CEO comp limit is probably the only exception
To those to whom much has been given, even more will be given.
We do have one consolation, however, as we prepare to pay the check for this lousy meal. We've located a different version of the history of this crisis that is more accurate -- and more entertaining -- in this must-see video:
Tuesday, September 23, 2008
SO, FORREST, WHAT DO WE DO NOW? Ten Steps to Fix the Paulson Plan and Solve the US Debt Crisis JS Henry and Brent Blackwelder
The US Congress is busy working hard on US Treasury Secretary Henry M. Paulson Jr.'s $700 billion TARP bailout plan -- at least everyone except Alabama's Rep. Spencer Bachus, the ranking Republican on the House Financial Services Committee, who has spent much of the day explaing why a senior official in his position has the time, much less the ethical license, to be making scores of options trades during office hours.
While we have every confidence that Rep. Bachus and his peers will provide masterful oversight of the Secretary's proposal, it is understandable that with less than six weeks left to the November election, and Congress set to adjourn on Sept. 29, we appreciate that they may have more important things to worry about than the greatest US financial crisis since the Great Depression.
So it is time to help them out. Given the widespread dissatisfaction -- indeed, revulsion -- at Paulson's initial request for a $700 billion blank check -- on top of the other $500 - $700 billion that the Treasury/ FDIC and the Federal Reserve have already committed to Fannie/ Freddie, AIG, Bear Stearns, and other banks this year -- it is clear that revisions are needed. But time is short -- not just because of election imperatives, but because global financial markets are on pins and needles, waiting for a clear solution.
Any time there is this kind of sea-changing economic event, it tends to surface every interest group's Christmas wish list of long-delayed "essential reforms."
In this situation, indeed, the crisis has brought forth everything from proposals for "nationalizing the banks" and new regulatory agencies to "clawbacks" in executive severance plans and income tax reform. There are also a substantial number of people who are concerned about the implications of the initial Paulson proposal for constitutional democracy -- some have called it as nothing less than an "economc coup d'etat" by "Commandate Paulson," because of all the unreviewable authority it would have vested in the Secretary and his minions.
Given that Congress is moving at the speed of light, we need to "tier" these proposals according to their importance. There are also a few more innovative ones that deserve immediate attention. Here's our own "Top Ten Improvements" wish list.
1. Equity “Upside” and Voting Power.
In return for the undeniable new risks that US taxpayers are taking on, and the poor management track record of leading Wall Street institutions, it is reasonable to insist that they receive an “upside” on the value of participating financial institutions (FIs) themselves as well as on the potential increased value of acquired mortgage-backed assets. This proposal commands widespread support in this panel.
Technically, this could be accomplished by demanding preferred shares (with anti-dilution provisions) from any financial institutions (FIs) that receive assistance, as was routinely done by Bank of Japan in exchange for financial assistance during the Japanese bank restructuring of the 1990s, and by the Chilean government during the February 1983 bank nationalization.
Warrants might also be used, as was done in the case of the 1979 $1.2 billion Treasury loan guarantee to Chrysler. (According to Sen. Bradley, the Federal Government eventually made money on those warrants.) We believe that while warrants are easier to implement, it is vital to insist on actually equity (including voting power). This will provide the Treasury with much more direct influence over management behavior, will be easier to value, and will also be easier to explain to the public than warrants.
2. Clawback Provisions for Executive Severance Pay.
The basic principle here is that for senior FI executives, there should be accountability for some time period even after they leave office – at a minimum, any future compensation or severance that they receive should be subject to stiff taxes or repossession in bankruptcy court. Insisting on compliance with this standard should be a condition for participation in the bailout.
3. Share the Pain.
A. Emergency Taxes.
Since this very costly bailout package may severely limit the ability of the Federal Government to afford vital programs like health insurance reform and alternative energy, it is important that we deal now with the substantial “tax justice” implications of the bailout.
One way to do this would be to start treating this as the national emergency that it really is, and help ordinary taxpayers pay for it by: (1) eliminating the carried-interest benefits for hedge fund managers; (2) cracking down on offshore havens – no FIs should be permitted to establish subs or place SPVs in them; (3) imposing at least a temporary increased income tax rate on all people with incomes above $1 million and on all estates above $10 million.
B. Compulsory Write-Down/ Debt Reduction of Residential Mortgages.
Given the failure of this summer’s relief packages for ordinary mortgage holders to have much impact, and the fact that foreclosures are still increasing (to a record 100,000+ per month, and that housing prices are still falling in a majority of key markets, this is an another essential measure. The debt restructuring should be implemented quickly, affect large numbers of people, and be inversely proportional to mortgage size. It might also be means –tested.
Such a measure would not only provide equitable relief to millions of would-be homeowners; it would also help to kick-start a US economy recovery.
4. Financial Products Safety Commission.
This would review and certify the quality of all financial products offered to the general public. Products like zero-down payment mortgages would require special labeling, and might not qualify for government incentives like interest deductibility, access to the government insurance window, and so forth.
5. A New US Treasury-Created Market for MBS Insurance.
A novel idea suggested by our good friend Prof. Lawrence Kotlikoff of Boston University is that the US Treasury might be able to use current authority to offer ABX-like insurance at a fixed price per tranche to institutions that hold MBSs. According to Professors Kotlikoff and Merlin, if such a government-backed insurance market were in place, backed by a significant reserve against losses, it might even obviate the need for the entire $700 billion, while creating a market-based workout alternative.
This could be combined with #1, if FIs were allowed to pay for the insurance with equity or warrants. This would also have the benefit of helping to recapitalize troubled FIs.
6. New “Pecora Commission” (ala 1932): a congressional committee with subponae power to investigate the root causes of this crisis and recommend further steps.
Saturday, September 20, 2008
SOCIALISM FOR BANKERS, SAVAGE CAPITALISM FOR EVERYONE ELSE? Bailout Jeopardizes the Entire Progressive Agenda James S. Henry
Ladies and gentlemen: pardon my intemperance, but it is high time for some moral outrage -- and a little good old-fashioned class warfare as well, in the sense of a return to seriously-progressive taxation and equity returns for public financing.
After all, as this week's proposed record-setting Wall Street bailout with taxpayer money demonstrates once again, those in charge of running this country have no problem whatsoever waging "class warfare" against the rest of us -- the middle classes, workers and the poor -- whenever it suits their interests.
At a time when millions of Americans are facing bankruptcy and the risk of losing their homes without any help whatsoever from Washington DC, the CEOs and speculators who created this mess, and the top 1 percent of households that owns at least 34 percent of financial stocks, and the top 10 percent that owns 85 percent of them, have teamed up with their "bipartisan" cronies in Congress, the US Treasury and the White House to stick us with the bill, plus all of the risk, plus none of the upside.
Upon close inspection, the Treasury's proposal is nothing more than a bum's rush for unlimited power over hundreds of $billions, to be distributed at Secretary Paulson's discretion behind closed doors and without adequate Congressional oversight.
This time they have gone too far.
As discussed below, the cost of this bailout could easily jeopardize our ability to pay for the entire economic reform program that millions of ordinary citizens across both major parties have been demanding.
Some kind of bailout may indeed be needed from the standpoint of managing the so-called "systemic risk" to our financial system.
However, as discussed below, the Paulson plan does not really tackle the real problem head on. Thsi is the fact that many financial institutions, including hundreds of banks, are undercapitalized, and need more equity per dollar of debt, not just fewer bad assets.
To provide that, we may well want to mandate debt restructurings and debt swaps, or provide more equity capital .
If private markets can't deliver and we need to inject public capital into financial services companies on a temporary basis, so be it. But it should only be in return for equity returns that compensate the pubilc for the huge risks that it is taking.
Call that "socialism" if you wish -- I think we are already well beyond that point -- sort of like Chilean economists became in 1983, when the entire private banking sector collapsed and was nationalized -- successfully -- by the heretofore "Los Chicago Boys."
To me, public equity investment, in combination with increased progressive taxation, should be viewed as just one possible way to get these companies the equity they need, while providing fair compensation to the suppliers of capital and participation in any "upside," if there is one.
Absent such measures, progressives certainly have much less reason to support this plan. After all, the increased public debt burdens that it would impose are so large that they could easily jeopardize our ability to pay for the entire economic reform program that millions of ordinary citizens (across both major parties) have been demanding.
From this angle, the Paulson program, in effect, is a cleverly-designed program to "nationalize" hundreds of billions of risky, lousy assets of private financial institutions, without acquiring any public stake in the private institutions themselves, and without raising any tax revenue from the class of people who not only created this mess, but would now like to be bailed out.
Any mega-bailout should come at a high price for those who made it necessary.
In particular, we must make sure that the butcher's bill is paid by the tiny elite that was responsible for creating this mess in the first place.
This is not about retribution. It is about insuring taxpayers are truly rewarded for the risks that they are taking -- isn't that the capitalist way? And it is also about making sure that this kind of thing never happens again.
After all, the real tragedy of this bailout is its opportunity cost. Consider a well-managed $1 trillion "matching" investment in strategic growth sectors like energy and health....If we really wanted to insure our competitive health, we would not be investing $1 trillion in lousy bank portolios generated by the chicanery-prone financial services sector.
CAPITALISTS AT THE TROUGH
This estimate is consistent with the $700 billion ("at any point in time") that President Bush and Treasury Secretary Hank Paulson are requesting from Congress this week to fund their virtually-unfettered ("unreviewable by any court") new "Troubled Asset Relief Program." (TARP)
The sheer scale of Paulson's proposal implies that federal authorities plan to acquire at least $3 trillion of mortgage-backed securities, derivatives, and other distressed assets from private firms -- on top of Fannie/ Freddie Mac's $5.3 trillion mortgage securities portfolio. How the Fed and the Treasury actually propose to determine the fair market value of all these untrade-able assets is anyone's guess. But since 40 percent derive from the exuberant, fraud-prone days of 2006-7, they will probably all be subject to steep (60-90 percent) discounts from book value.
That's consistent with the 78 percent "haircut" that Merrill Lynch took on the value of its entire mortgage-backed securities portfolio earlier this month -- actually, more like a 94.6% haircut, the portion that it received in cash.
This implies, by the way, that if the Federal Government were required to "mark to market" their $29 billion March 2008 investment in Bear Stearns' securities, it would now have a cash value of just $1.6 billion. Not a very hopeful sign from a taxpayer's standpoint.
Paulson's latest proposal dictates another sharp increase in the federal debt limit, to $11.313 trillion. This limit stood at just $5.8 trillion when Bush took office in 2001. By October 2007 it stood at $9.8 trillion. Then it jumped again to $10.6 trillion in July 2008, during in the Fannie/Freddie meltdown. As of March 2008, the actual amount of Federal debt outstanding was $9.82, just six months behind the limit and gaining.
All this new TARP debt will be on top of $200 billion of new debt that was issued to buy Fannie/Freddie's preferred stock, plus the assumed risk for their $1.7 trillion of debt and $3.1 trillion of agency mortgage-backed securities.
It is also in addition to the $85 billion 2-year credit line that Federal Reserve just extended to AIG, the $29 billion "non-recourse" loan provided for the Bear Stearns deal noted above; $63 billion of similar Federal Reserve lending to banks this year; $180 billion of newly-available Federal Reserve "reciprocal currency swap lines:" $5 billion of other emergency Treasury buybacks of mortgage-backed securities; $12 billion of Treasury-funded FDIC losses on commercial bank failures this year (including IndyMac's record failure in July); perhaps another $455 billion of Federal Reserve loans already collateralized by very risky bank assets; and the FDIC's request for up to $400 billion of Treasury-backed borrowings to handle the many new bank failures yet to come.
There is also the record $486+ billion budget deficit (net of $180 billion borrowed this year from Social Security trust fund) that the Bush Administration has compiled for 2008/09, drivem in part by the continued $12-$15 billion per month cost of the Iraq and Afghan Wars and the impact of the deepening recession on tax revenues. Longer term, there is also the projected $1.7 trillion to $2.7 trillion "long run" cost of those wars (through 2017).
All told, then, we're talking about borrowing at least another $1-1.4 trillion of federal debt to finance a record level of lousy banking.
COMPARED TO WHAT?
By comparison, Detroit's latest request for a mere $25 billion bailout looks miserly. And if we were in Vienna, we would say, "We wish we could play it on the piano!"
Compared to other bailouts, this is by far the largest ever.
For example, the total amount of debt relief provided to all Third World countries by the World Bank/IMF, export credit agencies, and foreign governments from 1970 to 2006 totaled just $334 billion ($2008), about 8 percent of all the loans. (Henry, 2007).
The savings and loan bailout in the late 1980s cost just $170 billion ($2008).
And the FDIC's 1984 bailout of Continental Illiinois, the largest bank failure up to this year, was (in $2008) just $8 billion (eventually reduced to $1.6 billion by asset recoveries).
Meanwhile, compared with other countries that are well on their way to building forward-looking "sovereign wealth funds" to make strategic investments all over the world, the US seems to be on a drive to create this introverted "sovereign toxic debt dump."
No one has a very precise idea of how much all this will cost, not only because many of the securities are complex and thinly traded, but also because their value depends to a great extent on the future of the US housing market. Housing prices have already fallen by 20-32 percent in the top 20 markets since mid-2006, and they continue to fall in 11 out of 20 major markets, especially Florida, southern California, and Arizona, where the roller-coaster has been the most steep.
At current T-bond rates (2-4 percent for 2-10 year bonds, the most likely maturities), near-term cash cost of this year's bailu is likely to be an extra $40 to $60 billion a year in interest payments alone.
Furthermore, since the borrowed funds will be invested in high-risk assets, the most important potential costs involve capital risk. There's a good chance that, as in the case of Bear Stearns, we'll ultimately get much less than $.50 for each $1 borrowed and invested. For example, Fannie and Freddie alone could easily be sitting on $500 billion of losses (=$2 trillion/$5.3 trillion* 50% default*50% asset recovery).
This could easily make the long-run cost of this bailout to taxpayers at least $150 billion a year.
No wonder traders on the floor of the New York Stock Exchange reportedly broke out singing "the Internationale" when they heard about the bailout.
But the direct financial costs of the bailout are only the beginning....
HIJACKING THE FUTURE
Last week's events produced terabytes of erudite discussion by an army of Wall Street journalists, prophets and pundits about short-selling rules, "covered bonds," and the structure of the financial services.
This is absolutely par for the course, as modern financial crisis journalism is concerned -- the "story" is always told mainly from the standpoint of what's in it for the industry, the banks, the regulators, and the investors.
For the 90 percent of Americans who own no money-market funds, and less than 15 percent of all stocks and bonds, however, this bailout means just one thing.
All of the money has just been spent. And it has not been spent on you.
For example, unless we demand an increase in taxes on the rich, big banks, and big corporations, as well as some public equity in exchange for the use of all this money, we can expect that the long-term costs of this bailout will "crowd out" almost all of the $140 to $160 billion of new federal programs that Barack Obama proposed. It will certainly make it impossible for Obama to finance his programs without either borrowing even more heavily, or going well beyond the tax increases (on oil companies and the upper middle classes) that he has proposed.
There will be no additional funding for pre-school education, child care, or college tuition.
There will be no additional funding for investments in energy conservation, wind, or solar power.
There will be no additional investments in national infrastructure (e.g., the reconstruction of our aging roads, highways, and bridges to "somewhere.")
Highway privatization and toll roads, here we come.
There will be no money to bail out the millions of Americans who are on the brink of losing their homes.
The supply of housing loans and other credit will remain tight, despite the bailout.
Indeed, if the economic elite has its way, the long-sought dream of "a home for every middle-class American family" may be abandoned as a goal of government policy.
Meanwhile, the government-sponsored consolidation of the financial services industry will make financial services more profitable than ever.
This is good news for the "owners of the means of finance." For the rest of us, it means steeper fees and rates. And if we fail to keep up with the new charges, we'll face the rough justice delivered by the latest bankruptcy "reform," which was rammed through the Congress in 2005 with support from many top Democrats.
Indeed, ironically enough, this latest bank bailout may even increase the financial pressure to privatize these comparatively successful government programs.
There will be no extra money to house our thousands of new homeless people, relieve poverty, rebuild New Orleans, or support immigration reform.
There will be no additional funds for national parks.
Indeed, we might as well start by privatizing our national and state parks, and drilling for oil and gas in the Arctic National Wildlife Refuge, Yosemite, the Grand Canyon, and right off the Santa Barbara coast. We're going to need those federal lease royalties. (Perhaps the oil barons will lend us an advance.)
There will be no funds available for increased homeland security.
There will certainly be no "middle-class" tax cut. Absent a progressive tax reform, the only "cut" the middle class is going to receive is another sharp reduction in living standards.
All told, the Bush/Paulson "permissive banking/ massive bailout" model beats even the old 1980s vintage Reagan formula, which tried to force government down-sizing with huge tax cuts.
Contrary to the sales pitch, those cuts never produced any incremental tax revenues, let alone any significant down-sizing. It has simply proved too easy for the federal government to borrow. And "conservatives" can always find wars, farm subsidies, defense contractors, and "bridges to nowhere" to spend the money on, just as fast as liberals.
Lately, however, it appears that US debt levels may indeed be reaching the point where they could impose a limit on increased spending. Given the sheer size of the new federal debt obligations, foreign creditors,who have recently been supplying more than half of new Federal borrowing, have been muttering about taking their lending elsewhere. And outside the financial services industry, Main Street companies are concerned being "crowded out" by record federal borrowing.
THE ALTERNATIVE -- THE "GET REAL" NEW DEAL
To make sure that real economic reform is still feasible, we need to demand a "Get Real/ New Deal" from Congress right now.
At a minimum, this Get Real/New Deal package should consider measures like:
(1) The restoration of stiff progressive income and estate taxes on the top 1 percent of the population (with net incomes over $500,000 a year and estates over $5 million) -- especially on excessive CEO and hedge fund manager compensation;
(2) Much more aggressive enforcement and tougher penalties against big-ticket corporate and individual tax dodgers;
(3) Tougher regulation of financial institutions -- possibly by a new agency that, unlike the US Federal Reserve, the SEC, and the US Treasury, is not "captive" to the industry;
(4) A crackdown on the offshore havens that have been used by leading banks, corporations, and hedge funds to circumvent our securities and tax laws;
(5) The immediate revision of the punitive bankruptcy law that Congress enacted in 2005 at the behest of this now-bankrupt elite; and
(6) While we are at it, stiff "pro-green" luxury taxes on mega-mansions, private jets, Land Rovers, yachts, and all other energy-inefficient upscale toys.
We also need (7) a National Commission to investigate the root causes of this financial crisis from top to bottom, and actually (unlike the hapless, ineffectual 9/11 Commission) hold people accountable.
Finaily, if the pubilc is going to provide so much of the risk capital for this restructuring, we should demand (8) public equity in the private financial institutions that receive so much of our help.
This will permit taxpayers to share in the upside of this restructuring, rather than just the downside risks.
Along the way, this will require that we explain to Secretary Paulson that this country is not Goldman Sachs. Even after 8 years of President Bush, this is still a democracy.
Secretary Paulson is not going to be given unfettered discretion to hand out closet "liquidity injections" to his buddies on the street -- no matter how worthy they are.
This will be essential, if the Federal Government is to be able to afford key reforms like health insurance, clean energy, and investments in education.
These may not matter very much to Wall Street executives, financial analysts, Treasury and Federal Reserve executives, or the more than 120-130 Members of Congress and 40-45 US Senators who earn more than $1 million a year -- and are already covered by a generous "national health care" package of their own design.
But these are the key "systemic risks" that ordinary Americans face.
These reforms may sound ambitious. So is the bailout. And the reforms that we are discussing are only fair.
After all, we the American people have recently been the very model of forgiveness and understanding.
We have tolerated and footed the bill for stolen elections, highly-preventable terrorist attacks, gross mismanagement of "natural" disasters, prolonged, poorly conceived, costly wars, rampant high-level corruption, pervasive violations of the US Constitution, and the systematic looting of the Treasury by politically-connected defense contractors, oil companies, oligopolistic cable TV and telecommunications firms, hedge fund operators, big-ticket tax evaders, and our top classes in general.
Does "class" still matter in America? You betcha -- perhaps more than ever. But enough is enough. Call your Congressperson now. Demand a"Get Real/ New Deal" qualifier to the bailout package before it is too late. We deserve to get much more for our money. So do our kids.
(c) SubmergingMarkets, 2008
Friday, September 05, 2008
NARRATIVES, NOT IDEAS McCain's Contradictory, Fearful Vision of the Next Four Years James S. Henry
Outside the Republican convention hall, Twin City cops and National Guardsmen in full-scale battle gear were arresting credentialed journalists like Amy Goodman and pepper-spraying peaceful demonstrators -- though you didn't hear much about that from the respectable TV commentators who were safe inside, battling balloon drops.
Inside the hall, we were treated to an odd combination of "Naughty Librarian" Gov. Sarah Palin, John McCain trying for the nth time to appear natural while reading the teleprompter and bashing his own party, and 2380 raucous Republican delegates -- 1.5 percent black, 5 percent Hispanic, 32 percent female, 80 percent over 50, and nearly 100 percent over-fed -- trying to appear jubilant, grinding to the heavy-metal rhythms that someone in the RNC hierarchy must have thought were a cool idea.
We also had yet another recapitulation of the Arizona Senator's horrific five years in a POW camp, after being shot down on his 23rd mission over Hanoi back in 1967.
Indeed, if McCain somehow manages to win this election, he will have no one more to thank than Nguyen Van Dai, the 68-year old retired Vietnamese colonel who actually launched the SAM missile that downed McCain's A-4 Skyhawk on October 27, 1967.
In any case, after watching the Republican Convention from mind-numbing start to finish, it is now crystal clear that, apart from McCain's 41-year-old combat narrative -- supplemented by the less familiar narrative about Palin's decade-long battle to combine procreation, small-time government, and the Assembly of God's "Plan for Alaska" -- the Republican Party has become the equivalent of the US housing industry.
It is intellectually bankrupt, with almost no new ideas. As former Reagan speech writer Peggy Noonan correctly put it, "They went for this, excuse me, political bullshit about narratives."
Worse than that, the Republican Party has also turned its back on many of its old favorite best ideas and brand values -- for example, "small government," "balanced budgets," "non-intervention," "environmental protection," and "the US Constitution."
Palin's first 15-minutes of fame temporarily blinded many commentators to this basic fact. But even the most faithful die-hard Republican strategists now agree that, apart from the novelty of her Bat Mitsvah, this abbreviated convention was a gigantic, expensive messaging mess -- and, on balance, a gift to the hapless Democrats -- who are otherwise still fully capable of losing this race, even with a full-scale political and economic gale at their backs.
We'll explore the numerous contradictions in McCain's program below.
(c) SubmergingMarkets, 2008
I. CHANGE WE CAN BELIEVE IN?
Obviously McCain is trying to jump on the "party of change" bandwagon. This is hardly a strategic insight, given overwhelming popular discontent with the "country's direction" and Obama's success with this theme.
On the level of practical policies, however, it is a little late.
Indeed, it has really been McCain's policy team that has been doing most of the "changing."
>For example, McCain has adopted the idea, which he once opposed, of extending Bush's tax cuts for corporations and the rich -- the $10 trillion long-run cost of which is even larger than th $7 trillion that Bush's cost.
Even if we abolish all future Congressional "earmarks," this scheme would cause the US deficit to soar even higher than its record $500 billion current level.
If we have learned anything from the last eight years, it is that such tax cuts don't pay for themselves or reduce government spending; they just produce larger government deficits.
>McCain's gone completely quiet on the constitutional issues of torture, closing Guantanamo, and illegal surveillance.
extent so has Obama. But these were supposed to be the kind of "vintage
maverick" issues where McCain spoke truth to power.
>He's got nothing to offer on the deepening economic recession or the national housing crisis, beyond more of the same.
His close friend former Senator Phil Gramm has resigned as Co-Chair of the campaign, but he is still likely to be named McCain's Secretary of the Treasury.
Yet he is a leading banking industry shill and an opponent of tougher regulation, whose efforts helped contribute to the lax lending policies that have produced the joint housing/banking crisis.
> McCain's ideas about privatizing education, health insurance, Medicare and Social Security are all warmed- over versions of the same proposals the Republicans have tried and failed to implement for over a decade, despite their control of Congress for much of this period.
Especially with the new, probably Democratic-controlled House and Senate, these proposals will be dead on arrival. We will not have "change," but four more years of stasis.
Regardless what one thinks of them, these two tactics would both take years to have any impact.
Even if they could overcome the substantial state and federal regulatory obstacles in their way, they would not produce any additional energy for at least 10 to 12 years.
In contrast, conservation and alternative energy sources like wind and solar produce benefits very quickly.
> McCain has nothing interesting to say about a whole host of pressing international economic issues, including the faltering WTO round, addressing global poverty, and reviving the global Kyoto accords on the environment.
>On the question of Iraq, McCain still opposes the idea of a definite timetable for withdrawal, which even the Iraqi Government now supports.
> On the questions of Iran and Georgia, McCain has sounded even more aggressive than VP Cheney, who wisely did not even bother to attend his own Party's convention.
At least since Barry Goldwater, the Republican Party simply can't get enough of portraying itself as "outside the Beltway," the underdog from the hinterland, and the victim of some vast liberal media conspiracy.
A visitor from another planet might be surprised to learn that the Republican Party has actually won the White House 9 out of 16 times since 1948. And John McCain, in particular, has been a member of Congress since 1982.
Furthermore, it also controlled the US House of Representatives from 1996 to 2006, and the US Senate from 2000 to the present, with enough seats to prevent any Democratic initiatives. It has of course controlled the White House from 2000 to the present. Along the way, it has also taken control of the US Supreme Court and the leadership of key "independent" federal agencies, like the Federal Reserve.
The Republican Party has also recently compiled a record number of convictions for illegal lobbying activities -- indeed, shortly before McCain was deliver his acceptance, the legendary White House intimate Jack Abramoff was receiving a four-year jail sentence for corruption and bribery.
The only "change" we can be sure of will come when -- as now appears likely -- the Republican Party loses control of all these institutions this November.
III. A BIPARTISAN MAVERICK?
The night before his own address to the convention, his own VP candidate could not have been more partisan in her feral attacks on Obama.
Indeed, just by nominating this hard-right, anti-choice, anti-gay, anti-environment, anti-libertarian for VP despite her self-evident lack of credentials, rather than choosing any number of more talented, moderate Republican women (or men), McCain has clearly helped to polarize the national debate.
This puts paid to all the rhetoric about bipartisanship in his acceptance speech.
IV. OPPOSED TO BIG BROTHER?
It seems that Mitch should stick to pillaging troubled companies, his forte. Is he really not aware that it is the Bush Administration that has been conducting illegal wiretaps and e-mail surveillance on millions of Americans during the last six years?
V. NATIONAL SECURITY EXPERIENCE? WHERE'S OSAMA?
To listen to McCain, Bush, Giuliani, Romney, and Co., our visitor from another planet would probably conclude not only that 9/11 did not happen on the Republican Party's watch, but also that the Iraq War was eminently justified -- indeed, in candidate Palin's memorable words, it is "a task from God".
According to the rhetoric at the Republican convention, the war against Osama Bin Laden and the Taleban in Afghanistan and Pakistan (remember them? the original perpetrators of 9/11?) must also be going so well that we can:
(1) Afford not to mention Osama or Afghanistan at all;
(2) Afford to extend NATO to Georgia and the Ukraine, right on Russia's borders;
(3) Afford to call Iran "the biggest supporter of state terrorism," and threaten it with military force!
When it comes to national security, Republicans do have this praiseworthy tendency to recall over and over again great moments of courage and honor that occurred long ago -- say 41 years ago.
But when it comes to all the shameful events that have happened on their own watch in just the last eight years, they become forgetful.
In my experience, Republicans are systematically incapable of apologizing for anything, even when they are grossly in the wrong. Indeed, that is a pretty good litmus test for a Republican.
>Lest we forget, Osama bin Laden, still safely ensconced in Pakistan (our putative ally), was the author of 9/11. Next week we'll commemorate the 7th anniversary of that date -- why has he not been brought to justice in seven years?
> Lest we forget, it was the Bush Administration -- especially Condi Rice and George Tenet -- that ignored numerous signals that allowed 9/11 to happen.
> Lest we forget, Mayor Giuliani was the genius who located the World Trade Center's emergency command post right across from the Twin Towers with a diesel fuel tank (even though they'd been an obvious target since at least 1993), ordered the cheap Motorola radios for NYC first- responders, and recommended the mobbed-up former Police Commissioner Bernard B. Kerik to be head of the Department of Homeland Security.
>Lest we forget, it was the Bush Administration -- with the so-called "maverick/military expert" John McCain toeing the party line, unlike Obama -- that took us to war in Iraq on a pack of lies.
Bremer's very first decision was to disband the Iraqi Army -- alienating all those thousands of Sunnis who have recently become our best friends in the "Awakening," and setting the stage for Al Qaeda's first real entry into the country -- on US coat-tails!
THE IRAQ/ AFGHAN CONUNDRUM
Rather than talking about responsibility for the original fiasco, the Republicans want to focus on claiming credit for what transpired after the event.
In the case of 9/11, they took credit for managing the crisis after the attack, ignoring their utter mismanagement before.
In the case of Iraq, they are even more cynical: McCain and the Republicans like to take credit for the progress since January 2007, ignoring the nearly four years of disastrous management after the March 2003 invasion.
In this spirit, McCain also likes to talk about the "surge" a lot, which he claims is a big success.
The surge was not his idea, but he takes credit for having supported it ever since General Petraeus and President Bush first introduced it in early 2007.
Obama, he says, opposed it, preferring a timetable that would have "lost the war."
In fact Obama has never insisted on such any such timetable.
He did, however, courageously oppose entering Iraq in the first place, which would have made the surge unnecessary.
In retrospect, Obama's fundamental political and military judgment looks pretty astute, compared with "experienced" McCain.
If Obama had been in charge, we might have saved $2 trillion and thousands of young lives.
He still actually believes, like George W. Bush, that the US made a terrible mistake by withdrawing from Vietnam in 1973!
True, if we'd followed Obama's course, Saddam & Co. might still be in power, just like Kim Jong Il or Robert Mugabe or the tyrants in Burma (and China!)
But Saddam would not have any more "weapons of mass destruction" than he ever had. Under the pressures of continued isolation, backed by the UN, his own people might have overthrown him, or he might have died of a heart attack. We can never say.
What is clear is that the main reason that the surge has "worked" is that we are now working closely with many of Saddam's former supporters among the Sunni "Awakening," who have turned on al Qaeda.
The Sunnis have "awakened" partly just because we finally decided to pay them, and partly because they got sick of being ordered around by these fanatical extremists -- who'd never taken root in Iraq before the US invaded the country, outraged the local population, and created a seedbed for insurgency.
It is also because many Shiites have wisely decided that the fastest way to get the US out of Iraq is to quiet down, supporting the Maliki government, probably with the backing of Iran.
Ironically, for someone so concerned about Iran's supposed threat to the region, McCain does not acknowledge the fact that the Iraq invasion, and the continued US presence there, have only strengthened Iran's hand.
So it is as misleading for McCain and the Republicans to take credit for the surge as it is for them to take credit for fighting the (very incomplete) war against al Qaeda and the Taleban in Afghanistan, in the wake of 9/11.
Once again, however, if you have no original ideas or solutions of your own, it is tempting to concentrate on telling stories about the past.
(c) SubmergingMarkets, 2008
Thursday, September 04, 2008
OBAMA: "PALIN/MCCAIN HAVE NOTHING TO OFFER BUT PERSONAL ATTACKS"
Tuesday, September 02, 2008
MCCAIN's MIGRAINE Is His VP Choice a "Natural," Or An Eagleton/Quayle Combo? James S. Henry and Matthew Maly
By law the US is required to have a Vice President. Do we really want it to be this wing-nut Northern Exposure beauty queen?
In the wake of the uproar -- indeed, shock and awe -- provoked by John McCain's surprising selection of 44-year old Gov. Sarah Palin of Wasilla, Alaska, on top of all the hoopla over Barack Obama's dissing of Hillary Clinton and our collective nightmare with "Darth" Cheney, some pundits have suggested that it may be time for the US to follow the Finnish model and have no US Vice President at all.
With each day's new revelations about Gov. Palin's complex personal life and rather extreme views, some pundits have also suggested that she is a cynical choice, who might either quickly go the way of former Missouri Senator Thomas Eagleton, who lasted just two weeks as George McGovern's VP pick in 1972 -- or perhaps worse yet for the Republicans, a reprise of the legendary Indiana lightweight, Dan Quayle.
THEY'RE ALL WRONG
This is a time when our economy is in serious trouble, state and federal budget deficits are out of control, energy costs are unaffordable, the US Constitution is under attack, tax evasion is at a record level, and we're still tied down in two major wars in Iraq and Afghanistan. Tensions are mounting with Russia and Iran, social inequality is soaring, environmental calamities abound, Freddie Mac and Fannie Mae are about to fail, our education system is broken, the drug wars continue unabated, and millions of Americans lack jobs, decent housing and health care.
It permits the whole nation to "double down" all at once, experiencing a kind of risk-taking that none of us would ever be able to achieve on our own.
Here we have an example of vintage McCain quirkiness. And this is precisely the kind of joy-ride, fly-boy entertainment that government, at its best, is supposed to offer to the masses.
Indeed, Sarah's selection is bound to make our peculiar "imperial electocracy" the envy of the entire world -- once again!
FINALLY A REAL BABE!
Ms. Palin may not yet be a household name, but upon closer examination, we believe that -- at least from the Republican vantage point -- her qualifications for the Vice Presidency -- just one bad biopsy away from the world's most powerful office -- are overwhelming.
First and foremost, just take a look -- this woman is amazing!
To paraphrase Joe Biden, Ms. Palin is an "articulate, bright, clean, good-looking" white woman.
And young! Why, she was only 4 years old when 72-year old John McCain was bombing peasants from 30,000 feet, and 9 years old when he was released from the POW camp in 1973.
Indeed, Sarah was first runner-up in the 1984 Miss Alaska beauty pageant, after being voted Wasilla Alaska's "Miss Congeniality."
True, back then, Wasilla only had about 5000 residents. But so long as you were not a moose or an environmentalist, Wasillans are the most congenial people on the planet. And Ms. Sarah was the most "congenial" of them all.
Anyone who has ever attended public high school knows what that means - abstinence-based ideology or no.
We think we can all trust "Bomber" McCain's judgment on this one. John may have only met his VP choice two or three times, and he may not know much about economics, but he is a world-class expert on beauty queens.
After all, his first wife Carol was a model and his second wife Cindy was Junior Rodeo Queen of Arizona in 1968.
(Just in -- McCain has also reportedly expressed interest in naming Sherri McNealley, the real winner of the 1984 Miss Alaska contest, as his future Secretary of State, but so far she's still MIA.
He's also expressed interest in appointing Wasilla's current mayor, Dianne M. Keller, to be his Attorney General, once she completes her law degree.)
In any case, unfortunately, this VP choice will probably not swing Hillary's disaffected female supporters to the McCain camp.
Many of them are aging die-hard feminists who may have serious issues with Palin's political views -- for example, her opposition to abortion even in the case of rape or incest, and her unsympathetic description of Hillary Clinton as a "whiner." (Where on earth would she get such an idea?)
From a strictly male hormonal perspective, however, this is the best VP selection in history -- precisely the kind of candidate we need to arouse our interest and get us up off the couch.
After years of enduring so many talented but extraordinarily plain women (and men) in national politics (viz Senators Clinton, Hutchinson, Mikulski, Boxer, and Feinstein, as well as Cheney, for example), finally the US Senate might be presided over by someone who still leaves something to the imagination.
Sarah Palin is a doer, not a talker. Not only is she the Governor of Alaska, but she is a "hockey mom" with five children by birth (but no adopted ones, unlike the 72-year old McCain). These include an unmarried pregnant 17-year old, a son on the way to Iraq, and a 5-month old infant with Downs Syndrome.
She's at least as tough as John McCain. She hunts and fishes. She eats what she kills. She been known to run 5-10 miles a day. She's fired a librarian for not censoring the books in the library, and a couple of police chiefs for not taking sides in personal vendettas. She's stood up to the corrupt hierarchy in her own Party -- just like Barack. She's under investigation by Alaska's State Ethics Commission for "using her public office to settle a private score." (Who could resist doing that?)
When Sarah was pregnant with her fifth child, her water broke while she was attending a Republican Governors' conference in Dallas. She passed up all the great hospitals in Texas and flew all the way back to a Wasilla Alaska hospital just to have this special-needs child delivered at home.
That's precisely the kind of crazy, death-defying, life-threatening behavior that we could all use so much more of in the highest echelons of the federal government!
Shock-Treatment Tom (Eagleton), come back! All is forgiven!
Adding the burden of the US Vice Presidency to this full plate will no doubt provide a shining example of just how to strike that delicate balance between family life, work life, and blind ambition -- and the many benefits of the faith-based "Just Say No" approach to birth control!
(c) Submerging Markets, 2008
SHE'S FROM A SWING STATE -- REALLY!
Ms.Palin is also a life-long resident of Wasilla, an Anchorage suburb with 5470 residents (as of the 2000 Census), otherwise best known as the birthplace of porn star April Flowers, and the location of (Frommer's Guide) "the worst kind of suburban sprawl of highway-fronting shopping malls and gravel lots."
Many Republicans may not yet have realized that so much depends on Alaska, our newest "swing state."
After all, Alaska is a bit of an odd duck, as states go. It is the least-densely populated state in the country, with 1.1 inhabitants per square mile, only has 676,000 residents and 3 electoral votes. Over forty percent of its citizens live in Anchorage, the largest city, with 278,000 residents. Nearly 16 percent of its residents are native Americans, the highest share in the country. Sarah Palin's evangelical roots notwithstanding, less than 40 percent of its population belongs to any church. It has not voted for a Democratic Presidential candidate since 1964. The oil and gas industry accounts for more than 80 percent of the state's GDP. It already derives so much revenue from oil and gas that the state has accumulated a $36 billion "permanent development" fund. There is no state income tax, it already has the lowest tax burden in the US, and, indeed, every Alaskan collects a dividend of about $1500 - $1800 per year from the fund just for fogging a mirror.
But, as usual, the utterly-unpredictable McCain believes that he sees what others do not see. In a tight election like this one, Alaska must be the lynch-pin that holds everything else together.
SHE CAN DRIBBLE!
Like April Flowers and, indeed, former Senator Bill Bradley, Sarah Palin played high school basketball. Indeed, she was a point guard on the 1982 "Wasilla Warriors" basketball team that won Alaska's "small school" state championship. Her nickname on the team was "Sarah Barracuda," yet another testiment to her "congeniality."
"I know this sounds hokey, but basketball was a life-changing experience for me. It's all about setting a goal, about discipline, teamwork, and then success."
At first glance this may strike you as mindless drivel.
But read that statement over and over again after downing a six-pack of Alaska Smoked Porter and puffing a couple of Humboldt County Js, and you will soon begin to appreciate the true meaning of "deep drilling in the wilderness."
SHE KNOWS HOW TO PARTY!
Sarah clearly also knows how to balance education, hard work, and fun. After her stunning high school basketball career and her brief run as a beauty queen, undoubtedly she had any number of scholarship offers from Ivy League Schools.
Never too proud, however, she courageously chose to downshift to such legendary party schools as Hawaii Pacific College, North Idaho College, and the University of Idaho, where she finally graduated with a BA degree in "communications-journalism" in 1987.
That led to a brief career as a sports reporter for an NBC affiliate in Anchorage.
SHE KNOWS FOREIGN POLICY!
Gov. Palin speaks no foreign languages, and has had very limited foreign travel -- just like another recent Republican President! She only acquired her first US passport in 2006.
On foreign policy issues ranging from the Middle East and Iraq to the WTO, Russia, Latin America, and the "war on terror," her own "issues page" is totally blank.
She also has zero mention of "Native American" or minority issues on her web site, but that's another matter.
This may be a little unfair. Sarah really is an expert of sorts. For example, in the early 1990s, before joining the Republican Party, she and her husband were leading activists and, reportedly, registered members of the Alaskan Independence Party.
This curious group, which has about 13,700 members, has at various times sought the abolition of all property taxes, a referendum on Alaska independence, a UN seat for Alaska, and secession, including a possible union with one of Canada's western provinces.
Furthermore, in the 1990s, she and her husband were both "brigaders" for extreme right-winger Pat Buchanan, who sought the Republican Presidential nomination several times.
In the increasingly competitive global economy of the 21st century, where education, language skills, and international experience will be key factors for success, this is a perfect role model for young American women!
On the other hand, the Palins' early support for a secessionist movement in Alaska may not go down very well with the numerous pro-Georgia supporters in the McCain camp right now.
HER VAST EXPERIENCE!
In 1988, as noted, Sarah briefly worked as a local TV sports reporter. (View a clip of your future VP here.)
In the 1990s, while still a member of the Alaska Independence Party, Sarah as served two terms as a member of the Wasilla (pop <5000) Town Council. (4 years).
She then served two terms as Wasilla's (pop <5000) Mayor (4 years). During her first term, she angered many local residents, who threatened to impeach her.
Under her administration, Wasilla hired a lobbyist in Washington, D.C., and from 1996 to 2002 the town procured more than $27 million in "earmarks" with the help of Alaska Republican Senator Ted Stevens, who chaired the US Senate Appropriations Committee, and was otherwise perhaps best known for his description of the Internet as a "series of tubes."
In 2002 she ran for Lt. Governor of Alaska and lost.
That same year she campaigned hard for Alaska Republican Governor Frank Murkowski, who reciprocated by appointing Palin to be Chairman of Alaska's Oil and Gas Commission.
She served 11 months as head of Alaska's Oil and Gas Commission, before resigning over the Republican-led corruption she found there. (11 months).
From 2003 to 2005, anti-corruption crusader Palin served as a director of "Ted Stevens Excellence in Public Service," a so-called "527" organization that was close to Senator Stevens. Stevens later campaigned actively for Palin in her 2006 run for the Governorship against Murkowski. In July 2008, Senator Stevens, the longest-serving Republican in the Senate, was indicted on seven felony counts for lying about gifts he had from oil companies.
Evidently Palin has the capacity to be a bit flexible in her ethical judgments -- which we believe is a very good sign.
In November, 2006, Sarah was elected Governor with 48.3% of the vote. She took office in mid-December 2006, and has been running Alaska every since. (20.5 months).
By comparison, Democratic VP candidate Joe Biden has been a member of the US Senate for 35 years, since 1973, when Sarah was 9 years old. Barack Obama has been a member of the US Senate since 2004, when Sarah was 40, and a member of the Illinois Senate for 7 years before that. So some might conclude both Democrats have the edge in experience over Palin.
Au contraire, we argue: there's simply no job in America that is anywhere near as relevant to the demands of the US Presidency as the task of running a tiny one-horse town and an overwhelmingly inaccessible, underpopulated, federal government-dominated, energy-rich state like Alaska.
HER TOUGH STANDS ON THE ISSUES!
Sarah is certainly not shy about standing up for what she believes in. Indeed, she has taken bold stands that many Americans -- especially women -- may find interesting:
> As noted, Sarah is opposed to abortion under any circumstances except where the life of the mother is at stake, even where there has been rape or incest. This is a position that exceeds even McCain's position.
> She also favors requiring parental consent for teenage abortions -- as, for example, in case of her own daughter.
> She opposes sex education in public schools, and advocates "abstinence-only" solutions for birth control -- despite the fact that birth control programs have been responsible for the her state's sharp decline in abortions and teen-age pregnancy.
>In a fit of budget cutting in June 2008, Palin also sliced $1.1 million out of a legislative-approved $5 million bill to assist troubled teenagers.
> She favors drilling for oil in Alaska's wilderness -- again, exceeding McCain's position.
> She also opposes listing polar bears as an endangered species, because it might inhibit oil drilling. (Her husband Todd works for BP.)
>Sarah's got her gun! She's a lifetime member of the National Rifle Association, a crack shot and a moose hunter. This would at least guarantee that there would be no more untoward VP shooting incidents. (vis Cheney's facial attack on poor Harry Whittington.) When she was Mayor of Wasilla in 1997, one of the reasons she fired Police Chief Irl Stambaugh was reportedly that he opposed an NRA-backed state law that permitted concealed firearms in banks, bars, and restaurants.
> Along these lines, she also favors permitting shooters to hunt bears and wolves out of airplanes. Presumably this does not include bombing them from 30,000 feet.
> She supports the War in Iraq, and a new Alaska gas pipeline, saying in June 2008 that they were both God's will.
> Like Louisiana's Republican Governor Bobby Jindal, Sarah favors teaching creationism in high schools. In her words, "Teach both (theories). This follows the Alaska Republican Party's platform: "We support giving Creation Science equal representation with other theories of the origin of life. If evolution is taught, it should be presented as only a theory."
> Sarah believes that global warming is NOT man-made. In her devout evangelical universe, presumably that means that global warming is God-made. Having created the universe, then, God has now decided to un-create it, and we mortals have no choice but to go along, gas guzzling and all. Indeed guzzling gas is like shooting wolves -- a divine right.
> Sarah opposes gay marriage, even to the point of supporting a 1998 constitutional amendment that banned it in Alaska.
> As for health care, Sarah favors the abolition of "certificate of need" regulation, a measure that most health care analysts would actually raise health care costs.
> On the famous $400 million federally-funded "Bridge to Nowhere," while Palin has claimed that she opposed it, actually the truth is more complicated -- she seems to have favored it before she opposed it."
>.....Etc. Etc. Etc.
Across all these positions, Governor Palin has clearly demonstrated her ability to stick to her strongly-held core principles and religious beliefs even in the face of the facts -- an ability that we believe is just so unbelievably awe-inspiring, especially in a potential Commander-in-Chief!
SHE CLEARS THE PATH!
While, as we've seen, Sarah Palin is an accomplished woman, she surely must realize that there are thousands upon thousands of other women in America with qualifications at least as good as hers -- women who could all perform the tasks of VP, even if, like her, they are not quite sure what those tasks are.
What an inspiration her election would be to all these other women! Furthermore, what an inspiration it will be to all the ordinary blue-collar men like Todd Palin, Sarah's husband! This is 21st century America, and egualitarian electo-cracy has truly arrived!
Actually poor Todd may deserve a little bit of sympathy.
How did he ever let his wife put him in this situation -- with a 5-month old baby that needs breast-feeding and a pregnant 17-year old, and the Good Governor away on the campaign trail, 6-7 days a week.
Todd must be especially excited about the future husband of the bride-to-be, an 18-year old named Levi Johnson, whose "MySpace" page contained this thoughtful meditation until recently:
"I'm a fuckin' redneck who likes to snowboard and ride dirt bikes. But I live to play hockey. I like to go camping and hang out with the boys, do some fishing, shoot some shit, and just fuckin' chillin' I guess. “Ya fuck, with me I'll kick your ass."
Furthermore, if this happy family happens to win, just imagine Ms.Palin and her poor husband dining with, say, the King of Jordan.
Are they expected to read up on Jordan in advance? Which fork will Mr. Palin use first, in front of the King? Will the King be interested in his stories about moose gutting, sled-dog racing, and long cold days of fishing? Has he ever read Mark Twain's Prince and the Pauper?
For a few brief days all this may have felt like winning the lottery. But very soon the Palins are more likely to feel that they are outsiders looking in, impostors who are on the verge of being exposed and thrown out of the club.
What an inspiring ordeal for the rest of us to watch!
We have grown so used to the polished, practiced ways of life-long professional politicians with Ivy League credentials, no particular religious beliefs, and oh so much detailed knowledge about the issues!
We are simply not prepared for the level of humility and honesty that will be presented in this ultimate Reality Show -- where, suddenly, it seems as if anyone at all might suddenly become eligible for the highest office in the land!
What a tribute to John McCain's "maverick" spirit -- otherwise known, quite unfairly in our opinion, as quirky impulsiveness.
SO WHAT ABOUT THE OTHERS?
Given the amazing range of attributes displayed by this comparative newcomer to the national scene, we should not be surprised that her rivals, and perhaps even her sponsor McCain, are a little taken aback.
I. POOR JOHN McCAIN
First of all, don't we all agree that Cindy McCain looks about as unhappy as any woman in America? And the reason is interesting: it may be the case that subconsciously, neither she, nor perhaps even her husband, really wants to win this election.
Take the McCain's recent "$5 million is rich" gaffe. As soon as he made this statement, he admitted that he knew that it would be used against him. Indeed, how could it NOT be used, since it was so inaccurate? Yet McCain never bothered to qualify the statement.
The job also requires an even temper and the ability to make a calculated, balanced, well thought-out decision. Secretly, McCain may even realize that he may not quite trust himself to have these qualities. Over the years, he knows better than anyone just how often he has "screwed the pooch."
In truth, one of the most important reasons why he has acquired a reputation as a "maverick"is that he is impulsive. You be afford to be impulsive as a US Senator, when you are one out of a hundred. For all his years of "experience," the buck has never once stopped on John McCain's desk, any more than it has stopped on Hillary's, Barack's or Joe Biden's. Except for Sarah's 19 months, they are all SENATORS, goddamit: by definition, THEY HAVE ALL HAD ZERO FINAL decision-making experience.
Presidents are not like that. There is NOTHING BUT decision-making, many decisions are final, and most have enormous implications. The President's Black Box is not for casting a vote, or for being one out of a hundred.
Fortunately for us, it may be the case that John McCain, and at least Cindy, really does not ever want to come near that Black Box. They are running to have done so, as a favor to his Party, and perhaps to their ancestors.
All the time he is running, John McCain is secretly thinking mainly about minimizing the size of the loss that he fully expects, and indeed, might even feel the Republicans deserve.
Certainly his own Party is quite happy for him to play the role of this year's fall guy, while it catches a breather. And that, on top of his own "shoot from the hip, ask questions later" style, may be the real reason why he picked Sarah Palin.
II. POOR HILLARY CLINTON
While Hillary is obviously out of the running this time around, her example is a useful one, because it provides such a striking contrast to John McCain's lack of drive.
You see, the Clintons are not anywhere near as wealthy as the McCain - Hensley Arizona beer clan, but they are still successful beyond most people's wildest dreams. Yet this year Hillary Clinton showed everyone exactly what it means to "really want to be President."
There are millions of Americans who badly need jobs, to feed their families, to save their homes. But even in such do-or-die situations, few show the kind of passion, determination, and tenacity that Hillary has showed – not even close.
The Clintons erred in assuming that practiced insincerity, calculation, ruthlessness, lots of money, and professional campaigning would work for them again, as they have always worked in the past. It took a Barack Obama to defeat these tactics, to make Hillary look like a turtle on her back. Only Obama's unique combination of skills and imagination could have pulled that upset off.
In any case, if one wants to know what the "will to power" really looks like, and what John McCain's haphazard campaign still lacks, study Hillary Clinton.
Or if you wish, just sit it out and watch her run again in four years -- perhaps even against Ms. Sarah Palin!
The real mystery to us is, if John McCain is truly a maverick, and sought the female vote, why he did not pick Hillary Clinton to be his Vice President? Party loyalties aside, we suspect that she might well have accepted in a heartbeat, especially if he had agreed to run on a "national unity" ticket and to step down in four years.
Now that would have been a maverick move.
III. JOE BIDEN
Joe Biden ran for President this year, for the second time in his career, and is as ambitious as the next Senator -- perhaps Hillary and Obama aside.
We all understand why Barack picked Joe Biden to be his VP. He is, first and foremost, trustworthy -- not like Hillary Clinton, with her backstabbing, self- aggrandizing husband more or less reluctantly by her side (Whether he stays there four more years is a good question.) Barack also chose Biden for comfort and advice, knowing that lots of hard work lies ahead.
Biden, with his 35 years in the Senate, will show him the Washington ropes, assist on foreign policy, and free him up to be a leader. Biden can do everything except choose a direction, which is something that only a natural leader can do.
He will not need any on-the-job training: his suitcase has been packed and ready for years. So Joe Biden was a good choice for Obama. It shows that Obama is already thinking about how to tackle the impossible job of being President, once he wins.
Again, the contrast with Sarah Palin in staggering. It would take her a lifetime to come anywhere close to his depth, intelligence, and experience, even apart from their differences on the issues. So while McCain is trying to avoid losing by placating the wing-nuts in his Party, Obama is thinking about governing.
And finally, the Obamas. Here it helps to tell a story. One of us once asked a
Soviet WWII veteran how he managed to survive that war, which he'd fought for four of the most terrible and murderous years in history. (We must remind our American audience that that war started very bad for the Soviet Union. The Nazis advanced very fast and the entire Soviet army was surrounded and decimated, with millions dead and millions more taken prisoner.)
This is what the WWII veteran said:
At the start of the war our division was completely destroyed. We did not know where the frontline was, we did not have any communication equipment, and our commanding general was dead. We did not have any weapons that could destroy German tanks, so we were just running toward Moscow, with the Germans in hot pursuit. Sometimes we had to fight them to gain time, sometimes German planes would bomb us, some of us drowned in rivers, and the injured could no longer be carried. Our numbers dwindled fast.
First we were led by a colonel, then by a captain, then a lieutenant. Finally, we got ourselves completely surrounded, practically out of ammunition, exhausted, with nowhere to run. Then our lieutenant was killed. Without an officer, the soldiers looked at each other in panic, not knowing what to do. But then someone shouted, "Follow my orders! I am assuming command!"
It was a private that nobody really knew. While everybody else was thinking of death, of giving up, he had been thinking of surviving and winning – and everybody immediately knew they had a commander again. It was that private that made us break through the encirclement and brought our division, and its torn and bloodied flag, across the front line where we, less then two hundred of us out of ten thousand that the division had at the start of the war, rejoined the army. This private was decorated and made an officer, and I was under his command for the entire war.
This was how I survived.
Now America is not encircled, out of ammunition, or in panic. But both parties agree, both candidates agree, and all the polls agree: for the last eight years, America has not been well led. It is now in serious trouble.
It is at this grave moment that a "Natural" may (or may not) appear. We are in such a dire situation that a McCain, Biden, Clinton, Romney, Lieberman, Pelosi, Kerry, or any other conventional politicians cannot save us.
They are all good officers, fine for parades or even conventional issues and set-piece battles, they are all but useless when you are encircled and you need to find solutions for multiple, seemingly-intractable problems all at once.
When McCain and his advisors tell us that the US economy, with its outmoded Detroit-based, debt-ridden, China-financed, over-militarized, under-insured foundation, is "fundamentally sound," or that the US should remain in Iraq til hell freezes over, or that we should consider bombing Iran willy-nilly, they are acting like conventional officers who are completely surrounded, yet completely out of touch with the real perils.
Indeed, if you owned eight houses, the state of the US economy would not be your greatest worry, either.
The point is that any number of our senior statesmen might do just fine as US Presidents. But just not at this moment.
This is the moment for a Natural. It is easy to make fun of Ms. Palin's background and experience, but just like Obama, the fact is that she has come far, has strong leadership skills, learns quickly on the job, and commands our attention.
So if this is moment for a natural like Barack, why isn't it also a moment for a Natural like Ms. Sarah Palin, from an entirely different political direction?
Indeed, given McCain's age and Hillary's stunning defeat, that could be the real choice in this election -- between two very different Naturals, two very different paths to national recovery.
(c) Submerging Markets, 2008