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Just a pause in the midst to express appreciation for Weather Underground‘s storm-tracking services, and handy pile of Good Stuff, such as the WunderMap. Their site is far less crapped up with junk than Weather.com.
Right now we’re getting a late summerlike storm, complete with thunder. Thanks to the map’s animation and storm tracking features, I can see exactly what’s happening, and educate my judgements about whether to walk to the bus or the train — and when.
Anyway, dig it.
The #4 item on Twitter (behind Bailout, McCain and iPhone) is Selamat Hari Raya. #5 is #atlgas, for gas in Atlanta.
Got an email from my sister Jan the other day. She’s a Navy veteran who knew McCain, along with other notables. She’s also quite astute about politics, and follows it more closely than I do. I asked her if it’s cool to pass the email along, and she said yes, so here goes…
After seeing the visuals of yesterday’s (Thursday’s) White House meeting, I came to a conclusion: The Republicans need McCain to lose. Not in a landslide, just narrowly; but they really want and need him to lose.
Why? Well, first of all, because they don’t like him, or Palin. And they don’t think he represents their interests or true conservatism. And they know he is unpredictable and uncontrollable. And old and aging fast in the stress of campaigning, which does not bode well for life in the oval office. So if he dies, there would be Palin, which does not bear thinking about for them: she would set the case for leadership by women and neocons both back a generation and make the GOP the laughing stock of the world.
But the best reason to want McCain to lose is because they know that whoever wins this election will have four years of no-win:
- even if the bailout works, the economy will be a mess and hard times will hit everyone (but economic advisors and pundits)
- recovery of Katrina is still stagnant and the real extent of the Texas coast’s devastation is just coming to light; the new President will have to do the recovery right this time, which will cost billions
- at the best in Iraq all four years will be an expensive extraction quagmire
- our military will be struggling with recovering from this war’s damage for at least 4 years, if not the next decade
- Afghanistan is going to be a very hard war and Pakistan is on the brink of radicalism
- Iran will be very eager to test the next president;
- Kim will die and North Korea is a great, and dangerous, unknown that will cost us manpower and money to either keep isolated or help restorePutin will take the opportunity of our distractions to expand Russia’s power and influence and control
- Labor’s time is up in the UK
- Chavez will challenge the new president for supremacy in Latin America;
- Global warming will become more and more visible and action more urgent and because of the delays of the last 8 years, action will be more expensive
- Social security and medicare will be taxed beyond capabilities because bulk of the baby boomers who will become eligible
- taxes will have to go up, for some folks anyway
- because there will be no funds for the new President’s promises or programs, education, health care and infrastructure will not be addressed as aggressively as they should and the people will feel betrayed
So whoever is elected this time will, at best and with superb leadership, management and luck, avoid a real disaster and might just be able to start us on the road to recovery. But it will be a time of fingers in the dike, not developing a real flood control system, not visibly anyway.
So in 2012 an opposition candidate will be able to ride in on the white horse of told-you-so and have a good chance of winning.
And right now there are at least two generations of Republicans in congress, governors mansions and the private sector, just salivating at the thought of 2012. And very willing, almost eager, maybe even praying, for McCain to give them that chance.
I think she might be right. On the phone she just told me to notice that Rove is quieting down. Check the trend chart here.
Eric Norlin points (via Howard Linzon) to this piece by Andy Kessler. Eric’s summary: Smile. Think abundance, not scarcity. Get optimistic. I’m an born optimist, so this has an appeal.
Great remembrance of Paul Newman by Manohla Dargis in the NY Times. (I’d like to beg forgiveness for the annoying login required by the Times, but I won’t. It’s just plain wrong for the Times to retain that friction after it’s bothered to open its content anyway.)
My own favorite Newman moves are later ones: The Verdict, Nobody’s Fool, Empire Falls. As a journalist, I have a special appreciation for Absence of Malice, where the best performance actually belonged to Wilford Brimley, playing himself, essentially. In it Newman is by turns both passionate and, as Dargis puts it, cooler than dry ice.
He was, finally and enduringly, a good man. You knew that. It came across in his acting and his life. He’s a guy I wish I had known. Sad to see him go.
In his comment here, Mike Warot encourages me — and the rest of us — to watch this video by Karl Denninger, whose blog is here.
I did. It’s good. But I’m not sure Denninger is right. Or all-right, let’s say. Just somewhat.
Here’s the problem as I currently see it. (And I’m no economist. This is just me, one citizen trying to make sense of something that I’ve hardly paid attention to in the past. So take this with an acre of salt if you like.)
Yes, the system is rigged and corrupt. Yes, the Fed and Treasury have been messing up for decades. (As Kevin Phillips will tell you.) Yes, federal power has gone over the top here. Whoever heard of the Office of Thrift Supervision before it swooped in and sold WaMu to JP Morgan Chase? At least there’s some common sense involved with banking, and “trift” (a term that now feels euphemistic in a statist way, like “corrections”). Banking got sucked into runaway shell games, in which empty vessels multiplied and divided, as whole institutions with MBA-packed buildings grew to manage and manipulate them. Solidity and liquidity were both replaced by gasseosity — but in sectors of Xtreme Arcana that nobody outside fully understood. Thus we’ve had inflation for years, and have put off facing it, because it was hidden and the System seemed to be working.
Meanwhile the whole country became infected with the sickness of making money only for its own sake, backed by little resembling work or manufacture — a trend we’ve been seeing since the Carter administration.
The “free market” in finance has always been rigged by its Alpha beasts, its lobbied legislators and its regulators, to favor growth. But lost in this long round has been elementary horse sense about what’s actually valuable, what actually produces goods and services, what’s free and what’s not. Growth in this long round has had many costs, and we’re not even close to visiting all of them.
Perhaps it’s in our nature, with economic evidence going back to tulip bulbs. But I think it goes deeper than that. Our species pestilential and rapacious on a scale the planet has never seen before. It can rationalize chewing irreplaceable valuables out of the ground and seas, using them up and spreading its wastes everywhere. This cost-blind nature — is made manifest in a financial system that best rewards games built on games that are almost nothing but rationalizations — worse, of a sort that only its rationalizers can understand. The financial sector has become a casino in which the highest rollers have bought the house and rigged every game to pay off by splitting winnings to bet on other rigged games, while the rest of us say “Great!”, because we’re in there playing too: betting on worthless stocks, buying overpriced houses on easy credit with negative equities, running up credit card bills while thinking nothing of paying monthly interest rates north of 20%.
This “free market” was a free-for-all in which even its hands-off regulators participated. All while the country went from being the world’s leading manufacturer and creditor to the world’s leading out-sourcer and debtor — with the load now running into the dozens of trillions of dollars. Remember that we voted for the people who presided over that.
It’s tempting to blame and punish, but that isn’t what we need now. What we need is for credit to keep moving while the financial sector gradually shrinks to sane dimensions, with value that rises from 1/1 relationships between reality and perception — or at least a fair chance that good ideas will turn into good business. (I don’t want to throw smart investor babies out with the dumb investor bathwater.)
I don’t know if this $.7 trillion bill will do that. I do have a strong hunch about what will happen if it doesn’t. Or if we do nothing and let nature take its course. The entire financial sector will collapse, and the government won’t be able to print enough money to pay off its own and everybody else’s creditors, starting with China. Businesses of all kinds will close, and all but a few public utilities will cease to run smoothly. With weak manufacturing, absent small farming and other graces of traditional functioning societies, we’ll fall into a depression as bad or worse than the Great one. Cities will fail and crime will go rampant. And we’ll bore our grandchildren with stories of what it was like to hike ten miles through the snow to work at the only shit jobs that were left.
I believe this is what Warren Buffett also sees when he compares the current crisis to Pearl Harbor. I believe Buffett because he got wealthy by being sensible and prudent, and very much not of a type with those that have made a mess of the financial system.
Or so it seems to me on a Sunday morning just short of the precipice.
Oh, and I don’t hear either candidate talking about what’s really going on here. Nor do I expect them to.
James Fallows: After thirty years of meeting and interviewing politicians, I can think of exactly three people who sounded as uninformed and vacant as this. All are now out of office. One was a chronic drunk.
I think McCain won the thing. Not on substance, but on style. McCain sounded like Reagan, and Obama sounded like Kerry. The CNN talking heads seem to be giving the edge to Obama, but I just saw Guiliani on MSNBC, who made it clear that Obama gave the right wing talk machine a pile of fodder for the next week’s shows. Every time Obama said “John is right,” I winced.
FWIW, I listened to most of it on the radio, so the stuff about McCain never looking at Obama I missed.
On the right, Charles Krauthamer:
| Paulson is a lame duck. In four months, he is gone. Paulson is asking for the money not for self-aggrandizement but for the same reason Fed Chairman Ben Bernanke and the markets are asking for it: to prevent the American economy from going over a cliff. |
| Some disdain that assessment as hypothetical. Paulson and Bernanke, who actually peered into the abyss on Black Thursday (September 18), think otherwise. They’re not infallible, but prudence dictates not risking the economy on the opposite bet. |
| The stock market dive and the seizing up of the credit markets convinced them that their ad hoc Bear-yes, Lehman-no rescue of investment firms had not only reached a dead end, but was actually making things worse. It had added uncertainty to a situation in which pre-existing uncertainty was already causing panic. |
| Hence the need to go below the institutional superstructure to the underlying toxic assets, which Paulson proposes to take off the private sector’s books by having the government buy them for, yes, $700 billion. |
| Congress has every duty to be careful with taxpayers’ money and to suggest improvements in the administration plan. But part of Congress’ reaction has nothing to do with improving the proposal and everything to do with assuaging the rage of constituents — even if it jeopardizes the package’s chances of success, either by weakening it or by larding it up with useless complicating provisions designed solely to give the appearance of sticking it to the rich. |
| Window dressing such as capping pay packages, which the Bush administration has already caved in to. I’ve got nothing against withholding golden parachutes from failed executives. But artificially capping the pay of people brought in to lead these wobbly companies back to health is a fine way to tell talented executives to look elsewhere for a job. In the demagogic parlance of this election year, it is a prescription for outsourcing our best financial minds to London and Dubai. |
| The mob is agitated, but hardly blameless. While the punch bowl — Alan Greenspan’s extremely low post-9/11 interest rates — was being held out, few complained about cheap loans and doubling home values. Now all of the sudden everything is the fault of Wall Street malfeasance. |
| I have little doubt that some, if not many, cases of malfeasance will emerge. But what we conveniently neglect is the fact that much of this crisis was brought upon us by the good intentions of good people. |
| For decades, starting with Jimmy Carter’s Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac — who in turn pressured banks and other lenders — to extend mortgages to people who were borrowing over their heads. That’s called subprime lending. It lies at the root of our current calamity. |
| Were there some predatory lenders? Of course. But only a fool or a demagogue — i.e., a presidential candidate — would suggest that this is a major part of the problem. |
| Was there misbehavior on Wall Street? The wheels of justice will grind. But why wait for justice? If a really good catharsis will allow a return of rationality to Capitol Hill — yielding a clean rescue package that will actually save the economy — go for it. |
On the former and future right, Kevin Phillips:
| McCain has never been much on economics, but Paulson’s indicated arrangement with the Democrats — financial firms will get to turn in the toxic debt and financial instruments they can’t peddle for reimbursement by an American taxpayer-funded entity — is so bad that if the former Navy pilot grins and accepts it he will look like a wobbler and a Grade A sap. He’s already lost the edge he had coming out of the Republican convention. Barack Obama, by contrast, can get away with being evasive because the Democrats look like they’re accepting a measure principally authored and promoted by Paulson and Federal Reserve Chairman Ben Bernanke. |
| Now for a little bit of background. We’re not just looking at a real estate mess. Over the last quarter century, the total of public and private credit market debt in the United States — most of it, in fact, is private — has more than quintupled from $8 to $48 trillion, the biggest such orgy in world history. Over that period, domestic financial debt – the money borrowed by the financial sector for expansion, consolidation, empire-building, leverage, exotic mortgages, gambling, you name it – swelled from just $1 trillion to some $14 trillion. Employing these economic steroids, the financial sector ballooned itself from 14-15% of what back in the mid-1980s was the Gross National Product to 20-21% in 2004 of the newer Gross Domestic Product calculation. In the meantime, the once-dominant manufacturing sector fell far behind, dropping to just 12% of GDP. In a nutshell, the economy has been hijacked in recent decades by the very groups who now purport to have remedies – Wall Street, from whence Paulson emerged, and the money-bubbling, don’t regulate the dangerous practices Federal Reserve Board, from whence Bernanke comes. |
| The public is finally starting to understand what’s been going on in this perverse milieu of Wall Street socialism where private individuals get the profits and the taxpayers underwrite the bail-outs. It has a long history; in Bad Money I have a chart that lists fifteen or so rescues over some 25 years. Finance has now grown into an octopus, with dozens of debt, speculative, credit card, mortgage, interest group and Washington lobby tentacles that will lock onto any new bail-out proposal and turn it into another food supply. Even as the new “legislation” is being drafted, you can bet all the lawyers, lobbyists and big donors are already on the phone to key people in Congress, the White House, the Treasury and the Federal Reserve. Anybody with a good nose can almost smell the fixes and corruption, and of course, political critics and the public will be told that there’s just no time for debate, no time to go over the details. Don’t pass it tomorrow, pass it yesterday. We can assume that George W. Bush will sign it, possibly with a fleeting smirk. |
| Will this bail-out solve the current mess? Of course not. For the last year, Paulson and Bernanke have been Fumble and Bumble. They won’t strike at the roots of the problem – indeed, one could almost say the two men represent those roots — so their rescue gimmicks fail and the crisis extends and deepens. |
| Ironically, the best hope for resistance comes not from the left but from free-market elements of the Republican Party. I have not had much good to say about the GOP for years, but recent events may hint at their political and ideological renewal. Sometime back, when Congress passed the Fannie Mae and Freddie Mac bail-out program, Senator Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, ultimately voted against it. He had worked on its early stage, but ultimately voted no because seeing a pay-off to “Wall Street and K Street (the Washington lobbyist corridor)”. Then the Republican National Convention, in a rejection of Bush, Paulson and Bernanke, put an anti-bailout section in its 2008 platform. A few days ago, the ranking Republican on the Senate Banking Committee, Richard Shelby of Alabama, called on the Fed to reject bail-outs and allow the markets to work even if the consequences are “brutal.” And on September 18, a hundred Republican members of the House of Representatives sent a letter to Paulson and Bernanke requesting that the two men “refrain from conducting any additional government-financed bail-outs for large financial firms.” |
| I suppose there’s a chance that McCain could decide to oppose the administration and truly fight this latest round of Wall Street socialism. Maybe instead of asking George W. Bush to fire SEC Chairman Cox, McCain could come out against Paulson and Bernanke. But the odds are much greater than an embarrassed McCain will flounder toward November defeat. |
| That would mean that the anti-bail-out forces in Congress and at the grassroots will take over the national party helm in 2009, and it’s not too late to start right now. If they strike a tough stance in the next few days, they could expose, delay, amend and even block — by any available means — what amounts to a massive mutation and even perversion of the U.S. economy. The leader of the hundred House Republican conservatives, Congressman Jeb Hensarling of Texas, summed it up quite neatly: “Enough is enough. It’s time to bail out the American taxpayers from bail-out mania.” Hopefully, we’re looking at a September battle cry. |
Is that what McCain is up to? Jim Manzi says “it’s hard not to credit him for running a tactically ingenious campaign”.
