With the news of Lehman’s frenzied courting of Barclay’s for a shotgun marriage, and the elopement of Merrill and Bank of America, everyone is nervous. On the Twitter stream, the buzz is that the end of America is nigh, that maybe even the end of the world is upon us.
This was not entirely unexpected. The ball was put in motion at the end of March when the subprime crisis finally burst into the public consciousness in a big way, Bear Stearns failed, and Lehman teetered on the edge.
Last week’s bailout of FreddieMac and FannieMae simply brought the next round of illiquid financial institutions to the fore.
Hear this: We have a situation, brought on by a national addiction to credit on an individual, corporate and governmental level. It’s not going to go away anytime soon. It’s not going to get easier.
As long as our government continues to finance the Iraq War with abandon, credit will be tighter, financial institutions will be as squeezed as the individual, and our nation will leverage the future of our children in the name of “national security”. Just as a reminder, the architect of the blueprint for the failure of these financial institutions can be laid directly at the feet of Phil Gramm, John McCain’s chief economic adviser. McCain continues to try to tell Americans he will not raise taxes and will extend the Bush tax cuts, but he does not admit that what he proposes is impossible.
This is important, because it goes straight to the heart of our faltering economy. There is no question that the debt we’re racking up in Iraq (last tally it was 3 TRILLION). Despite the Bush Administration promise that Iraqis would help foot the bill, the facts say otherwise. They have not contributed one penny to the debt the US has accumulated during our occupation of their country. Why should they? It’s not as if we were invited in, and asked to stay.
The continued shakiness of our financial institutions and Federal bailout responses are cause for concern, but not cause for panic. It is not time to make a run on the bank. It IS time to be smart about how your money is banked. Make sure you’ve got cash in FDIC-backed institutions, be prudent and get rid of as much personal debt as possible. (I have more suggestions here).
As a third-party pension administrator, I admit to having concern about how 401(k) investors are going to react to today’s news. As the single largest cash investor in US markets, it’s really important that participants in 401(k) plans react with caution, rather than on impulse. Retirement plans are long-term investments, and investors have an opportunity to buy at bargain-basement prices while the markets react to the Lehman/Merrill news. This is not a time to pull funds out of the market; it’s an opportunity to leverage the state of the market for future growth.
But on a higher level, all of us need to ask how much bleaker this economy will get before we’re staring down a full-fledged depression. While McCain and Bush try to tell us it’s in our heads, facts remain facts.
To understand the problem, you need to know that the old world of banking, in which institutions housed in big marble buildings accepted deposits and lent the money out to long-term clients, has largely vanished, replaced by what is widely called the “shadow banking system.” Depository banks, the guys in the marble buildings, now play only a minor role in channeling funds from savers to borrowers; most of the business of finance is carried out through complex deals arranged by “nondepository” institutions, institutions like the late lamented Bear Stearns — and Lehman.
The new system was supposed to do a better job of spreading and reducing risk. But in the aftermath of the housing bust and the resulting mortgage crisis, it seems apparent that risk wasn’t so much reduced as hidden: all too many investors had no idea how exposed they were.
This is the problem in a nutshell. The twisty passages of current banking and securities law have done a wildly effective job of hiding vulnerabilities until it’s far too late to correct without drastic measures. The best solution is going to be a steady diet of transparency, mandatory disclosures, belt-tightening, and putting an end to the bleeding of our resources into Iraq.
Areas to watch: Insurance companies, who typically invest heavily in the mortgage markets but usually have lower liquidity needs than brokerage houses and banks, and the larger institutions like Bank of America and Citibank. As they consolidate and bring the troubled securities children under their corporate umbrella, there should be concern that they are not putting us at greater risk by concentrating exposure in one place.
Oh, and listen carefully to what John McCain has to say about this latest shakeout. My guess is that he will try to brush it off as less than it is or write it off to market adjustment. Don’t believe him. I cannot say this loudly enough. Attention should and must be paid to this. That doesn’t mean panic, it means heads-up, stay alert, and watch your back.
Someone should ask Sarah Palin how she’d handle this too. I’d love to hear her very detailed and experienced answer.
Wow. On the day Palin attends a deployment ceremony for her son, she advocates for war with Russia. This is just so wrong on so many levels…
GIBSON: Let’s start, because we are near Russia, let’s start with Russia and Georgia.
The administration has said we’ve got to maintain the territorial integrity of Georgia. Do you believe the United States should try to restore Georgian sovereignty over South Ossetia and Abkhazia?
PALIN: First off, we’re going to continue good relations with Saakashvili there. I was able to speak with him the other day and giving him my commitment, as John McCain’s running mate, that we will be committed to Georgia. And we’ve got to keep an eye on Russia. For Russia to have exerted such pressure in terms of invading a smaller democratic country, unprovoked, is unacceptable and we have to keep… GIBSON: You believe unprovoked.
PALIN: I do believe unprovoked and we have got to keep our eyes on Russia, under the leadership there.
GIBSON: What insight into Russian actions, particularly in the last couple of weeks, does the proximity of the state give you?
PALIN: They’re our next door neighbors and you can actually see Russia from land here in Alaska, from an island in Alaska.
Sarah Palin on Russia:
We cannot repeat the Cold War. We are thankful that, under Reagan, we won the Cold War, without a shot fired, also. We’ve learned lessons from that in our relationship with Russia, previously the Soviet Union.
We will not repeat a Cold War. We must have good relationship with our allies, pressuring, also, helping us to remind Russia that it’s in their benefit, also, a mutually beneficial relationship for us all to be getting along.
Now, let’s unpack this just a little bit. Russia was not unprovoked. As much as McCain/Palin want to paint the conflict in Russia as the big bad wolf eating the innocent Georgia, it didn’t really happen like that. In fact, following her logic about protecting smaller democratic countries, she should pay due respect to South Ossetia and acknowledge that Georgia was annexing them even as they expressed desire to be independent of Georgia. There was plenty of provocation.
Of course, it’s much more convenient to dumb down the argument to RNC talking points and argue that Georgia was somehow being punished by Russia for joining Nato. It’s also more convenient to ignore the fact of the gas pipeline crossing Georgia that the neo-cons desperately want to control.
Oh, but then I forgot. John McCain says Palin knows more about energy than possibly anyone else in the US.
Those gosh-darn Republicans sure are given to knowing everything, aren’t they? Just ask Meghan McCain.
Keith Olbermann’s special comment last night echoed everything I’ve been saying whenever I hear John McCain pronounce that a) He knows how to win wars; and b) he will bring our troops home from Iraq after we ‘win’ and with honor.
Let me just say this here and now: I believe that our troops have honor just by virtue of the fact that they are serving, have served, have placed their lives at risk and have obeyed orders that they perhaps didn’t even agree with. Every day that they get up and put their boots on and go back out there, they serve with honor. There is absolutely nothing in the outcome to Iraq that will change the fact that these are honorable men and women serving their country with, yes, honor.
With that said, every single time McCain makes the broad claims about victory and honor, I find myself screaming the words “Define victory!” at my television set. Or my car radio. Or even my iPod, on occasion.
The fact is, victory in Iraq is undefined now, and will forever be undefined. This is largely because there was no clearly-stated objective beyond getting rid of Saddam Hussein, and that objective was completed 5 or so years ago.
Q: Do you think you will ever use the word “victory”?
Petraeus: I don’t know that I will. I think that all of us at different times have recognized the need for real restraint in our assessments, in our pronouncements, if you will. And we have tried to be very brutally honest and forthright in what we have provided to Congress, to the press, and to ourselves.
“This is not the sort of struggle where you take a hill, plant the flag and go home to a victory parade…it’s not war with a simple slogan.
Once again, McCain lies and distorts for political gain. Oh, don’t we all want to puff out our chests and proclaim ‘victory’. And of course, McCain has to take that tack in order to lie about Barack Obama as being a ‘quitter’ who wants to ‘give up’ in Iraq, with quips and sound bites like this one:
“This is a man who can give an entire speech about the wars America is fighting, and never use the word `victory’ except when he’s talking about his own campaign.”
Now you hear Petraeus echoing more or less what Barack Obama has said throughout the campaign — that withdrawal from Iraq must be done with caution, but that it must be done, particularly with Afghanistan at grave risk.
Make no mistake about this: John McCain’s idea of honor IS victory — HIS. And he will lie and sell out to the highest bidder to be victorious.
Democrats cannot afford to be complacent about Sarah Palin, nor can they afford to be shrill. I mentioned on Twitter over the weekend that I thought it was a horrible idea to even repeat the rumors that were flying around in high number and force. Nor could they be judgmental about her parenting skills, her daughter’s pregnancy, or any other personal issues that might arise.
This, despite the fact that Republicans have traditionally used those issues to undermine Democrats’ candidacies, and especially Barack Obama’s.
Here’s why. Framing this election one around personalities and personal attacks will benefit the Republicans. They know this. From Rick Davis, McCain’s campaign manager:
“This election is not about issues,” said Davis. “This election is about a composite view of what people take away from these candidates.”
Davis added that issues will no doubt play a major role in the decisions undecided voters will make but that they won’t ultimately be conclusive. He added that the campaign has “ultimate faith” in the idea that the more voters get to know McCain and Barack Obama, the better the Republican nominee will do.
Davis understands that if Democrats make this a contest of personalities, they’ll lose. Barack Obama gets that, too, which is why he so masterfully shouted out yesterday for the press and his supporters to step back from attacks on Palin and her children, while tying it all into his own past as the child of a single parent who got pregnant at age 18.
George Lakoff understands this, too:
But the Palin nomination changes the game. The initial response has been to try to keep the focus on external realities, the “issues,” and differences on the issues. But the Palin nomination is not basically about external realities and what Democrats call “issues,” but about the symbolic mechanisms of the political mind — the worldviews, frames, metaphors, cultural narratives, and stereotypes. The Republicans can’t win on realities. Her job is to speak the language of conservatism, activate the conservative view of the world, and use the advantages that conservatives have in dominating political discourse.
If bloggers and twitterers and the media focus on the personal side of Palin, they miss the larger picture, and in so doing, allow the McCain campaign to frame the election in terms of personality — in the ‘gut factor’. The gut factor involves all of those things which the right trumpets as “their” issues: family values (with a twist of authoritarian bent but still, family values).
What Palin represents is the symbol of the Republican base: solid, conservative, religious, towing the line for those “traditional family values”. Even her daughter’s pregnancy will be viewed in that light, make no mistake about it.
So we have a choice. We can speak to the family values that we hold dear or allow them to be hijacked in a petty debate that misses the larger picture in favor of nonsensical pissing matches over whether Palin should have stayed at home, whether she should have kept better track of her daughter, whether she parented right. Those are non-issues. NONE of us ‘parent right’. Or correctly. We all just do our best in the circumstances we have.
What Palin does is validate McCain’s rapid turn to the base. No longer the darling of independents, he has taken one large step to the right and turned in that direction as he moves ahead. But without Palin, who is standing there already, that turn doesn’t have much credibility. WITH her, it’s a much more powerful case for McCain’s candidacy with the base.
Democrats didn’t stand much chance of winning that base anyway. But they do have the opportunity to frame the debate around what matters to independents and the majority of Democratic voters, and that frame has to be in the context of family and family values.
- It is a family value to want your loved ones to be healthy and have access to health care when they need it.
- It is a family value to aspire to home ownership and expect to be able to not only achieve that goal, but not lose it after the fact because of greedy mortgage companies.
- It is a family value to want your children to be educated and have access to higher education.
- It is a family value to have the opportunity to work at a decent job with a decent wage.
- It is a family value to enable parents to adequately care for their children in situations where both parents must work, and for laws to protect working women and give them equal pay for equal work.
- It is a family value to expect your country to send our sons and daughters into wars worth fighting, wars over principle or security, rather than wars for oil and greed.
- It is a family value to expect our returning soldiers to be cared for and given respect not only in tribute, but in investment in their futures and their health
These are all planks on the Democrats’ platform. If we want Palin to be neutralized and for Obama to win the election, the dialogue should be all about family values, but family values as seen through the eyes of real people suffering all around this country as the result of the last 8 years of failed “family value” policies.
With that in mind, I would challenge you to go to the Momocrats’ site and read their post series entitled “Palin in Comparison“, where they look at what she represents to the Republican base and then answer with the Democrats’ position on those same issues. Then talk to family, friends. Remind them that the Republicans have had eight years to demonstrate even a small regard for the family, but have only shown an amazing tendency toward greed, avarice, and the destruction of just about every value we hold dear in this country.
The election is certainly not about personality. It is about values. It is about who voters feel will stand up for them as we face some of the hardest issues we’ve had as a nation, while cleaning up the Constitutional and economic mess left behind by the Bush Administration. When it’s seen through that frame, it’s no longer McCain’s election to win.
In a nutshell, it is all about the fierce urgency of NOW.
This was the topic of our discussion today on NewsGang Live. I recommend downloading today’s episode. Well worth the listen.
One of his best yet. The full text is here.
The 5 goals he outlined were:
- Securing all loose nuclear materials
- Working toward a world with no nuclear weapons
- Investment of $150 billion in alternative energy with a goal to end dependence on foreign oil
- Arriving at a diplomatic solution with Iran
- Rebuilding alliances to meet common challenges of 21st century
Here’s one of the most compelling moments in the speech:
Imagine, for a moment, what we could have done in those days, and months, and years after 9/11.
We could have deployed the full force of American power to hunt down
and destroy Osama bin Laden, al Qaeda, the Taliban, and all of the
terrorists responsible for 9/11, while supporting real security in
We could have secured loose nuclear materials around the world, and
updated a 20th century non-proliferation framework to meet the
challenges of the 21st.
We could have invested hundreds of billions of dollars in
alternative sources of energy to grow our economy, save our planet, and
end the tyranny of oil.
We could have strengthened old alliances, formed new partnerships,
and renewed international institutions to advance peace and prosperity.
We could have called on a new generation to step into the strong
currents of history, and to serve their country as troops and teachers,
Peace Corps volunteers and police officers.
We could have secured our homeland–investing in sophisticated new protection for our ports, our trains and our power plants.
We could have rebuilt our roads and bridges, laid down new rail and
broadband and electricity systems, and made college affordable for
every American to strengthen our ability to compete.
We could have done that.
Instead, we have lost thousands of American lives, spent nearly a
trillion dollars, alienated allies and neglected emerging threats – all
in the cause of fighting a war for well over five years in a country
that had absolutely nothing to do with the 9/11 attacks.
Really a fine speech from Sen. Obama. Don’t listen to the pundits, go read it or listen when they post it on the Obama website.
An astounding sound bite from Tran Trong Duyet, keeper of Hoa Lo prison, where John McCain was held, beaten, and tortured:
“I don’t know how he’d react if he met me again,” said Mr Duyet, flicking through old black and white photographs of himself and his American prisoners at Hoa Lo.
“But I can confirm to you that we never tortured him. We never tortured any prisoners.”
I guess we know where our government learned to say that waterboarding wasn’t torture, too. By McCain’s own account, he was beaten, held in solitary confinement, and subjected to torture that permanently disabled him.
Duyet’s entire interview is nothing but party-line propaganda, similar to the same spew that comes out of this administration about torture, Guantanamo, and civil rights.
So is Mr Duyet implying that that Senator McCain lied about his treatment at the Hanoi Hilton?
“He did not tell the truth,” he says.
“But I can somehow sympathise with him. He lies to American voters in order to get their support for his presidential election.” .
Reading this just leaves me cold. I believe McCain was tortured in Vietnam, which makes his vote against the Intelligence Authorization Act that much more unbelievable. How can someone who was subjected to torture turn to a propaganda spinner like Duyet?
I suppose it depends upon how desperate he is to get elected.