That Popping Sound You Hear...

...is the sound of right wing skulls exploding across America:

BOSTON--Commissioner Roger Goodell said here Tuesday that it would be inappropriate for the owner of an NFL franchise to make the sort of controversial statements attributed in the past to conservative radio talk show host Rush Limbaugh.

"I've said many times before we're all held to a high standard here, and I think divisive comments are not what the NFL is all about," Goodell said at an NFL owners' meeting. "I would not want to see those comments coming from people who are in a responsible position in the NFL, absolutely not."

Limbaugh has acknowledged being part of a group bidding for the St. Louis Rams.

Goodell and several owners said Tuesday that the Rams' sale process is in its early stages and the league is far from considering a potential bid by Limbaugh and Dave Checketts, the chairman of hockey's St. Louis Blues.

But any proposed franchise sale would have to be approved by three-quarters of the owners, and Goodell's comments signaled that it perhaps would be unlikely that Limbaugh's bid would be ratified by the other teams.

Now, no big deal, right? It's not the first time someone has made a complete ass of themselves and been prevented from joining the cool kids club.

Except...well, Rush is held in (for reasons that remain unclear) some high esteem among the more neanderthalic limbic-systemites of this nation. You know, the more reptilian-brained Americans? They tend to get a little vicious when one of their own is threatened with anything mildly close to a sanction against their behavior or idols.

Take the Tea Baggers. Or the the unimaginative, idiotic, and ultimately ineffectual protest created on the fly against Senator Olympia Snowe, whose vote yesterday in committee to approve the Baucus healthcare plan was the sole Republican one, on a bill that is about as friendly to the insurance industry which is Astroturfing the TeaBaggers as they're going to get in this era of poverty. Or, indeed, the fluffernutter reaction to the Nobel Peace Prize.

It must be frustrating to be a right-winger these days, but I digress...

Look, Rush has said some remarkably ignorant and moronic things, and that alone should not keep him from being an NFL owner. Al Davis has said many moronic and idiotic things, and he's not only kept his franchise but has been allowed to move it up and down the California coast like a Hell's Angel on the PCH.

And Rush is a truly controversial figure and even that should not keep him from owning an NFL team. After all, Jerry Johnson of the Dallas Cowboys just opened a multibillion dollar football stadium in the middle of the worst recession since the Great Depression that replaces...well, a multibillion dollar stadium that was in perfectly good shape, and no one is taking his franchise away from him.

What SHOULD keep him from being locked out of owning a franchise is the fact that a large enough percentage of the owners simply don't like the thought of being associated with an idiotic, nonsensical, foul-mouthed bigot who will own a team that no one will want to play for. In their opinion, it demeans the game and will weaken the product.

This isn't the public domain of America. There is no First Amendment right in the domain of the private enterprise that is the NFL, and Rush is getting a first-hand lesson in what the average worker has to endure on a day-to-day basis: at-will employment, albeit in Rush's case at the executive level.

And here's where the explosion is happening in the skulls, thick as they are, of the right wing: they're watching a wealthy businessman (there really is no other way to describe someone who exploits everyone around him, including himself, for his own profit) being treated like one of them by a sport they all love deeply.

Who to root for? After all, the NFL provides them with (subjectively speaking) "quality" entertainment to remove them from the mundanities of miserable proletaria for most of the day on Sunday (and Monday night and sometimes Saturday and Thursday), gives them a rooting interest in millionaires. Rush provides them with lightning rods to exhaust their anger and rage at their own miserable mundanity, blaming the liberals or the gays or the women for their own inadequacies.

And now they're being reminded over and over just how miserably mundane their lives are, how pathetic the American male existence is, all that privilege and power having been pooled not amongst the majority of white men, but among an elite, including Rush and the owners of the very club that would not have him as a member.

See, this is why the whole "anti-anti-affirmative action" effort falls apart. Yes, white men in this country generally have it better than minorities, women, and gays. No doubt about it. But here's the thing: the white men we make that argument to are not in much better shape than the minorities and groups that they fear will take even more away from them.

This is the case we need to make to them, that this equal rights initiative is not aimed at them, that the gay marriage movement won't make them gay, but is an attempt, ultimately successful (because it must be) to garner the privilege of the economically more privileged, which is largely older, whiter, and male.

So we see the assault on the average American male: on the one hand, he sees a threat from us on the left, on the other, he sees there are limits to even the avatars he has created to live vicariously thru (you don't think Rush has been married four times because he likes being married? He does it because of the image of power and potency it portrays to his audience. As I said, he exploits even himself.)

And he can't very well reconcile the two groups by painting the NFL owners as liberal stooges! He is experiencing a deep cognitive dissonance, one that will make for interesting observation in the months and years to come.

Ain't That America?

Or are we living in the time of the plague?

Detroit: Too broke to bury their dead

We can bail out General Motors and big banks, but let a poor person die and we stack 'em like cordwood.

We could have had healthcare for the poor. That might have prevented a lot of this. But no, the economic royalists MUST have their say and way.

Economic Dodgeball

This is long overdue:

President Obama yesterday announced a major offensive against businesses and wealthy individuals who avoid U.S. taxes by parking cash overseas, a battle he said would be fought with new tax laws, new reporting requirements and an army of 800 new IRS agents.

During an event at the White House, Obama said his proposal would raise $210 billion over the next decade and make good on his campaign pledge to eliminate tax advantages for companies that ship jobs abroad.

"I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens," Obama said, flanked by Treasury Secretary Timothy F. Geithner and Internal Revenue Service Commissioner Douglas Shulman.

The nation's largest business groups immediately assailed the proposal, arguing that it would subject them to far higher taxes than their foreign competitors must pay and ultimately endanger U.S. jobs. Key Democrats were cool to the plan, and said Obama's ideas should be considered as part of a broader effort to streamline the nation's complex corporate tax code.

It's about time, says me.

The logic is very simple: if you incorporate in the largest economy on the planet and do not move your entire operation overseas (including the executive suites), then you should be subject to US tax on your income.

If you live in the United States and are a United States citizen, then you should be subject to United States tax on your income.

Period. End of discussion.

For far too long it's been way too easy for corporations and people to shelter income by offshoring it. That is, set up a foreign subsidiary (or bank account) and conduct business under that guise. You were exempt from paying tax on any of that income until you repatriated it.

Bollocks. There's a clear economic benefit from that income, even if it remains overseas, in terms of stock price and annual results. So either one of two things must happen: either that income doesn't count towards your annual results, or you owe taxes on it.

For you lay folks out there, please understand that there is little connection between a company's annual income as reported to shareholders and what it claims on taxes. This move is a major step towards what should be the ultimate goal: if you claim earnings to the public, then you owe taxes on those earnings and you should not be able to manipulate your taxable income so easily.

After all, if I tried to shelter American income offshore, I'd be hauled before a Tax Court in no time. But MicroSoft or ExxonMobil or Halliburton can pretty much with a straight face claim American income for the benefit of their shareholders and stock price, but suddenly hold out empty pockets for the tax man.

That's not right and it's not fair and must change. So kudos to President Obama for doing the right thing.

Greed Is God

This week seems to be my week to explore humanity and the emotional states underlying our current national crises of the economy and the political atmosphere.

So let's take this from a different perspective and try to tie them together.

Fortuitously, I was reading an article in National Geographic magazine about the burgeoning oil sand industry in Canada.

Lest you think that natural resource exploitation and the ravaging of native lands only happens in tropical climes, you need to read that article. However, it's this quote that caught my eye and got me thinking:

"It's my belief that when government attempts to manipulate the free market, bad things happen," Premier Stelmach told a gathering of oil industry executives that year. "The free-market system will solve this."

But the free market does not consider the effects of the mines on the river or the forest, or on the people who live there, unless it is forced to. Nor, left to itself, will it consider the effects of the oil sands on climate. Jim Boucher has collaborated with the oil sands industry in order to build a new economy for his people, to replace the one they lost, to provide a new future for kids who no longer hunt ptarmigan in the moonlight. But he is aware of the trade-offs. "It's a struggle to balance the needs of today and tomorrow when you look at the environment we're going to live in," he says. In northern Alberta the question of how to strike that balance has been left to the free market, and its answer has been to forget about tomorrow. Tomorrow is not its job. 

Today v. tomorrow. The now v. the then. Hmmmm...sounds familiar...

And this is the struggle that President Obama as well as every other world leader faces today, the juggling of the efficiencies of the free market against the need to protect the environment and the people, to state the general case.

There are no simple answers to be had here, as much as the conservatives would like you to believe. They want you to believe that because in an environment (pun intended) that is bereft of ideas, we cling to the past, to ideas that work sometimes if at all. The simple answer is to let the market sort it out.

I've said before that the power of the market, the real strength of it, is to weed out weakness, to promote a sort of economic evolution.

When it works well, it's extremely good at this. I don't think the market has worked well since the Reagan administration, and I'm not completely sure why.

Certainly, with Reagan, we saw the fledgling crony capitalist markets. The amount of money suddenly available in the junk bond market, the extraction of mythical valuations of "goodwill" and the raping of pension plans for the cash they contained, all combined to create barriers to entry in industries as diverse as banking and retail.

If you're wondering why Wal-Mart is ubiquitous, but you can't find an Alexander's or a Gimbel's (sorry, I'm Noo Yawk oriented), this is why: they were swept up in junk bond mania.

At first, this was an efficiency exercise. Truly there were companies that were wasting resources, paying, you know, salaries and pensions, among other things. The wave of mergers and acquisitions probably, at first, cut a lot of fat out of the marketplace, setting the stage for the enormous growth of the 1990s.

However, all good things become bad in due time, and the wolves howling at the door stopped wanting just fat and wanted the real meat.

The market, rather than be efficient, became cannibalistic.

We've seen this time and time again in America: they call it a "bubble" but in truth, it's the self-feeding cycle of cannibalism, developed through what Greenspan called "irrational exuberance".

Another Reagan-era monstrosity is the flow of corporate money into politics. A nonsensical and absurd ruling (1978 Boston v Bellotti) by the SCOTUS allowed that corporations, which are basically money magnets, have the same free speech rights as persons, and so should be allowed to contribute to politicians and to have a say in the running of the country.

All that money that had been paid out in dividends and re-invested in making the company more efficient and more responsive to their customers now became a cudgel to force legislators to bend the rules of commerce in their favor.

And now we have what we have: a Congress beholden to special interest groups, because the rewards of all that contributed money is more money to spend on advertising, which means the price of campaigning skyrockets, which means the only way a person can afford to run (even Obama) is to suckle at the teat of corporate America.

The Chinese have a saying: all feasts must have an end.

As well, governmental regulation has its good points, and its absurdities. Too much regulation can stifle creativity. Too little regulation, and you get salmonella in your peanut butter. The tendency in this swing of the pendulum is to enforce "just right sized" rules, but eventually, there will be too many and they will be too burdensome.

So which becomes the bigger burden? Too much regulation or too much money floating around?

Neither. Both. And there's the problem.

We'll continue this whipsaw back and forth until someone has the gumption to stand up and say "enough". No more corporate political contributions, get that stupid decision overturned and finally work for the people, the individuals, and not the aggolmerations of capital and political power that have worked to effectively disenfranchise the entire nation.

This is not a Republican issue (altho it tends to affect Republican administrations more than Democratic) or a Democratic issue, but a national issue.

Greed is god in this country, and it's time to tear down the idols and expose the feets of clay.

A Day In The Life

There's a man I see at the subway station where I exit the system to go to my office.

Let me describe the station: annexed to the Grand Central Terminal is a platform for the 42 Street Shuttle. It's an open air station, in that the token booths...I guess I have to call them Metrocard machines now, c'est dommage...are on a mezzanine, and there are four open stairways leading down to the train platform.

This mezzanine is shaped like an "H" and overhangs the platforms on one end. Along these corridors are office buildings with stairways that lead to the subway, one of New York's many hidden attractions.

One corridor leads to two buildings, and is lightly travelled, so lightly that the shops along this walkway have shuttered. There was a locksmith and a shoe store, both long gone and gated now.

Down this corridor, dimly lit with greying grimy walls, stands a emaciated man with an unkempt fro and the wisp of a beard. Usually, he's wearing some bizarre combination of clothing. Today, it was a pair of running tights, and a hoodie sweatshirt.

I understand why he wears what he wears: he gets these clothes donated by the overpriced clothing stores in the terminal itself, who probably throw clothes at him, rather than have him linger in their stores with the high priced running shoes and the double-mark-up shirts. Even his shoes speak of high end, albeit leftovers.

Sometimes I see him practicing karate katas, waving his hands with force and purpose, kicking high over his head, but nearly silently.

I'm sure the cops have warned him. There's usually a cop or three on the platform or on the mezzanine. You could say this is ground zero for the anti-terror forces of the NYPD.

Maybe he practices these forms because in his head he imagines kicking bin Laden in the teeth when he shows up wired and strapped with explosives.

Maybe he feels he needs to keep in shape because down in the subway, when things get tough in the city, is where death happens. Certainly, the number of homeless, which has crept steadily upward since the 90s, is beginning an inexorable geometry of expansion.

Maybe he's just insane.

Sometimes he just stands there. In the summer, he wears worn jeans cutoff at the knees and held up with a rope like Lon Chaney's Wolfman.

Sometimes he sings, but not very often and not very loud.

Sometimes, he's scary, screaming and ranting at everyone and everything, including me when I need to walk past him to get to the bank. I ignore it, of course. I've seen how high he kicks.

He holds court in this corridor, this dingy remnant of better days in corporate America. The fence that separates the mezzanine from the platform is embedded in a concrete knee wall, tiled with, well, white ceramic tile laid in the subway pattern.

A long banquette for his imaginary court.

He never harasses anyone who walks by, apart from the occasional angry running commentary. He never asks or demands spare change, which sets him apart from his homeless brethren and their imitators. He never accepts a handout. I know. I've tried.

And he never looks lost. He always seems to know that he is precisely where he needs to be, when he needs to be there, even when I've seen him patrolling the vaulted main room of the terminal, rummaging through the bins for leftover food.

This is his home, his castle, his palace, this grand and glorious monument to man's inability to remain in one place for very long.

Ironic, ain't it? He tolerates we many, we unhappy many, we band of bummers, because we cook for him, we clean for him, and we entertain him; hundreds of thousands of jesters a day, regaling in our finery. What must he make of us?

The station nominally closes its doors at 2AM for cleaning, but I know, I mean, I know, he's found a spot where he can't be seen and watches his staff cleaning his mansion.

Or maybe he doesn't care to hide himself. Maybe he's allowed by the MTA to wander freely, picking up the leftovers of the food court, sleeping on a bench somewhere because it's warm. I'd like to think so. I'd like to think that this man, whom we might pity, has been allowed the dignity by the bureaucrats and governance to remain in his home.

And yet, I can't help but feel that he deserves better than this Fisher King-like life he leads. Yes, he seems happy enough, and yes, he's refused help from me, but how can we know for sure that he isn't simply overly suspicious? How can we know he doesn't know how to ask for help? Indeed, how can we be certain that anyone's ever been able to ask him properly?

In a country overseen by Republicans for six of the past eight years, in a state run until recently by Republicans, in a city run by Republicans for decades until one finally had the sense to say basta! and became an independent, this man stands as his own monument to the torment and torture of the poorest of the poor, the meekest of the meek, the most trod-upon of our society.

A shining example of Republic-tude. Mental health be damned! We have wars to fight and cronies to enrich! Economic royalists, we say!

For this man's sake, and for the sake of others like him who have no voice, who hold no seat at the table of American politics but who have to live with our laws and our government, I truly pray that the new hope that Obama promises will include him.

By Jove, I am not covetous for gold,
Nor care I who doth feed upon my cost;
It yearns me not if men my garments wear;
Such outward things dwell not in my desires.
But if it be a sin to covet honour,
I am the most offending soul alive.

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You're Probably An Elitist If...

Virgin Ben Shapiro, the godawful scion of two Ivy League educated Reaganauts and himself an Ivy League graduate, has pontificated on how Barack Obama and his liberal minions are elitists.

Indeed, he's even written a list of qualities to assist in identifying elitists!

In true FReeper fashion, he's ignored a few. I'd like to flesh out his list for him:

If you know a polo player, you're probably an elitist.

If you went to an Ivy League school without an affirmative action scholarship, you're probably an elitist.

If you drink martinis wearing a suit and a tie, you're probably an elitist.

If you've ever smoked a Cuban cigar, you're probably an elitist.

If you know anyone who has a chauffeur, you're probably an elitist.

If you went to a prep school, you're probably an elitist.

If you live in a gated community, or were raised in one, you're probably an elitist.

If your dad (or mom, to be politically correct) made most of her income last year from stock options that the board of directors voted him, you're probably an elitist.

If you ride in the corporate jet, you're probably an elitist.

If you have a golden parachute, you're probably an elitist.

If you have a portfolio that includes more than a Charles Schwab account and a few CDs, you're probably an elitist.

If you own an original Rembrandt, you're probably an elitist.

If your idea of a "drink after work with the guys" includes a stop at Harry's Bar on Hanover Square, or any Morton's restaurant, you're probably an elitist.

If you've ever played croquet or lawn bowling and HAD TO WEAR WHITE, you're probably an elitist.

If you've ever been to a cotillion, a debutante ball, or a "coming out party" for a girl of teenage years (not the "out of the closet" kind), you're probably an elitist.

If you have ANY friend who is proudly called Muffy, Biff, or Dexter, you're probably an elitist.

If your friends include more than one person who uses two initials in addition to a first and last name ("C. Russell M. Taibi"), you're probably an elitist.

If your household help...well, you're probably an elitist right there, but...if your household help addresses you by your professional title, you're probably an elitist.

If you've voted Republican for the last four Presidential cycles because, goshdarn, Barry Goldwater said you should always vote Republican, you're probably an elitist.

If you've never set foot in a store in Harlem, despite the fact that your commuter train stops there daily, you're probably an elitist.

If you can discuss the finer distinctions between Chardonnay and Sauvignon Blanc, you're probably an elitist.

If your make of car has two names (e.g. Rolls Royce), you're probably an elitist.

If your house has more bathrooms than there are residents, you're probably an elitist.

If you can name the last three squash world champions or have attended the world championship at least once, you're probably an elitist.

If you can tie your own bowtie, you're probably an elitist.

Finally, if you're in your twenties, are male, attended an Ivy League college and proudly claim you never got laid, even by a townie, YOU'RE AN ELITIST!

False Truths

My good friend, Britisher, makes a very cogent observation in comments from yesterday's post:

Im a technical ignoramus when it comes to high finance but...isn't this while mess ALL about debt? Debt incurred by gambling on future profits based not on tangibles but on "prospects"?.

It seems to me that for years now trade has not been based on identifiable tangible need ( barter as it were) so much as on desire.

I mean a lot of the money at stake is surely imaginary. A lot of the wealth accumulated was imaginary. Investments were made without any supporting collateral and then more investments were made on those investments that weren't supported by anything so everyone shuffling money got rich by pure accumulation.

In short investment banks started 'printing' money and trading that money for other money and more money which was also 'printed'.

This mess is actually a market adjustment.

Am I right? Or partly right?

Yes, Virginia, there was a Santa Claus.

I'm going to get financially technical for a moment, but bear with me. I think I can make it understandable.

All investments are speculations. When you purchase an investment, any investment, from your house to a 1952 Mickey Mantle baseball card to a diamond ring, you are placing a bet.

See, factored into the price you pay for your house/card/diamond/stock is what are called "future cash flows". These can either be income, like a dividend or an interest payment, or capital gains, meaning your purchase is going to go up in value.

This future income or profit is discounted and added to the cost of the investment (what it physically costs to create). In most investments, that cost is minimal (it is not in the purchase of a house).

As Michael Kinsley points out in Time:

How is the country any richer if the exact same stock of existing housing is suddenly worth, say, 20% more? Other markets produce things. They sell what they produce. When prices go up, they produce more. Not so with real estate, for the most part. This market consists primarily of trading the same thing again and again. And you know the old saw about land: They're not making any more of it. Real estate is the only major consumer market in which how much you'll pay someone depends on your belief about how much someone else will pay you. In this market, prices go up when people believe they will continue to go up. To restore confidence would mean restoring belief in the greater fool.

And he's right, of course. Land is a fixed commodity, but there is plenty of land in the country, believe it or not, since half the population lives within 150 miles of a coastline. Yes, you want to be close to your job, but on the other hand, the way the economy is trending and the way workforces are being distributed and outsourced, you might want to live away from a city and telecommute now.

Land prices should probably fall back further, based on this alone.

But I digress. Kinsley's larger point, that buying a home is betting that you can get a sucker to pay even more for it after you've lived in it and aged it, is valid. Not only valid, but has been the basis of real estate sales since postwar America in the 50s.

Too, the perception that, by mortgaging nearly 100% of the cost to purchase you are in effect playing with house money, feeds into this conceit. You are gambling with money you have little responsibility for, because if you walk away from the mortgage, hey, the bank will foreclose, sell your house, pay off your mortgage and you still have a little left over, if the system works "the way its supposed to".

That's not to trivialize foreclosures: they are painful processes and usually occur because of some other trauma to the family/owner: job loss, medical expenses, or divorce. But if you know the bank will be "taken care of", you have one less worry on your plate while dealing with the primary problem in your life.

The trouble is, as Brit points out, it's all a fucking illusion. All of it. Rather explicity, I might also point out.

When you purchase a house, you should be paying what you think it is worth now to you, to live in, to spend some time in, to establish a domicile. We're not talking about buying a stock. Stocks are like going to a casino: you shouldn't do it unless and until you can afford to lose all of the money you invest.

This is why brokers are formally referred to as "broker-dealers" because they're dealing cards at a blackjack table, and they hold all the aces. The investment game is rigged in their favor and so any bets you might make have to be carefully picked for you to beat the house.

A house is different. A house is real money for a real necessity. If it goes up in value, then that's a bonus. But that shouldn't be the reason you go out and buy a house. You should buy a house because you need a house.

Now, you're sitting there thinking I'm kicking the American homeowner while he's down. I am, but I'm also not, because I don't blame people for wanting to believe what they want to believe, or for believing that house prices would always go up.

That's what we've all been told. And there's where the blame lies. Who told us? The bankers, brokers and developers who right now stand to be bailed out. The people who marketed "zero money down, interest only loans" without warning us that in five years, you'd have to start paying down principal AND that interest rates would like double or even triple! There is no way in the world your income can triple in five years, unless you are extremely fortunate.

The difference here is, while those banks and you gambled that you might earn enough money in five years to actually pay down your loan, or that your house might accumulate enough new value to pay off the mortgage on a sale, you couldn't have known better, while they should have!

They are financially savvy and you are not. Or at least they are supposed to be, which is why they are supposed to be licensed mortgage broker-dealers. But past history dictates that even the "experts" are not expert when things get complicated enough.

Hell, even I couldn't have foreseen the depth of this crisis, altho I had an inkling and indeed let my "inner pessimist" run amok on this blog about the coming collapse of the American economy.

There's a bitter lesson to be learned from all this: nothing, no part of your life, is without risk, is not a gamble of one sort or other. Houses were supposed to be the safest investment you could make. Indeed, they were the single largest investment you could make.

You have to start thinking about what you buy and how much you pay for it in terms of purchasing a car (the second largest purchase most people will make in their lifetimes, and an object lesson): what can the actually asset you are buying do for you?

See, cars only lose value when you drive them off the lot, at least for the first twenty years, and even then, you have to have taken immaculate care of them for them to earn back your original purchase price, even. The rational decision with a car is to buy one you can drive into the ground, making it cost as little as possible for the value attained from it (hauling groceries, taking vacations, commuting). You want to drive the car so much that the cost to own per mile is as small as possible.

So it should be with your house. You ought to buy a house that means something to you in twenty years, that makes it worth the purchase price, and forget that it *might* increase in value enough for you to retire on.

And screw the economic royalists and their attempts to shove down your throat some illusion. You're better than that!

Greed Is God

Much of this week, hell, much of this year, has been about the coming economic disaster, which appears is now arriving on Track 13.

It got me to thinking a little about the capitalist system and its built-in, inherent flaw. Hell, it's such an obvious flaw that it boggles the mind that a rational people would choose it for their economy. Even Adam Smith saw it coming and warned against it.

Laissez-faire capitalism can loosely be defined as each person acting in his own interest contributes to the benefit of society at large.

For the large part, this system works pretty well: it's simple, easy to implement, and eventually, all people can benefit from truly free markets.

The one flaw in the ointment, the thing that ultimately Smith warned us on, is, well, greed. I mean, it's right there in the first part of that equation: A person's self-interest.

Implicit in that statement, of course, is the question "Which self-interest?" After all, one can be greedy to the point that it no longer is in one's self-interest. Think about Ebenezer Scrooge.

The assumption Smith made in his time was that man would remain ultimately a polite creature, fair and impartial, and more to the point, powerless over his fellow man (except for nobility, royalty and slavers).

In other words, business would remain small and personal. Indeed, his specific warning was against business combinations that would tend to unduly influence a market.

In fact, despite Republican tendencies to the otherwise, he insisted on government regulation in markets to assure that companies would remain beholden to the market, to the customer, and to society.

What we have witnessed over the past eight years is one of the least regulated markets in world history. Even the Romans, no socialist society, had the decent sense to keep the overseers at least nominally independent of the overseen!

The systematic deregulation, either de jure or de facto by ignoring regulatory oversight or simply paying lip service to it (SEC chairman: "Say, you boys over there at Bear Stearns aren't doing anything I should know about, are you?" *winkwink*), of the Bush administration was teasing the tiger with a thick steak on the wrong side of a short fence. It was asking for trouble. It was practically BEGGING for it.

Combined with the recent hard-line business attitude that economic royalists have taken since at least the Reagan administration (another Republican), which has seen huge companies overthrown because any shlub with a sufficient credit line thought he could squeeze more shareholder value out of the company than current ownership, and you have a deadly combination.

Management at corporations have had to genuflect to the shareholders, but those shareholders have tended more and more to focus on the short-term quarterly profit than the more nebulous, less objective, "value of the company".

The "self-interest", if you will. As companies have gotten bigger and bigger and more out of touch with their customers and the community, we've seen less and less accountability, less and less care, on the part of the corporation.

Which I think may have been Adams' point: business combinations, whether in the form of conglomerates, mergers, or even simply a gathering of minds at the watering hole on a Friday night to split up a market, mean less attention is paid to the business at hand: providing society with the benefits it deserves from putting up with the plunder of capitalists.

Smith, in other words, believed that so long as people could remain human, capitalism would always be in balance with the rest of society.

And yet, we've all seen that this was not the case, and in my estimation, could never have been the case: Greed is a powerful intoxicant.

That may be why it is one of the seven deadly sins. Which now brings us to the message at hand for today.

I've often wondered how capitalism can exist in a society that considers itself Christian.

Indeed, for the first two thousand years, give or take a couple of centuries, Christianity banned capitalism, on the grounds that earning money on money or charging more for a good than what it cost, was a form of usury, which is barred in the Old Testament.

In 1635, a Massachussetts man was convicted of "greed"...yes, it was a crime!...because he earned 6% on his sales, which was 2% more than the law allowed.

A law! About greed! Unthinkable today!

Christ himself warned against the accumulation of wealth. You might recall the "camel thru the eye of the needle" parable.

We see that Christianity is antithetical, even hostile, towards capitalism and vice versa. Why?

Because Christianity is about your fellow man, and capitalism is about, well, taking that fellow to the cleaners. Capitalism is soulless, godless and worships nothing so much as efficiency, the more ruthless, the better.

That's not me saying that. That's the damn system, which rewards short term efficiencies, even if it means breaking the law or the covenants of society, in order to squeeze one more dollar out of a transaction.

Greed pervades the system. Greed is inherent in the homeowner who borrows more money that he can realistically afford to pay back, because he's certain the value of his home will increase exponentially, and that value is his nest egg for retirement.

Greed is inherent in the banker who finances that mortgage, who knows that when the house of cards falls down people are going to get hurt, but he can justify the month's loan activity to his regional office with increases, not decreases, only.

Greed is inherent in the broker who bundles that mortgage along with countless others in a resaleable bite-size package to a series of investors looking to make money off other people's pains. The idea was to diversify the risk, to take the mortgages off the banks' books and to hand the risk over to other people who needed to balance their portfolios, but you know what happened: everyone jumped into the game and soon not enough good mortgages were floating around, so people just effectively packaged "junk mortgage bonds" and passed them off as AAA credits.

Greed, in other words: squeeze them for every buck you can get.

Greed is inherent in the municipalities, states and even the Federal Government, who all benefit from higher home values and balance their budgets on the backs of the greedy in the form of property taxes and the income taxes upon sale or disposal of the property, as the greedy homeowner climbs the social ladder to his McMansion built on his veery own McCloud in the McSky.

Do none of these people, for there must be a whole lot of crossover here, listen in church when the minister or priest talks about the evils of greed?

I've always believed that America, being somewhat psychotic in this regard, should make a choice: God or mammon.

If you're going to choose God, then turn communist. Communism and Christianity are perfectly suited to each other: to each according to his needs, from each according to his ability dovetails nicely with love thy neighbor and turn the other cheek.

If you're going to choose mammon, money, then drop the fucking pretense of being godly. It insults my God and it's silly on its face. I mean, seriously, is there a stupider sight than to see John McCain shocked, SHOCKED, to find there's no one minding the store?

(Showing Memeorandum da love)

While The US Burns

As California begins the wildfire season both early and in earnest, the question has to be asked, why so many so big?

National Geographic Magazine's latest issue attempts to answer this question:

In 2006, wildfires burned 15,000 square miles across the country, a record nearly matched last year. Two-thirds of the burned acreage was in the West. One obvious cause is a decade of drought and warmer temperatures. Mountain snow melts earlier, and winter storms arrive later, extending the fire season in some regions by several weeks. Vast tracts of drought-weakened forest have succumbed to insects and disease, turning trees to tinder. In response, we have bolstered our fighter ranks, padded them with private contractors, provided them more hoses and axes and trucks. Annual federal spending on firefighting has leaped from $1 billion when the recent drought began in 1998 to more than $3 billion last year, with even greater costs forecast for the future. But the drought is only one part of the burn equation.

"The more money we spend, the worse it gets," one fire scientist told me last summer. "If that's not a condemnation of our fire policies, I don't know what is."

Indeed.

One answer is, of course, the short-sighted fire management policies of the past, which demanded that each fire be put out as it occurs and that the best way to do this was to throw monoey and manpower at it.

In some areas, government policies work best on large problems. In others clearly not so well, and this is one of those times when panicked policies designed to serve the desires of developers and settlers, people with an economic interest in natural resources, were foolish and flawed.

Another answer is, naturally, global warming, yet another instance of Bad Big Government in the form of protectionist policies for economic development. A balanced approach to shepherding and managing our natural resources.

It costs roughly $200,000 a day to fight even a small fire, so that adds up to millions even assuming a quick battle of less than a week. Multiply that by 1,400 fires, and you're talking about hundredss of millions a week, even billions and that's starting to rival the Iraq war for inefficiencies.

Now add to this the cost of protecting other "investments" made with private funds, and you begin to grasp the costs of greed, and for what?

So someone else can have a nice view out their window in the morning?

A new beginning must be undertaken to straighten out the priorities of this nation, one that doesn't exclusively accept that "money=good."

What Was Left On The Cutting Room Floor

(hat tip Karyn Mannix)
I'm struggling with how to characterize the jitters of the market and the surprising (if feeble) news out of the Federal Reserve this morning.

On the one hand, I can't recall a moment in history when the US had this much warning of a total meltdown in what many of the uninformed take to be the economy: the New York (and other) Stock Exchange. Stock exchanges tend to be lagging indicators of the economy, tho, so the steep drops we've been experiencing are echoes of what's really going on in the commercial sector of the country.

On the other, I can't recall such a feeble response: a stimulus package that actually might harm the economy longer term, as well as a pissant rate cut of a three-quarters* of a percent in the prime rate.

The tax cut and rebate package on the face of things sounds like a pretty good deal: put money immediately back in the hands of taxpayers, while giving businesses a break on their earnings.

The administration doesn't seem to get it. This is not a temporary economic correction, this is a full-blown recession that's teetering (if not already fallen) on the brink of depression.

If we take Paulson's words at face value, and assume he's just talking things up to avoid panic, well, a) he's not succeeding too well, based on the futures market as of 9:15 this morning, and b) we'd like to think that behind the scenes, there's some furious activity to fix things quickly.

There's some evidence of that, but it's easy to infer there are some major obstacles to creating an effective response.

Rumours on the European markets are that the Federal Reserve cut is the first of a series of central bank rate cuts, primarily in Europe, to be announced. Could be. As I said, I can't recall any emergency rate cuts in my lifetime. It would be indicative of a collaborative effort to announce the US rate cut before the others are announced.

The problem for Europe, however, is they've actually been raising their central bank rates in order to stem inflationary pressures. A cut now would send a very mixed message to their markets.

The Fed's quarter point three-quarter point* rate cut serves only to aggravate the markets here. They will open down about 300 points, and investors were expecting (funny how yesterday, there wasn't even the merest hint of a rumour of a rate cut, and now suddenly, they were "expecting"?) a half a point cut.

Not that any of this will really make a difference, of course. While credit markets are tight, it's not because interest rates are high, it's because the markets are terrified of the outcome of the mortgage default crisis. You could lower the discount rate to zero (a prime rate of 3%), and banks still wouldn't lend.

Asia is in total meltdown already, which means that China is experiencing its first market crash. There's no way of telling what response Beijing will make. This side note is a way of saying, "Gee, I sure hope they don't start calling in their chits on the American economy!"

The Bush legacy seems to be even further in the hole. His Hail Mary pass of a Middle East settlement is in disarray, and his one hope for any positive news was four years of relative economic strength. Not Clintonian, but Bush would have been able to point to positive growth, especially if you look at the last five years of his administration only.

Alas, even that slim margin of growth has been squandered, along with several hundreds of billions of dollars in Iraq and trillions domestically. Had we not had tax cuts of the severity that Bush insisted and the Republican Congress lapped at like Tommy Lee on Pamela Anderson, we might have some programs in place already to deal with the problems ahead.

Instead, we squandered like a drunk sailor on shore leave with a stolen credit card. Hey, the rich sure as hell won't ever have to pay these bills back, why should they care?

* The Fed sent out a press release correcting the initial announcement.

A Bit Of A Thought Experiment

The year is 2025. America has gone bankrupt. Eight years of Bush's overspending on a preventable war put us into such a hole that it became impossible to dig our way out, particularly after oil prices skyrocketed and the Chinese called in their chits on our debt.

America is unrecognizable. Our resources are being plundered by other nations for their own use and profit. Our citizens subsist, they no longer thrive, but for a small number who have thrown their lot in with the "invasion".

I mention all this because over the weekend I was watching one of my favorite guilty pleasures: They Live, a 1988 film directed by John Carpenter.

Ostensibly, the plot revolves around an invading army from the Andromeda galaxy that has come to earth to feed off us and our natural resources. The army has co-opted our media and advertising, sending "subliminable" messages to "OBEY. CONFORM. MARRY AND REPRODUCE. CONSUME. SLEEP."

Most people are unaware of this invasion. Some are collaborators, helping the invaders in exchange for "a little taste of that good life". A few figure out there's a problem and try to recruit an underground resistance.

And then I turned off Fox News...

FAVORITE QUOTES:

1) "I have come here to chew bubblegum and kick ass... and I'm all out of bubblegum."

2) "You... you look like your face fell in the cheese dip back in 1957."

3) "You see, I take these glasses off, she looks like a regular person, doesn't she? Put 'em back on...formaldehyde-face!"

4) "What's wrong with having it good for a change? Now they're gonna let us have it good if we just help 'em. They're gonna leave us alone, let us make some money. You can have a little taste of that good life too. Now I know you want it, hell everybody does. What's the threat? We all sell out every day, might as well be on the winning team."




Who do you think will be at the border, welcoming the Chinese businessmen in with open arms and deposit slips?

It's Like A Glass Of Champagne...

...all these bubbles bursting. Only it ain't champagne, more like sewage.

The housing market boom has turned to bust, and with it topple many cherished ideals of the Republican party platform: specifically, in this case, the tax cut.

When Bush proposed his tax cuts, coming on the heels of the first balanced budgets in decades and the first budget surplus in centuries, it was assumed that much of the tax burden would shift down the government scale: states and localities would be forced to raise revenue in order to finance unfunded mandates the Republican Congress was throwing their way, like, say No Child Left Behind.

States and localities, of course, were having their own tax battles. No one in their right mind, in the greed infested environment so polluted with the nonsensical notion that tax cuts were actually *good* for the economy, was about to impose new taxes.

Salvation came in the form of the housing bubble. A community could merely tweak the tax rate slightly, and generate brand new revenue based solely on the fact that house values were skyrocketing and all the community had to do was keep appraisals in line with that valuation.

Worked fine until the bubble burst:

The real estate frenzy that once filled public coffers with property taxes has over the last two years given way to a devastating bust. Rather than christening new facilities, the mayor [Eric Feichthaler, Cape Coral, Florida] finds himself picking through the wreckage of speculative excess and broken dreams.

Last month, the city eliminated 18 building inspector jobs and 20 other positions within its Department of Community Development. They were no longer needed because construction has all but ceased. The city recently hired a landscaping company to cut overgrown lawns surrounding hundreds of abandoned homes.

“People are underwater on their houses, and they have just left,” Mr. Feichthaler says. “That road widening may have to wait. It will be difficult to construct the high school. We know there are needs, but we are going to have to wait a little bit.”

Waiting, scrimping, taking stock: This is the vernacular of the moment for a nation reckoning with the leftovers of a real estate boom gone sour. From the dense suburbs of northern Virginia to communities arrayed across former farmland in California, these are the days of pullback: with real estate values falling, local governments are cutting services, eliminating staff and shelving projects.

So let me draw the picture for you: a lower tax base from the Federal government on down to your city or town; a crumbling infrastructure in terms of bridges (remember the I-35 bridge in Minnesota?), highways, streets, and public facilities like schools, hospitals, and services like police and fire departments; a shrinking tax base as baby-boomers begin to retire, forcing Social Security to call in its chits from the general tax revenue; an aging population demanding health care reform; a horribly tragic, wasteful war that's drained one trillion dollars plus from our collective nest eggs-- and the worst is yet to come.

Next year, another two million or so mortgages will have to be re-assessed as they are due for drastic rate hikes. That's going to create yet another contraction in the real estate market (barring a drastic intervention by the Fool On The Hill, George W Bush) that's going to fling off yet another wave of revenue cuts for states and communities.

And yet, Republicans nationwide applaud this kind of shit. I guess living in a gated community has some advantages but what happens when the gatekeepers can't get to work or can't get to an emergency room? Gates can trap inside as well as keep people out.

Not a pretty picture for the holiday season, huh?

Le Droit Du Seigneur & Economic Royalty

In feudal times, all who worked for the lord of the land submitted to droit du seigneur, which demanded, among other things, any virgin woman to be married was offered to the manorist first, in order to deflower her (aka prima nocti, or law of the first night).

Should she be silly or unlucky enough to become pregnant, well, that was her family's burden. In addition to spreading his genetic material (believing that peasants and serfs were of lesser blood, so "improving" his people), it was also a form of suppression: by humiliating his charges, they would be less likely to rise up in revolt or even to ask a boon of the lord.

Well, to no one's surprise, this elitist, royalist tradition continues today, albeit in a mutated form:

A Treasury-backed plan to stabilize a vital segment of the credit markets has been shelved, the banks involved said yesterday.

The strategy called for banks across the globe to create a $100 billion fund aimed at jump-starting the troubled market for short-term loans, acting like a credit card for companies.

But the architects of the plan, which was developed by Citigroup and other leading financial institutions at series of meetings convened by Treasury officials this fall, struggled to recruit other banks and called it quits this week.

This plan was a key privatized element of Bush's mortgage "bailout" plan, supposedly directed at borrowers but in truth, designed more to protect lenders.

The larger commercial banks, like Citibank or JP Morgan Chase, could afford to absorb some of the shortfalls and defaults that would cripple smaller lenders. The $100 million fund would limit their losses to this amount, and that risk would be spread out across a number of banks around the world.

Makes sense, right? This way, the credit markets don't dry up so quickly, and might even weather the storm.

So why is this being shelved?

Earlier this week, Paulson and the banks behind the plan said they were committed to its establishment. That changed yesterday after Treasury officials and the banks, which included Bank of America and J.P. Morgan Chase, said that the fund was "not needed at this time" because market conditions had improved.

Subtle, that.

Market conditions have improved, a little (read: bank earnings have stabilized), but the economy itself (and the money that goes to pay mortgages) has not. In business-speak, the banks took a look at the risk and realized they were a lot more likely to lose the entire $100 million than they were a month ago:

The plan would have helped major issuers of asset-backed commercial paper called structured investment vehicles (SIVs). These semi-independent funds, set up by Wall Street banks to make complicated investments, have suffered deeply from the credit crunch.

The SIVs issue short-term loans and invest that money in securities backed in many cases by mortgages. But after a wave of defaults and foreclosures swept across the nation, the value of the securities held by the SIVs plummeted. The debt markets panicked, and the SIVs found it impossible to sell off any holdings.

With those large losses and a climate of fear in the marketplace, the SIVs were unable to issue short-term loans.

Since then, many banks, in particular Citigroup, have moved more than $100 billion in troubled assets from their SIVs onto their own balance sheets, alleviating a key rationale for the rescue fund. The transfer means the banks are agreeing to back loans made by the SIVs.

Prima Nocti, indeed. These guys pumped the American homeowner full of their vile seed, and now walk away with millions of pregnant mortgages about to come due, which they can easily write off their books now. Essentially, the banks are telling Paulson, the Treasury Department and the Bush administration, "Screw you, this is your problem, you fix it!"

George Will, a man no one really need admire, has said one admirable thing in his life: the American capitalist system is designed to privatize profit, but socialize losses, except when it comes to the individual wage-earner. If a business loses it's headquarters in a foreclosure, that business can write that loss off. A human family? Eh. Not so much. If a bank forecloses on a mortgage it holds, it can write off that loss. I lend you a $100, and I have to go through hoops and garters to prove to the IRS there was indeed an actual loan if you can't pay me back. And our transaction was probably better documented than the banks!

Next year will be a pivotal year in the mortgage and credit markets. This move tells me the banks are expecting bigger problems than anyone anticipated.

The Ugly Times

If you're old enough to remember the Carter administration (1977-1981), then you'll remember the ugly phenomenon, unprecedented in a free-market economy, of stagflation.

Loosely defined, stagflation is when the economy is stagnant (i.e. a recession, in which economic activity slows) coupled with hyperinflation (when prices skyrocket through the roof).

The Carter stagflation hit when OPEC decided to play games with the price of oil. Since America was far and away the single largest consumer of OPEC oil, this was targeted directly at us, likely as a result of several foreign policy factors (Iran being number one among them).

Now that oil is flirting with its all-time record highs, as adjusted for inflation, as improbable as it may seem, we look likely headed down the stagflation path once again.

It's hard to describe what living in those times was like. The prime rate was up around 20%, while inflation ran at a then-unheard of (in America) rate of 15% (some studies indicate inflation may actually have reached higher levels in the past, like during the Civil War, but there's no clear measure of these incidents).

So the government was borrowing money at credit card rates, while families were seeing their incomes deteriorate at about one and a half percent a month, meaning if you made $30,000 a year, which was a really comfortable salary in 1979, by the end of that year, effectively you were making $25,000, but still paying taxes at the $30,000 rate, I should add. Further, banks stopped lending money at points in the incident, because if prime lending rates were 15%, say, but inflation was 16%, they were actually losing money in the deal.

Let's look at the current situation, tho: the housing market has cooled off and begun to drop nationwide. Housing prices have traditionally been the source of "wealth" in America, a fairly nebulous term that really means, "in a pinch, can I sell my home for more than I paid and pay down my credit cards?"

So long as the answer was "yes," people felt secure and kept on buying. Now the answer is "Eh. Not so much!"

This morning, we've seen clear signs that the economy is in serious trouble. While the Producer Price Index, the average cost to produce a good and bring it to market, shot up 3.2% on an annual basis in November, retail sales were up only 1.2%.

Which means that the entire increase in retail sales can be attributed ONLY to inflation (and the PPI doesn't include direct energy costs!), meaning the consumer economy dropped by about 2% in November. People bought 2% less in November. Period.

The consumer markets make up about 70% of the gross domestic product (the entire economic activity of a nation), so we'll call this a drop of about 1.75% in the economy.

In other words, a recession. A contraction. Not a good thing.

In current economic theory, you fight inflation by raising interest rates. This tightens available credit, forcing companies to put off infrastructure investment, and also means people like you and me pay more interest on our credit cards.

But the Fed has had to lower interest rates in response to the crippling sub-prime mortgage crisis, which has rippled now into prime mortgages. Anyone who believed this crisis was contained in the sub-prime markets is an idiot, including Ben Bernanke.

No rational borrower in his right mind is going to see Ditech.com offering 0% adjustable rate mortgages and not bite their banker's ass about paying 5%, even on a fixed rate loan! Hell, I bitched about paying 1.9%!

This clearly ripples through the credit markets, and is a far larger problem than we've been led to believe.

And don't think this is only an American problem. England's Northern Rock bank debacle shows that it's at least hitting the EU, and many central bank heads believe that we might see the first global stagflation in history.

You wanted to be a war president, Herr Bush? You will be, in 2008. A global stagflation will mean more poverty, more starvation, more angry young men and women in the streets of poor countries with weak tyrannical leaders.

The pieces are in place, ladies and gentlemen, for a true World War III. And we have only ourselves and our greedy overlords to thank.

Watching The Wheels Spin

This ain't rocket science, guys...

CINCINNATI (Reuters) - Every politician in the U.S. presidential race claimed to be fighting for the middle class, and it seemed a sound strategy -- until the Democratic front-runners tried to define who, exactly, was middle class.

While Sens. Hillary Clinton and Barack Obama couldn't agree during a recent debate whether someone earning $97,500 or more could be considered middle class, voters have little difficulty judging who isn't -- the presidential candidates themselves.

"None of them really represent the middle class," said Rick Fulmer, 52, who works at the YMCA as a fitness trainer. "Both parties are tied to big business. It takes millions to run for president."

This is both ridiculously easy and profoundly difficult.

The middle class is easily defined, economically. Since the average family of four earns $45,000 a year, the safest definition of the "middle class" is the 80% or so who range around that point. Let's say any family (of neaarly any size) that earns from $35,000 to $75,000, just to be on the safe side, because census data says that a third of American households earn in that range.

Simple, right? Here's where it gets tricky: people who earn more (and some who earn less) believe they are middle class, when in fact they are not.

It's the belief that matters, however. A family that earns around $200,000 (two wage earners, with two kids, say) that lives in New York City or its suburbs will assume it's middle class, because that $200,000 doesn't buy much, once you factor taxes, mortgage, heating, and health insurance into the mix. Perhaps their disposable income is more along the lines of someone earning $75,000 but lives in Texas or Florida.

See? Not middle class, yet very middle class. The family in New York can't afford private schools, even if their income says they should. So education initiatives are very important to them (indeed, they probably moved to a district with better schools because of that very fact).

Too, when firefighters and some teachers make $75,000 a year or more, the definition of middle class becomes even fuzzier. While technically these earners are upper-middle class, you'd have to agree that their jobs keep their values firmly planted in middle class terra firma.

When politicians talk about "middle class," they're talking about the values of hard work, saving a buck, trying to live the American ideal of 2.6 kids, a house, two cars in the garage and providing for the family.

The proverbial "chicken in every pot" of a few generations ago has morphed into a Nintendo in every living room (or a PC, if you buy Microsoft's mission statement), but that's the spirit of the middle class.

Which is what makes the election of George Bush all the more unlikely, since he was born on third base thinking he'd hit a triple. He shares NO middle class values. He's never worked a hard day in his life that wasn't for a photo opportunity.

Sure, he can talk a good "middle class" game, but how can someone truly understand the middle class unless he (or she) has either lived it, or gone out of his way to understand it, like the Kennedy clan has?

What makes this discussion even fuzzier when it comes to Democrats, who traditionally have been and rightly should be the party of the middle class, is this interesting tidbit from the Heritage Foundation: 2005 tax data showed Democrats represent nearly 60 percent of the wealthiest one-third of congressional districts -- those with a high number of people earning more than $100,000 per year.

Admittedly, most of those are on the coasts, which means much higher costs of living, which means, yes, these "rich people" are the very essence of the middle class. Unfortunately, the tax code is skewed towards viewing them as rich, which means they get hammered by things like the alternative minimum tax, even if like you and I, they send their kids to public schools and ride the subways.

(OK, full disclosure...I'm not middle class. I make much more money, so extract the "me" and "we" bits out, even if I do ride the subways and sent my daughter to public school.)

This might be part of the disagreement that Obama and Clinton are having over the increased Social Security tax that Obama proposes. It would hit New Yorkers hard, "middle class" New Yorkers.

Personally, I have no problem with Obama's proposal. While there is no current Social Security crisis, I've always believed that Social Security taxes should not have a ceiling and in fact, should be applied to ALL income (with the possible exclusion of bank interest earned in a savings account, but that's a different part of my NotPresident platform), and that this revenue really should be locked away and not used in return for IOUs from the general spending fund.

So what are "middle class values," anyway?

Well, here's what I believe and if I was counseling a candidate, what I would tell him or her:

1) Hard work is its own best reward, but is also a path to the American Dream. I'm aware of the naivete it takes to swallow that, but enough people do that you have to account for it. The American Dream was never about being wealthy. The Horatio Alger stories saw the hero only achieve a decent living, never wealth. He became comfortable. The "chicken in every pot" ideal. To that extent, this is an attainable value. To the extent that this value gets warped by the economic royalists into "the American Dream is a million bucks," and the concommitant tax cuts they espouse and manipulate the average American into supporting...well, that's a con game. People don't get rich through hard work for someone else, and studies show that most people who work hard for themselves can't even promise a comfortable lifestyle.

2) Since Christ championed the poor, we should help them too. This will piss off an awful lot of hard left readers, but the simple fact is, America is a Christian nation, and while that has negative connotations in some circles, it shouldn't be perceived as evil. Hell, I'm Christian, and what goes on in the Religious Right offends me, too. But Christ's teachings about "Do unto others" and the other rules he set forth for living in a state of grace hold deeper meaning to most Christians, the ones you meet everyday in stores and at the PTA. They really Do believe that the poor need our help. This message gets warped by the economic royalists as "the poor are all about handouts," which distracts attention from the real reasons middle class families can't get ahead: the profiteers and pirates of the corporate classes.

3) If you leave me alone, I'll leave you alone. True dat. I think most families, apart from the gossip aspect, are happy not to know what their neighbors are up to, because it makes them fair game for intrusion themselves. This gets corrupted by the economic royalists into the pro-life logical fallacies and the pro-gun "from my cold dead hands" trope. I'm not sure why. I think it has to do with another distraction, possibly as government and the rich explore how to exploit the new technologies available for intrusion into control and economic devastation. But that's just a guess.

4) Finally, I'll have what he's having. Pretty simple, this is about not just fairness, but comparative greed. We all know this as "Keeping up with the Joneses." Naturally, as any TV watcher will tell you, this gets exploited by the economic royalists to create a need where none exists (really, if a Prius can get you from point A to point B, why would you need a Hummer?), which is the linchpin mechanism that feeds all the other exploitations I've listed above.

So this really is simple. And hard. And confusing. But once you grasp it, you can go with it.

Et, vOILa!

I wonder if it's coincidence that this is happening ahead of what is effectively a media blackout for four days...

LONDON (Reuters) - Oil held above $98 a barrel on Wednesday, after closing in on the $100 milestone as the dollar hit new lows and cold weather in the United States, the world's biggest fuel consumer, stirred anxiety over winter supplies.

U.S. light crude surged to a record $99.29 early in the session, but then edged down from this peak to stand at $98.39, up 36 cents at 8:04 a.m. EST.

Prices blasted past the previous $98.62 record, extending a rally that has lifted oil by 45 percent since mid-August as speculative investment rises, supplies tighten and the dollar weakens.

I'm going to speculate for a minute here: if oil passes $100 before next Monday (there are three trading days, if you count time differences in the Asian markets), it will spike over $150 by the end of next summer.

Crude has risen 45% just in the past three months, so a further fifty percent increase ahead of the Beijing Olympics would not be impossible. And none of this is with any reference to Hugo Chavez's rant the other day.

Coupled with the dollar dropping to record lows against the euro, it's gotten so that even the Saudis are making noises about the weak US economy.

Heading into the holiday shopping season, people are understandably edgy. Who wants to choose between Junior's iPod and heating the house for a month?

And where's the President's leadership on all this? Is he more concerned with covering his ass or with helping poor Americans to keep from freezing in the long cold winter ahead?

In 1979, if you're old enough, you may recall that Jimmy Carter was at least concerned enough to speak to Americans nearly weekly, recreating FDR's fireside chats, during that tragic economic period in our history. Carter instituted price controls when oil hit $15.35 a barrel, well before it hit its all-time peak of over $39 a barrel (adjusted for inflation, that would be $101 today).

Bush? Nothing. Not even asking us to turn our thermostats down and wear a sweater. No lowering of Federal speed limits. Bush is less effective than Jimmy Carter. There's your legacy, sir.

We're heading for a very nasty period in American history. We can't lower interest rates for fear the dollar will plummet further, yet we can't maintain them as more and more Americans default on their home mortgages. Neither can we raise them. The Fed's hands are tied, pretty much.

This nation has been destroyed by men (and a few women) hellbent on ideological concretization, with no regard to the one true fact of life: there is no "one right way". Frederick Winslow Taylor is an extinct dinosaur, and rigid dogma will always lose out in the end to the chaos of life and the planet.

Always.

Why This Might Matter To You

You might consider this payback for our arrogance over the past seven years, and undoubtedly there's a bit of that in there.

You might consider this a bitof "get even" for our economic hegemony that sees Wal-Mart in China and Hooters in Saudi Arabia.

Or you might consider this the natural progression of economic evolution:

Investors would like to believe that a portfolio which is diversified across both developed and emerging markets would continue to perform well, even during a U.S. recession, because Chinese economic growth is creating insatiable demand for raw materials in particular.

The U.S. accounts for about 25 percent of world output and in past business cycles investors have suffered as world stockmarkets have weakened when U.S. economic growth has slowed, as it has this year, or slipped into recession.

"A lot of my colleagues are arguing that it is different this time around," said Andrew Milligan, head of global strategy at the investment arm of UK insurer Standard Life Plc

It's true.

It used to be that, when the US sneezed, the world caught the flu. We only need look within our lifetimes to see that, after the 1987 market crash and the (chronologically, not causitively) subsequent economic depression in the US, the world suffered as well (after a bubble in the Japanese markets which caused them to have to shovel money into assets overseas...but that's another story).

A curious thing happened in this past Bush recession: other markets strengthened. Led by China and India, Asian markets absorbed our economic hits in 2001 and 2002 (and a mini-hit in 2003), and took advantage of them by expanding their trade with the US (our trade deficit went from $400 billion to $700 billion.)

There are probably many reasons for this, of course. The one that occurs to me most quickly is the fact that, in the 1990s, the global economic playing field levelled.

No longer was it necessary for a country to have access to vast resources in order to grow economically. Information was the engine of growth now, and information had no borders. The Internet saw to that.

Which is why when you call Verizon to fix your DSL service (don't get me started!), you now either speak to someone in Mumbai or Mexico City, depending on the operating system you use: there's no need for a physical presence inside our borders, because the cost of the call is nominal when you factor in wage differentials, and the same database of information is available to Ricardo or Sajni as it is to Joe or Claire.

Too, the ability to digest data and churn out information no longer meant being physically on Wall Street to cop tips while out at a luncheon: it was there, out in the public, which is why London, with its easier banking and stock regulations is now the financial capital of the world, despite the New York Stock Exchange being the single largest exchange in the world.

In other words, the new economic model rewards efficiency over resources. Do it faster, cheaper, with less waste, and you're going to make money.

The Europeans and Asians have been working in that mode for centuries now. Ever been in a British shower?

Ever wonder why a British shower is as unfulfilling as it is? Maybe it's because the world has recently undergone the kind of transformation that the US will now have to undergo: a contraction of expectations.

Bill Clinton, during his administration, foresaw this. Like him or not, he was correct when he stressed the need to retrain and re-educate American workers as their jobs went overseas, thanks in part to NAFTA but overwhelmingly because of this economic trend of rewarding efficiency.

In a land where it used to make sense to drive an hour in each direction to a job, it makes less sense: companies can't compete when they have to take an economic hit every morning there's a traffic jam.

In a land where it used to make sense to drive lumber across country to build a house, it no longer makes sense: the price of fuel is way too high, and the inefficiencies of wood construction are magnified when that fuel cost is added in.

In a land where Playskool used to manufacture toys in Milwaukee and ship them worldwide, it no longer makes sense when China can do it far cheaper (and far more dangerously!), and still keep retail prices affordable.

Do you see how ridiculous that is? A toy is designed here in the States, and it's still cheaper to have a factory in China (buying substantially all its raw materials from the greatest resource store in the world, America) build that toy and ship it here to sell in a Tyos R Us in Paramus, NJ, a round trip of some 15,000 miles, give or take.

What does this mean to us?

It means that we'll be shipping more and more raw materials overseas. It means that, as China and other Asian and European countries see their citizens becoming wealthier, American retail markets will have to fight harder (meaning higher prices) for things we take for granted. Like toys. Like cars. Like clothing.

It means, in short, a forced move to the progressive agenda of doing more with less, of conservation, and of progressive tax codes.

Will that happen? Yes.:

Large new sources of demand have emerged in China, India and elsewhere, and may be sufficient to counter the impact of a U.S. recession, argued Milligan, who directs investment strategy at Standard Life Investments which has about $280 billion in assets under management.

In addition, in the event of a U.S. recession, the Chinese government could increase its spending to ensure China's annual economic growth does not slip below its recent average of around 10 percent before the 2008 Beijing Summer Olympics, he said.

World stockmarkets have recovered since a global credit and liquidity crisis in mid-summer, and in some countries stocks have rallied to new highs, partly because of the belief that Chinese economic growth is offsetting the impact of a weak housing sector on the U.S. economy.

Will we still have impact? Yes. As noted, the US is the single largest economic bloc in the world, roughly 25% of the global economy. Together, China and the other Asian countries make up nearly that much.

But China's economy alone is growing at an annual 10.5% rate, while the US can barely muster 2.5-3% under the failed policies of the Bush administration (thank the tax cuts!). China is poised within the next two years to become the world's third largest economy, surpassing Germany and lagging only England and the US.

Then all hell breaks loose. While the US could wage an economic "Cold War" with China, ultimately, the momentum is in China's hands: to our 300 million people, China can mobilize over 1.3 billion: that's the United States, PLUS one billion more folks.

It's a war we cannot win, and thanks to the loss of prestige engendered by this ridiculous invasion of Iraq and the utter insolence and hubris demonstrated by the Bush administration (most recently in Russia), we can't even be assured that we can steal a chunk of it away from China now.

Not That This Was Unexpected, But...

...yer an idiot, Paulson:

TOKYO (Reuters) - U.S. Treasury Secretary Henry Paulson said the turmoil in global markets will "extract a penalty" on growth but the financial system and economy was strong enough to withstand it without provoking a U.S. recession.

"The economy and the markets are strong enough to absorb the losses," Paulson told the Wall Street Journal in an interview published on its Web site on Thursday.

Paulson also said the repricing of risk in markets should not surprise anyone and was inevitable, and that nothing should be done to guarantee market players against losses or restrain them from taking risks.

All this article really needs is a video of someone whistling past the graveyard. Or maybe this:So many reasons Paulson is an ass here, so little bandwidth.

First, he has a point: easy credit is no different than any other economic bubble and economic bubbles burst. Period. But here's the thing: this was a bubble the Fed could have AND SHOULD HAVE done something about years ago.

I find it hard to believe that Alan Greenspan (and now Ben Bernake) don't watch TV from time to time. Hell, you can't turn on the TV but for coming across and ad for Ditech.com or Countrywide Home Loans, advertising "No money down, no principal payment" loans at rates that make the prime interest rate look like a high-yield bond. Did it not occur to them, the way it occurred to me, that there might be something wrong in an economy where it's worthwhile for a predatory lender to run commercials hawking a dangerous financial product 24/7? So you bump up interest rates a bit, and you save a few people from making the biggest mistake of their lives.

You know, Alan, Ben, and now Hank, it's OK to do a little thinking about work while you're away from the office. Most of us have to do that, from time to time.

And now here's ol' Hank talking up the economy, you know, don't worry, everything's going to be fine, as the Fed pumps $50 billion dollars into the monetary system to shore up the credit markets.

OK, so a basic economic lesson here: when a government is forced to pump that kind of money into the system, where does it come from, in a nation running hundreds of billions in deficit spending each year?

Here's a hint: It ain't from a savings account.

There are two ways for the Fed to get their hands on that kind of dough that quickly: borrow it (meaning it will have to be paid back and then the question is, from whom was it borrowed?) or print it.

If it's just printed, then simple supply and demand will tell you what happens to the value of the dollar in your pocket: more supply lowers the "price" of that good, so by extension (and yea, I know, the analogy has holes in it, but it fits the argument more clearly than a real analysis), more money drives the value of your dollars down, meaning it will take more money to buy something.

In other words, inflation. Which the Fed tames by raising interest rates, thus stifling the demand for money.

If the money has been borrowed (ignoring for a moment from whom, tho I have my suspicions), then all this does is shift the risk off the original badder debts from the lenders (rapacious bankers and sub-prime mortgage companies) to, well, us.

In effect, the money the Fed has pumped into the credit markets is a guarantee that the government will stand behind the loans out there already (although not all of them, to be sure...I doubt we can get our mitts on something like $7 trillion to finance all the mortgages out there), meaning the ultimate responsibility for repaying this money isn't on the lenders, but on the guarantors, and since the Fed has authority but no responsibility, that privilege falls on our shoulders.

Where has this money come from?

Well, the make-up of the Fed is a bunch of money center banks, like say Citibank, Chase, Bank of America, who created and run the Federal Reserve System. No one knows for sure who precisely is on the Fed board, but these three are a safe bet.

These money center banks, which also sit on the central bank boards of nearly every other major nation in the world as well as the World Bank, would have the resources to finance, short term and at a rate of return commensurate with the critical nature of the emergency (in other words, usury) the hundreds of billions of dollars needed to stem the global economic collapse that is threatening the world.

As I said, for a price. They get us coming and going here, because who do you think funds the money to the mortgage markets to lend to people like you and me at attractive rates to pay off the credit cards (that they've issued) to try to get solvent by borrowing off our salaries in perpetuity? And now who's funding the bailout of those same sickening loans?

All this, so we could buy a new computer. Or car. Or second home.

So why is Paulson an idiot? He's bluffing, of course, and it's not a particularly good bluff this time. He sees (or he should) what should be evident to anyone after reading this far down: there's an enormous risk involved in the game the central bank is playing.

All it takes is one of the members to say "basta!" and the house of cards falls, forever. You've heard stories about The Great Depression, but you might (and I think you will) be living through something far worse in the very near future. And mind you, we were able to grow out of the Great Depression only by getting our asses into a world war, something we can't afford to do right now, because we've exhausted our financial and materiel supplies on this ill-starred and ill-fated invasion of Iraq, along with the more justifiable but still tragic war in Afghanistan.

Many of the 25%ers, the folks who still support George W Bush thru thick and thin, believe an apt comparison can be made to Harry Truman. It's clear from reading this, they're two Presidents too close.

A Novel Approach

One thing I value in my quest to seek the office of NotPresident (see sidebar to the right to make campaign contributions) is novel ideas to solve stubborn or impopsing problems. As you are no doubt aware, I've put you to sleep bored you to tears spent many days talking about mortgage defaults and the plight of the middle and working classes who are loaded up with debt and have very shaky incomes to pay them off with.

So when the latest Democracy Journal was delivered to my inbox this week, I found an amazingly simple idea from Elizabeth Warren, the nation's premier expert on middle class bankruptcies: a Financial Products Safety Commission

I t is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street–and the mortgage won’t even carry a disclosure of that fact to the homeowner. Similarly, it’s impossible to change the price on a toaster once it has been purchased. But long after the papers have been signed, it is possible to triple the price of the credit used to finance the purchase of that appliance, even if the customer meets all the credit terms, in full and on time. Why are consumers safe when they purchase tangible consumer products with cash, but when they sign up for routine financial products like mortgages and credit cards they are left at the mercy of their creditors?

The difference between the two markets is regulation. Although considered an epithet in Washington since Ronald Reagan swept into the White House, the "R-word" supports a booming market in tangible consumer goods. Nearly every product sold in America has passed basic safety regulations well in advance of reaching store shelves. Credit products, by comparison, are regulated by a tattered patchwork of federal and state laws that have failed to adapt to changing markets. Moreover, thanks to effective regulation, innovation in the market for physical products has led to more safety and cutting-edge features. By comparison, innovation in financial products has produced incomprehensible terms and sharp practices that have left families at the mercy of those who write the contracts.

Sharp practices such as raising your interest rate on one credit card because you were a day late on another one, and raising it to some usurious rate of near 25%, only because some states in the nation allow that (most do not, but it's based on the state where the card company operates. Hullo, South Dakota!).

Why do people go into debt? Basically, debt is an advance on your income, with the promise to pay it back over time. Usually, you do this when you need to buy something, like a house or a car, that will last a long time and costs a lot of money.

But credit is also a trap, more so for people who get addicted to the feeling of wealth one gets from being flush with cash and able to buy things.

Consumers can enter the market to buy physical products confident that they won’t be tricked into buying exploding toasters and other unreasonably dangerous products. They can concentrate their shopping efforts in other directions, helping to drive a competitive market that keeps costs low and encourages innovation in convenience, durability, and style. Consumers entering the market to buy financial products should enjoy the same protection. Just as the Consumer Product Safety Commission (CPSC) protects buyers of goods and supports a competitive market, we need the same for consumers of financial products – a new regulatory regime, and even a new regulatory body, to protect consumers who use credit cards, home mortgages, car loans, and a host of other products. The time has come to put scaremongering to rest and to recognize that regulation can often support and advance efficient and more dynamic markets.

Isn't my credit rating at least as important as the fact that my house might burn down from a faulty toaster?

Particularly given the recent changes to the bankruptcy law that make it less likely that a consumer will ever be discharged from his debts if he gets in too deep over his head, this proposal is now more vital than ever. Things are only going to get worse for people as banks compete harder in a tighter mortgage and credit market for consumer dollars.

Americans are drowning in debt. One in four families say they are worried about how they will pay their credit card bills this month. Nearly half of all credit card holders have missed payments in the past year, and an additional 2.1 million families missed at least one mortgage payment. Last year, 1.2 million families lost their homes in foreclosure, and another 1.5 million families are likely headed into mortgage foreclosure this year.

Families’ troubles are compounded by substantial changes in the credit market that have made debt instruments far riskier for consumers than they were a generation ago. The effective deregulation of interest rates, coupled with innovations in credit charges (e.g., teaser rates, negative amortization, increased use of fees, cross-default clauses, penalty interest rates, and two-cycle billing), have turned ordinary credit transactions into devilishly complex financial undertakings. Aggressive marketing, almost nonexistent in the 1970s, compounds the difficulty, shaping consumer demand in unexpected and costly directions. And yet consumer capacity–measured both by available time and expertise–has not expanded to meet the demands of a changing credit marketplace. Instead, consumers sign on to credit products with only a vague understanding of the terms.

Indeed. To most of us, the language in a credit card agreement may as well be Sanskrit, for all we understand of it. The Schumer box, which is supposed to summarize the rates included in the agreement in plain English, can't possibly cover all the contingencies that are spoken about in the small print in which those rates may change.

Will this proposal ever see the light of day? I doubt it, without a concerted effort on the part of consumers and advocacy groups. Banks and other financial institutions make enormous contributions to politicians of both parties, precisely to keep regulations as lax as possible.

But something needs to be done and soon. Consumer debt to the United States is as big a problem as global warming is to the planet: it could cause the entire meltdown and collapse of the US economy, which is run on the fuel of consumer spending. For sure, the economy is going to take massive hits over the next several years as the mortgage market contracts, which will create opportunities for the fleecing of Americans, both legally and fraudulently, by legitimate financial concerns and, to put it politely, shady lenders and Nigerian princes whose money is trapped in Lagos.

It currently costs the American consumer $89 billion just to make the interest payments and fees on credit card debt. That doesn't include auto loans and mortgages, you'll notice. That's money that could be spent on shoes, books, clothing and laundry. Pretty essential stuff, and I chose those because they rank only slightly higher, in toto, than credit card servicing costs to the average Amerian family.

Yet, most people can tell you who makes quality clothes and shoes, or writes books worth reading.

We need an agency, not to protect Americans from falling into bankruptcy, that would be way too hard to do, but to help Americans understand what they are getting themselves into long before they get into trouble. Loan and credit language is deliberately obtuse, and that's the equivalent of putting rat poison into a teddy bear.

And poison is precisely what this language is designed to sugar-coat, or at least obscure. Most card companies will do as they damned well please, no matter how much you beg or complain, and the legal recourses you have are usually stacked in the lenders favor. You can't take them to court, you have to go to an arbiter that they get to choose. And so on.

I could go on, but Ms. Warren states the case more plainly than I could. What troubles me most about this is, its such an obvious solution to a pressing problem that it should be getting much more attention than some backwater webjournal and blog.

Spread the word, folks. We need this. Now.