Entries for September 2008
September 30, 2008
Why the Wall Street bail out plan is bad-6: The credit ratings agencies scandal
In voting down the bailout proposal 228-205 yesterday, the House of Representatives struck a small blow for democracy. They refused to be steamrolled by Wall Street and its agents in Congress and the administration.
As usual, in the run up to the vote, the administration met in secret with the Congressional leadership, worked out some vague plan, gave the House members just a few hours to see the bill, and then ordered the House members to vote for it or else, saying "Trust us, we know what is best. If you immediately don't do what we say, the world will come to an end."
Why exactly is this so urgent? Why cannot a solution wait for weeks or even months? This crisis was not created in a day, why must it be 'solved' in a day? On the rare occasions when the question is posed of why this urgency is necessary, the response is incoherent, vaguely referring to the need for 'confidence' and 'calming the markets'.
This attempt by an elite to ram through a policy with major consequences without extended debate is an insult to the democratic process and is symptomatic of an oligarchic system, not a representative democracy.
There should be public hearings when such a major issue is involved. There should be open testimony from all relevant parties as to what exactly the problem is and the pros and cons of the various options. Everything should be out in the open and completely transparent.
To their credit, enough members resisted the president, Treasury Secretary, Fed Chair, and the leadership of both parties (such as that blustering bully Barney Frank) and said resoundingly "No!" Of course they will now come under intense pressure and blamed for losses on Wall Street. But the goal of the government should be the general welfare of people and the broader economy, not to protect stock prices in the short term.
The members of Congress who voted no should resist pressure and not capitulate until they get a deal that is genuinely in the interests of ordinary people and not Wall Street. The only way we are going to get any serious and meaningful reform of the deeply flawed financial system is in exchange for the bailout money. Once you give Paulson the ransom he is demanding, it's all over. You can forget about getting any long-term solutions.
And now we return to the regularly scheduled post . . .
In my post on the current financial mess, I pointed out the key, and scandalous, role played by the credit ratings agencies like Moody's and Standard and Poor which gave the highest ratings of AAA to these mortgage-based securities although they did not deserve them. This was important since major public funds (like pensions) that deal with the savings of many lower and middle-income people are required to only invest in the safest securities. So getting the AAA rating was essential if this vast pool of money was to be tapped.
An article in Bloomberg News reveals how the top executive at these ratings companies pressured their analysts to give these highest ratings without the normal scrutiny they should receive, because "Without those AAA ratings, the gold standard for debt, banks, insurance companies and pension funds wouldn't have bought the products."
Flawed AAA ratings on mortgage-backed securities that turned to junk now lie at the root of the world financial system's biggest crisis since the Great Depression, according to Raiter and more than 50 former ratings professionals, investment bankers, academics and consultants.
"I view the ratings agencies as one of the key culprits," says Joseph Stiglitz, 65, the Nobel laureate economist at Columbia University in New York. "They were the party that performed that alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the ratings agencies."
What these ratings agencies did was to take short cuts and depend on computer-driven mathematical models and their competitors' analyses rather than do their own field research. In fact, people were not interested in even seeing the properties on which their ratings were based.
In late 2005, First Pacific's Mann says, he invited East Coast investors to take a subprime mortgage tour up California's main interstate artery, to see the problem for themselves. The I-5 runs from San Diego to Sacramento, passing through Orange County, Bakersfield and Stockton.
"Nobody wanted to do it," he says. "Unfortunately, most of the models were constructed by people who hadn't seen most of America and certainly weren't familiar with the areas they were rating."
The article describes how the analysts were pressured.
"We must produce a credit estimate," Gugliada, a member of the structured-finance rating group's executive committee, wrote to Raiter in a March 2001 e-mail. "It is your responsibility to provide those credit estimates, and your responsibility to devise a method for doing so. Please provide the credit estimates requested!" he wrote, signing off with his nickname "Guido."
"He was asking me to just guess, put anything down," says Raiter, interviewed at his home in rural Virginia, 69 miles (111 kilometers) west of Washington. "I'm surprised that somebody didn't say, 'Richard, don't ever put this crap in writing.'"
Gugliada, like Raiter, now says that he views as flawed many of the ratings S&P and Moody's assigned.
"There was the self-delusion, which hit not just rating agencies but everybody, in the fact that the mortgage market had never, ever, had any problems, and nobody thought it ever would," Gugliada says.
But then came the reckoning.
Driven by competition for fees and market share, the New York-based companies stamped out top ratings on debt pools that included $3.2 trillion of loans to homebuyers with bad credit and undocumented incomes between 2002 and 2007. As subprime borrowers defaulted, the companies have downgraded more than three-quarters of the structured investment pools known as collateralized debt obligations issued in the last two years and rated AAA.
. . .
Bank writedowns and losses on the investments totaling $523.3 billion led to the collapse or disappearance of Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. and compelled the Bush administration to propose buying $700 billion of bad debt from distressed financial institutions.
At bottom, the problem was the incestuous relationship between the companies seeking the ratings and the ratings agencies that bestowed them.
Through it all, the rating companies had a basic conflict: They were paid by the businesses whose products they rated. Moody's told the Paris-based Committee of European Securities Regulators in November 2007 -- in the 49th footnote of a 35-page response to its questionnaire on structured-finance -- that it allowed managers who supervised analysts to "provide expert input" on fees "in a limited range of circumstances."
SEC Chief Cox said in June that the rating companies engaged in the "lucrative business of consulting with issuers on exactly how to go about getting" top ratings.
This what happens when you take away oversight and mindlessly extol the virtues of the 'free market' and blandly assume that 'the market will correct itself.' Greed runs rampant.
POST SCRIPT: McCain and the Keating Five scandal
Given the strong similarity of the current Wall Street bailout scandal to the earlier savings and loan scandal of the 1980s, you would have thought that the media would have paid more attention to that story, especially since John McCain was one of the five US senators fingered as being influenced by the notorious Charles Keating, who went to jail for his role. Keating was a benefactor of McCain and a close friend of Cindy McCain.
For those not familiar with that earlier episode here is the story of McCain and Keating told in less than two minutes.
September 29, 2008
Why the Wall Street bail out plan is bad-5: Rewarding greed
In this next-to-last post in this series (but probably not on this topic), I want to look at how senior Wall Street executives saw their profession as some sort of game in which the goal was to extract more personal benefit than the next executive, leading to a leap-frogging of various forms of compensation packages that would leave ordinary people gasping.
These executives were taking risks with other people's money that left many ordinary people ruined while they themselves were benefiting:
The chairman of Lehman Brothers, Richard Fuld, still has his mansion in Greenwich, CT, his oceanfront estate on Jupiter Island in FL, and his Park Avenue co-op in Manhattan.
Many at Lehman blame Fuld for dallying while his investment bank went bust, taking risks with other people's money while he cleared over $40 million in salary and stock in the last year alone.
. . .
Fuld isn't the only top executive who remains well-off despite his firm's collapse. Former Bear Stearns CEO Alan Schwartz collected more than $38 million in salary and bonuses in the last three years for which figures are available.
These people live in a different world from you and me. The report describes the 'hardships' being undergone by the Wall Street executives as a result of the current financial situation.
"A lot of those people will have to sell their homes, they're going to cut back on the private jets and the vacations. They may even have to take their kids out of private school," said Frank. "It's a total reworking of their lifestyle."
He added that it's going to be no easy task.
"It's going to be very hard psychologically for these people," Frank said. "I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he's ever done."
And now we are supposed to bail out such people when their actions have resulted in other people losing their jobs or their only (modest) homes?
Some lawmakers are furious at what they are being asked to approve by the Bush administration, the Federal Reserve, and their own leadership. One anonymous Congressperson sent an email in which, in addition to demanding major reforms in the financial sector in return for the bailout, he/she also wants them to be publicly humiliated for what they have done to the country, and demanding that Congress should not be bought off with some trivial considerations.
I don't want to trade a $700 billion dollar giveaway to the most unsympathetic human beings on the planet for a few [expletive] bridges. I want reforms of the industry, and I want it to be as punitive as possible.
. . .
I also find myself drawn to provisions that would serve no useful purpose except to insult the industry, like requiring the CEOs, CFOs and the chair of the board of any entity that sells mortgage related securities to the Treasury Department to certify that they have completed an approved course in credit counseling. That is now required of consumers filing bankruptcy to make sure they feel properly humiliated for being head over heels in debt, although most lost control of their finances because of a serious illness in the family. That would just be petty and childish, and completely in character for me.
I think this congressperson is merely channeling the deep reservoir of anger in the general public at what they rightly see as little more than a fraud perpetrated on them.
When poor people get into trouble because they make stupid or greedy decisions, they are lectured to by the rich on the need to be prudent and live within their means and to suffer the consequences of their actions. When the very rich do the same thing, the government rides to their rescue. 'Throwing money at the problem' (a favorite phrase used by the rich to denigrate any attempt to fund initiatives that help ordinary people, like education or health care) becomes the desirable mode of action when the recipients are Wall Street or the defense industries.
Meanwhile on the House floor Rep. Marcy Kaptur of Ohio tells it like it is:
As I have said repeatedly, the leadership of both parties are already bought and sold by Wall Street like any of the other commodities they trade in. They are simply looking for a face-saving way to capitulate and give away the store and a grand 'bipartisan compromise' is what they seek, so that one party cannot take advantage of public anger by accusing the other of selling out to Wall Street. It is only the 'minor' members of Congress who are not beholden to these interests that can stage a revolt.
I think that most people, even if they are not sure exactly what is going on, are suspicious that this is a sweet deal for insiders by insiders. Apparently opposition to the bailout is running at between 10-to-1 to 100-to-1, if measured by the calls and emails received by members of Congress. But just like in the run up to the Iraq war, regular Congresspeople can be frightened into thinking that they will be blamed if they oppose their party leaders and the group of 'wise experts' who solemnly tell them that they know what the best of action is.
As former Labor Secretary Robert Reich says:
Put yourself in the shoes of a member of Congress, including our two presidential candidates. The Treasury Secretary and Fed Chair have told you this is necessary to save the economy. If you don't agree, you risk a meltdown of the entire global financial system. Your own constituents' savings could go down with it. An election is six weeks away. Besides, in the last two days of trading, since rumors spread that the Treasury and the Fed were planning something of this sort, stock prices revived.
Now - quick -- what do you do? You have no choice but to say yes.
But you might also set some conditions on Wall Street.
The public doesn't like a blank check. They think this whole bailout idea is nuts. They see fat cats on Wall Street who have raked in zillions for years, now extorting in effect $2,000 to $5,000 from every American family to make up for their own nonfeasance, malfeasance, greed, and just plain stupidity.
Reich lists five conditions, the first of which is that "The government (i.e. taxpayers) gets an equity stake in every Wall Street financial company proportional to the amount of bad debt that company shoves onto the public. So when and if Wall Street shares rise, taxpayers are rewarded for accepting so much risk."
There are alternatives. It has been pointed out that Sweden faced a similar crisis in 1992 but took a very different attitude and solved it with almost no cost to the taxpayers. (Thanks to Norm for the link.)
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.
Why should we not get what, say, Warren Buffett or JP Morgan Chase got when they invested in troubled firms like Lehmans or Washington Mutual? Why should the taxpayers not be treated as investors and have the same risk/reward expectations as any other investor? Why should we pay for something for which there is no clearly discernible public good?
It is time for people to get really angry. We should not take the word of sober-voiced people in suits who soothingly tell us that although they were the ones who created this mess and did not even see it coming, we should now unquestioningly trust them to solve the mess by giving them virtually everything they want.
We are being told that it is imperative that we 'calm the markets', as if the trillion-dollar financial sector is a colicky baby in a restaurant. We are being told that we must restore 'confidence in the markets' as if the market is a shy teenager about to go on a first date. Why should we care about confidence? And whose confidence are we talking about?
They are taking us for suckers and we will have only ourselves to blame if we allow them to do so. We, the people, technically own the government but it has been co-opted by the financiers. It is time to take it back from these usurpers.
POST SCRIPT: Imminent threat, anyone?
Jon Stewart reminds how Bush is using the same scare tactics to push the $700 billion giveaway plan that he used to push the Iraq war.
September 26, 2008
Why the Wall Street bail out plan is bad-4
A large number of economists were quick to express their dislike of the Paulson plan and have been vociferous in urging Congress to not be stampeded by the administration but to use this opportunity to put back into place some of the regulations that were dismantled over the last three decades.
Meanwhile on NPR this morning, Allan Meltzer, a former Fed economist and a professor at Carnegie Mellon University says that he does not see that this 'crisis' hurts anyone other than a few major players on Wall Street and that all the scaremongering about a global financial catastrophe if nothing is done are nor warranted.
Meanwhile a group of 150 economists have also weighed in, saying that there is no need for this mad rush and we should think things through carefully before committing ourselves to the Paulson plan or some minor variation of it.
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. . . .
2) Its ambiguity. . . .
3) Its long-term effects. . . .
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
I am not optimistic that these cautions will be heeded. The administration and Congressional leadership is deep in the pockets of Wall Street and will find some face-saving way to give them everything they want.
Alexander Cockburn walks us through some of the highlights of the bipartisan deregulation that resulted in Wall Street firms playing fast and loose with other people's money for their own benefit. One key person who appears repeatedly in this sordid story is Phil Gramm, the former Senator from Texas who is now economics advisor to John McCain and reportedly his preferred choice to be Treasury Secretary. As US senator from Texas, he pushed through some of the key legislation that resulted in this mess.
In 1999 John McCain’s friend and now his closest economic counselor, then a senator from Texas, was the prime Republican force pushing through the Gramm-Leach-Bliley Act. It repealed the old Glass-Steagall Act, passed in the Great Depression, which prohibited a commercial bank from being in the investment and insurance business. President Bill Clinton cheerfully signed it into law.
A year later Gramm, chairman of the Senate Banking Committee, attached a 262-page amendment to an omnibus appropriations bill, voted on by Congress right before a recess. The amendment received no scrutiny and duly became the Commodity Futures Modernization Act which okayed deregulation of investment banks, exempting most over the counter derivatives, credit derivatives, credit defaults, and swaps from regulatory scrutiny. Thus were born the scams that produced the debacle of Enron, a company on whose board sat Gramm’s wife Wendy. She had served on the Commodity Futures Trading Commission from 1983 to 1993 and devised many of the rules coded into law by her husband in 2000.
Somewhat stained by the Enron debacle Gramm quit the senate in 2002 and began to enjoy the fruits of his own deregulatory efforts. He became a vice chairman of the giant Swiss bank UBS’ new investment arm in the US, lobbying Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006, urging Congress to roll back strong state rules trying to crimp the predatory tactics of the subprime mortgage industry.
Cockburn points out that the enabling of Wall Street shenanigans has always been a bipartisan affair.
But is [Gramm} Exhibit A? No. That honor should surely go to Robert Rubin and to the economic course he set for his boss, the eagerly complicit Bill Clinton. Gramm has been the hireling of the banking industry. Rubin is at the beating heart of Wall Street finance, and he and Lawrence Summers at Clinton’s Treasury, were the guiding forces for financial deregulation.
Obviously the Republicans hoped that the roof wouldn’t fall in on their watch, and the crisis could be deferred to 2008 and then blamed on the Democrats. But their insurance policy was that if the roof did cave, as it has now, the rescue policy would be identical in both cases. That’s why Obama has collected more money than McCain from the big Wall Street houses.
The gang that successfully got out of Dodge in time was the Clinton-Rubin-Summers gang, just before the last bubble -–the stock market bubble -- burst in March of 2001. They knew what was coming.
Rubin is one of Obama's advisors, Gramm is McCain's so whoever becomes president, as usual Wall Street has its friends in high places. They make money from public investments when the going is good and make money directly from the taxpayers when the going is bad. The only way their hands can be taken out of the till is if the public angrily tell their representatives that there should be no bailout until massive reforms and regulations are put into place so that people's money is safeguarded from these rapacious predators.
This episode illustrates better than any civics class exactly who runs the country and for whose benefit.
POST SCRIPT: Jon Stewart on the Paulson plan
September 25, 2008
Why the Wall Street bail out plan is bad-3: More doubts
I have described before how the subprime mortgage debacle lies at the root of this mess. But how did it come about that mortgage lending, once the most conservative and transparent and regulated of banking practices, became the basis of a massive shadow economy in which trillions of dollars flowed around, free from any oversight? And what is the government bailout meant to do?
The foundations of the mess lies with the neoliberal deregulation policies that began under the Carter administration and was enthusiastically followed by every subsequent administration of both parties. The driving idea behind all this loosening was that the banking and investment sector was being shackled by too many regulations and too much oversight. The protective firewalls that had been put up between banks and investment houses following the excesses that led to the Great Depression were targeted. It was argued that if the banks were freed from these onerous restrictions, capitalism would bloom.
Since Wall Street executives have always formed the core advisory group around any government (and currently are deeply enmeshed in the Obama and McCain campaigns) and also have strong ties with the congressional leadership of both parties, it was not hard to persuade the government to loosen the restrictions that had been put into place following the last debacle of the financial sector during the Great Depression of 1929.
The same Wall Street types who put into place the conditions that caused the current mess are now the ones who claim they are the ones who can solve it. They are trying to panic everyone into accepting a plan that will rescue themselves from their own actions by passing the cost on to us.
Since the main problem now is that all these banks and investment firms are being dragged down by having on their books all these mortgage-based securitized investments whose value is doubtful (to the extent that they can even figure out its value), what the rescue plan seeks to do is to use taxpayer money to buy these possibly worthless investments at values far more than they are worth, essentially taking these liabilities off the hands of the banks and putting them in the hands of taxpayers. It is like going to a garage sale and paying original list price for the junk that is being sold.
While this is clearly a good deal for the banks and Wall Street, rescuing them from the consequences of their bad decisions by letting them unload their bad debts and giving them a huge infusion of cash, what is in it for the taxpayer? As far as I can see, very little. We greatly increase the national debt and the interest on that debt (which will eventually have to be paid in the form of higher taxes) while getting ownership of assets whose value is unknown. The only possible bright spot is that these doubtful assets may, over time, rise in value. But that is a big gamble, and I would not be surprised if there are also conditions in the agreement that will take such profits (if they ever materialize) and give it back to the banks. After all, what these people seek is to entirely privatize all profits while having the taxpayers pay for all losses.
Economist Paul Krugman, comparing this plan with the savings and loan bailout of the 1980s, explains clearly why he thinks this is a bad plan and should be rejected. (Incidentally, John McCain was implicated in that earlier influence-peddling scandal, as one of the infamous 'Keating Five'.)
The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.
And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.
. . .
Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.
In fact, as Atrios points out, the plan seeks to give the Treasury extraordinary freedom from any oversight. They have added wording that says: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
In other words, Paulson is telling Congress to just give him the money to do what he wants. The Treasury Secretary, like many of his predecessors, is from Wall Street (he spent three decades at Goldman Sachs) and thus is sympathetic to the plight of this particular group. They are his base.
William Greider, in a must-read article, writes that we are currently witnessing an attempt to pull off one of the biggest swindles of modern times:
It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses--many hundreds of billions, maybe much more. What's not to like if you are a financial titan threatened with extinction?
If Wall Street gets away with this, it will represent an historic swindle of the American public--all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called "responsible opinion." If this deal succeeds, I predict it will become a transforming event in American politics--exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion.
He quotes others in support of his thesis that what is being proposed is an insider deal:
Christopher Whalen of Institutional Risk Analytics, a brave conservative critic, put it plainly: "The joyous reception from Congressional Democrats to Paulson's latest massive bailout proposal smells an awful lot like yet another corporatist lovefest between Washington's one-party government and the Sell Side investment banks."
A kindred critic, Josh Rosner of Graham Fisher in New York, defined the sponsors of this stampede to action: "Let us be clear, it is not citizen groups, private investors, equity investors or institutional investors broadly who are calling for this government purchase fund. It is almost exclusively being lobbied for by precisely those institutions that believed they were 'smarter than the rest of us,' institutions who need to get those assets off their balance sheet at an inflated value lest they be at risk of large losses or worse."
Greider points out that the government, if it were truly acting in the interests of the people, has a lot of power to use the crisis to reform the system:
A serious intervention in which Washington takes charge would, first, require a new central authority to supervise the financial institutions and compel them to support the government's actions to stabilize the system. Government can apply killer leverage to the financial players: accept our objectives and follow our instructions or you are left on your own--cut off from government lending spigots and ineligible for any direct assistance. If they decline to cooperate, the money guys are stuck with their own mess. If they resist the government's orders to keep lending to the real economy of producers and consumers, banks and brokers will be effectively isolated, therefore doomed.
Only with these conditions, and some others, should the federal government be willing to take ownership--temporarily--of the rotten financial assets that are dragging down funds, banks and brokerages.
Right now it looks like the Congress is getting ready to cave in to this deal in exchange for only some purely symbolic concessions like limits on executive compensation. The fix seems to be in. Only strong public opposition will prevent this giveaway of public funds to the very people who caused this crisis.
POST SCRIPT: Intelligent Design trial talk
Judge John E. Jones, who presided over the Dover intelligent design trial in 2005, will speak today from 5:00-6:00 pm in Strosacker Auditorium, followed by half and hour for questions.
September 24, 2008
Why the Wall Street bail out plan is bad-2: Manufactured crisis?
I have been getting increasingly suspicious that this so-called financial crisis may be a bogus one to enrich this administration's base of Wall Street cronies before Bush leaves office. While I am not an economist and do not have the inside knowledge that Henry Paulson (Treasury Secretary) and Ben Bernanke (head of the Federal Reserve) have, there is something about this mad rush to pass major legislation that strikes me as very suspicious. It reminds me too much of the way the administration flat-out lied about the danger that Iraq posed in order to get Congressional authorization for the invasion.
People like Paulson and Bernanke lied when they said they had the situation under control earlier when they bailed out Bear Stearns, Fannie Mae, Freddie Mac, and AIG. How do we know that they are not lying again now in order to push a covert agenda? While I accept that the financial sector is in trouble, what I want to know is what evidence has been produced that we need to act immediately. The stock market might go down if no immediate action is taken but that is not sufficient reason because they are betting on a bailout and their potential disappointment is not a reason for throwing more money into their trough.
When one of the senators at yesterday's hearings asked Paulson why he needed $700 billion all at once and why he could not initially accept a 'smaller' amount like $150 billion now and the rest staggered over time, he replied that the markets needed the larger amount to show 'confidence'. What kind of answer is that? Why should we care if the market has 'confidence'? What he really means is that he wants stock prices to go up by giving away taxpayer money. We need to go back to basics where stock prices reflect the real value of companies.
How do we know there is really a crisis except for the fact that we are being told so repeatedly in screaming headlines? What evidence do we have that the credit markets are really freezing up? Are industries not functioning because they can't get credit? Are ordinary people not being able to buy a car because they cannot get a car loan? Paulson and Bernanke keep saying that if they don't get all the money right now, this minute with absolutely no conditions, there will be a financial Armageddon and ordinary people will suffer. But the evidence produced so far is that only some banks and Wall Street financial firms will suffer.
I am not the only one who is deeply skeptical. Pulitzer Prize winning reporter on tax policy David Cay Johnson (author of the book Perfectly Legal that described how tax policies have been systematically used to siphon money away from the poor and middle class to the rich) sounds similar cautions about being pressured by a phony crisis:
In covering the proposed $700 billion bailout of Wall Street don't repeat the failed lapdog practices that so damaged our reputations in the rush to war in Iraq and the adoption of the Patriot Act. Don't assume that Congress must act instantly, as so many news stories state as if it was an immutable fact. Don't assume there is a case just because officials say there is.
The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise. And be skeptical of what gullible Congressional leaders, most of them up before the voters in a few weeks, say after being given a closed-door meeting on supposed horrors.
The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)
Ask this question -- are the credit markets really about to seize up?
If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.
If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?
Financial reporter and New York Times columnist Gretchen Morgenson in an interview on Fresh Air tells host Terry Gross that she too does not trust these people to tell the truth now given that they have lied to us before. In a column, she argues that the fix is in to benefit Wall Street, because we, the people, have no lobbyists working on our behalf. In theory our congresspeople should be our lobbyists but given the corrupt, money-driven political system we have, even the suggestion that Congress will look out for us is laughable.
Morgenson provided some information that was new to me. She said that AIG had written $441 billion in credit insurance on mortgage-related securities that had gone sour, three –quarters of it to European banks. Furthermore, the total value of the credit default swap market (the quasi-insurance that propped up the value of the subprime mortgages) is $62 trillion. And all this was unregulated. And now we are supposed to trust Paulson, Benanke, Robert Rubin and all the other people in suits who created this unregulated monster to take us out of this mess.
When reporters for mainstream media like Morgenson say flat out that they suspect the government is lying to the people in order to reward the financial giants and their lobbyists who pour vast amounts of money into the system, it indicates that a sea change is occurring.
Chris Bowers manages to flesh out my vague fears into some very pertinent and concrete questions.
The more I think about this deal, the more it starts to look like a fraud on the American taxpayer. It is time to put the brakes on the Paulson-Bernanke-Bush juggernaut and start looking very, very carefully at how to take the gamblers out of the financial markets.
What we should watch out for is when Paulson and Bernanke meet with congressional leaders in a secret session and then they all come out and say that due to facts they cannot reveal to us, they have to do what Paulson wants (with some window dressing added) to avoid a terrible outcome. That is exactly what happened with the Iraq war and is a sure sign that the fix is in and that the reasons for taking the action will not stand scrutiny.
We should not accept this under any circumstances and should demand total transparency. This whole mess was caused by opaque trillion dollar financial transactions hidden from the world. It is not going to be solved by more secrecy.
POST SCRIPT: Silver lining?
The only silver lining to be found in this mess is that it may make it less likely that Bush will launch an attack on Iran before he leaves office. I had been fearful that the neoconservative cabal that have such influence over the Bush-Cheney regime might persuade them that carrying out such an insane plan was a good idea. Given the preoccupation with the financial crisis and its cost, such an action now seems unlikely.
Meanwhile, you can listen to (and read the transcript of) the interview NPR had with Iranian President Ahmadinejad. He repeatedly challenged the bland assumption that the US spoke for the entire world, that the things that bothered the US also bothered the world. His questioning of the assumptions so rattled the interviewer (US journalists rarely examine the assumptions of the government-corporate elite in the US that frames the discussions) that the latter started an idiotic line of questioning as to whether the Iranian leader watched western TV and whether he listened to the Beatles and Led Zeppelin.
The interviewer seemed to assume that Ahmedinejad is some kind of ignorant isolationist. The fact that he is a university academic who is well aware of what is going on in the world and capable of matching wits with western journalists seemed to have taken the interviewer by surprise.
September 23, 2008
Why the Wall Street bail out plan is bad-1
I wrote last Friday of the reasons behind the current financial mess. Over the weekend, as everyone is aware by now, the US government issued a plan to put up a huge amount of money (initially about $700 billion but likely to grow to well over a trillion) to bail Wall Street out of the financial difficulties caused by its own greed and recklessness.
The public and the Congress are being stampeded with 'the sky is falling' rhetoric into giving the Treasury Secretary Henry Paulson a blank check, with no oversight and almost no reforms, to dole out money to his cronies in the financial sector so that they can continue the reckless practices that have led to the present situation. We should not forget that Paulson spent almost his entire career (over three decades) at Goldman Sachs, one of the investment banks at the center of the current mess.
Paulson says he wants a 'quick and clean' plan approved by the Congress. To translate, 'quick' means he wants Congress to approve the plan immediately without looking too closely at it, and 'clean' means he does not want them to demand accountability and reforms in return for shelling out taxpayer money to the very firms and executives who caused this crisis.
The bankers themselves want taxpayer money with no restrictions at all and even want to prevent the courts from having any jurisdiction in the matter, which strikes me as an open invitation to swindle.
Paulson, Ben Bernanke (head of the Federal Reserve Board), and George W. Bush are acting as if there are only two alternatives: giving Paulson this blank check or a collapse of the global financial markets. This is false. Even within this short time, economists have been able to come up with possible alternatives, as has senator Christopher Dodd. I am not endorsing these alternative proposals by any means. I don't think they go far enough in providing regulatory oversight. But the point is that alternatives exist, more proposals can be created, and all should be discussed when such a large amount of money is involved.
The Paulson plan is a bad plan and should be opposed. Paulson, Bernanke, and Bush are saying that the necessary reforms and oversight can be added later after the crisis has passed, but only a sucker would accept that deal. Once the administration and the Wall Street firms get their hands on the money, you can be sure that they will fight any reforms tooth and nail. It is only now, when they are over a barrel and desperately seeking relief, that Congress has any leverage at all to get the needed reforms enacted.
We need to be wary of false compromises. After all, the leadership of both parties and the Bush administration are almost all bought and sold by Wall Street interests and they have every intention of capitulating to the demands of those interests. They will look for a way to do so while seeming to represent the interests of ordinary people. So we will hear loud grandstanding talk of needing to cap executive salaries (which those executives can easily circumvent) and some crumbs thrown to those whose homes have been foreclosed, while ignoring the fact that the real need is re-regulation of the financial markets, to put back in place those features that prevent executives at these banks and other financial institutions from acting like high rolling gamblers using other people's money. All this talk of a possible financial apocalypse is meant to steamroll those few people who oppose what is likely to be a blatant rip-off of taxpayers.
Major legislation that is rushed under panic conditions (whether real or simulated) almost always leads to bad results because the authors of the legislation use the rush to stealthily advance their covert agendas. For an example, we need go no further than the abominable USA PATRIOT Act that was rushed through in the wake of the events of September 11, 2001 under conditions of fake panic and which has resulted in the massive violations of citizen rights and protections that were once taken for granted. Or the Iraq war authorization act that was stampeded through Congress because of fake panic created that Iraq was building a nuclear bomb. We know how well those turned out. The plan for the federal bailout of Wall Street has all the signs of being a repetition of those two events.
To get a scale of the amounts currently involved, see this exchange between the hosts of the PRI program Marketplace. The 'credit default swap' market referred to is a rough measure of the amount of money that was swirling around in the subprime mortgage dealings.
BOB MOON: OK, I'm about to unload some numbers on you here, so I'll speak slowly so you can follow this.
The value of the entire U.S. Treasuries market: $4.5 trillion.
The value of the entire mortgage market: $7 trillion.
The size of the U.S. stock market: $22 trillion.
OK, you ready?
The size of the credit default swap market last year: $45 trillion.
KAI RYSSDAL: That's a lot of money, Bob.
Yes, sirree, Bob, that is a lot of money. And all of it in a shadow economy, without any supervision by the government.
If there was any doubt as to who runs the country and for whose benefit, this episode should remove them, because both the Democratic and Republican parties colluded to create the conditions which gave rise to the current crisis and now both are colluding to save their rich supporters from the consequences of their actions.
What we clearly have now is government of the rich, by the rich, and for the rich.
POST SCRIPT: Religious nuts
Recently John McCain and Barack Obama were interviewed separately by Rick Warren, pastor of the Saddleback evangelical megachurch. Jackie Broyles and Dunlap from Red State Update engaged outside the forum with protestors from the Westboro Baptist Church, a group that is so viciously and irrationally antigay that I sometimes wonder if they are actually a bunch of performance artists, cleverly playing a prank on all of us.
I have written before that humor and ridicule is the best way to deal with such people, and Jackie and Dunlap seem to share that view.
September 22, 2008
I follow news on two levels. The first level is trying to get actual information about what happened. The second meta-level is observing how events are covered and what and whose agenda is being served by the news media.
I cannot remember when I first started following the news in this dualistic way but I do know that by 1989 I had already fallen into this habit. Two things happened simultaneously in December of that year that drove home to me forcefully the need to do this.
With the disintegration of the Soviet Union, there was a revolt in Romania against its despotic leader Nikolai Ceausescu that began around December 17, 1989 that resulted in the government firing on demonstrators. This increased the protests and eventually led to the overthrow of the government and the later execution of Ceausescu.
Meanwhile on December 20, the US invaded Panama to overthrow its leader Manuel Noriega, massively bombing whole areas of the capital city, in the process destroying the densely populated El Chorrillo neighborhood in downtown Panama, which contained mostly poor people.
In those pre-internet days I had no recourse other than US TV to keep up with breaking news and I recall watching the news coverage as it switched back and forth between events in these two countries.
When it came to Romania, the US TV news reporters expressed deep skepticism about the Romanian government's official claims about everything being fine and actually went to investigate the reported killings of civilians by the forces loyal to Ceausescu. They relayed stories of the dead and displaced that contradicted the official accounts. They acted as journalists should, being skeptical of official claims and seeking independent verification of the facts by going to the scene of the events and talking with eyewitnesses.
When the news switched to coverage of the events in Panama, however, it was quite different. The US reporters exhibited a remarkable lack of curiosity about civilian casualties caused by the US bombing and showed a cheerful willingness to accept at face value the official US government and military version of events. Once in a while the network news anchor would ask the reporter if he had heard of any civilian casualties as a result of the US invasion and the answer was always the same, that the US government and the military had 'no information' about the number of civilian dead. That was it. There was no attempt at all to independently find out the truth as they had done in Romania, although they had far more reporters on the ground in Panama. The news media acted as pure propaganda agents, passing on the US government and military story.
Those who think the media are better now are deceiving themselves. This kind of unbalanced reporting is still alive and well in the way that the media covers civilian casualties in the current conflicts around the world. How it is reported depends on whether the civilians are killed by 'us' and 'our' friends or by 'them', where the categories of 'us' and 'them' are defined by the US government.
Consider the conflict currently going on in Afghanistan.
On August 26, 2008 the BBC reported deaths by US bombing of about 90 people, 60 of them children, in the village of Azizabad in Afghanistan. But in the US such reports are treated as merely rumors not worth sending a reporter to, unless confirmed by the US military. And in order to prevent US reporters going there, the US authority has a standard procedure it follows whenever such a tragedy happens: first deny that any civilians died at all and assert that all the people killed were the enemy (which on its face is highly unlikely in any guerilla war), then when the prima facie case becomes too strong (as in this case when even UN observers confirm the deaths) say that they will themselves investigate, and ask the reporters to hold off on any judgment until the investigation is completed at some indefinite date.
Pentagon officials say they are concerned about the conflicting reports and are continuing their own investigation. Spokesman Bryan Whitman said he did not know when the investigation would end and its results released.
All this is stalling for time, with the military either staying silent and hoping people will forget the incident or conceding at a much later time that a very small number of civilians were killed in the midst of a large number of enemy, thus becoming 'collateral damage' and thus supposedly excusable.
The US media is happy to play along in this game. The blog left I on the news describes the reporting by the New York Times of this particular incident, and follows up with a description of the classic non-denial denial by a US government spokesperson when the evidence gets too strong.
It now turns out that there is credible evidence that the original report of large numbers of civilian deaths (including the huge number of children) is correct. But this report in a major US newspaper came on September 7, about two weeks later, and is still being denied and stonewalled by the US military, who still claim that they were responding to Taliban attacks. Meanwhile, to pacify the furious Afghan people, the Defense Secretary Robert Gates offered a vague and general apology for any civilian casualties, without acknowledging specific culpability in this case, and promised to take more care in the future.
This pattern is then repeated the next time civilians are killed. The US military has still not acknowledged civilian deaths.
Glenn Greenwald follows up the story, providing more details of the original incident as well as the attempted cover-up.
Next: Other examples of unbalanced coverage
POST SCRIPT: The elitists
An odd feature of this campaign is the attempt by the McCain campaign to try and paint Obama as an 'elitist'. But Newsweek ran a story that looked into how many cars each candidate owns. The scorecard? The McCains: 13, the Obamas: 1, and that too a modest Ford Escape Hybrid.
September 19, 2008
The current financial mess
In a past series of posts, I looked at the financial crisis created by the collapse of the subprime housing crisis.
In the wake this week of the massive federal bailouts of Fannie Mae and Freddie Mac and AIG (American International Group), the collapse of the venerable Lehman Brothers investment bank, and the sale of another giant Merrill Lynch to Bank of America that staved off its own bankruptcy, it may be good to see how all these are linked.
This crisis is the inevitable result that follows 'bubble' economics', the runaway (and unrealistic) growth in the price of a commodity due to the belief of investors that the price of that commodity will either always increase or that they can sell out before it drops. In this case, the commodity is real estate. At every stage of the process, the firm belief that the value of homes would increase, coupled with little or no oversight to ensure that minimum caution was exercised in lending money, resulted in this runaway train that is now crashing and causing massive damage.
The foundations of this bubble lies with the providing of mortgages to large numbers of people who simply could not afford the homes they sought to buy. How was this done? One culprit was the creation of mortgages that had very low introductory rates that enabled people to pay the mortgage premiums, at least initially. Of course, such an artificially low rate could not be sustained so the premiums would suddenly rise after a few years, to a level the buyer could not afford. This seems like an unbelievably stupid plan for both the home buyer and the people providing the mortgage. And it is, unless you believe that the price of the home would increase in value, because then the homebuyer could sell the home before the mortgage went up, repay the money to the mortgage lender, and still make a profit. Everyone wins. There seemed to be a free lunch, just for the taking.
As a result, all kinds of shady practices arose. Mortgage brokers working on commission actively sought out even ineligible buyers for properties, inflated their income to meet the minimal requirements for eligibility, and sold them properties. The banks providing the money did not bother to really check on the credit worthiness of the buyers because they immediately sold off most of their mortgages to investment banks. These investment banks then 'securitized' their collections of mortgages, bundling them into huge packages of thousands of mortgages, then dividing them up into smaller pieces, and selling the pieces like other securities such as bonds.
Since investors believed that home prices would always go up, there seemed to be little or no risk. But as a result of this bundling and slicing and dicing and no strict accounting or transparency requirements, no one knows exactly which mortgage is in which bundle, even now. But who cares? The idea was that by this bundling, even if a mortgage here or there went into default, it would be a small part of the whole package, hardly noticeable. Wholesale defaults would not happen since home prices always go up, don't they?
The investment banks then bought and sold these securities, their huge commissions adding to the price. They were aided in this by the credit ratings agencies (like Moody's) that gave these securities the highest ratings of AAA, which made them seem to be very safe investments. Why would the credit rating agencies give high ratings to securities whose origins were so murky and about which they seemed to know so little? Because it is a little known fact that these rating agencies are paid by the very companies they rate and so have a vested interest in pleasing their clients. Of course, they also felt there was little risk in giving these high ratings because, as we all know, home prices always go up, don't they?
What about those cautious investors who were still a little nervous about buying these securities despite their high ratings? No problem. Along comes AIG, a huge insurance conglomerate. They created a new division that sold things called Credit Default Swaps (CDS). These things act like insurance in that they guarantee to reimburse the investor if their securities should lose value, thus reassuring them that these mortgage-based securitized investments were a safe bet. Although the CDS were sold like insurance, they are not actually called insurance because insurance is a regulated industry monitored by the states and as soon as something is called insurance it comes under that regulatory umbrella. But no one really paid much attention to such petty details since home prices are sure to go up, aren't they? Thus no one was likely to lose money. So AIG was raking in huge amounts as 'insurance' premiums, while feeling it ran little or no risk of having to pay out any money.
And as long as home prices went up, they were all making money and no one was paying close attention, except for a few worrywarts who didn't like to see trillions of dollars moving around in an unregulated and opaque manner. And for awhile home prices did go up, as was inevitable as more and more people were being encouraged and enabled to buy homes they really could not afford on the expectation that prices would go up yet higher. Thus were created the classic bubble conditions.
But all bubbles are inherently unstable and eventually collapse. And when it does, who gets hurt the most depends on who ends up holding the worthless investments. In this case, it is the US taxpayer.
Home prices started to drop. As homebuyers realized they could not pay the suddenly increased mortgage payments and could not sell the houses for a price that covered the amount they owed, they defaulted. As those defaults spread rapidly and became well known, investors started getting nervous about the value of the mortgage-based securities they were holding and started to sell them, rapidly lowering their value. This meant that banks and other investment houses that had these things as assets suddenly found their value drop precipitously and had to announce huge write-offs. Furthermore, those companies could no longer use those worthless securities as collateral to raise money and thus could not pay their own debts, making them risks for default and bankruptcy. This decreased investor confidence in those institutions and their share prices dropped dramatically.
This is what happened to Bear Stearns, Lehman Brothers, and Merrill Lynch. But they are just the most highly visible institutions. Huge numbers of banks are owners of similar mortgage-based assets and are nervously trying to figure out how much (or little) they are worth and what impact the revelations of their true value will do to their viability to survive. Eyes are now looking nervously at other banks like Washington Mutual and Wachovia and the two remaining large investment banks Goldman Sachs and Morgan Stanley.
British comedians John Bird and John Fortune back in August 2007 explained how subprime mortgage crisis came about. I have shown this before but it remains one of the clearest explanations.
Fannie Mae and Freddie Mac got hammered because they were the ultimate purchaser, the backstop if you will, of these mortgage-based securities. By buying them from the investment banks, they pumped money back into the mortgage system, enabling further cycles of dubious homes sales. As a result, these two giants ended up holding trillions of dollars of such worthless assets. They were able to buy these securities because they were easily able to borrow money since, although they were private companies, their incorporation charter gave them a quasi-government status, encouraging investors (especially foreign governments like China and oil-rich states with a lot of money to invest) to loan them money, since it was widely believed that the US government would not let these two institutions collapse. This is what the government did last weekend, essentially nationalizing those companies.
The US government desperately needs these foreign governments to invest in the US because that is the chief way they finance the deficits caused by the tax cuts for the rich and the two wars that are currently being fought. So essentially the US cannot do anything that will discourage future investments by these foreign governments. By taking over Fannie Mae and Freddie Mac, the US government is reassuring the foreign governments that they will get their money back since now the US government is directly responsible for paying back the money.
Meanwhile AIG, which had been eager to 'insure' these securities because of their safety (since home prices always go up, don't they?) had to pay out huge amounts of money when the value of the securities collapsed and was on the verge of financial collapse itself. Although their regular insurance business was sound, the action of its little known CDS division was threatening to bring down the entire company. Since many other large institutions (mutual funds, pensions funds etc.) had large investments in AIG, the collapse of AIG was believed to be potentially disastrous over the entire financial sector. So on Wednesday the government essentially nationalized that too.
But as a result, the taxpayers are now suddenly the owners of these three shaky companies with all their dubious assets. Furthermore, the trillions of dollars in debt owned by these companies now become part of the national debt, effectively doubling it. So while these companies made a lot of money for their executives and investors while the going was good, the taxpayers are now stuck with the bill for their recklessness. This is what capitalism has become, privatizing profits while socializing losses. Capitalism in the US has become socialism for the rich.
John Bird and John Fortune discuss how the belief in markets always going up usually end up as government bailouts.
How will the US government (i.e., us) pay back all the money it now suddenly owes as a result of the unregulated greed that ran rampant over the last decade and that enriched a few at the expense of the many? How much bad debt still lurks in the financial sector and how many firms are still hiding the true extent of their liabilities?
I would hope that all those people who were gung-ho for privatizing social security, like George Bush and John McCain, would now realize what a bad idea that is.
The next president is going to have a lot to deal with.
POST SCRIPT: Explaining the current crisis
On April 3, 2008, Michael Greenberger, in an interview with Terry Gross on Fresh Air provided a very lucid explanation of what was roiling the financial markets.
He paid a return visit two days ago (September 17, 2008) to explain what was behind the most recent developments.
Both interviews are well worth listening to.
September 18, 2008
The Palin choice-12: The strange appeal of Sarah Palin
(For previous posts in this series, see here.)
I want to end this longer-than-anticipated series of posts by returning to the original question of "Why?" but shifting it from why was she chosen to why so many people are enamored of her, given her obvious shortcomings.
There is no question that the selection of Sarah Palin has given a big boost to the McCain campaign. It has definitely enthused the party faithful. Whether this lasts and translates into changing actual voter preferences among the so-called independent or 'swing' voters is something that has to be awaited. There are already signs that her star is beginning to fade.
Conservative (and former Republican) John Cole explains his concern with what the Palin choice says about the direction in which the Republican Party is heading.
The depressing thing is that this has been the GOP platform for years now. Expertise is overrated. Gut instincts, being "tough," and being "decisive," and not "blinking" are all far more important than actually knowing things.
. . .
Look at the thorough disdain for science the GOP has displayed for the past few years. Amorphous morals trump reason and science, and then those morals are conveniently discarded or altered when it becomes inconvenient for the GOP (see: family values, David Vitter).
The funny thing about all this is that the new savior of the GOP, Sarah Palin, is the one who is finally waking everyone up to what the Republican party really is all about. They are not serious about foreign policy . . . They are not serious (or honest) about scientific policy. They are not serious about economic policy (other than cutting taxes). They are not serious about an energy policy (just drill, baby, drill).
They just are not serious about, well, anything.
And Sarah Palin is the distilled essence of wingnut. She has it all. She is dishonest. She is a religious nut. She is incurious. She is anti-science. She is inexperienced. She abuses her authority. She hides behind executive privilege. She is a big spender. She works from the gut and places a greater value on instinct than knowledge.
This disdain for knowledge and expertise is a troubling phenomenon. While the leaders of the country need not be scholars or policy wonks or experts in economic or military matters, that is a far cry from the absurd notion that common sense and gut instincts are sufficient for making major decisions. As another conservative Dan Drezner says: "Question to other GOP policy wonks: is it possible to support a candidate that campaigns on the notion that expertise is simply irrelevant?"
Even David Brooks, a reliable purveyor of conservative conventional wisdom, is having qualms about this tendency to view knowledge and expertise as somehow suspect and to praise ignorance as being a sign of being a 'real' person. .
This argument also is over what qualities the country needs in a leader and what are the ultimate sources of wisdom.
There was a time when conservatives did not argue about this. Conservatism was once a frankly elitist movement. Conservatives stood against radical egalitarianism and the destruction of rigorous standards. They stood up for classical education, hard-earned knowledge, experience and prudence. Wisdom was acquired through immersion in the best that has been thought and said.
People who call themselves conservatives in America have long ago abandoned those standards. So what exactly is Palin's appeal to the present-day conservative faithful? It cannot be merely her views on the hot-button culture war issues. While she can glibly recite the standard right wing talking points on taxes and abortion and guns, so could any of the other people who competed against McCain in the primaries or whose names were floated as vice presidential possibilities. Clearly it is something about her as a person that seems to excite the imagination of the party faithful.
Cole points out a telling portion of her interview with Charles Gibson that I too found troubling, when he questioned her about the moment when she was asked to be the vice presidential nomineee.
Charles Gibson, the interviewer, asked her if she didn't hesitate and question whether she was experienced enough.
"I didn't hesitate, no," she said.
He asked if that didn't that take some hubris.
"I answered him yes," Ms. Palin said, "because I have the confidence in that readiness and knowing that you can't blink, you have to be wired in a way of being so committed to the mission, the mission that we're on, reform of this country and victory in the war, you can't blink. So I didn't blink then even when asked to run as his running mate."
This is, of course, absolute drivel. Surely any reasonable person would want to think it over before taking on such a major responsibility as the vice presidency, especially since there is no indication that she was required to make an immediate decision. At the very least her responsibility to the people who elected her governor should have given her pause. Why is she spouting nonsense about 'not blinking' and being 'committed to the mission' when the question posed to her did not require either of those things?
Like Cole, I was disturbed by this pride in the lack of thoughtful decision-making in a situation that did not require urgency. Palin takes pride in making instantaneous decisions, without weighing the pros and cons. It seems like steely-eyed, clenched-jaw determination and an unquestioning and overweening confidence in the rightness of ones instincts are what passes for leadership these days. She is proud of being 'wired' in this way so she never has to 'blink' when faced with a decision because her gut tells her exactly what to do. She presumably reacts the same way when asked whether she wants tea or coffee.
Cole then put his finger on the reason that Palin appeals to the faithful: "She is supremely self-confident to the point of not recognizing how ill-equipped she is to lead the country . . . [She is] George Bush in a dress." (my italics)
Cole remains cynical about the ability of his fellow conservatives to see through the phoniness. He thinks that they have been cheerleaders for George Bush for so long that they are unable to break from the addiction.
The Palin interview should be a gut-check for Republicans and conservatives who think the last eight years has been a perversion of conservative principles. I am betting most of them will not even put down their pom-poms, though.
POST SCRIPT: New Rules
Bil Maher is back with his New Rules where he comments on some of the issues raised in this series of posts.
September 17, 2008
The Palin choice-11: McCain and Obama on taxes
(For previous posts in this series, see here.)
I have looked previously at where Sarah Palin stands on the issues. In this post I will examine McCain's positions. This is not easy to do since McCain has shown himself remarkably willing to change positions for the sake of expediency. Yesterday's Post Script of the Daily Show bio of McCain shows this.
McCain keeps saying that he is a 'maverick' but what that seems to mean to him is that he takes policy positions that serve the purpose of polishing his own image. If that requires him to criticize his own party when his own needs demand it, he does not hesitate to do so, but he rarely follows that up with any actions that actually goes against his party. Steve Benen has been keeping a running list of McCain's flip-flops. It is getting pretty long.
It is important to emphasize that changing one's position on an issue is not by itself bad. If the facts or circumstances change or one is presented with compelling new arguments or evidence, then one should review and revise one's stand. It is the reasons for the change that are important. With McCain, he often does not even bother to give any reason.
Although the campaign has become, as usual, focused on trivialities (lipsticks, pigs, and fish) and culture wars, the really important issues are those of war and peace and the distribution of income, wealth, and services in the country. The one-party/two-factions system that exists in the US requires both candidates to serve the interests of Wall Street and the wealthy. Both Obama and McCain have obliged. It is only at the margins that they differ.
Candidates who strongly favor the very rich (like McCain) prefer to talk in terms of 'averages' (in income or tax cuts), because that can mask huge differences between groups. You can give huge tax cuts to a few rich people and very small cuts to a large number of poor people and still claim that people are receiving a good 'average' tax cut. But what needs to be examined is how it breaks down in narrow income slices.
The Washington Post recently had the kind of political analysis that is worth reading. It analyzed how Obama's and McCain's tax plans would affect people in specific income groups. Such detailed breakdowns are far more useful than broad generalizations.
We see that McCain's policies are heavily skewed to benefit the very wealthy. McCain emphasizes how his policies would give everyone a tax cut and the average benefits would be larger than Obama's plan. That is true, but the graphic clearly shows that lower income groups get tiny tax cuts while the very rich get enormous benefits. Obama gives bigger tax cuts to the lower income groups (those earning below about $100,000), smaller tax cuts to those earning between $100,000 and $250,000, while the very rich have to pay more taxes.
The [Tax Policy Center] took a look at the various tax proposals put forth by the two candidates and estimated that Obama's plan would lead to a boost in aftertax income for all but the highest earners, while taking a smaller bite out of government tax revenues than would McCain's plans.
. . .
Under McCain's proposals, by contrast—including an extension of the Bush tax cuts for all taxpayers, a corporate tax cut, and a larger reduction in estate taxes than Obama would support—far more of the benefits would go to the top. If his plans went into effect in 2009, married couples in the bottom fifth of the population would see aftertax income go up just 0.2%, while those in the next quintile would see a 0.7% hike. But those in the top quintile would see a bump up in aftertax income of 2.7%.
There is no question that the Bush administration has favored fiscal and monetary policies that have favored the already well-to-do, while gutting the protections that poorer people depend upon. The Wall Street Journal points out that among wage earners, only professionals like doctors and lawyers made more in 2007 than in 2000. McCain's tax policies will enable the very rich to keep even more of their income, accelerating the inequalities that has been going on for some time.
Although Obama's tax plans are a less generous to the very wealthy than McCain's, for me, the biggest factor in favor of Obama is that he is unlikely to recklessly start another war or create international tensions, while McCain is, if possible, even more reckless than Bush.
POST SCRIPT: US-Pakistan clashes?
Lost in the coverage about the presidential campaign and the chaos in the financial markets has been this troubling story about tension between US and Pakistani forces on the border between Afghanistan and Pakistan following an incursion into Pakistan by US forces on September 3 that led to the deaths of some villagers.
The BBC reports that a second attempted incursion was stopped because of Pakistan paramilitary troops firing on US forces:
Pakistan's army spokesman has made clear that its forces have been ordered to open fire if US troops launch another raid across the Afghan border.
. . .
Locals said seven US helicopter gunships and two troop-carrying Chinook helicopters landed in the Afghan province of Paktika near the Zohba mountain range.
US troops from the Chinooks then tried to cross the border. As they did so, Pakistani paramilitary soldiers at a checkpoint opened fire into the air and the US troops decided not to continue forward, local Pakistani officials say.
September 16, 2008
The Palin choice-10: The real McCain
(For previous posts in this series, see here.)
One of McCain's successes is the way he has managed to cultivate and flatter the press so that they have been very gentle to him and taken his self-portraits of being an honorable, independent-minded maverick at face value, instead of portraying him more accurately as a self-aggrandizing panderer who shamelessly exploits his Vietnam experiences to hide his right-wing agenda and his reckless personality.
The real McCain is a much darker figure. To start to get a better idea of who he really is, watch this 'McCain in three minutes' video, produced by ABC News's Good Morning America.
The darker side of McCain has always been apparent although the media chose to turn a blind eye to it. The Keating Five savings-and-loan influence peddling scandal (which was not in the above video) is one such example of McCain's corrupt politics, quite at odds with his claim to be an opponent of lobbyists and corruption. The Phoenix New Times also details the shady history of the origins of his wife's family's fortune and his participation and benefiting from it.
Meanwhile, a London newspaper lays out the story of how McCain callously abandoned his first wife after she had been disfigured in a car accident, to marry the current one.
In 1992, Robin Silver and Bob Witzeman went to meet with McCain at his office in Phoenix to discuss Mt. Graham. Silver and Witzeman are both physicians. Witzeman is now retired and Silver works in the emergency room at Phoenix hospital. The doctors say that at the mention of the words Mount Graham McCain erupted into a violent fit. "He slammed his fists on his desk, scattering papers across the room", Silver tells us. "He jumped up and down, screaming obscenities at us for at least 10 minutes. He shook his fists as if he was going to slug us. It was as violent as almost any domestic abuse altercation."
Witzeman left the meeting stunned: "I'm a lifelong environmentalist, but what really scares me about McCain is not his environmental policies, which are horrid, but his violent, irrational temper. I think McCain is so unbalanced that if Vladimir Putin told him something he didn't like he'd lose it, start beating his chest about having his finger on the nuclear trigger. Who knows where it would stop. To my mind, McCain's the most likely senator to start a nuclear war."
This trait earned him the nickname 'McNasty' in high school and his casual hurling of obscene and ugly language at his wife and others are well known to those who work with him but largely hidden from the public. McCain also publicly made a vicious joke about Chelsea Clinton when she was still a teenager, a joke that was so mean that many major publications refused to publish it.
All these things reveal him to be a person of highly dubious character. Those supposedly religious people and Biblical literalists who like to claim that a candidate's personal character is the most important thing and who think that plastering the Ten Commandments everywhere and praying in schools is the answer to everything seem to have no problem with these revelations, revealing that their religion is one of convenience.
When confronted with any criticism, McCain and his campaign have pathetically resorted to using his prisoner of war experience to excuse anything, a kind of 'get out of gaffe free' card. Steve Benen lists all the times they have invoked his prison experience as a a shield. What is worse is that they simultaneously claim that McCain is reluctant to talk about it, although campaign and the Republican convention highlights that story at every opportunity.
Rudy Giuliani's shameless invocation of the events of 9/11 for his personal advancement was mocked by Joe Biden who said that his every sentence consisted of a noun, a verb, and 9/11. Replace '9/11' with 'POW' and we have a good description of John McCain's answers to awkward questions and criticisms. This trait has become so blatant that even Maureen Dowd (someone who never fails to portray Republicans as macho and decry Democrats as wimpy) became distracted from her usual pathetic obsessions with the Clintons to comment on it.
So it’s hard to believe that John McCain is now in danger of exceeding his credit limit on the equivalent of an American Express black card. His campaign is cheapening his greatest strength — and making a mockery of his already dubious claim that he’s reticent to talk about his P.O.W. experience — by flashing the P.O.W. card to rebut any criticism, no matter how unrelated. The captivity is already amply displayed in posters and TV advertisements.
John McCain also seems to be showing himself to be increasingly cranky as can be seen from the Time magazine interview. It seems like he is on a short fuse and I wonder how long it will be before his legendary temper and uncontrollable rage explodes in full view of the media.
The story of McCain's lack of awareness of the number of houses he and his wife own (we still don't know the exact answer. Four? Seven? Twelve?), his lack of knowledge of the make of car he drives (a Cadillac CTS), his $500 Italian shoes, and his fancy lifestyle has exposed the absurdity of his campaign trying to insinuate that Barack and Michelle Obama and his wife are 'elitists'.
If all that was not bad enough, John McCain is running a campaign that is so full of distortions and lies that Josh Marshall concludes that McCain is running the sleaziest campaign in modern history and is clearly unfit for the office he is seeking.
POST SCRIPT: The Daily Show on McCain
Here is a biopic of McCain that accurately captures his opportunism.
September 15, 2008
The Palin choice-9: McCain's recklessness
(For previous posts in this series, see here.)
When I first heard that John McCain had selected Sarah Palin, my initial hypothesis was that this was a desperation move, a sign that the campaign's internal analyses were suggesting that the seemingly close national polls were misleading and they were going to lose unless they did something to break out of the rut. It seems like that initial impression was right.
The Palin choice is being portrayed by media analysts as a sign that the McCain campaign felt they needed to solidify the campaign's right wing, evangelical base. Perhaps that is true. It is undoubtedly the case that that group seems very excited by the choice.
But the reports about last minute decisions suggest that there is very little coherence to their campaign strategy. After all, all the indications are that right up till the end, McCain had really wanted Joe Lieberman or Tom Ridge but had been warned away from them, saying that this same base would revolt.
But Lieberman and Ridge are not very similar to Palin on social issues. So to lurch abruptly from them to Palin suggests that such policies don't matter at all to McCain, not if he risks losing because of them. It looks like McCain would risk putting the country in untested hands simply to salvage his chances of winning, which makes a mockery of his boast that he "puts country first".
As Kyle Moore says:
At the first sign of trouble, McCain abandoned his game plan and went instead with a high risk maneuver that thus far seems to have some pay off, but is coming with a high cost.
What does that say about how he’ll behave in the realm of foreign policy? Will he abandon any semblance of a safe and tested plan in favor of a high risk move that will put us and our families in danger? What about terrorism? In a McCain administration, I think that this indicates that instead of pursuing a smart and tough anti-terrorism policy, he would engage in a reckless and reactionary response that would only make us less safe and likely put us in another war.
We can discuss the lack of qualifications for Sarah Palin, and there are plenty, but the biggest problem is that it indicates that John McCain’s temperament and judgment is far below the standards necessary to serve in the Oval Office.
Steve Benen adds:
So, what are we left with here? John McCain met Sarah Palin in person once, for 15 minutes. Months later, he then talked to her on the phone for five minutes. Four days later, without a thorough background check, he invited her to be vice presidential nominee of the Republican Party.
Sensible people of sound mind and character simply don't do things like this. Leaders don't do things like this. Those fundamentally unsuited for the presidency do things like this.
Even David Frum, a conservative and former speechwriter for George W. Bush says over at National Review Online:
The longer I think about it, the less well this selection sits with me. And I increasingly doubt that it will prove good politics. The Palin choice looks cynical. The wires are showing.
. . .
I'd guess that John McCain does not have a much better sense of who she is, what she believes, and the extent of her abilities than my enthusiastic friends over at the Corner. It's a wild gamble, undertaken by our oldest ever first-time candidate for president in hopes of changing the board of this election campaign. Maybe it will work. But maybe (and at least as likely) it will reinforce a theme that I'd be pounding home if I were the Obama campaign: that it's John McCain for all his white hair who represents the risky choice, while it is Barack Obama who offers cautious, steady, predictable governance.
Here's I fear the worst harm that may be done by this selection. The McCain campaign's slogan is "country first." It's a good slogan, and it aptly describes John McCain, one of the most self-sacrificing, gallant, and honorable men ever to seek the presidency.
But question: If it were your decision, and you were putting your country first, would you put an untested small-town mayor a heartbeat away from the presidency?
Other Republican party stalwarts like Michael Murphy and Peggy Noonan are equally worried about what this choice says about McCain, as was revealed by their comments to MSNBC's Chuck Todd when they thought their microphones were off.
(You can read transcripts of the comments here.)
If anything, this entire episode confirms reports that McCain is hot-headed and reckless, a dangerous trait for a president to have. Furthermore, it reveals that these people are very unserious, caring little for policy, and viewing elections as entirely tribal feuds, appealing to the worst of passions, and further trivializing the process.
Now that the lightweight Palin has been picked, the McCain campaign is desperately trying to change the focus of the discussion. Their campaign manager is now saying that this election will not be about issues but about people.
I read that as a signal that we are now going to see a campaign based purely on culture wars (god, family, sex, abortion, race) and the politics of tribal resentments. It worked for the Republicans in 2004 on the issues of gay marriage and the ten commandments.
This time they are trying to sell the idea that McCain and Palin represent 'real people' who will bring change. This Tom Toles cartoon points out the hypocrisy of McCain campaigning as the agent of change. But will it work?
POST SCRIPT: Video of Palin pork
The hypocrisy of Palin/McCain on the earmarks issue:
And cartoonist Mike Luckovich gives his take.
September 12, 2008
The Palin choice-8: The vetting process
(For previous posts in this series, see here.)
John McCain's campaign people surely must have been aware of the dangers of suddenly springing an unknown like Sarah Palin onto the national stage. If you are determined to do so, the way to minimize the chance of unpleasant surprises is to have a very long, exhaustive, and fairly open vetting process. But the trade-off for doing so is that you then cannot keep the process secret because too many people are involved and being questioned.
For reasons that are not clear to me, it seems like McCain wanted both a relative unknown and also for the announcement to be a big surprise, and these two things simply don't go well together. He apparently wanted to "shake up the ticket". The fact that Palin's name was kept to just a handful of close advisors suggests that the vetting process was cursory and hurried. As The Politico reports:
They met for the first time last February at a National Governors Association meeting in Washington. Then, they spoke again — by phone — on Sunday while she was at the Alaska state fair and he was at home in Arizona. . . . The fact that McCain only spoke with Palin about the vice presidency for the first time on Sunday, and that he was seriously considering Lieberman until days ago, suggests just how hectic and improvisational his process was.
The New York Times fleshes out what went on behind the scenes:
Mr. McCain was getting advice that if he did not do something to shake up the race, his campaign would be stuck on a potentially losing trajectory.
With time running out — and as Mr. McCain discarded two safer choices, Gov. Tim Pawlenty of Minnesota and former Gov. Mitt Romney of Massachusetts, as too predictable — he turned to Ms. Palin. He had his first face-to-face interview with her on Thursday and offered her the job moments later. Advisers to Mr. Pawlenty and another of the finalists on Mr. McCain's list described an intensive vetting process for those candidates that lasted one to two months.
"They didn't seriously consider her until four or five days from the time she was picked, before she was asked, maybe the Thursday or Friday before," said a Republican close to the campaign. "This was really kind of rushed at the end, because John didn't get what he wanted. He wanted to do Joe or Ridge.
It appears that they are doing the real vetting after they made the selection.
Aides to Mr. McCain said they had a team on the ground in Alaska now to look more thoroughly into Ms. Palin's background. A Republican with ties to the campaign said the team assigned to vet Ms. Palin in Alaska had not arrived there until Thursday, a day before Mr. McCain stunned the political world with his vice-presidential choice. The campaign was still calling Republican operatives as late as Sunday night asking them to go to Alaska to deal with the unexpected candidacy of Ms. Palin.
The shallow nature of the vetting process is becoming increasingly clear:
Representative Gail Phillips, a Republican and former speaker of the State House, said the widespread surprise in Alaska when Ms. Palin was named to the ticket made her wonder how intensively the McCain campaign had vetted her.
"I started calling around and asking, and I have not been able to find one person that was called," Ms. Phillips said. "I called 30 to 40 people, political leaders, business leaders, community leaders. Not one of them had heard. Alaska is a very small community, we know people all over, but I haven't found anybody who was asked anything."
The current mayor of Wasilla, Dianne M. Keller, said she had not heard of any efforts to look into Ms. Palin's background. And Randy Ruedrich, the state Republican Party chairman, said he knew nothing of any vetting that had been conducted.
State Senator Hollis French, a Democrat who is directing the ethics investigation, said that no one asked him about the allegations. "I heard not a word, not a single contact," he said.
A number of Republicans said the McCain campaign had to some degree tied its hands in its effort to keep the selection process so secret.
We don't know much yet about Palin and what we are learning is clearly not what the campaign intended as a first impression. But this decision and the process by which it was arrived tell us a lot about McCain and his campaign, and most of it is not good.
It has become a cliché to say that the first and most important decision that a president of president-to-be makes is the choice of the vice-president because he is putting the leadership of the country potentially in the hands of that person. Furthermore, the decision is his and his alone. It does not require consent of the US Senate and voters are not required to approve it during the primaries. So how that decision is made says something about how the candidate deliberates.
Perhaps the most pathetic attempts to put her in a positive light have been the statements that Palin has foreign policy experience because Alaska is so close to Russia! For sheer inanity, that probably beats the other statement by McCain that "[Palin] knows more about energy than probably anyone else in the United States of America." Really?
The way the Palin choice was made, irrespective of how well it turns out for McCain, indicates a certain recklessness that does not reflect well on his temperament. Cartoonist Mike Luckovich speculates on what the choice of Palin reveals about how McCain will select his cabinet.
It has become increasingly clear that the McCain camp is banking on the American public being stupid.
POST SCRIPT: How Palin was really selected (language advisory)
September 11, 2008
The Palin choice-7: Her background and positions on issues
(For previous posts in this series, see here.)
What do we really know about Sarah Palin, apart from her family life? Here is a synopsis of some of her views.
- Palin doesn't believe global warming is man-made.
- Palin is the candidate of a powerful far right-wing cabal; her nomination seals their support for the little-wanted McCain.
- Palin staunchly opposes abortion, even in cases of rape and incest.
- Palin supports failed abstinence-only sex education programs.
- Palin is under investigation for allegedly abusing her power as governor to help her sister in a messy divorce.
- Palin has big money ties to Alaska Sen. Ted Stevens, who has been indicted for political corruption.
- During her time as mayor, Palin drove the town of Wasilla deep into debt.
The Progressive Review has more on Palin's views.
Palin also supports, against all scientific advice, allowing the public to kill wolves by shooting them from planes.
She also believes that we should teach creationism in schools, in addition to evolution.
Since Obama's pastor became a campaign issue, it is instructive to see what her pastors' views are and that can be seen here. She was baptized in the Assembly of God church in Wasilla that is Pentecostal and whose parishioners believes in speaking in tongues and whipping themselves into incoherent frenzies.
Although she speaks as someone who looks out for taxpayers, she got the state to pay her thousand of dollars in per diems for staying in her own home. In fact, Palin seems quite comfortable stating things that are flat-out contradicted by facts.
Her record as Mayor of Wasilla and her attempt to ban books from the public library and fire the librarian when she refused to go along can be seen here.
Her husband and her own past flirtations with the Alaskan Independence Party (whose founder has said "The fires of hell are frozen glaciers compared to my hatred for the American government" and "I won't be buried under their damn flag,") can be seen here and here.
Palin and her husband also had some failed business ventures.
Given all these negatives, Glenn Greenwald describes how Palin's supporters are trying to shut down criticism of her.
Palin herself has been shameless in her repeated lies about being a stalwart opponent of federal pork earmarks, especially the infamous 'bridge to nowhere', using the same words each time. She first supported it, then opposed it only after Congress cut off funds to build it, and yet still kept the money and used it for other projects.
In actual fact, under her governorship Alaska requested the highest per capita earmarks of any state. She is in fact just the kind of person that John McCain says he detests and thinks is ruining the country.
Steve Benen summarizes why Palin is wrong for the job and what this choice says about McCain.
What should be clear to anyone paying attention is that the McCain/Palin ticket is cynically hoping that people will overlook the facts and vote on the basis of bogus slogans and non-issues.
POST SCRIPT: Leave Sarah Palin alone!
Since Sarah Palin's policies and history cannot bear close scrutiny, the McCain campaign has gone into full victim mode, whining about how mean people are to her, and trying to pressure the media to treat her gently. A famous defender of another beleaguered woman has resurfaced to rescue her. (language advisory)
September 10, 2008
The Palin choice-6: McCain and women
(For previous posts in this series, see here.)
The reason that is bandied about the most for the Palin choice is that it was aimed at attracting women voters to the Republican cause, especially those Democrats who are allegedly so furious that Hillary Clinton did not get their party's nomination that they were looking for reasons to vote for McCain.
The good thing about McCain's choice of a woman as a running mate is that it reveals that he does not harbor any absurd beliefs that women are not capable of running the country. Thanks to his choice, whichever ticket wins in November will result in either a black president or a female vice-president and this, other things being equal, is a good thing.
On the other hand, the fact that Palin was a hometown beauty queen (Ms. Wasilla, pop: 7,000) and Miss Alaska runner-up (1984) does raise some disturbing questions, though about McCain and not her. There is nothing wrong in being physically attractive and looks and governing abilities are not mutually exclusive.
The problem is that McCain's first wife was a swimsuit model, whom he divorced after she was disfigured in a car accident to marry his present wife Cindy, an extremely wealthy heiress seventeen years younger than him and a Junior Rodeo Queen of Arizona in 1968. The fact that he now picks an attractive woman 28 years younger than him and whom he hardly knew to be his running mate seems to reveal an uncomfortable pattern of McCain as being a man who is more influenced by shallow considerations like looks than is perhaps desirable in someone seeking such a responsible office.
The fact that he has called Palin his 'partner and soul mate' is a little inappropriate for a man with his history. The Jed Report has picked up on some odd behavior by McCain when he first presented her as his running mate that will provide plenty of fodder for body-language aficionados. Watch.
It seems likely that the McCain's advisors became a little concerned about this and have said something to him because McCain has now started to talk about his wife more.
If, as has been widely suggested, McCain specifically wanted a woman to woo over the disaffected supporters of Hillary Clinton, there were other options. As Steve Benen points out:
I'd just add how striking it is that McCain had more capable women to choose from, but picked one who wasn't even a governor when he started his presidential campaign. Senators such as Hutchison, Dole, Snowe, Collins, and Murkowski were skipped over, as were more experienced governors like Lingle and Rell, as were "mavericks" like Todd-Whitman, as were cabinet secretaries like Rice, Spellings, and Chao, as were business leaders like Fiorina and Whitman.
McCain skipped over more capable women for a younger, less experienced woman he barely knows. This is supposed to impress women voters? Seriously?
This all comes back to the question: Why did he pick Palin? Although Obama and Clinton and McCain all occupy the narrow ideological spectrum demanded by the one-party/two-faction state that currently exists in the US, there is no question that Obama and Clinton are far closer to each other in their views than either is to McCain or Palin. Given the difference that exists between Clinton's and Palin's views on issues, thinking that the selection of Palin would appeal to Clinton's supporters is like thinking that Alan Keyes appeals to black voters.
Clinton supporters had already been moving to Obama. I have no idea about how women as a whole will react to what seems to me like blatant pandering by McCain. But a young woman whose views I respect told me some time ago that she was voting for Obama on the issues but really respected McCain as a person of integrity and principle. She stuck to this position despite my presenting arguments and facts that I thought clearly showed McCain to be a phony who was shamelessly using his war experiences to deflect attention from his policies and serious flaws as a candidate. But she is now absolutely livid about the selection of Palin, saying it revealed McCain to be a 'slimy and shallow manipulator'.
Although this is a sample of one and should not be given much weight, early polls seem to indicate that the selection of Palin, while firing up the conservative and religious base, is not having the intended effect. Andrew Sullivan says that the early results are not encouraging for McCain: "From this first snap-shot (and unsettled) impression, Palin has helped McCain among Republicans, left Democrats unfazed, but moved the undecideds against him quite sharply. I totally understand why." Joe Klein seems to find a similar result. But other polls suggest that white women have indeed moved towards McCain.
But events are still fluid and moving fast. We will have to wait until a few weeks have passed and the conventions fade into memories to see what the true situation is.
POST SCRIPT:A little Googling is a dangerous thing
On the day that Barack Obama clinched the number of delegates he needed to win the nomination, John McCain gave a speech that was widely ridiculed for its poor delivery. In addition, they made him stand in front of a green background that gave him a pasty look and the impression of his head being like a lump of dough bobbing around in a bowl of lime Jello. Since green (and blue) screen backgrounds are used in filming to project backdrops, there has been an explosion of video clips online that have taken his speech and changed the backdrop for humorous effect.
I was startled therefore when shortly into his acceptance speech last week, McCain was once again in front of a bright green background for about five minutes, suggesting another goof-up. But when the camera switched to a wide view, I realized that the green was the lawn in front of a mansion.
But why show a mansion as a backdrop? And whose mansion? For a wild moment, I thought that they might have decided to deliberately flaunt McCain's wealth by showing a picture of one of McCain's many homes but quickly dismissed the idea as absurd.
Josh Marshall was also puzzled by this and investigated and discovered that the mansion was that of Walter Reed Middle School in California. His hypothesis is that someone was asked to provide a backdrop of the Walter Reed Medical Center, googled just the name, came up with this image and used it without checking further. That explanation is consistent with the general sloppiness of the campaign.
Many news organizations have asked the McCain organization about the house but they refused to answer questions, reinforcing the impression that this was an embarrassing mistake. The middle school principal has also complained about her school being used for political purposes without her permission. (Josh Marshall has an update.)
September 09, 2008
The Palin choice-5: To close the age and health gap?
(For previous posts in this series, see here.)
Another possibility for the Palin choice is that perhaps she was selected to close the age and health gap between the McCain and Obama tickets.
There is no question that the Obama campaign just oozes energy (despite Joe Biden), while John McCain does not. McCain was born even before Obama's mother was, and it shows. Whenever Obama and McCain are shown together, McCain comes out looking the worse.
Obama projects the kind of youthful vigor that Americans like to see in public figures ever since TV started playing a big role in the 1960 election and kept their presidents constantly in the public eye. John Kennedy is the model for this (he carefully hid his serious health problems from the public) and it is no accident that George W. Bush spends a lot of time being seen hacking away at brush and riding bikes. These are deliberate image creating events, to show people that their leaders are fit and energetic.
These age and health concerns about McCain have so far been flying under the radar and mostly raised by comedians and cartoonists portraying McCain as a cranky old man. No one wants to be accused of ageism and only humorists can get away with raising this touchy subject. The Obama campaign has studiously avoided any direct mention of age, perhaps because it would be in poor taste and also might cause a backlash among the large percentage of voters who are elderly.
But lingering, low-level concerns about this issue undoubtedly exist. Polls have long shown that voters find McCain's advanced age (72) a bigger concern than Obama's ethnicity, and his multiple bouts with melanoma are well known. Reagan having Alzheimer's disease during the latter stages of his presidency have also raised concerns about electing the oldest first-term president ever.
So was Palin picked to compensate for this perceived age and energy deficit?
If so, it might have had the opposite effect. One consequence of the Palin pick is that the issue of age and health of McCain have now moved front and center, as people will undoubtedly start taking into consideration the odds that she will be asked to assume the presidency in the event of McCain becoming incapacitated. People are now consulting actuarial tables to figure out what are the chances that she will have to take over at some point. The age concerns have gone mainstream
Furthermore, being constantly seen next to the very young-looking and vibrant Palin is undoubtedly going to make McCain look really old, like he is her father or even her grandfather. For all these reasons, I had expected McCain to pick someone in their fifties or sixties, old enough to not make McCain look bad by comparison but young enough to appear dynamic. Palin went completely against that expectation.
While choosing a fresh face unknown to the nation does have some advantages, I have written before of the dangers involved in putting a novice onto the national stage. Another problem is that although Palin seems bright and able, she simply hasn't had the time to get up to speed on many issues.
Furthermore, she would not have as yet mastered the skill of seasoned politicians in being able to distinguish between those questions that call for a response that has been carefully scripted to be 'on message' and cater to targeted constituencies, and those which are outside the predictable and for which you have to learn the art of the 'non-response response', where you speak in bland generalities without really addressing the question. They also know how to filibuster, running out the clock by talking about extraneous issues without pausing and allowing the questioner time for follow-ups.
Really good politicians know how to subtly modify both classes of answers so that the answers seem fresh and not robotic. Furthermore, their families need to learn that they should be seen and not heard or when pressed, give similar non-answer answers. To engage with their questioners in a thoughtful way is to be avoided because it runs the risk of committing a 'gaffe'. Even the more seasoned Obama sometimes makes the 'mistake' of trying think a question through rather than giving a formulaic answer. It is a sad reflection on the state of politics that treating voters as intelligent is a bad thing politically.
The media love to focus on gaffes because they make news, are easy to understand and report, and don't require the hard work of analyzing policy positions. As a result, politicians make it a priority to avoid making any verbal missteps, even trivial ones. But even seasoned politicians can occasionally trip up and make the kinds of gaffes that the media will focus on, whether it is trivial or important. It is inevitable that Sarah Palin, simply because of the lack of time to prepare and however much a quick study she might be, will make some.
James Fallows, editor of the Atlantic Monthly, predicts that we are going to see her and the McCain campaign plagued with having to explain away one gaffe after another. One campaign operative even made the extraordinary assertion that she may only give set speeches and never take questions. The McCain campaign, by hiding her away from questions for so long has set the bar so low that even a marginal performance will be seen as effective.
I personally do not think she will make many gaffes because most journalists are drearily predictable, sticking to a very narrow range of questions and policy perspectives, and this makes it easy to prepare responses in advance. Her first interview is with ABC's Charles Gibson, who was identified by Glenn Greenwald back in May as a reliable water-carrier for Republican talking points, which probably explains why he got the interview.
This absurd media obsession with gaffes has arisen because we seem to expect our leaders to be able to immediately spit out answers to any and every question. But even for a president, very, very, few issues require a snap judgment, and those that do are usually fairly trivial. How ridiculous the situation has become can be seen by the fact that no politician can now say in answer to a question, "That is something that I will need to think about, gain more information, and consult with experts before I reach a conclusion", even though that would reveal a deliberate and mature thinker.
But McCain seems to think that making quick decisions is a good thing and takes pride in it, as if it were a competition.
"I make them as quickly as I can, quicker than the other fellow, if I can," Mr. McCain wrote, with his top adviser Mark Salter, in his 2002 book, "Worth the Fighting For." "Often my haste is a mistake, but I live with the consequences without complaint."
This adds further evidence to his reputation for recklessness.
The problem is that if he becomes president, he is not the one who has to live with the consequences of his hasty mistakes. We do.
POST SCRIPT: Fannie Mae and Freddie Mac
Over the weekend, the government took a major step in bailing out these two mortgage giants, the latest development in the continuing mortgage crisis.
Economist Michael Hudson explains what happened and why
The next president is going to inherit a major headache caused by rampant, unchecked greed in the mortgage sector.
September 08, 2008
The Palin choice-4: Shameless double standards
(Although it may look on the surface as if this blog has become obsessed with Sarah Palin, it really is a chance for me to express some thoughts about politics in general, using her story as a hook. So I hope those who are sick of hearing about Palin will bear with me. For previous posts in this series, see here.)
By now, there cannot be a single person in the country who is not aware of the intimate details of the Palin family. We now know about Palin's unwed daughter's pregnancy, that this news was released by the McCain campaign to counter the rumor that this same daughter is the real mother of Palin's youngest child who was born in April with Down's syndrome, her husband's DUI conviction a long time ago, the messiness of her sister's divorce and their involvement with it, and other problems with the law. It has become a tabloid-style soap opera, putting things that should be private into the full glare of the national media spotlight, with promises of more lurid details to come.
It is important to keep in mind that none of these things reflect on Palin's ability to govern, though how she handled them in the context of her official duties is relevant and will reveal a lot about her. Of these, the 'troopergate' episode is the most troubling.
Even if the suspicion that Palin pretended to be the mother of her daughter's child is true, it is not by itself a big negative, even though it means she lied to the public. Devoted parents are willing to do extraordinary things to protect their children from harm and it will not be the first time that such subterfuges have occurred and will not be the last. If true and it was at her daughter's request, it would suggest that Palin was willing to risk her own career to protect her daughter from public disapprobation, surely an act that one can understand and empathize with.
This kind of thing was perhaps inevitable with the choice of a relative newcomer like Sarah Palin for such a high profile role, although the sheer speed and number and scale of the revelations has taken me by surprise.
You can get away with nominating a newcomer if you or anyone you trust and respect happen to have had a long and personal relationship with them and can vouch strongly for them. But there is no indication that McCain knew her well at all since he met her for just the second time the day before he formally announced his pick. There is no indication that any of his staff knows her any better, and since they apparently limited the selection process to a very small group of people, the chances of getting input from people with deep personal knowledge of Palin became remote.
What amazes me is the claim of Palin's supporters that all revelations about her is positive news and a cause for celebration because it shows 'family values' and her strong opposition to abortion. As some conservatives have pointed out, it is not a good thing for high schoolers to have children and this should not be celebrated the way that the McCain/Palin camp is doing.
As Lawrence Auster says disgustedly, conservatism for some has become a caricature, a one-note song about abortion that drowns out everything else:
All that the evangelical and Catholic conservatives care about is opposition to abortion. All that's required for them to be happy is an illegitimate or defective pregnancy, followed by birth. They have no vision of social order, no vision of an overarching good, but have reduced all goods to the good of avoiding abortion. Which means that they embrace every kind of disorder, so long as rejection of abortion is thrown into the mix.
Jon Stewart finds example after example of this kind of unprincipled somersaulting.
This is not a new phenomenon. The Republicans are demanding that McCain's Vietnam experience be treated like a religious talisman that must be venerated by all. But recall that John Kerry's purple hearts received in Vietnam were attacked in 2004 and trivialized and ridiculed by Republican convention goers wearing band-aids with purple hearts drawn on them.
Similarly, Glenn Greenwald in his usual thorough way has documented how John Kerry was portrayed by right-wing media commentators as a gigolo because he married a rich woman, the heir to a ketchup fortune. And yet, this year those same people are not calling McCain a gigolo for marrying a rich heiress to a beer fortune, whose money and family connections he has used to advance his career.
I have been impressed by the ability of some of the Republican party and its conservative Christian base to pivot so quickly, suddenly celebrating things like teenage parenthood that they would have normally been swift to condemn as incontrovertible evidence of the increasing sinfulness of the nation as a result of taking prayer out of the school and teaching evolution (see this cartoon). Now because the person whom they like has these things going on in her family, we are hearing paeans for them as being 'real people', that such things show that the Palins represent 'heartland values'.
I suspect that had McCain nominated someone who later was revealed to be a serial killer but who said he loved Jesus, opposed abortion, and favored policies that favored the wealthy, these same people would suddenly say that 'real Americans' have prison records and the ability to kill without compunction is just the kind of toughness we need in a national leader in order to deal with terrorists. They would also decry as wimps the Democratic candidates because neither had the gumption to shoot a man, just to watch him die.
More problematic is whether the McCain campaign knew all these things about Palin in advance. If they didn't, that reflects badly on McCain and his campaign for being so sloppy in their vetting process, and on Palin's judgment in not being aware that she must come clean because these things don't stay hidden for long.
If McCain did know, then it becomes mystifying as to why they chose her despite these problems and why they did not reveal them right at the outset instead of being pressured to do so by rumors. Again, this is Palin's private life but in such high profile campaigns the private inevitably becomes public and the way to deal with it is to reveal things voluntarily without being seen as forced to do so.
Although the McCain campaign said that Mr. McCain had known about Bristol Palin’s pregnancy before he asked her mother to join him on the ticket and that he did not consider it disqualifying, top aides were vague on Monday about how and when he had learned of the pregnancy, and from whom.
Another conservative Byron York of the National Review adds this perspective:
I don't usually engage in these scenarios, but I'll do it here. If the Obamas had a 17 year-old daughter who was unmarried and pregnant by a tough-talking black kid, my guess is if that they all appeared onstage at a Democratic convention and the delegates were cheering wildly, a number of conservatives might be discussing the issue of dysfunctional black families.
When it comes to the kind of 'families practicing traditional values' normally loved and praised by evangelical Christians, the best example in the race is the Obama family. The only thing they are missing from being a Normal Rockwell painting is having a dog. The Obama children have been promised the latter after the election, whatever the result.
POST SCRIPT: Folsom Prison Blues
For those who might be a little puzzled by my allusion above to shooting a man just to watch him die, it was an excuse to give you the source of that famous line. You can never have too much of Johnny Cash.
September 05, 2008
The Palin choice-3: The danger of picking an unknown
(For previous posts in this series, see here.)
One factor that the McCain camp may have used in selecting Palin may have been the sense that she was a fresh face that would generate interest in a way that a more familiar figure would not. The announcement of Palin certainly did that. It immediately shifted the discussion on Friday away from the hugely successful Democratic convention and Obama's excellent speech on Thursday to the topic of Palin. If that was a tactical goal of the McCain campaign, it succeeded.
But you live by the headline, you die by the headline, and the Palin announcement was itself almost immediately replaced by coverage of hurricane Gustav (hurricanes provide great visuals and human drama and will always trump political maneuvering) and the latter completely dominated news coverage over the Labor Day weekend. On my travels during those three days, whenever I briefly turned on the TV for news, they were having all hurricane all the time and no Palin. She did not even appear on the Sunday talk shows.
While fresh faces undoubtedly generate excitement, it is always dangerous to introduce an unknown figure into a major national campaign at such a late stage. The strong possibility exists that it will be followed by a string of embarrassing revelations about the person and family members, as has been the case here. This is not because she or her family is bad but because they are human.
All of us who have reached middle age, lived full lives, and have families have had things happen in the past that we might not think are big deals because we have lived through them, but if suddenly revealed to the world might prove embarrassing and have to be explained away. For almost all of us, what saves us is that nobody is interested in hearing about our past lives and no one is interested in finding out about them either.
But in the case of Palin, she is so new to the national scene that hordes of media are going to examine every tiny aspect of her past life to get a better idea of who she is. And they are going to find out things that she herself might have forgotten or wish would remain unknown. Palin and her family are going to be put under the microscope and I feel sorry for them because all kinds of information will come out now about them that will have to be explained away.
There will be well-meaning people who have known her in the past who will want to get their few moments of fame by recounting anecdotes about her, not realizing that these can be damaging. There may be people who dislike her for some reason or are jealous and have harbored grievances over things she did long ago, and will now relish the chance to get their revenge by revealing or even making stuff up. There will be those who will use her new high visibility to advance their own cause, like the Alaskan Independence Party (some of whose members want to put secession from the union to a vote) and to which Palin's husband once belonged and which she seems to have sympathies for.
Even if these stories turn out be false or malicious or exaggerated, fending them off is going to consume the energy of the McCain campaign. As these things come to light and have to be explained away, it will divert the campaign from its message.
The only way to avoid such embarrassments is to nominate an unmarried, childless, orphan who was an only child and preferably one whose hometown was obliterated by some natural disaster, taking with it almost everyone who knew the candidate in their formative years. The nominee should also preferably have in their adult years been a Trappist monk with its associated isolation and strong emphasis on being silent.
The advantage of having been in public life for a long time (like Joe Biden) is that although nobody gets really excited by the choice, almost all of your dirty linen has already been aired and you have survived, and people are likely to think that there is nothing new worth digging for in your distant past. Only deliberate leaks of new information by people seeking to scuttle your candidacy are likely to be damaging. If McCain had picked any of the well-known candidates in public life, there would have been far fewer problems.
For example, Rudy Giuliani has all kinds of things in his past like his extramarital affairs, his association with the corrupt Bernie Kerik, and even dressing in women's clothing. If he had been unknown and picked as the running mate and these things had then been revealed, he would likely have had to quit. But because these things were already well known before he ran for president, they would not have the same impact if he had been chosen as the running mate. His campaign for the presidency imploded because he was simply a terrible candidate.
By contrast, when Geraldine Ferraro was picked as Walter Mondale's running mate in 1984, newly revealed allegations about her husband's shady business dealings suddenly came to light and dogged the campaign. The same thing happened when somebody from the past revealed Thomas Eagleton's hitherto unknown shock treatment for depression after he had been selected as George McGovern's running mate in 1972.
So unless they commit new transgressions (like Larry Craig or John Edwards or Mark Foley), long-time public figures are a safe choice. But with Palin, everything about her and her family's life will be new. I hope she and her family is braced for the kind of close scrutiny that none of us would enjoy.
Next: How well was she vetted before being nominated?
POST SCRIPT: An odd speech
Though the first draft of Sarah Palin's speech was written by others even before she was selected and had to be rapidly modified because it was "too masculine" (whatever that means), it was very well-delivered. She is clearly comfortable in the spotlight, articulate, and knows how to engage her audience. She reads from a teleprompter much better than John McCain, whose speech on Thursday was more stiff and awkward.
I was, however, startled by the content of Palin's speech and its relentlessly harsh, mocking, smug, sarcastic, and ridiculing tone and the blatant falsehoods it contained which, although the crowd seemed to love it, has the danger of coming back to haunt her. Since she immediately followed an equally long and harsh speech by Rudy Giuliani, the entire 75 minutes that began at 10:00 pm seemed to be relentless Obama bashing at a largely schoolyard-taunt level, and made her seem like some kind of pit-bull, although she clearly relishes creating a tough image of herself.
The demeaning of the work of community organizers by the evangelical governor of Alaska was curious in a country where that kind of local civic activity is valued as good citizenship. As some have been quick to point out, it was after all Pontius Pilate who was a governor and Jesus who was a community organizer.
I was chiefly puzzled by two things: There was no real introduction to tell us about her (after Giuliani ended his speech, he simply walked off and she simply walked on) and her speech seemed to be aimed at the rabid partisans in the convention hall who were already her ardent supporters, not at winning over those undecideds who might have tuned in to the speech looking for her to give them confidence in her ability to serve as president if needed. As one commentator said: "Whoever the speech writer was, it became apparent rather quickly they were going for zingers, barbs, and clever one-liners, and not really thinking much about how the non-bloodthirsty segment of the viewing audience would feel about it."
I now know what happened. Giuliani's speech was to have been followed by another speech (presumably a warm introduction of Palin by someone who knows her well) and then a four-minute soft-focus biographical video telling her life story and emphasizing her achievements and qualifications. That positive and uplifting tone would have at least provided a welcome change after Giuliani and softened her image.
But what happened was that the media-loving Giuliani so relished his time in the spotlight that he added ad-libbed ridicule-laden applause lines to his vetted speech, causing him to run well over his allotted time, resulting in the introduction and biopic getting pulled at the last minute. Despite that, Palin still ended 15 minutes over the scheduled end.
Lesson: Never put an egomaniac before your main speaker in a tightly scheduled program.
September 04, 2008
The Palin choice-2: The experience question
(For previous posts in this series, see here.)
While the choice of Sarah Palin as John McCain's running mate is a poor one, I don't think the problem is Palin the person or her knowledge and experience. For all I know about her, Palin may well make an excellent vice-president (and president, if necessary).
I have never understood why people and the media are so obsessed with the experience argument. If there is any job for which relevant experience is unobtainable, it is the presidency of a country simply because the job is unique. What you are called upon to do in that job is unlike any other job you will ever have. The only kind of experience that is directly relevant, but which you can never get, is first being the president of some other country.
Furthermore, as president, you don't actually run the government or even the White House in any practical sense. Other people do all that and you have at your beck and call all the people you want for advice and actual implementation. The concrete skills that you need are not for being president but for running for the office. That requires the ability to raise a lot of money, run a good campaign, deal with the media, and speak well in public. Having prior experience in those areas definitely comes in useful during elections.
Palin already has run for governor and won, so she has some experience in this area, even though Alaska is not a big state in terms of population, ranking #47 among states. But she is being selected for vice-president and will join an already existing campaign the running of which is out of her hands, so that should not be a major problem.
What I find very odd is that some of her supporters are chortling that her lack of experience and knowledge on national and international issues cannot be used against her because Obama is also allegedly inexperienced. This argument does not make any sense. It was the McCain camp that was banking heavily on using the inexperience argument against Obama. By choosing Palin, McCain has effectively taken that argument off the table. Obama wins because he now does not have to even defend himself on the inexperience charge. All he has to do is watch while the McCain camp make fools of themselves arguing that she is more experienced than him. It is strange for McCain supporters to claim a victory for unilaterally disarming themselves. (See this cartoon.)
While I don't think experience should be a big factor in judging whether someone could be a good president, this does not mean that certain qualities are not preferred and even essential. There are things that I think a good president should have but those qualities can be developed over most kinds of life experiences. The important question is to what extent has her past life and work reveals that she has those qualities.
The qualities that a good president needs (which are independent of any polices or ideology) are many: have a commitment to uphold the constitution in spirit and letter, should have a commitment to the national and global interest over petty parochialism, be able to use evidence and reason in arriving at thoughtful decisions, be a good judge of people and situations, have a curious mind and be a quick learner, be humble enough to be able to ask for and take advice, be aware of the impact that one's words carry and thus be prudent in what one says, be aware of the power that one has and be cautious in exercising it, and be able to take the long view and think strategically while being flexible enough to make tactical changes when the contingencies of events demand them
Photo courtesy of http://mudflats.wordpress.com
Whether she has had obtained enough experience, as the mayor of a tiny remote town of Wasilla (which, as humorist Dave Barry points out, has roughly the same number of houses as John McCain) and less than two years as governor of a state with a total population that is comparable to the city of Cleveland, to be able to step in and be president is somewhat irrelevant, except insofar as what her actions in the past reveal about the important qualities that are relevant to being president.
There is an interesting blog by someone living close to Wasilla that talks about life in that part of the word. This blog has suddenly shot up in popularity, becoming the go-to place to find out about Palin and her life. In one post the blogger describes the shock at hearing the news of Palin's selection and in another he describes the increasingly messy investigation into the abuse of power allegations against Palin.
In my opinion, there are hundreds of thousands, and perhaps millions, of people around the country who have many if not most those qualities and would make wonderful presidents. That is why the discussion as to whether someone is the 'best' person for the presidency or vice presidency is absurd. There is never a 'best' person. There are only better or worse people in terms of meeting those standards. President Bush has clearly demonstrated that he does not have most of the required qualities but Palin might. The problem is that we simply do not know.
The questions about whether she has the desired qualities may be answered as her life comes under scrutiny, but as yet the answers are unknown. McCain's statement that she is clearly the best person for the job is laughable on its face, and a sign of desperation. The interesting question I want to examine is how McCain came to pick her and what the selection says about him with respect to his own possession of the above qualities, and how this might affect the campaign.
In subsequent posts, I will break down this question into the various considerations that McCain and his team may have taken into account and see how she stacks up.
POST SCRIPT: Sarah who?
Jon Stewart and Stephen Colbert are taken by surprise.
September 03, 2008
The Palin choice-1: Why?
Like almost everyone, I was stunned by John McCain's choice of Sarah Palin as his running mate. And like them, I am wondering which of the two extreme views of her nomination is true: that she is a bold choice that will give McCain victory in November or that she is terrible pick that will end up being a millstone around his neck and send him spiraling down to a defeat of historic proportions.
There has, of course, been enormous attention to this story. While I don't usually pay too much attention to the personalities of politics, preferring to focus on a few issues that are important to me, the exceptional nature of the choice has sucked me into the discussion along with everyone else, mainly to try and figure out what this pick reveals about McCain.
Since I knew I would traveling over the Labor Day weekend and would not have my laptop or internet access, I wrote most of my coming posts last Friday, the day on which her selection was announced, and Saturday morning. While driving during the long weekend, I only heard news headlines about the progress of hurricane Gustav and nothing about Palin, so I have had to time to mull over my initial reactions to McCain's decision. And my initial reaction that this was a bad choice has solidified.
(As is my usual style, whenever I feel that I need multiple posts to cover a topic, in order to create a coherent narrative, I first write out a skeletal outline of the entire series, which is then fleshed out, updated, polished, and edited before each daily posting. I now wonder if Palin might withdraw from the race even before my series ends next week, so I am preempting the completion of my series on the politics of food until the Palin series is over. That is how bad I think this development is for the Republican ticket.)
There are definitely many positives to her choice. But the problem is that each of those positives, aimed at achieving a particular result, are more than cancelled out by huge negatives that will prevent that result being achieved. The calculations involved are fairly obvious. So the question of interest is how McCain and his team did the same sums that I did and came out with a much different answer. What did they think was so positive about her that would compensate for these negatives?
Palin's name was not unknown to me. I had heard of her before this and had also heard the chatter that she was on his short list of candidates. But I had not given much credence to those reports because I first learned of her some time ago in the context of articles on the investigations into charges of corruption and abuse of power in Alaskan politics, highlighting senator Ted Stevens but also others including her. I knew that she and her husband were in the midst of a situation in which she was alleged as governor of the state to have exerted undue influence to get her brother-in-law (who was mired in a messy custody battle with her sister) fired from his job as a state trooper, going to the extent even of firing her Public Safety Commissioner because he did not carry out her wishes. Josh Marshall has an excellent synopsis of what has become called, inevitably, 'troopergate'.
There are reports that she is to be deposed in that court case soon and that she has claimed executive privilege to not release certain records to investigators and may face subpoenas as a result. She has hired a private lawyer to look after her interests, a sign that she may fear prosecution for actions that fall outside her official prerogatives.
Because of all this, I did not take her chances seriously. And this was even before I returned home on Tuesday morning, checked the news, and discovered that the whole thing had blown up into a full-throated soap opera. I thought that she was put on the list of candidates for the same reason that many such names are usually leaked, to satisfy narrow constituencies that their interests are being considered. I figured that McCain would be foolish to pick someone slap in the middle of being investigated for abuse of power. Why take on that aggravation when there are so many other people who won't come with all that baggage?
Someone once said that the most common last words expressed by reckless men before they do something stupid is: "Hey guys, watch this!" The McCain decision strikes me as exactly one of those ideas, something that looks bold and daring and exciting in the heat of a brainstorming session where a few people are trying to "think outside box" and make a stunning impression, but where all the negatives only show up in the cold light of day. It is then that you realize that there is a very thin line separating 'thinking outside the box' from 'being out of your mind'.
I think that this decision is going to haunt McCain. His and her ardent supporters are trying to put on a good face and saying that this move is a 'game changer'. I think they are right but not in a good way for him. It risks changing a narrow race into a blowout victory for Obama.
Next: The experience question
POST SCRIPT: Political humor
Sarah Palin has her own blog!
September 02, 2008
Before he moved over to his new home at Mother Jones, Kevin Drum revisited a topic at his old Washington Monthly blog that I too have raised before, to criticize reporters who say that there is "statistical dead heat" whenever the polls show the difference between voters preferences for two candidates fall within the margin of error.
In other words, if the polls show 46% for Obama and 43% for McCain with a 3% margin of error, then the race is reported as a "statistical tie" or some such thing, giving the impression that it is a toss-up as to who is ahead. This is simply not true.
Drum has consulted with two professors pf mathematics and statistics at California State University, Chico and they have provided the formulas that enabled him to prepare a handy little chart to tell you the actual chance that some one is ahead, even though the preferences fall within the margin of error.
|Margin of Error||1%||2%||3%||4%||5%||6%|
So if a candidate has a 3% lead with a 3% margin of error, far from being a dead heat, it is highly likely (84% chance) that the candidate is actually ahead. Even if the candidate has only a slim 1% lead and the margin of error is a whopping 5%, it is still not a 'dead heat'. The candidate still has a 58% chance of winning.
Like Drum, I do not have much hope that reporters will ever change their misleading reporting because they have a vested interest in continuing to talk this way. Races that are close generate more interest and thus more viewers and readers, so reporters will always try to make them seem closer than they are.
Talking of polls, there seems to have been an explosion in the number of polling organizations out there, and their results differ. This can cause some confusion in the public mind. When one polls gives one result one day and the next day the media report another poll with quite different results, this might give people the impression that the race is highly volatile or that some polling organizations are biased in favor of one or another candidate.
But that need not be true. There is something called the 'house effect' that can skew the results in particular ways without any intention of misleading. Charles Franklin over at Pollster.com explains what is going on:
Who does the poll affects the results. Some. These are called "house effects" because they are systematic effects due to survey "house" or polling organization. It is perhaps easy to think of these effects as "bias" but that is misleading. The differences are due to a variety of factors that represent reasonable differences in practice from one organization to another.
For example, how you phrase a question can affect the results, and an organization usually asks the question the same way in all their surveys. This creates a house effect. Another source is how the organization treats "don't know" or "undecided" responses. Some push hard for a position even if the respondent is reluctant to give one. Other pollsters take "undecided" at face value and don't push. The latter get higher rates of undecided, but more important they get lower levels of support for both candidates as a result of not pushing for how respondents lean. And organizations differ in whether they typically interview adults, registered voters or likely voters. The differences across those three groups produce differences in results. Which is right? It depends on what you are trying to estimate - opinion of the population, of people who can easily vote if the choose to do so or of the probable electorate. Not to mention the vagaries of identifying who is really likely to vote. Finally, survey mode may matter. Is the survey conducted by random digit dialing (RDD) with live interviewers, by RDD with recorded interviews ("interactive voice response" or IVR), or by internet using panels of volunteers who are statistically adjusted in some way to make inferences about the population.
Given all these and many other possible sources of house effects, it is perhaps surprising the net effects are as small as they are. They are often statistically significant, but rarely are they notably large.
One way to avoid mistaking inter-poll variability for voter volatility is to track the results of just one poll. In other words, only compare the results of one poll with the earlier results of the same poll conducted using the same methods and questions.
To paraphrase Jon Stewart, elections are god's way of teaching Americans statistics.
POST SCRIPT: Mike Huckabee on Colbert Report
It was refreshing to listen to Mike Huckabee being interviewed on the Colbert Report about his reaction (after just the first two days) to the Democratic Convention. Huckabee was one of the most interesting primary candidates on the Republican side but the attacks on him from the Republican Party establishment were quite vicious.
Although I disagree with many of his views, there was something engaging and honest about him that I found likeable. He also has a sense of humor. All these positive characteristics are reflected in the interview. His closing comments on Obama and the role of race in America seemed genuine and heartfelt.
September 01, 2008
Taking advantage of people's poverty
(Due to today being a Labor Day holiday and being ontravel, I am reposting an old item, edited slightly because I can never stop tinkering with what I have written. New posts will begin again tomorrow.)
I read in the paper recently of an incident where the wealthy son of industrialist and his friends were about to enter a Los Angeles restaurant. Outside the restaurant was a homeless person and the youth offered the homeless person $100 to pour a can of soda over himself. The homeless man did so and the crowd of rich people laughed uproariously at this, paid him, and went on their way.
This story infuriated me, as I am sure it will to most people who hear it. It seemed that these people were humiliating the man, taking advantage of his poverty for their warped sense of what is amusing.
But at some level, I feel that I am not being consistent. In earlier postings I have said that we should not concern ourselves and interfere with what consenting adults do. And in this case we have what seems, at least on the surface, to be a purely consensual transaction between two adults. The homeless man was not forced to pour the soda over himself. He did so because he wanted to obtain $100. So on one level, one can view this incident as saying that he was paid for a job. And as things go, there are a lot more disgusting things that one can be asked to do than pour a soft drink over oneself. In fact, as a society, we pay lots of people do things for us that we would shrink from doing ourselves. We pay them to go into sewers, to execute people, clean public toilets, etc. and we do not feel repelled by this. So why did I find this particular story so repellent?
Perhaps it was because we consider the homeless man is in too weak a position to freely give consent. After all, $100 was a lot of money to him. To offer very poor people what is to them a lot of money in return for doing acts that we would not do seems to offend our sense of fairness. But it is not only poor people who can be tempted in this way.
Many years ago, I saw the film The Magic Christian starring Peter Sellers and Ringo Starr, with the former as a millionaire who enjoyed seeing what he could get people to do out of greed. The point the film was making was that people at any level of society would do almost anything, even wading through a disgusting mixture of urine and excrement, provided the price was right.
At that time I thought that the film was an overly cynical representation of human motivation but now I am not so sure. Some of the reality shows on TV seem to indicate that money and fame (however fleeting) are enough for many people to overcome their normal sense of propriety and self-respect. It is a disturbing thing to ask oneself the question as to what one might be willing to do if the price were high enough.
This is why I feel that it is so important that everyone be paid a living wage and have the minimum living requirements of food, clothing, and shelter, so that they are not forced to trade their dignity in exchange for these basic necessities of life. If they do have the basic necessities and are yet willing to do things in exchange for further riches, then that is up to them.
But clearly the homeless man was not in that position and perhaps the reason we are so repelled by this story is that there was no redeeming purpose at all for the action, unlike the situation where people do jobs that society requires but which we might find personally distasteful. Here the whole point seemed to be to flaunt rich people's power over the poor and to gain enjoyment from the humiliation of another human being.
But what constitutes humiliation is also tricky. What for one person is a humiliating act is for another person a chance to proudly flaunt their lack of concern for society's expectations and mores. If the homeless man thought there was a market for his actions and decided to be entrepreneurial and launch a career by offering to pour soda over himself to anyone who would pay, would the action now become respectable, just another job that many of us personally would not do but is otherwise acceptable?
After all, some comedians are willing to have pies thrown in their face as part of their act. And reality shows like Fear Factor show that people are willing to do the grossest things just to be on TV. The only difference between these things and the homeless man story seems to be that the homeless man was destitute and the event was spontaneous, not planned and scripted.
It seems like all these questions come back, in some essential way, to the issues of justice as fairness as the only sound basis for constructing society. Under those conditions, the only power that one person has over another is that freely yielded.
But the soda-pouring episode still angers me.
POST SCRIPT: The world's cheapest car
The Tata company of India introduces their $2,500 Nano. Its engineers show off the car and explain how they managed to obtain a nice looking and seemingly safe car for such a low price.