'Winging It

2010-01-31T21:42:00.003-06:00

The truism that "Americans love an underdog" enjoys widespread belief and application. The Tea-Party phenomenon fuels underdog challenges to established political elites (although given their "astroturf" status, one wonders whose interests these challenges actually represent). Scott Brown commands the underdog-loving spotlight. Whenever an establishment appears to be challenged by an outsider, the image of populists vs. elitists seems to follow within instants.

Thomas Frank, however, whose What's the Matter With Kansas explains the Tea Party phenomenon at least as well as any other analysis, thinks that Scott Brown's victory should ignite a populist fire within the Obama Administration. Writing before President Obama's State of the Union Address and his subsequent appearance with the House GOP in Baltimore, Frank challenged the President to expose the GOP's faux-populism--expressing rage over the bailouts while also blocking efforts at financial reform--by challenging them over this very set of issues:

What you need to do now is pick a fight, preferably one that forces the obstructionists of the right to take the side of privilege. You need a battle that will expose their populism and their protest for the pretenses they are. Your target is obvious: the financial industry, from Wall Street to the credit card companies. Yes, taking them on will cost you campaign contributions for 2012, but take Wall Street down a few pegs and Americans might start to remember what it was their grandparents loved about Democrats all those years ago.

TIME magazine thinks that Obama is following this script. Their piece, "Can Bashing the Banks Help Obama?" oozes with outsider vs. establishment/elite face-offs. Noting that earlier Administration jibes at Wall Street bankers had produced few policy changes, TIME's Grunwald and Scherer nevertheless state that "the latest bank-bashing does indicate a new strategic approach to [Obama's] second year, inspired by the same public wrath that produced [Scott] Brown's upset."

That means more populism and confrontation, less deference to Congress. It's a shift from an inside game to an outside game, from passive leader of a divided party to active agitator for change. The idea is to take an uncompromising stand, make a clear case to the public and then force lawmakers to choose sides — as opposed to announcing general principles, letting Congress hash out its own details at its own pace and then desperately cutting deals to try to cobble together 60 Senators.

Additionally:

So now they want to draw bright lines: Are you with us or Wall Street, with ordinary families or greedy titans? They figure that if they can't get a legislative victory, they'll get a potent political issue.

But Republicans are already accusing Obama of sacrificing reform on the altar of politics, and it's true that the bright-line strategy could scuttle whatever chances there might have been to build bipartisan consensus in the Senate

We saw this in both the State of the Union Address, when Obama challenged the GOP Senate leadership to assist in governing, and again in Baltimore, where the President repeatedly drew distinctions between House Republican and Administration policy preferences. (Hmm. Recall, this is potentially a very polarizing device [see, particularly, the last paragraph].)

TIME says:

It's no coincidence that the day before Obama announced his latest push to crack down on big banks, his confidants David Axelrod and Valerie Jarrett met with Troubled Asset Relief Program (TARP) watchdog Elizabeth Warren, the intellectual mother of the consumer agency and the most prominent populist advocate for financial reform. "They made it very clear that Wall Street needs to stop acting like nothing has changed," Warren told TIME.

(For more on Warren's views, see this awesome clip from the Daily Show. And, yes, I want to make out with her, too.)

Also, the White House seems to have remembered that they have ex-Federal Reserve Board chairman Paul Volcker lurking around the Executive Branch, for, as TIME notes:

It's also no coincidence that the President made his announcement while standing next to the unlikeliest populist advocate for financial reform, 82-year-old former Federal Reserve chairman Paul Volcker, a previously marginalized Obama adviser who had chastised the Administration for making insufficient efforts to limit the size and risk profiles of big banks. The White House is tired of complaints that its economic team — especially Treasury Secretary Timothy Geithner, the former New York Fed president who helped bail out AIG and other failing firms — is too close to Wall Street. Bringing the legendary gray eminence in from the cold — Obama called his plan to ban proprietary trading by commercial banks "the Volcker rule" — not only lent capitalist gravitas to populist bank-bashing but also reinforced the message that the Administration will not be outflanked in its assaults on Big Finance.

The details of the Volcker rule will be more fully explained as early as Tuesday, although it is clear Mr. Volcker advocates a strict separation between commercial banking and other financial services activity:

The BBC has obtained a recent article by Mr. Volcker for a specialist magazine, OMFIF (Official Monetary and Financial Institutions Forum). In it, Mr. Volcker made it clear that he wants a complete separation of commercial banks from the financial markets.

"We simply cannot afford further financial market breakdowns," said Mr. Volcker's article.

"I favour a separation of commercial banking activities that are essential to the functioning of our financial system from more speculative trading-oriented capital markets activities that are not.

"To lower the risk and vulnerability of commercial banks, I favour prohibiting their ownership or sponsorship of hedge funds, private equity funds, and large-scale purely proprietary trading activities in securities, derivatives or commodity markets.

"These measures would directly eliminate potential areas of risk, reduce conflicts of interest and focus management attention on the core functions of banking."

The BBC points out that Volcker's ideas enjoy traction among banking analysts:

His ideas are strongly supported by many people who follow retail banking, who feel the reckless property related-lending that led to the crisis was a result of the swashbuckling culture of Wall Street investment bankers that now control finance.

"The investment bankers had effectively achieved something extraordinary in a period of as little as 20 years - control over many of the largest retail deposit-taking institutions in the world," says Michael Lafferty, chairman of Lafferty Group, a global banking research house.

"My personal view is that retail banking and investment banking are like oil and water - and will never really mix.

"We have at last the opportunity to return banking to real bankers, concerned about customers and with a proper appreciation of risk, and to help markets break out of their extreme tendency for booms and busts of the past three decades."

Awareness of popular anger at the global financial elite extends even to the World Economic Forum in Davos, Switzerland, where bankers focused concern on the "real economy."

Despite the bankers' recognition of the need for reform, specific criticisms of the Volcker rule have been expressed:

The IMF's Strauss-Kahn called for a speeding up of new rules on capital requirements for banks.

"The question of coordinating this financial sector reform is top priority. We're not going exactly in the right direction," Strauss-Kahn said in an oblique reference to Obama's proposals to bar commercial banks from proprietary trading and ties with hedge funds and private equity funds.

Discussions at the Davos meetings, in fact, challenged the necessity of regulating institutions deemed "too big to fail," suggesting instead the creation of a transnational resolution fund to prevent future financial crises, although it should be recognized that "finding a consensus on how to limit the potential cost to taxpayers of emergency bail-outs could lead to critical delays."

At a bigger picture level, the issue of populist appeals generated a pseudo-exchange between David Brooks of The New York Times and Matt Taibbi of Rolling Stone.

Brooks, in a piece called "The Populist Addiction" pretty much outlines the worst aspects of populism, describing more European fascism than the nineteenth century Populist movement from whence the notion—populism—takes its name. He does, however, nicely differentiate the left- and right-wing versions of the contemporary populist beast, but he sees populist appeals as attempts by political elites to gain more power:

Ever since I started covering politics, the Democratic ruling class has been driven by one fantasy: that voters will get so furious at people with M.B.A.'s that they will hand power to people with Ph.D.'s. The Republican ruling class has been driven by the fantasy that voters will get so furious at people with Ph.D.'s that they will hand power to people with M.B.A.'s.

Taibbi responds pretty forcefully, calling Brooks' piece "a passionate defense of the rich" while claiming to be the target of the shot Brooks takes at the end of his fourth paragraph when he argued that "with the populist narrative, you can just blame Goldman Sachs [for the entire financial crisis]." Taibbi did, after all, call Goldman Sachs "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

On the one hand, at least some elements of the journalistic and economic elites have perceived that citizens/consumers/voters in the West perceive those elites to be completely out of touch with the lives normal citizens/consumers/voters live. They can either accept reform or generate even more cynicism, though if the return are high enough, they might yet gamble that citizens/consumers/voters and their interests are not worthy of action to stop the boom and the bust. So that's what's on the other hand: How much reform will the banking elites who constitute Thomas Friedman's Electronic Herd be willing to consider in the public interest of the political communities where they profit?

Pakistan Under Seige

2009-10-15T14:57:00.007-05:00

Terrorists/militants struck multiple targets on multiple occasions this week in Pakistan.

Pakistani Army HQ was attacked by gunmen. These gunmen seized hostages. Pakistani commandos surrounded and then stormed Army HQ, freeing the remaining/surviving hostages.

A suicide bombing in Peshawar is interpreted as a warning to the Pakistani government.

The Pakistani government vowed an anti-Taliban campaign in the region surrounding Peshawar. Some argue this should embolden the U.S. in its own campaign against the Taliban.

Then, today (Thursday), multiple coordinated attacks rocked Pakistan again, with terrorists/militants dressed in police uniforms assaulting multiple law enforcement agencies in Lahore. The Taliban claimed responsibility.

Some Pakistani police forces blamed India's intelligence service for the attacks.

Interestingly enough, Afghanistan's ambassador to the United States blamed Pakistan's intelligence service, the ISI, for an attack on India's embassy in Afghanistan.

Global Economic Future

2009-10-15T12:13:00.003-05:00

In case you missed it, The Economist ran a special report about the global economic future. It is not particularly happy reading, since recovery from a deep recession to a "new normal" may involve lower output and (thus) higher unemployment:

In a recession firms shed labour and mothball capital. If workers are left on the shelf too long, their skills will atrophy and their ties to the world of work will weaken. When spending revives, the recovery will leave them behind. Output per worker may get back to normal, but the rate of employment will not.
Something similar can happen to the economy’s assembly lines, computer terminals and office blocks. If demand remains weak, firms will stop adding to this stock of capital and may scrap some of it. Capital will shrink to fit a lower level of activity. Moreover, if the financial system remains in disrepair, savings will flow haltingly to companies and the cost of capital will rise. Firms will therefore use less of it per unit of output.

The result is a lower ceiling on production. In the IMF’s latest World Economic Outlook, its researchers count the cost of 88 banking crises over the past four decades. They find that, on average, seven years after a bust an economy’s level of output was almost 10% below where it would have been without the crisis.
This is an alarming gap. If replicated in the years to come, it would blight the lives of the unemployed, diminish the fortunes of those in work and make the public debt harder to sustain.

Additionally:

This special report will argue that although a “new normal” for the world economy is now in sight, it will be different from the old normal in a number of ways. Demand in rich countries will remain weak and emerging economies will not be able to compensate. The report will explain why many governments will have to keep their stimulus packages going for longer than expected, or face entrenched unemployment that will permanently lower their economic potential. Public debt will rise so that private debt can fall. The banks, the report will show, will remain cautious about lending again, which will slow up the recovery but also make companies more careful about their investment; and the securitisation markets that became so fashionable during the boom will recede, though not disappear altogether.

A persistent shortfall in demand will weigh on supply. By the time this crisis is over, as many as 25m people may have lost their jobs in the 30 rich countries that belong to the Organisation for Economic Co-operation and Development (OECD). The danger is that several million may never regain them. The mobilisation of capital will be fitful as the financial system copes with past mistakes and impending regulation. The travails of finance, in turn, may prevent the recovering economy from backing and exploiting innovations.
Like Japan’s bubble years, the years that led to the global financial crisis have left a heavy legacy of debt on the balance-sheets of banks and households, especially in Britain and America.

Something to Consider

2009-09-16T14:15:00.003-05:00

Two--no, three--articles to consider:

The failure of economists to predict Depression 2.0. (And some questions about financial economics.

Robert Lucas rebuts here.

My half-witted take: the efficient-markets hypothesis rests on...never having interacted with real people or something...seriously, how much irrationality dances in front of your eyes every day when walking around in the world?...have you watched people drive lately?)

How/why economists failed in predicting Depression 2.0. Krugman writes long but well.

Remember Keynes

2009-09-14T21:50:00.002-05:00

Some self-referential B.S., but remember this stuff when evaluating GOP economics analysis/arguments.

Capitalism American Style

2009-09-14T21:30:00.006-05:00

It's not in very good shape, regardless of any sort of "recovery". By that, I mean the structure of capitalism is morphing, not really into right-wing fears of incipient "socialism" (there isn't much government ownership of the means of production, after all), but into plutocracy. Adam Smith wasn't envisioning plutocracy, by any means. Evidence follows---

While intervening in financial crises that threaten to sink the whole economy is understandable, this is ridiculous:

Last October, Congress passed the Emergency Economic Stabilization Act of 2008, putting $700 billion into the hands of the Treasury Department to bail out the nation’s banks at a moment of vanishing credit and peak financial panic. Over the next three months, Treasury poured nearly $239 billion into 296 of the nation’s 8,000 banks. The money went to big banks. It went to small banks. It went to banks that desperately wanted the money. It went to banks that didn’t want the money at all but had been ordered by Treasury to take it anyway. It went to banks that were quite happy to accept the windfall, and used the money simply to buy other banks. Some banks received as much as $45 billion, others as little as $1.5 million. Sixty-seven percent went to eight institutions; 33 percent went to the rest. And that was just the money that went to banks. Tens of billions more went to other companies, all before Barack Obama took office. It was the largest single financial intervention by Treasury into the banking system in U.S. history.

But once the money left the building, the government lost all track of it. The Treasury Department knew where it had sent the money, but nothing about what was done with it. Did the money aid the recovery? Was it spent for the purposes Congress intended? Did it save banks from collapse? Paulson’s Treasury Department had no idea, and didn’t seem to care. It never required the banks to explain what they did with this unprecedented infusion of capital.

And then there's this analysis:

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

This is all particularly galling when the same corporate interests who picked the Treasury's pockets also spend large sums of money to lobby against national health insurance.

Bush Legacy Watch: Shoe Thrower

2008-12-15T22:51:00.001-06:00

I wonder if W. even realizes the significance of shoes being thrown at him by an Arab.

During the invasion U.S. soldiers witnessed Iraqis throwing shoes at murals of Saddam Hussein: it is an act of profound disrespect.

Apparently, the reporter who threw his shoes at President George W. Bush hates both the U.S. and Iranian role in Iraq.

More Apologies and a Very Sad Explanation

2008-12-11T09:53:00.002-06:00

I apologize for the lack of posts, but my time with the blogosphere has become limited due to tragic circumstances at my workplace.

As noted, "Some Defunct Economist" waits tables. The restaurant I work at is something of a local institution. A few of the servers have been there for years, and one in particular has worked there since the late '70s.

This last weekend she went to the hospital with some chest pains and learned that she has multiple health problems, including cancer, which has metastasized.

She won't be back to work.

Since we are a small organization, the rest of us on the schedule have had to alter our schedules. I and a couple of other servers will be pretty much living there for the next few weeks.

I am very depressed by these events, such that even when I find time in front of my roommate's laptop I don't even want to think about stuff outside my direct line of sight.

I apologize for my current lack of zeal. Perhaps in a couple of weeks I'll do more than simply complain, but until then, keep the faith by doing two things: reading Krugman and expressing overt exasperation with both neoconservatives and supply side charlatans.

Thanks,

JJV

Apologies & Some Summarizing, Updated

2008-12-07T12:36:00.008-06:00

My apologies: posting is light at I am again having some computer issues involving a spastic video card that is producing double vision. I will try to produce something later today/night but between my work schedule and my bum machine I will not be posting too much until one or another of the situations resolves itself.

It is 11 degrees here and snowing.

On to other news.

David Gregory is the new host of Meet the Press.

Obama is promising big infrastructure projects, while Krugman, who advocates such policies, worries that they will take a while--up to a year--to rally the real economy since they take time to plan and execute. So, hopefully, extended unemployment benefits and food stamps for the short-term? They provide the best bang for the buck, anyway.

Obama, being no idiot, knows this, and honestly admits that the economy will get worse before it gets better.

Obama's honesty is quite refreshing, but also states the incredibly obvious: American citizens read/heard/watched on Friday, when the latest jobs report announced that over a half-million jobs had been "lost" in November alone.

Robert Reich wonders if we can call Depression 2.0 a Depression yet. When professional economists are freaking out, well, things are pretty grim.

It may not look like it at first, but the fact the Senate refuses to let Vice President-Elect Joe Biden join in its deliberations is probably a very good thing for those sensitive to separation of powers, checks and balances, a non-tyrannical executive branch, civil liberties, and the overall general reasons constitutional republics are preferable to banana republics.

The AP reports on Freddie Mac's drive to free itself of regulatory control. Wow, they spared no expense.

George Will often makes no sense. Here, he continues in the same vein, inventing a new ideology, reactionary liberalism, and then ascribing it some curious goals. Ysglesias' take on Will's column is here. My fascination is this: it was conservatives not liberals who turned "liberal" into a dirty word by doing exactly what Will does here, which is to make stuff up and rhetorically link liberals to it. Will's market fundamentalism might be amusing were he not so insistent on not learning anything at all from recent economy history.

Well, back to watching the Vikings try to end the Lions' winless streak and then off to work.

Bush Legacy Watch--That Which We Dare Not Name

2008-12-04T16:49:00.004-06:00

Remember that the Bush Legacy includes torture.

How President-Elect Obama deals with this issue will form a large part of the Obama Legacy.

Froomkin nails it:

Of all the ways the Bush presidency represented a break with traditional American values, none is more shocking or grievous than the countenancing of torture.

In order to be morally superior to one's enemy, one must act morally superior to one's enemy.

This is something the neo-conservatives completely forgot/ignored/dismissed/twisted in all their thinking about responding to 9/11.

They approached the issue from the perspective of an implicit American moral superiority so grandiose that it made the use of any possible means a moral act.

And thus completely immoral means adopted without apology.

Neo-connery.

Auto Bailout News

2008-12-04T16:07:00.004-06:00

The auto industry is screaming louder, but they still face skepticism in Congress.

The crisis Detroit faces may soon come to a head: Ford says it will go down if GM goes down, and GM says it could go down within weeks.

While weighing possible action to save the Big Three, the New York Times editorial board argues that the American auto manufacturers can give taxpayers reduced greenhouse emissions in exchange for their dollars.

However, Robert Reich rains all over this parade, arguing that no matter what, Detroit will continue to ignore fuel-efficiency:

Telling automakers to make more fuel-efficient cars as a condition of being bailed out is like telling Citigroup or any other big bank to issue more affordable loans to Main Street as a condition of being bailed out. It won't happen. Conditions like these make the public feel better about using their tax dollars to bail out private firms, but they're useless. Automakers, like the big banks, will do the minimum required, and you can bet their lawyers and lobbyists will find ever more clever ways of avoiding even that minimum. Without lots of buyers who want fuel-efficient cars, automakers won't produce them, period. (Without credit-worthy borrows able and willing to pay the costs of bank loans, they won't be issued, either.)

John Cole depicts the auto industry's collapse as a three act play, wherein labor gets hosed due to management's incompetence. Nice shot at Mitt Romney (and anyone else echoing his line about UAW pay), by the way.

Keynes--the essential primer

2008-12-04T15:31:00.003-06:00

For those confused about all things Keynsian, here is Robert Reich's "abridged version". The essential essentials are this:

Keynes' basic idea was simple. In order to keep people fully employed, governments have to run deficits when the economy is slowing. That's because the private sector won't invest enough. As their markets become saturated, businesses reduce their investments, setting in motion a dangerous cycle: less investment, fewer jobs, less consumption and even less reason for business to invest. The economy may reach perfect balance, but at a cost of high unemployment and social misery. Better for governments to avoid the pain in the first place by taking up the slack.

And, regarding the (somewhat intentional) confusion some are sowing between the original New Deal and the use of a Keynsian stimulus:

As the Depression wore on, Roosevelt tried public works, farm subsidies and other devices to restart the economy, but he never completely gave up trying to balance the budget. In 1938 the Depression deepened. Reluctantly, F.D.R. embraced the only new idea he hadn't yet tried, that of the bewildering British "mathematician." As the President explained in a fireside chat, "We suffer primarily from a failure of consumer demand because of a lack of buying power." It was therefore up to the government to "create an economic upturn" by making "additions to the purchasing power of the nation."

Yet not until the U.S. entered World War II did F.D.R. try Keynes' idea on a scale necessary to pull the nation out of the doldrums — and Roosevelt, of course, had little choice. The big surprise was just how productive America could be when given the chance. Between 1939 and 1944 (the peak of wartime production), the nation's output almost doubled, and unemployment plummeted — from more than 17% to just over 1%.

Never before had an economic theory been so dramatically tested. Even granted the special circumstances of war mobilization, it seemed to work exactly as Keynes predicted.

An immediate conclusion: Even if the New Deal didn't work, the Obama Administration still has a shot at using Keynsian policies to mitigate the impact of Depression 2.0.

And that's what I'm talking about when I say, "Bring on the stimulus." I am simply echoing far, far better minds than my own. Expertise matters, even in republics, and we ignore it at our peril.

Mumbai Terror: Pakistan Links Unearthed

2008-12-04T15:00:00.005-06:00

A former Department of Defense official, speaking anonymously to the New York Times, says that the Mumbai attackers received Pakistani training as tens of thousands marched in Mumbai's streets.

Meanwhile, India reports possession of proof of Pakistani involvement, implicating Pakistan's intelligence service, the ISI. Additionally, training for this mission began a year ago. However, despite the linkages between the terrorists and the ISI, India has few options for a response given Pakistan's political fragility.

Further complicating matters, the Pakistani military has reasons to desire a diversion away from the Afghanistan border and towards the Indian border:

According to the Indian sources, the military in Pakistan appears to be acting out of three motivations. First, they wish to divert international concern away from the Mumbai attacks and the role of Pakistan-based terrorists towards a more general concern about India-Pakistan tension.

Second, they wanted to send a message to India that “you can talk all you like to Zardari and the civilian government but nothing will change.”

The third reason, the sources said, was that the Pakistan army “needs a way out of the unpopular war it is fighting under U.S. pressure in FATA and Wana. They really have a problem and need a diversion. Thanks to the war on terror and the Musharraf legacy, for the first time in the history of Pakistan, the army is unpopular inside the country. They are in trouble.”

The New York Times editorial board urges India not to treat the Mumbai attacks the way the United States treated 9/11, arguing against a major troop buildup on the Indo/Pak border:

When commentators repeat the metaphor of 9/11 they are in effect pushing the Indian government to mount a comparable response. If India takes a hard line modeled on the actions of the Bush administration, the consequences are sure to be equally disastrous. The very power of the 9/11 metaphor blinds us to the possibility that there might be other, more productive analogies for the invasion of Mumbai: one is the Madrid train bombings of March 11, 2004, which led to a comparable number of casualties and created a similar sense of shock and grief.

If 9/11 is a metaphor for one kind of reaction to terrorism, then 11-M (as it is known in Spanish) should serve as shorthand for a different kind of response: one that emphasizes vigilance, patience and careful police work in coordination with neighboring countries. This is exactly the kind of response India needs now, and fortunately this seems to be the course that the government, led by the Congress Party, has decided to follow. Government spokesmen have been at some pains to specify that India does not intend to respond with a troop buildup along the border with Pakistan, as the Bharatiya Janata-led government did after the attack by Muslim extremists on India’s Parliament in 2001.

Finally, and a bit off-topic, the terrorists used all the trappings of high-tech culture in these attacks--satellite telephones, Blackberries, GPS indicators, and high definition photography. Such developments had been anticipated recently in Wired. This is the cutting tactical edge of Fourth Generation Warfare (4GW). (Please see Thomas X. Hammes' The Sling and the Stone for a lot of stuff to think about regarding 4GW.)

The Bush Legacy: Worse than Hoover?

2008-12-03T15:18:00.005-06:00

Harold Myerson of the Washington Post sticks another icepick into Bush. His formulation is that Bush = Hoover, but worse, and after citing Hoover's, uh, responses to the economic downturn we now call the Great Depression, Myerson gets right to the meat of the comparison:

The Bush administration's approach to today's meltdown is to direct all its energies and largess to lending institutions. There is, as yet, no program to help floundering homeowners renegotiate the terms of their mortgages. The president is opposed to further stimulus programs, even though private-sector investment in the United States has all but ceased.

It's becoming increasingly clear, however, that while saving the banks may limit further calamities, it doesn't really save anybody else. Even with government-guaranteed lines of credit, financial institutions are refusing to lend money. With the banks effectively on strike, an economic recovery, if there is to be one, must begin with the government injecting funds to those parts of the economy that need it most: infrastructure development, state and local governments, an alternative-energy sector. These are all programs to which Bush is firmly opposed.

In a sense, Bush's inactivity is even less excusable than Hoover's. Unlike Hoover, Bush could learn from the successes of New Deal and World War II-era programs to revive the economy. Keynes's general theory of how to defeat depressions wasn't around when Hoover was president, but it's been with us now for 72 years. What's more, virtually every reputable conservative economist, from Martin Feldstein on down, now supports a government stimulus program. But Bush, drawing on no known body of economic thought, remains opposed. (So does Republican House leader John Boehner, who seems determined to elevate stupidity to a party principle.) And with each passing day, the economic hole out of which we will have to climb grows deeper.

Myerson goes on to argue that there aren't mammoth protests against Bush right now because his suckiness as a president is as mammoth as our three worst previous presidents (and how 'bout that for a trifecta?):

So where's the outrage? Why aren't demonstrators besieging the White House? Where are the "Welcome to Bushville" signs in those neighborhoods where abandoned homes outnumber the occupied ones?

The answer, I suspect, is that you can only irreversibly give up on a president once. Further catastrophic failures on the president's part elicit only diminishing returns. Buchanan did nothing while the South seceded: That was it for him. Hoover did nothing as farmers, workers and middle-class America got wiped out: With that, he was beyond rehabilitation. Nixon had Watergate: Enough said. One mega-strike and you're out.

Bush, however, has had three. He misled us into a nearly endless war of choice to disarm a threat that never really existed. He let a great American city drown. And now he stands by while the economic security of tens of millions of Americans is vanishing.

Yet, somehow, W. has few, if any, regrets, and sees nothing, nothing at all, as his fault.

Amazing.

The Audacity of Dope.

Obama Cabinet: Foreign Affairs Stuff

2008-12-03T14:42:00.005-06:00

President-Elect Obama taps retired General James Jones as National Security Adviser.

Jones' tasks will include restoring the proper (statutory) functioning of the National Security Council and the interagency process in the national security bureaucracy. Why? Well, as David Corn puts it:

One of George W. Bush and Dick Cheney's many accomplishments was to wreck the national security apparatus of the United States government--with key assists from Condi Rice, Donald Rumsfeld and Paul Wolfowitz. For years, Foggy Bottom and the CIA were at war with the Pentagon and the White House, while the national security adviser (that would be Rice) became not a policy broker (as the job requires) but an enabler. She allowed ideologues to run wild and to trump expertise. She made sure that dissenting opinions were not placed front and center before the president. Foreign policy became the territory of a small band of arrogant know-it-alls who, it turned out, did not know nearly enough.

On Bush and Cheney's watch, the system broke down--by design. It's imperative that the foreign policy machinery of the US government be revived and restored. There needs to be a working balance between the intelligence community, the military, and the diplomats. There needs to be a free flow of ideas. The views of true experts inside and outside the government ought to be factored into major decision-making. And it is the job of the national security adviser to ensure this happens.
That mission will fall to Jones.

(For more on the broken interagency process between 2001 and 2005, see the text of Lawrence Wilkerson's speech at the New America Foundation, here; as the former chief of staff for Colin Powell, he's the guy who first made me aware of the brokenness of the interagency process and how Rice enabled both the brokenness and Bush's horrible decision making.)

Fred Kaplan offers a similar analysis of Jones' new role, here, and as usual he nails it:

It may be telling that Obama has been seeking advice lately from two other generals who served as national-security advisers: Colin Powell and Brent Scowcroft. Anthony Zinni, a retired Marine general who's known Jones for 30 years and followed a similar career path, told me in an e-mail that he sees Jones as "a Scowcroft type of NSA," elaborating, "He works hard to build consensus and has a lot of patience. He doesn't like to seek confrontation but won't shrink from a fight. … He doesn't seek the limelight but will be the hand behind keeping things on track and focused."
"On track and focused" is precisely where George W. Bush failed to keep things, especially in his first six years (that is, until Robert Gates replaced Donald Rumsfeld at the Pentagon). As a result, policies drifted, information was suppressed, dissenting views were circumvented, and, sometimes, decisions made by the National Security Council were simply ignored or surreptitiously overruled. (For one crucial instance, click here; for others, read some of these books.)
Rumsfeld in particular was able to get away with this high-handedness—at one point, to prevent a decision from being made, he simply didn't show up for three consecutive NSC meetings—in part because Condoleezza Rice, Bush's first-term national-security adviser, was a weak manager; Rumsfeld, a veteran infighter, ran circles around her; and Bush, a lackadaisical president in this respect, declined to rein him in.
This sort of manipulation and chaos, it's safe to bet, won't be countenanced by Gen. Jones.

Combine this appointment with the retention of Gates at Defense, who provides Republican cover for Obama's national security decision-making, and then factor in Clinton at State, and the outlines of Obama's mastery of process begin to take shape, as Andrew Sullivan argues:

I'll place my bet that all the surge has done is postpone an inevitable "total breakdown." Obama's biggest test will be resisting the temptation to stay once violence soars as US troops withdraw. But that's what Clinton is for. She's the armor on his vehicle out, and will provide the political cover for the necessary retreat.

While a cynical reading of the situation (not that I'm above that in any way), it is also breathtaking in both its audacity and political brilliance.

My guess is the President-Elect has read The Prince.

The Bush Legacy (Sarcasm Minimized, I Promise)

2008-12-03T04:33:00.003-06:00

There were two things in the news that attracted me the way blood in the water attracts sharks.

The first concerned Bush's "exit interview" with Charlie Gibson in which he still refuses to concede he did anything wrong. (Note that we will see, below, how the LA Times headline distorts what Bush actually meant by saying that.) The full transcript of the interview is here.

Dan Froomkin, writing in his "White House Watch" blog for the Washington Post, absolutely goes to town on both Bush and on some of the spin in the stories about his interview (today's entry is titled "Bush Gets Out the Shovel"), pointing out that Bush refused to accept responsibility for the mistakes made before the invasion or Iraq or for the current economic and financial crises:

Rather, in the first of several planned "exit interviews," Bush continues to refuse to take responsibility for a single thing that went wrong on his watch.
The president who sent troops into a disastrous war under false pretenses, led the economy into its biggest crash since the Great Depression, let New Orleans drown, embraced torture and turned America into a pariah nation seems to think that if anyone is to blame, it's not him. He just happened to be in charge during a series of unfortunate events.

Bush seems to think he can win over the verdict of history with a smirk and a shrug, and by maintaining that he "stuck to his principles."

The second amusing news item concerned an exchange on Fox News where a "who was worse: Nixon or Bush" meme made an appearance. It deserves discussion. The Bush Administration has a lot in common with the Nixon Administration, really, but the Bushies have perpetrated greater sins. See John Dean's Worse than Watergate and Jane Mayer's The Dark Side for more.

Mumbai Terrorism Update

2008-12-03T04:11:00.005-06:00

The United States claims it warned India of the Mumbai attacks.

The Pakistani president claims the terrorists were "stateless actors", thus denying any official government involvement in the attacks.

Current Secretary of State Condoleezza Rice is currently in India, urging Pakistan and India to cooperate in investigating the origins of the Mumbai attacks.

Marc Ambinder writes that the attacks have vastly complicated the situation in South Asia making it another Middle East but with nuclear weapons included:

It's the Middle East with nuclear weapons on both sides. If soft power doesn't work, do you despose [sic] the Pakistani government and take possession of their nuclear program? Let them have a nuclear exchange and hope that it somehow does not spread? The next steps for the US aren't clear. President Obama might appoint an envoy to the region, empowered to engage in shuttle diplomacy a la Richard Holbrooke, Geroge [sic] Tenet or Dennis Ross.

Speaking of Richard Holbrooke, he will be working on South Asia issues for the Obama Administration. Some preliminary analysis from Foreign Policy here.

Conservative Reality Dysfunction: Hunter

2008-12-03T02:50:00.002-06:00

Republican Congressman Duncan Hunter claims there is more violence in Tijuana, Mexico than in Iraq and Afghanistan. His additional comments regarding public safety in Baghdad are equally incredible.

Mumbai--U.S. & India Agree Attacks Linked to Pakistan

2008-12-02T19:51:00.005-06:00

The Cheesetec, "Some Defunct Economist's" dad, writes:

The Indian intellegence agency say that the terrorists were from Pakistan Occupied Kashmir. The message they sent claiming to be a new group contained quite a few expressions that belie that it is a home-grown group. The spelling and the terms used to identify it is a Hyderabad-based group betrays a Hindustani or Urudu slant, which is more in tune with Pakistani group.

The United States and India are officially in agreement about a link between Pakistan and the terrorists who assaulted Mumbai.

The New York Times notes the effectiveness and the preparedness of the attackers.

In what The Hindu calls a "key test for India-U.S. intelligence ties" the FBI is on the scene in Mumbai offering technical assistance.

The Mumbai police chief says the terrorists came to Mumbai from Karachi, Pakistan aboard a ship. The New York Times picks this up and then notes U.S. officials agree that militants in Pakistan directed the operation.

The group being mentioned is Lashkar-e-Taiba (often abbreviated L-e-T). Further information is available here. More data provided by: the Council on Foreign Relations; the New York Times; GlobalSecurity.org; Reuters; and the Times of India.

Pakistan's leading English newspaper, Dawn, reports that the United States is saying it trusts Pakistan. At the same time, Pakistan has some really serious problems, as indicated by the following headlines on Dawn's website: "10 Killed In Mingora suicide attack" and "Militants hit NATO supplies; 22 trucks torched" and "Anarchy continues to haunt Karachi".

These attacks will heighten tensions in the region, both between India and Pakistan as well as intercommunally within India.

UPDATE--Time asks if a reversal of the India-Pakistan "thaw" is to follow.

Iraq: Contractor Abuses

2008-12-02T19:43:00.003-06:00

McClatchy breaks depressing news, headlined "Military contractor in Iraq holds foreign workers in warehouses." The story says:

About 1,000 Asian men who were hired by a Kuwaiti subcontractor to the U.S. military have been confined for as long as three months in windowless warehouses near the Baghdad airport without money or a place to work.

Najlaa International Catering Services, a subcontractor to KBR, the Texas firm formerly known as Halliburton, hired the men, who're from India, Nepal, Sri Lanka and Bangladesh. On Tuesday, they staged a march outside their compound to protest their living conditions.

It continues:

The laborers said they paid middlemen more than $2,000 to get to Iraq for jobs that they were told would earn them $600 to $800 a month. Some of the men took out loans to cover the fees.

"They promised us the moon and stars," said Davidson Peters, 42, a Sri Lankan. "While we are here, wives have left their husbands and children have been shut out of their schools" because money for the families has dried up.

The men live in three warehouses with long rows of bunk beds crammed tightly together. Reporters who tried to get a better glimpse inside were ushered away by armed guards.

The conditions in which the men have been held appear to violate guidelines the U.S. military handed down in 2006 that urged contractors to deter human trafficking to the war zone by shunning recruiters that charged excessive fees. The guidelines also defined "minimum acceptable" living spaces — 50 square feet per person — and required companies to fulfill the pledges they made to employees in contracts.

When questioned, the U.S. military denied knowledge:

A U.S. military spokesman for the Multi-National Force-Iraq referred questions to KBR. The spokesman said that the American military wasn't aware of the warehouses until McClatchy and the Times of London began asking questions about it on Monday.

Wow, talk about winning some hearts and minds. (OR: Wow, the private sector really makes America look great around the world! And: Thanks KBR/Haliburton/Cheney for actively making the world hate us more than it ever imagined it possibly could.)

Depression 2.0--Krugman in Longer Format

2008-12-02T15:28:00.003-06:00

Krugman writes about what needs to be done in the New York Review of Books.

Depression 2.0--One Year and Counting

2008-12-02T14:20:00.010-06:00

The AP writes its story upside down, here.

The New York Times story puts the more important information at the top.

The AP story is worth studying, however, for it is quite informative, despite taking a roundabout way to the good stuff.

The AP begins and goes on at length about a sell-off on Wall Street taking 7 paragraphs to get to the important stuff:

Adding to the gloom, the National Bureau of Economic Research, a group of academic economists, concluded Monday that the country has been suffering through a recession since December 2007.

With NBER's decision, the United States has fallen into two recessions during Bush's eight years in office. The first one started in March 2001 and ended in November of that year.

The economy jolted into reverse in the final three months of last year. After a short spring rebound, it contracted again in the summer. Economists say it is still shrinking and will continue to do so through at least the first quarter of next year.

Unlike past recessions, consumers are bearing the brunt of this one. Clobbered by job losses, hard-to-get credit and hits to their wealth from sinking home values and plunging portfolio investments, consumers have cut back sharply on their spending, throwing the economy into chaos.

Watching customers' appetites wane, employers have throttled back on hiring. The unemployment rate in October zoomed to 6.5 percent, a 14-year high. So far this year, 1.2 million positions have disappeared. The jobless rate is likely to climb to 8 percent or higher next year.

Against that backdrop, many economists believe the current recession will be the worst since the 1981-82 downturn.

This is terrible news except in one respect: it reinforces the big F**K YOU we should all be throwing Phil Gramm's way. Remember Phil Gramm?

You know, Phil Gramm, who as chairman of the Senate Banking Committee, recklessly deregulated banking and financial markets, paving the way to the Trillion Dollar Meltdown.

Phil Gramm, who in July 2008 while working as an economic advisor to the McCain campaign, delcared that the United States of America has become "a nation of whiners" that is merely in a "mental recession."

Thus the "official" news that the nation has been in a recession for a year, makes me wonder just how little Gramm, an economist by training(?!?!), actually knows about, well, anything. Gramm, a wildly conservative economic "expert", was completely out-thought by the American electorate who knew the economy sucked way back in July. The electorate telling this to pollsters inspired Gramm to open his mouth and spew forth his ignorance (video, here).

News that the recession has been going on for a hear thus stands as (yet more) evidence of the idiocy of Supply Side Nonsense. (Those who wish to claim that nobody else knew there was anything wrong with the economy may want to check here.)

UPDATE--Andrew Leonard satisfyingly piles on Phil Gram and Amity Shlaes in Salon, here. The money quote ends the piece:

But the footnote to today's NBER announcement is that we can now definitively say that Shlaes was wrong, back in July. Her understanding of current economic affairs proved embarrassingly limited.
And this is a person we're supposed to take seriously as she attempts to rewrite the history of the 1930s?

Enough spleen and back to that upside-down written AP article we were talking about. Yup, talk about burying the lead, they start with the Dow, drop some meaty anti-supply side recession information on us, and they save the most important news for last.

Why would I say that? Well, the article concludes with Fed chair Ben Bernake's a concession that monetary policty has ceased to have any traction:

To help ease the pain, Bernanke said additional interest-rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive the economy, which is likely to stay mired in weakness well into next year.

The Fed's key interest rate now stands at 1 percent, a level seen only once before in the past half-century, and many economists predict Bernanke and his colleagues will drop the rate again at their next meeting on Dec. 15-16.

The Fed can lower its key rate only so far — to zero — and it's getting ever closer. Given that constraint, Bernanke said there are other ways to bolster economic activity.

The Fed, for instance, could buy longer-term Treasury or agency securities on the open market in substantial quantities, he said. This might lower rates on these securities, "thus helping to spur aggregate demand," Bernanke said.

Because the Fed can go only so low in reducing interest rates, the central bank over the past year has resorted to a flurry of other radical and often unprecedented actions with the hope of busting through credit jams and getting financial markets operating more normally.

The bracing impact of the Fed's aggressive rate reductions, however, has been somewhat stymied by the credit and financial crises, Bernanke said. Despite lower borrowing costs, skittish banks have been reluctant to lend money to people and businesses, a vicious cycle that has seriously hobbled the U.S. economy.

"Even if the functioning of financial markets continues to improve, economic conditions will probably remain weak for a time," Bernanke warned.

This news is wildly important and worrisome.

One, more evidence that we approach--or may now be within--liquidity trap territory. That's a very bad place to be. Here is Krugman going long and wonky on the whole matter of the Fed's loss of influence on events in the real economy.

Economists aren't very drama-ish. They don't run around and wave their hands. But right now they are, for economists, pretty much freaking out. If they were say, literary scholars, their hair would be on freakin' fire.

Thanks, W.! I've always wondered what panicked social scientists would look like and, in that regard, you are a gift that keeps on giving: economists, sociologists, political scientists of all specialties--international relations thinkers, comparative political analysts, specialists in domestic politics and such quaint notions as "civil liberties" and "checks and balances"--all freaking out over the costs and consequences of Bush's rule.

"May you live in interesting times."

Conservatism vs. Realism

2008-12-01T14:27:00.003-06:00

One of the emerging narratives of Obama's cabinet appointments is the re-emergence of the realists in the foreign policy realm. After eight miserable years of Neo-Connery (neoconservative dominance), this is welcome.

Daniel Larison wonders why conservatism doesn't produce more realists, citing specifically the [Andrew] Jacksonian side of American conservative thought.

Hmm. Well, the biggest reason would be this: Realists reject unquestioning acceptence of an actor's--any actor's--stated intentions. Whether it's "us" or "them" doing to moralizing, realists brush that away and start looking for the interests underlying the rhetoric.

For realists, there is no room for beating one's breast and declaring one's intrinsic moral superiority.

As a result, the conservatism of the moment--assuming such a thing can be said to exist as a coherent body of thought--mixes very poorly with realism, as it is directed at some core level to consistently assume and/or proclaim the moral superiority of its vision, regardless of what actions it adovacates.

Realists are mostly disinterested in weighing morality in international politcss, but they do recognize that morality is a function of actions rather than words. To most realists, neocons are wildly amoral and breathtakingly hypocritical.

Realists, for the most part, didn't advocate the invasion of Iraq in 2003. They certainly didn't beg the Department of Justice to functionally void the Geneva Conventions. They don't agonize over negotiating with the Iranians, for realists think talking with one's "enemies" is a good way to avoid misunderstandings.

No, realists pretty much reject the GOP mainstream's foreign policy priorities.

And that doesn't make them soft at all. It makes them a whole lot better adjusted to the world as it is than any neo-conniving nitwit.

Mumbai Militancy Continues...With Implications

2008-11-28T14:34:00.005-06:00

Several hostages were slain as the death toll continues to rise, and the siege of Mumbai continued, the Hindu and the Hindustan Times reported Friday.

This report from the BBC contains a good overview.

Slate's "Today's Papers" has extensively linked coverage from all the major U.S. dailies.

There are many speculations on who exactly is behind these attacks. The holding of Western hostages leads the Times of London to suggest that Al Qaeda may be involved:

Dozens of gunmen were involved in up to 19 different attacks, although the main focus seemed to be the taking of foreign hostages and detaining them in two of Bombay’s most prestigious hotels.
Judging by the apparent cockiness of at least one of the gunmen caught looking into television cameras, these terrorists were clearly prepared to die for their cause.

Al-Qaeda as an organisation has proved in the past that it has the capability to coordinate multiple attacks. Last night an organisation calling itself Deecan Mujahideen claimed responsibility but, as in the past when unknown groups came forward to admit involvement, the name was neither recognizable nor relevant.The sheer audacity of the terrorists are all familiar elements of al-Qaeda’.

"Apparent cockiness" aside, India's NDTV suggests the signs point to a previously unknown group.

Fareed Zakaria, answering questions from Newsweek, also doubts Al Qaeda involvement, suggesting that militants from Kashmir may have had a hand.

Insurgents from Kashmir certainly have the training and experience to do this. This raises the troubling possibility that elements within Pakistan are linked to this attack.

In fact, the Indian government has linked the actions to elements in Pakistan:

The conflict in the stricken Indian city of Mumbai narrowed to a final running battle between commandos and at least one attacker who was still roaming the charred corridors of a luxury hotel, the Taj, but the murderous assault on the country’s financial capital continued to shake the nation and raised perilous tensions with neighboring Pakistan.
A measure of the possible disturbing implications of the attacks for regional relations, the chief of Pakistan’s powerful intelligence organization, Ahmed Shuja Pasha, was due to make an extraordinary visit to India to assist in the investigations and calm tensions between the two countries, as the Indian government explicitly blamed “elements with links to Pakistan” and the full scale and death toll from the attacks became clearer.
American intelligence and counterterrorism officials said Friday there was mounting evidence that a Pakistani militant group based in Kashmir, most likely Lashkar-e-Taiba, was responsible for the deadly attacks on Mumbai.

The Indian media and American government officials are looking at a Pakistan-backed Kashrmir-based insurgent group:

The Indian media focused on the possible involvement of Lashkar-e-Taiba, a Pakistani guerrilla group run by Pakistani intelligence in the conflict with India in the disputed territory of Kashmir.

As the State Department reported that Secretary of State Condoleezza Rice had called President-elect Obama twice to brief him on the attacks, American intelligence and counterterrorism officials said Friday there was mounting evidence pointing to the involvement of Lashkar- e-Taiba, or possibly another Pakistani group based in Kashmir, Jaish-e-Muhammad.

Indian government officials also emphasize Pakistani involvment:

In a televised speech Thursday, Prime Minister Manmohan Singh blamed forces “based outside this country” in a thinly veiled accusation that Pakistan was involved. A day later, India’s foreign minister Pranab Mukherjee was quoted by the Press Trust of India as saying that, according to preliminary reports, “some elements in Pakistan are responsible.”

On the other hand, the Wall Street Journal suggests that domestic Islamists may be responsible for this carnage:

The scale and sophistication of the Mumbai attacks, as well as the choice of targets, however, appeared to point to a more insidious threat that the Indian government has been reluctant to acknowledge so far -- the potential involvement of extremists within the country's own Muslim community, which, at 150 million, is the world's third-largest after Indonesia and Pakistan. It is also one of India's most economically and politically disadvantaged minorities.

In a statement that couldn't be independently authenticated, a previously unknown group, the Deccan Mujahideen, claimed responsibility for the Mumbai operation, describing itself as hailing from the south Indian city of Hyderabad. Hyderabad was the world's largest Muslim-ruled monarchy until it was invaded and annexed by India in 1948.

The WSJ's report cites some international terrorism experts supportive of this perspective:

"It would be extremely difficult for foreigners to come in and operate in this manner," said Rohan Gunaratna, head of the International Center for Political Violence and Terrorism Research in Singapore. "They certainly had intimate knowledge of the city. The pre-eminent threat to India is home-grown."

Christine Fair, a South Asia specialist at the Rand Corp. think tank, added that the modus operandi of the Mumbai militants -- coordinated small-arms assaults and hostage-takings, rather that suicide bombings -- didn't match the signature of the best known Pakistani militant groups or Al Qaeda.

"I think it's very much a home-grown attack," she said. "There are very deep and unresolved social justice issues for Indian Muslims. They have a lot of motivation."

India's Muslims, some of them still nostalgic for a medieval golden age when most of the subcontinent was under Muslim dominion, are among the country's poorest communities, partly because much of the Muslim professional class emigrated to Pakistan at partition in 1947.

In addition to being disproportionately targeted in outbreaks of religious violence, they are severely underrepresented in the country's government bureaucracy, universities and security services. On literacy scores, young Indian Muslims now lag behind even the country's historically most disadvantaged group, the Dalits, or Hinduism's "untouchables."

While only a small minority of Indian Muslims supports violence, the community is often represented by hardline clerics in India's interest-group brand of politics, where caste and religion-based "vote banks" frequently trump political platforms and ideologies. The global campaign against Salman Rushdie's "Satanic Verses" was launched by an Indian Muslim politician in 1988. Last year, Bangladeshi feminist writer Taslima Nasrin was expelled from Calcutta and eventually had to leave India because of violent protests organized against her by Indian Muslim community leaders who described her writings as disrespectful of Islam.

Finally, the Journal notes that the BJP, the "Hindu nationalist" political party also sees domestic Islamists as the culprits (uh, no surprise there, huh?):

India's main opposition movement, the Hindu nationalist Bharatiya Janata Party, has repeatedly accused the ruling Congress party of undermining the country's anti-terror effort by extending "political patronage" to supporters of radical Islam. The Congress-led central government, which usually relies on the Muslim vote, has earned BJP's ire by scrapping draconian anti-terror laws passed by the previous BJP administration, and by staying a death sentence against a Muslim cleric convicted of orchestrating a 2001 attack against the Indian parliament.

"People are very concerned about the soft policies of the present government," Mukhtar Abbas Naqvi, a BJP spokesman, said after the Mumbai attacks. "This isn't the only terror attack. There have been several this year," he added, ticking off bombings in various Indian cities.

On the other hand, both India Today and The Hindu report that the terrorists used a highjacked ship to reach Mumbai. The Lost Angeles Times passes along a report that the militants arrived by sea, landing in small boats.

Whomever is ultimately responsible for these attacks, two consequences will be heightened Indian suspicion of Pakistan as well as further complicating American strategy in the region:

But no matter who turns out to be responsible for the Mumbai attacks, their scale and the choice of international targets will make the agenda of the new American administration harder.

Reconciliation between India and Pakistan has emerged as a basic tenet in the approaches to foreign policy of President-elect Barack Obama, and the new leader of Central Command, Gen. David H. Petraeus. The point is to persuade Pakistan to focus less of its military effort on India, and more on the militants in its lawless tribal regions who are ripping at the soul of Pakistan.

A strategic pivot by Pakistan’s military away from a focus on India to an all-out effort against the Taliban and their associates in Al Qaeda, the thinking goes, would serve to weaken the militants who are fiercely battling American and NATO forces in Afghanistan.

But attacks as devastating as those that unfolded in Mumbai — whether ultimately traced to homegrown Indian militants or to others from abroad, or a combination — seem likely to sour relations, fuel distrust and hamper, at least for now, America’s ambitions for reconciliation in the region.

The early signs were that India, where state elections are scheduled next week, would take a tough stand and blame its neighbor. In his statement to the nation, the Indian prime minister, Manmohan Singh, who in the past has been relatively moderate in his approach to Pakistan, sounded a harsh tone.

He said the attacks probably had “external linkages,” and were carried out by a group “based outside the country.” There would be a “cost” to “our neighbors,” he said, if their territory was found to have been used as a launching pad.

The prime minister did not name Pakistan. But everyone — certainly on Pakistani television news programs Thursday night — knew that is what he meant, and that the long history of Pakistani-Indian finger-pointing had returned.

The Hindustan Times, an influential Indian newspaper, reported Thursday that India’s security agencies believed that the multiple attacks in Mumbai were by an Islamic militant group, Lashkar-e-Taiba, operating out of Pakistan.

Mumbai Terrorism Considered

2008-11-27T16:50:00.002-06:00

An interesting post at Crooks & Liars asks who is behind the attack: Al Qaeda, Pakistani proxies, or some other entity?

Continued updates forthcoming.

Mumbai Hostages Rescued

2008-11-27T05:35:00.003-06:00

The hostages have been rescued as explosions rocked the Taj hotel. The Times of India updates. (Cheesetec may wonder why I didn't link the Hindu, but honestly, they are hours behind on this story.)

The gunmen have demanded the release of Islamist militants.

Links between the gunmen and Al Qaeda have been disputed.

The standoff continues.

Kristol's Appeal to Ignorance

2008-11-27T03:30:00.006-06:00

William Kristol, editor of the Weekly Standard and opinion columnist at the New York Times, appeals to ignorance in this piece in the Times. (By "appeal to ignorance", I mean that Kristol essentially argues that because he has no idea how large an economic stimulus is necessary that no one could possibly know.)

Here he is:

The truth is, Schumer hasn’t a well-grounded view, or even a well-informed clue, as to how large the stimulus package “has to be.” I’d be amazed if he could give a coherent explanation of why it should be $500 billion to $700 billion instead of, say, $300 billion or $900 billion. On TV, he simply invoked the authority of “most economists,” who, according to Schumer, “say, to make this work, you need about 5 percent of G.D.P., which would be $700 billion.” Nor do I think Schumer could begin to explain why a demand-side stimulus package oriented toward employment, infrastructure and consumer spending will “work” in dealing with an economic crisis whose origins seem to be in the collapse of a housing bubble and the deleveraging of overstretched financial institutions.
Now I hasten to add — wait a second, Senator Schumer, put down the phone, no need to call me at home this early in the morning! — that I don’t mean to pick in any way on Chuck Schumer, who is surely among the more economically literate members of Congress. It’s not as if his colleagues have a better understanding of what has happened, or of what should be
done. And it’s not as if the rest of us do.

That first paragraph buries a cleverly constructed non-sequitur in its second half. Even if the "origins" of the economic crisis "seem to be in the collapse of a housing bubble and the deleveraging of overstretched financial institutions," that fact alone would not prevent the efficacy of a demand-side solution. Additionally, since the housing sector contributed so much to economic growth between 2001 and 2006, a collapsing housing market means aggregate demand is sagging as we speak. And the whole assertion is totally debatable at the top level, that of "origins", anyway. But I digress...

The second paragraph takes three sentences, not one of which contains an actual argument or any evidence, to assert that no on really knows what to do. It is here that he generalizes his own ignorance into a miasma of ignorance of such matters that affects all the rest of us, too.

Kristol's ignorance even extends to economists, apparently, for despite the fact they actually study such matters, he asserts they don't know anything, either:

In his interview, Schumer appealed to the authority of economists. Economists still do have considerable sway in our public life — even though it doesn’t seem that a large number of them have been particularly prescient in warning about, or strikingly persuasive in explaining, the current economic situation.

*Sigh*

He's wrong.

He's so wrong he should quit receiving payment for rendering opinions.

For a public intellectual to make the claims he makes about what can or can't be known in these circumstances is for him abdicate that very title.

At a minimum, it is intellectually lazy, and it verges outright intellectually dishonesty. Maybe I should soften that: he is one of three things, stupid, colossally lazy, or a liar. (Some other liberal bloggers might say he's all three.)

In the fact-based part of reality, it turns out that multiple economists have been able to provide an estimate as to what the stimulus should be.

Additionally, another columnist at the Times, Nobel laureate Paul Krugman, has written wonkishly about the necessary size of a stimulus on his blog at the New York Times website. In fact, anyone who's encountered national income accounting could probably give it a go if they had accurate numbers regarding GDP and its components.

Maybe Kristol didn't know about Krugman's scibbling. Maybe he is that lazy.

Now, when Kristol says economists didn't see the crisis coming, he may well be stating things as he knows them. He probably only knows supply siders and they don't predict anything right, anyway. They don't even predict stuff right historically. Instead, they keep reading their pet tax cuts back onto Kennedy's '63 tax cut, and they never consider the counterfactual question of what might have happened if Kennedy had opted for stimulatory spending, instead. But I digress...

That Paul Krugman guy we talked about earlier, well, he was writing about the liquidity trap on his blog in March. He sure saw something coming.

Hell, Nouriel Roubini predicted this crisis. Everyone hated on him for it, but he looks pretty prophetic now. Whatever model he's using proved accurate. Now, he calls for a massive government stimulus.

[And aside: Note that a lot of the links lead to New York Times materials. Once again: Is Kristol so lazy he couldn't even examine the website of the publication for which he writes?]

I think it goes back to the supply siders. Neoconservatives don't have an economic program of their own; instead, they have adopted contemporary Republican orthodoxy (conservative economic dogma), which happens to be Supply Side Nonsense. If the supply siders look foolish, so do the neoconservatives. As a paragon of neoconservatism, Kristol harbors little desire to be seen as foolish.

So, Kristol, I think, is: (1) trying to excuse supply siders for being so utterly unable to make accurate predictions, (2) painting the lack of such ability as "normal", acceptable, and simply passe, and (3) attempting to undermine the "Competency Narrative" that is surrounding President-Elect Obama and his Cabinet by implying they really don't know anything, anyway. In doing number (2), Kristol essential sweeps any responsibility for this mess under the rug, lest any of us forget that Supply Side Nonsense got us here to begin with.

Kristol finally obscures any distinction between forests and trees by saying this:

Indeed, one hopes they’re not too invested in the findings of the economics profession of which they’re such distinguished products — because one suspects many of the conventional answers of that profession aren’t much applicable to the current situation. After all, wasn’t it excessive confidence in complex economic models and sophisticated financial instruments on the part of people well educated in modern economics that helped get us into the current mess?

This is fine example of intellectual dishonesty disguised as witty remonstration.

No, the models macroeconomists use aren't the same models the math whiz kids tried to use to beat the derivatives markets. No, indeed. Even if those who wrote the financial models of the derivative markets were, in fact, "well educated in modern economics", there is no necessary relationship between models of a specific asset's performance and those of macroeconomic performance. It is a little like confusing data about a single student's performance for the results of the whole student body.

To be repetitively redundant: This quality of analysis is what the Times pays Kristol for? Seriously?

Public Intellectual, my bum left knee.

"Prime" Mortgage Borrowers Going Belly Up, Too

2008-11-26T15:23:00.004-06:00

The implosion of the housing bubble continues to spread bad news. Now it's the people who had good credit who are now feeling the pinch.

The Los Angeles Times fills us in on skyrocketing delinquencies and foreclosures in the "prime" mortgage market:

Although soaring defaults on subprime loans and other dicey mortgages are a well-known cause of the country's financial crisis, delinquencies and foreclosures now are skyrocketing among "prime" borrowers -- people with good credit histories who documented their incomes when applying for their relatively straightforward mortgages.

Nationwide, 3.07% of prime mortgages were in foreclosure or at least 60 days late in the second quarter of this year, the latest period for which the Mortgage Bankers Assn. has figures, easily topping the previous record of 1.97% set in 1985.

In California, with a jobless rate topping 8% and home prices down more than 40% from their peak and falling, the situation is significantly worse, with 4.15% of prime loans seriously delinquent. That far exceeded peaks of about 2.6% reached in the recessions of the 1980s and 1990s.

The epidemic of bad loans and lost homes among prime borrowers has only worsened since the second quarter ended, according to other, more recent data.

By putting more foreclosed homes on the market, the trend is likely to further depress housing prices, intensify the mortgage-related crisis afflicting the financial system and exacerbate the recession most economists believe is already underway.

"We should be really worried," said Stephen C. Levy, director of the Center for the Continuing Study of the California Economy, a private research firm in Palo Alto.

And as home prices continue to fall, delinquent borrowers are more likely than ever to end up in foreclosure.

"During the rising market, if you lost your job, got sick or your marriage failed you always had a parachute: Sell the house, pay off your mortgage and have something left to start again," said consumer finance expert Elizabeth Warren, a professor at Harvard Law School. "Or sometimes you could use your home equity line of credit to get by."

But now, for most people, "that parachute has gone up in flames," Warren said.

In California, delinquencies on prime mortgages could increase for years, said Christopher Thornberg, founder of consulting firm Beacon Economics in Los Angeles.

One reason, he said, is that home lenders became so complacent during the housing boom that they did little to qualify borrowers besides having computers check a few facts.

" 'Prime' lost a lot of meaning in the insanity of the last few years," said Thornberg, who was one of the first experts to foresee the housing downturn.

To be sure, the damage has been greatest in subprime mortgages, the high-risk loans tapped heavily during the go-go years by borrowers with the worst credit, the heaviest debt loads or the lowest down payments (and sometimes all three of those).

In August, more than 43% of subprime loans nationally were in foreclosure or at least 60 days late in paying, a rate nearly double that of August 2007, according to First American CoreLogic's LoanPerformance unit, which tracks 82% of all U.S. loans.

But problems with prime loans are increasing as fast or faster. About 7.5% of prime jumbo mortgages -- high-quality home loans too large to be sold to government-backed Fannie Mae and Freddie Mac -- were at least 60 days late or in foreclosure, according to LoanPerformance. That was more than three times the level of a year earlier.

As a result, prime loans account for a larger proportion of foreclosures than they did in August 2007.

Terrorist Assault in India

2008-11-26T15:18:00.002-06:00

Mumbai (Bombay) endures coordinated terrorist attack centering on popular tourist destinations, slaying key police personnel.

Center Right Nation Update Revisited

2008-11-26T01:39:00.003-06:00

Dueling pollsters debate the Center Right Nation Thesis (CRNT). Despite the partisan self-identification numbers, it sure seems like the nation (at least a majority of it) is a bit more center-left than center-right:

Whatever the appropriate label, substantial majorities of the voters of 2008 want the war in Iraq to end as soon as possible. Large majorities favor affordable health insurance for everyone, a fairer distribution of wealth and income, and higher taxes on the rich. They want to preserve traditional Social Security. They want more effective government regulation of the financial sector. On social issues, the country that elected Obama is tolerant of homosexuality and legal recognition of same-sex partnerships, less so of same-sex marriage. A post-election survey by Greenberg Quinlan Rosner, a Democratic polling firm, showed that 51 percent said "the government should do more to solve problems."

In a sense, then, the CRNT is all a blizzard of words, sort of like whistling past the graveyard, a verbal tic to prevent conservatives from freaking out about how far out of the mainstream they are. Conservatives just can't handle the truth, and so they invented a reassuring thing they can repeat to themselves to control their anxiety. (I guess they figure it beats the hell out of self-reflection.)

It turns out that voters hold eclectic rather than uniform views about issues--they can be liberal about some issues and conservative about others:

So claims that we are a "center-right" nation are not, even if true, determinative of "how Obama should govern." Nor is the statement likely to be true as a blanket statement, or to remain true over time. We may be a center right nation when it comes to foreign relations, a center left nation when it comes to Social Security, and maybe even a leftist nation when it comes to corporate power. And how do the terms "left" and "right" even apply to issues like government surveillance and civil rights? Both leftist and rightist authoritarian governments invade the hell out of their citizens rights and privacy.

As a consequence, Obama should govern based on his own judgment rather than by trying to predict what a "center right nation" would want him to do:

If Obama is a successful president, he will at various times anger and disappoint just about every existing political faction. If Obama is a great president, he will eventually dismantle many of the existing political factions and form new ones based around the current problems and needs of a very, very different world than the one that existed when the current factions formed.

All of this is one reason why I'm not upset that most of Obama's picks for the high level jobs have worked in the upper levels of government before. That alone does not mean that there won't be change. If Obama can select the right experienced people, and can set the right tone in his relationship with them, he will get a lot of input from people who understand the structure of the government, how its moving parts mesh or grind, and where a design modification may make all the difference in the world.

Obama should govern from his best judgment. Voters should all use our own best judgment in deciding how we feel about that governance. We should all hope that we turn out to have some much needed good luck.

Auto Bailout: Some Information on the Debate

2008-11-24T15:37:00.007-06:00

On the one hand, will Paulson sink Detroit? Dean Baker of the Center for Economic and Policy Research seriously wonders:

On the other hand, in the midst of a global economic slowdown, automobile output must decline, meaning that bailing out Detroit may spark all kinds of crazy industrial policy worldwide. Worth considering: if the U.S. goes for the bailout, and if other nations follow suit, then the global automotive industry becomes an even more entrenched interest in national economies. (If you subsidize something, you get more of it.)

As for proximate causes of Detroit's poor health, conservatives are blaming unions, the high labor costs union benefits require (like the "$70/hour lie"), and fuel efficiency standards.

The fuel efficiency argument is empirically denied by, oh, the Japanese auto industry.

Those blaming unions, like Rush Limbaugh, are going increasingly crazy with their arguments/assertions. Uh, Rush, what the hell are you thinking? What historical period's version of the American Dream says, "Work until you die?"

As long as we're considering the American Dream, remember that union jobs are one of the few ways for non-college educated workers to rise into the middle class (especially with the housing sector now in the toilet). Freddie argues:

Now we've got this financial crisis, and this proposed automaker bailout, and I read posts like this from Matt Yglesias and this from Jim Manzi, and I really feel like, hiding in the reeds of contemporary conservatism, there's a fundamental contradiction somewhere. Opposition to unions has long been a conservative virtue. Recently popular is the notion that we've overexpanded the ranks of those who attend or have attended college, and that we've got to stop acting like everyone should go to college, or is qualified to. And we've got thoughtful conservatives like Manzi pointing out that it isn't actually possible for large groups of Americans to make a middle class living without a college degree.

I put it to you that this collection of factors simply can't be synthesized with the American dream in any kind of broadly applied sense.

Many conservatives believe that personal economic growth is the best (and for the less sober among them, the only) method through which large amounts of people are capable of having their lives improved. The way to help be, the thinking goes, is to get out of their way, keep their taxes as low as possible and let them enjoy the fruits of increasing material wealth. This is entirely in keeping with the American dream. Conservatives, however, tend to be rabidly opposed to unions which, whatever else is true, raise wages and benefits for their constituents. The Two Minutes hate that is directed against the UAW by scores of conservative bloggers is not the product of a failure of the union to gain increased wages and improved benefits. In fact, it is the product of the exact opposite: the union has been too good in improving the employment conditions of its members, and management reports-- and many uncritically repeat-- that this makes it impossible for the companies to remain fiscally solvent. In any event, conservatives are opposed to unions, so they would remove this tool that workers have to attain increased affluence.

Detroit's real problem, Bernard Avishai argues in the Washington Post, is that the Big Three suffer from has an innovation deficit. Government intervention would have to impinge on many areas:

Innovation is mainly a matter of integration. These "modular" principles have been true for consumer electronics for years; car companies are simply getting up to speed. In fact, this set of principles applies to pretty much every high-tech product and every high-tech manufacturing process that produces a low-tech product. It applies to delivering professional and financial services. Peer-to-peer networks have changed the rules. Nobody is as smart as everybody.

Washington cannot save GM and Ford by handing them money and waiting for them to produce (or even demanding that they produce) an advanced hybrid. You can't order up innovation; you have to empower entrepreneurial teams to assemble delight, piece by piece, for specific customers. The Volt will need to be a part of a family of cars for GM to succeed. The Volt's key power-train components should quickly be absorbed into an environment-friendly Saab, for instance, or into some California-style sports car built around an iPhone. Even the coolest of these models will face stiff competition from global rivals, so they had better be made right.

Government -- or, more precisely, governments -- can help only if they grasp the way manufacturing companies work. The shakiest firms will need a tariff regime that permits an auto group to import components from the country where they are designed or most competitively produced. (The European Union's trade rules were a huge help in making it possible for Skoda to acquire components from VW Group companies, including the Spanish firm SEAT.) Federal and state governments should help jump-start a grid for electric cars, as Israel is doing. Most important, perhaps, Washington should move to stimulate innovation in entrepreneurial companies along the whole supply chain -- companies aspiring to provide new generations of components.

In particular, Washington should make patent protection harder to come by lest big companies become complacent and would-be competitors get stifled. In much the same way that the U.S. government is now taking stakes in banks that it's bailing out, it should also take stakes in car companies it invests in (remember, the German state of Lower Saxony still owns about 20 percent of Volkswagen).

The coming contraction need not spell disaster for Detroit. But we must understand that financial capital isn't the only kind that flows around the world or is managed and regulated. The same is true of intellectual capital -- the sheer capacity to turn learning into stuff. The good news is that the United States still has the world's largest proven reserves of intellectual capital. The bad news is that, unlike oil, the fact that we have it doesn't mean that others do not.

The Shrinking GOP

2008-11-24T15:28:00.004-06:00

Sophia A. Nelson says the GOP is a small tent party that is shrinking fast and needs to make some radical changes. Nelson specifically cites the lack of diversity within the GOP

Nate Silver goes broader, linking the GOP's inability to persuade those of differing points of view to conservative talk radio.

Citigroup Rescue Announced

2008-11-24T14:33:00.004-06:00

In yet another shift in the Federal government's response to the crisis in American credit and equities markets, government officials announced a huge plan to stave off Citigroup's collapse.

Daniel Politi of Slate.com provides background on shifting government strategies:

To recap: First, the government said it would buy troubled assets, then scrapped that plan in favor of injecting money into financial institutions. Now it's made it clear that it's ready to try a mixture of the two for certain institutions. The previous efforts led to a bit of optimism in Wall Street, but that optimism has always proved short-lived. The WSJ points out that the portfolio involved in this rescue is really only a drop in the bucket for a company that has $3 trillion in assets, including $667 billion in mortgage-related securities alone.

On to the details of the plan itself.

The New York Times reports:

Federal regulators announced late Sunday night that the government had approved a radical plan to stabilize Citigroup in an arrangement in which the government could soak up billions of dollars in losses at the struggling bank. President Bush said on Monday that more such rescues could be arranged if they became necessary.

The numbers are immense:

The complex rescue plan calls for the government to back about $306 billion in loans and securities and directly invest about $20 billion in Citigroup. The plan, emerging after a harrowing week in the financial markets, is the government’s third effort in three months to contain the deepening economic crisis and may presage other multibillion-dollar financial rescues.

Success is by no means a certainty:

Whether this latest rescue plan will help calm the markets is uncertain, given the stress in the financial system caused by losses at Citigroup and other banks. Each previous government effort initially seemed to reassure investors, leading to optimism that the banking system had steadied. But those hopes faded as the economic outlook worsened, raising worries that more bank loans were turning sour.

Here are the terms of the agreement between Citigroup and the federal government:

Under the agreement, Citigroup and regulators will back up to $306 billion of largely residential and commercial real estate loans and certain other assets, which will remain on the bank’s balance sheet. Citigroup will shoulder losses on the first $29 billion of that portfolio.

Any remaining losses will be split between Citigroup and the government, with the bank absorbing 10 percent and the government absorbing 90 percent. The Treasury Department will use its bailout fund to assume up to $5 billion of losses. If necessary, the F.D.I.C. Corporation will bear the next $10 billion of losses. Beyond that, the Federal Reserve will guarantee any additional losses.

In exchange, Citigroup will issue $7 billion of preferred stock to government regulators. In addition, the government is buying $20 billion of preferred stock in Citigroup. The preferred shares will pay an 8 percent dividend and will slightly erode the value of shares held by investors.

Once again, the notion of a firm being "too big to fail" has entered into the policy equation:

Once the nation’s largest and mightiest financial company, Citigroup lost half its value in the stock market last week. Although Citigroup executives maintain the bank is sound, investors worry that its finances are deteriorating. Citigroup has suffered staggering losses for a year now, and few analysts think the pain is over. Many investors worry that it needs more capital.

With more than $2 trillion in assets and operations in more than 100 countries, Citigroup is so large and interconnected that its troubles could spill over into other institutions. Citigroup is widely viewed, both in Washington and on Wall Street, as too big to be allowed to fail.

The Los Angeles Times notes that rescuing Citigroup is the largest single rescue effort to date:

In the largest single rescue effort thus far in the current financial crisis, the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. will shoulder 90% of the losses on most of a $306-billion portfolio of toxic mortgages and related securities.

According to the LAT, officials briefing the press claimed that Citigroup's failure could drastically deepen the nation's current economic crisis:

Government officials, briefing reporters late Sunday, made clear they believed that permitting any further trouble at Citigroup could shake investor and depositor confidence in the global financial system and dramatically deepen what already is the country's worst financial crisis since the Great Depression.

The terms of this agreement appear "lenient" compared to those granted AIG:

Terms of the new rescue package are considerably more lenient than those the government imposed on failing insurer behemoth American International Group Inc. In AIG's case, Washington required that the company's current management leave and demanded a near-80% ownership stake before helping the firm.

Government officials made it clear that they did not want to impose punitive terms on Citigroup because its stability was crucial to protecting the financial system.

Oh, great, and AIG has made such good use of the money that regulators have thrown at them.

*Sigh*

UPDATE--Some economists' views on this deal, from Economist's Views (h/t Krugman). Krugman himself says the deal is lousy.

The Bush Legacy (OR Bushed!)

2008-11-24T13:44:00.004-06:00

Of course, the largest parts of the Bush Legacy look (right now) to be international and economic chaos. (Echoing Josh Marshall: Why, oh why, did Bush ruin the country?)

Unfortunately, there is still time for W. to add to this legacy.

Lots of stuff is happening at the midnight hour:

Now, of course, Bush has entered into his own midnight period, and it promises to be a dark time indeed. Among the many new regulations—or, rather, deregulations—the Administration has proposed are rules that would: make it harder for the government to limit workers’ exposure to toxins, eliminate environmental review from decisions affecting fisheries, and ease restrictions on companies that blow up mountains to get at the coal underneath them. Other midnight regulations in the works include rules to allow “factory farms” to ignore the Clean Water Act, rules making it tougher for employees to take family or medical leave, and rules that would effectively gut the Endangered Species Act. Most regulations are subject to public input; such is the sense of urgency that the Administration has brought to the task of despoliation that the Interior Department completed its “review” of two hundred thousand public comments on the endangered-species rules in just four days, a feat that, one congressional aide calculated, required each staff member involved to read through comments at the rate of seven per minute. “So little time, so much damage” is how the Times recently put it.

The Bush Administration is, in fact, distinguishing itself in its current efforts:

What distinguishes this Administration in its final days—as in its earlier ones—is the purity of its cynicism. White House officials haven’t even bothered to argue that these new rules are in the public interest. Such a claim would, in any event, be impossible to defend, as just about every midnight regulation being proposed is, evidently, a gift to a favored industry.

In particular, the Bush Administration seems intent on trashing America's wilderness areas as thoroughly as possible:

George Bush is working at a breakneck pace to dismantle at least 10 major environmental safeguards protecting America's wildlife, national parks and rivers before he leaves office in January.
With barely 60 days to go until Bush hands over to Barack Obama, his White House is working methodically to weaken or reverse an array of regulations that protect America's wilderness from logging or mining operations, and compel factory farms to clean up dangerous waste.
In the latest such move this week, Bush opened up some 800,000 hectares (2m acres) of land in Rocky Mountain states for the development of oil shale, one of the dirtiest fuels on the planet. The law goes into effect on January 17, three days before Obama takes office.
The timing is crucial. Most regulations take effect 60 days after publication, and Bush wants the new rules in place before he leaves the White House on January 20. That will make it more difficult for Obama to undo them.

The reason for this effort, dear reader? It's a legacy thing:

The flurry of new rules - known as midnight regulations - is part of a broader campaign by the Bush administration to leave a lasting imprint on environmental policy. Some of the actions have provoked widespread protests such as the Bureau of Land Management's plans to auction off 20,000 hectares of oil and gas parcels within sight of Utah's Delicate Arch natural bridge.
The Bush administration is also accused of engaging in a parallel go-slow on court-ordered actions on the environment. "There are the midnight regulations that they are trying to force out before they leave office, and then there are the other things they are trying not to do before they go. A lot of the climate stuff falls into the category of things they would rather not do," said a career official at the Environmental Protection Agency.
Other presidents have worked up to the final moments of their presidency to impose their legacy on history. But Bush has been particularly organised in his campaign to roll back years of protections - not only on the environment, but workplace safety and employee rights.
"This is Bush trying to leave a legacy that supports his ideology," said Gary Bass, executive director of OMB Watch, an independent Washington thinktank that monitors the White House office of management and budget. "This was very strategic and it was in line of the ideology of the Bush administration which has been to put in place a free market and conservative agenda."

These Bush Administration initiatives weaken the Clean Water Act, the Clean Air Act, and the environmental impact study provisions of the Endangered Species Act:

The new regulations include a provision that would free industrial-scale pig and cattle farms from complying with the Clean Water Act so long as they declare they are not dumping animal waste in lakes and rivers. The rule was finalised on October 31. Mountain-top mining operations will also be exempt from the Clean Water Act, allowing them to dump debris in rivers and lakes. The rule is still under review at the OMB. Coal-fired power plants will no longer be required to install pollution controls or clean up soot and smog pollution.
Yet another of the new rules, which has generated publicity, would allow the Pentagon and other government agencies to embark on new projects without first undertaking studies on the potential dangers to wildlife.

At the same time, we learn of other actions that should be considered a part of the Bush Legacy, for example, another domestic propaganda initiative.

Ah, the Bush Administration! Like the Appalling Sarah Palin, a gift that just keeps on giving.

Health Care Reform

2008-11-23T13:50:00.005-06:00

John Aravosis, one of the insured, writes about the frustrations of health coverage in the United States. He also links to a Washington Post piece about the "5 Myths of Out Ailing Health Care System."

These myths are:
(1) "America has the best health care in the world."
(2) "Somebody else is paying for your health care."
(3) "We would save a lot if we could cut the administrative waste of private insurance."
(4) "Health-care reform is going to cost a bundle."
(5) "Americans aren't ready for a major overhaul of the health-care system."

Regarding number 5, even David Broder, oracle of Inside-the-Beltway Conventional Wisdom and partisan of "Bipartisan Consensus", seems ready to embrace a major overhaul of the health-care system. He thinks Obama has set himself up for a major push on this front:

When Barack Obama's transition team let out word that former Senate majority leader Tom Daschle would be his choice to run the Department of Health and Human Services and to quarterback his work on health reform, it signaled that Obama is serious about his campaign promise to make that issue a first-term priority.

Daschle would not leave a lucrative job at a law firm to twiddle his thumbs. Only with a clear understanding that the new president will put his own political capital at risk in this cause would the South Dakotan sign up for the job.

Daschle can be of great help to Obama in achieving the goal. He has made his own in-depth study of health-care issues and brings a genuine passion to the subject. And he knows the Senate, where past efforts have foundered.

There are positive signs within the Senate as well. Max Baucus of Montana, the chairman of the Finance Committee, one of the two main centers of Senate action, moved first by releasing a detailed outline of his preferred piece of legislation. Edward M. Kennedy of Massachusetts, the chairman of the other committee of jurisdiction -- Health, Education, Labor and Pensions -- quickly asserted his right to be at the center of action. He organized three task forces within his committee and reached out to Baucus to suggest that their staffs start exchanging ideas as well.

Obama Goes Large

2008-11-23T02:24:00.004-06:00

Obama pledges to go with a big economic stimulus package:

In the Democrats’ weekly radio address, Mr. Obama said he would direct his economic team to craft a two-year stimulus plan with the goal of saving or creating 2.5 million jobs. He said it would be “a plan big enough to meet the challenges we face.”

Mr. Obama said he hoped to sign the stimulus package into law soon after taking office on Jan. 20. He is already coordinating efforts with Democratic leaders in Congress, who have said they will begin work next month.

Advisers to Mr. Obama say they want to use the economic crisis as an opportunity to act on many of the issues he emphasized in his campaign, including cutting taxes for lower- and middle-class workers, addressing neglected public infrastructure projects like roads and schools, and creating “green jobs” through business incentives for energy alternatives and environmentally friendly technologies.

The money quote:

“We’ll be working out the details in the weeks ahead,” Mr. Obama said, “but it will be a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy. We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.”

A link to some punditry on this subject.

Bring on the Stimulus! Multiple Voices Version

2008-11-22T15:05:00.002-06:00

Conservative pundits are--predictably, laughably, and erroneously--blaming Depression 2.0 on Obama.

John Perr goes off at Crooks & Liars, using actual evidence to beat this absurdity to a pulp.

Back in the real world, economists are practically jumping up and down demanding that the federal government begin stimulating the real economy.

Robini, who predicted the financial system meltdown, supports a massive federal stimulus package.

For those worried about deficits and debt service, there actually is a deficit hawk's case for short-term deficits, with links to both Ysgelias's piece and the article he cites.

The Center Right Nation Thesis Again

2008-11-22T14:31:00.002-06:00

David Sirota, who originated the image to the right, writes again about the Center-Right Nation Thesis (CRNT). As he predicted, media references to the United States as a center-right nation spiked after election day.

Eli at Firedoglake explains that the media is actively debating the CRNT, and he refers us to the words of Tom Shaller, Tod Lindberg, and Ron Brownstein.

Shaller concludes that the GOP has only limited appeal outside the South:

Less than a third of Southern whites voted for Mr. Obama, compared with 43 percent of whites nationally. By leaving the mainstream so decisively, the Deep South and Appalachia will no longer be able to dictate that winning Democrats have Southern accents or adhere to conservative policies on issues like welfare and tax policy, experts say.
That could spell the end of the so-called Southern strategy, the doctrine that took shape under President Richard M. Nixon in which national elections were won by co-opting Southern whites on racial issues. And the Southernization of American politics — which reached its apogee in the 1990s when many Congressional leaders and President Bill Clinton were from the South — appears to have ended.
“I think that’s absolutely over,” said Thomas Schaller, a political scientist who argued prophetically that the Democrats could win national elections without the South.
The Republicans, meanwhile, have “become a Southernized party,” said Mr. Schaller, who teaches at the University of Maryland, Baltimore County. “They have completely marginalized themselves to a mostly regional party,” he said, pointing out that nearly half of the current Republican House delegation is now Southern.

Lindberg writes that the country has moved from center-right to center-left:

Thus Rich Lowry, the editor of National Review, in Outlook last week: The United States "is indeed, as conservatives have been insisting in recent days, a center-right country." On election night, former Bush guru Karl Rove opined on Fox News, "Barack Obama understands this is a center-right country, and he smartly and wisely ran a campaign that emphasized it." And it's not just conservative pundits and operatives singing this song. Take Newsweek editor Jon Meacham, who wrote an Oct. 27 cover essay entitled "America the Conservative," which argued that Obama will have to "govern a center-right nation" that "is more instinctively conservative than it is liberal."

The only problem: It isn't true. Or at least, not anymore. If you'd asked me a year ago whether the United States is really a center-right nation, I would have said yes -- after pausing for a second to contemplate the GOP's big congressional losses in 2006. At the time, Republicans cheered each other up by assuring ourselves that the worst was over: If you were running for Congress and survived 2006, you could hold your seat forever.

Tell that to Christopher Shays. After 2006, he was the sole surviving GOP House member from all of New England, but he went down this year, 51 to 48 percent. We are now two elections into something big. This month's drubbing is just the latest sign that the country's political center of gravity is shifting from center-right to center-left. Republicans who fail to grasp this could be lost in the wilderness for years.

Here's the stark reality: It is now harder for the Republican presidential candidate to get to 50.1 percent than for the Democrat. My Hoover Institution colleague David Brady and Douglas Rivers of the research firm YouGovPolimetrix have been analyzing data from online interviews with 12,000 people in both 2004 and 2008. It shows an overall shift to the Democrats of six percentage points. As they write in the forthcoming edition of Policy Review, "The decline of Republican strength occurs by having strong Republicans become weak Republicans, weak Republicans becoming independents, and independents leaning more Democratic or even becoming Democrats." This is a portrait of an electorate moving from center-right to center-left.

And Brownstein notes that Republican appeal beyond their base has all but collapsed:

Once again, Democrats are displaying much wider reach. In 2004, Bush outpolled Kerry in 255 congressional districts. After the 2004 election, Republicans controlled a commanding 213 of those 255 seats, leaving Democrats just 42. But after gains in 2006 and 2008, the Democratic total in those red districts has almost doubled -- to 83. That means while Republicans control less than 3 percent of the congressional districts that voted for Kerry last time, Democrats hold nearly one-third of the districts that backed Bush.
All of these trends expose the same dynamic: Democrats are effectively courting voters with diverse views, but the Republican capacity to appeal to voters beyond their party's core coalition has collapsed.

Sirota, in a mood to beat the press, cites polling data in Salon as he argues that the media is a Braindead Megaphone on the CRNT.

First, he takes on the media's hypocrisy in interpreting the 2004 and 2008 election results in wildly different fashions:

For weeks, your television, newspaper and radio have been telling you that America is a "center-right nation" that elected Barack Obama to crush his fellow "socialist" hippies, discard the agenda he campaigned on, and meet the policy demands of electorally humiliated Republicans.

This is the usual post-election nonsense from the Braindead Megaphone, as author George Saunders famously calls our political and media noise machine. When George W. Bush wins by 3 million votes, the megaphone blares announcements about a conservative mandate that Democrats must respect. When Obama wins by twice as much, the same megaphone roars about Democrats having no mandate to do anything other than appease conservatives.

Sirota cites the empirical evidence--surveys of the public's opinion--to refute the punditry:

Public opinion surveys show that most Obama voters knew the Illinois senator was a progressive when they cast their ballots — and that those votes for him weren't just anti-Bush protests; they were ideological. According to a post-election poll by my colleagues at the Campaign for America's Future, 70 percent of Americans say they want conservatives to help this progressive president enact his decidedly progressive agenda.

And then Sirota moves in for the kill, pointing out that that CRNT is a symptom of conservative fear that enactment of a liberal agenda will cost them middle class votes for decades:

Fifteen years ago, Republican strategist William Kristol warned that the Clinton administration's universal healthcare proposals represented "a serious political threat to the Republican Party" because, if passed, they "will revive the reputation" of Democrats as "the generous protector of middle-class interests."

As we all remember, Democrats failed to capitalize on the healthcare opportunity. But Kristol's prophecy was correct then, as it is now. With huge Democratic majorities in Congress come 2009, only the Braindead Megaphone is in Obama's way.

Thanks David!

I suppose repetition of the words "center-right nation" is supposed to convince voters to expect conservatism as "normal," and conversely perceive non-conservative policy actions as threatening. Ah, the politics of fear.

For a ridiculously long read that provides valuable background to this discussion, see here.

Clinton at State: Fast Reactions

2008-11-21T20:27:00.004-06:00

Hillary says yes to Obama.

It will probably be either a smashing success or a total failure. The U.S. needs to rapidly rebuild its international image, and the world does love Clintons. On the other hand, it could be farce.

Other perspectives

A positive view from Conason here.

John Dickerson posits that it depends on the nature of the relationship.

Andrew Sullivan covers reactions from Spencer Ackerman, who worries Clinton will stock State with loyalists, and Daniel Drezner, who thinks things will be fine as she and Obama have few substantive disagreements; Mr. Sullivan sides with the latter view.

Kevin Drum cites the choice as evidence that "that Obama is assembling an extremely experienced and competent set of advisors. This is a team that can definitely hit the ground running."

Chris Cillizza refers us to his piece on the pros and cons of Hillary at State.

Jonathan Zasloff thinks that Hillary at State and Bill Richardson at Commerce represents further Executive Branch aggrandizment at the expense of the Legislature (and certainly demonstrates the differential in prestige).

Steve Clemons calls it "a brilliant, but risky move", and he had a nice appearance on Countdown tonight.

Steve Benen's overview here.

Mary Katharine Ham sees massive political games forthcoming.

And TIME offers an answer to WHY Obama made this offer.

GOP Circular Firing Squad Continues

2008-11-21T18:19:00.004-06:00

The Senate GOP is in a funk.

The House GOP has selected leaders who are more conservative.

A major Republican foreign policy figure, Senator Chuck Hagel, lambasted Rush Limbaugh and some of his Republican Senate colleagues.

The National Review Institute reflects on the future of conservatism, while the National Review itself was frees itself of dissenting voices.

To top things off, the Republican brand is increasingly unpopular.

In a hilariously scathing piece The Economist, conservative but still part of the Reality Based Community, ponders whether the GOP is dying from the head down:

There are any number of reasons for the Republican Party’s defeat on November 4th. But high on the list is the fact that the party lost the battle for brains. Barack Obama won college graduates by two points, a group that George Bush won by six points four years ago. He won voters with postgraduate degrees by 18 points. And he won voters with a household income of more than $200,000—many of whom will get thumped by his tax increases—by six points. John McCain did best among uneducated voters in Appalachia and the South.

The Republicans lost the battle of ideas even more comprehensively than they lost the battle for educated votes, marching into the election armed with nothing more than slogans. Energy? Just drill, baby, drill. Global warming? Crack a joke about Ozone Al. Immigration? Send the bums home. Torture and Guantánamo? Wear a T-shirt saying you would rather be water-boarding. Ha ha. During the primary debates, three out of ten Republican candidates admitted that they did not believe in evolution.

The Republican Party’s divorce from the intelligentsia has been a while in the making. The born-again Mr Bush preferred listening to his “heart” rather than his “head”. He also filled the government with incompetent toadies like Michael “heck-of-a-job” Brown, who bungled the response to Hurricane Katrina. Mr McCain, once the chattering classes’ favourite Republican, refused to grapple with the intricacies of the financial meltdown, preferring instead to look for cartoonish villains. And in a desperate attempt to serve boob bait to Bubba, he appointed Sarah Palin to his ticket, a woman who took five years to get a degree in journalism, and who was apparently unaware of some of the most rudimentary facts about international politics.

But there's more:

One reason is that conservative brawn has lost patience with brains of all kinds, conservative or liberal. Many conservatives—particularly lower-income ones—are consumed with elemental fury about everything from immigration to liberal do-gooders. They take their opinions from talk-radio hosts such as Rush Limbaugh and the deeply unsubtle Sean Hannity. And they regard Mrs Palin’s apparent ignorance not as a problem but as a badge of honour.

Another reason is the degeneracy of the conservative intelligentsia itself, a modern-day version of the 1970s liberals it arose to do battle with: trapped in an ideological cocoon, defined by its outer fringes, ruled by dynasties and incapable of adjusting to a changed world. The movement has little to say about today’s pressing problems, such as global warming and the debacle in Iraq, and expends too much of its energy on xenophobia, homophobia and opposing stem-cell research.

Conservative intellectuals are also engaged in their own version of what Julian Benda dubbed la trahison des clercs, the treason of the learned. They have fallen into constructing cartoon images of “real Americans”, with their “volkish” wisdom and charming habit of dropping their “g”s. Mrs Palin was invented as a national political force by Beltway journalists from the Weekly Standard and the National Review who met her when they were on luxury cruises around Alaska, and then noisily championed her cause.

The conclusion implies the GOP is too stupid to realize how stupid it is:

How likely is it that the Republican Party will come to its senses? There are glimmers of hope. Business conservatives worry that the party has lost the business vote. Moderates complain that the Republicans are becoming the party of “white-trash pride”. Anonymous McCain aides complain that Mrs Palin was a campaign-destroying “whack job”. One of the most encouraging signs is the support for giving the chairmanship of the Republican Party to John Sununu, a sensible and clever man who has the added advantage of coming from the north-east (he lost his New Hampshire Senate seat on November 4th).

But the odds in favour of an imminent renaissance look long. Many conservatives continue to think they lost because they were not conservative or populist enough—Mr McCain, after all, was an amnesty-loving green who refused to make an issue out of Mr Obama’s associations with Jeremiah Wright. Richard Weaver, one of the founders of modern conservatism, once wrote a book entitled “Ideas have Consequences”; unfortunately, too many Republicans are still refusing to acknowledge that idiocy has consequences, too.

Wow. Top quality bile-slinging warms my flinty heart.

This round goes to the anti-intellectuals, whom Kathleen Parker calls the "oogedy-boogedy branch of the GOP." After that piece, by the way, I wonder how much longer Parker remains at the National Review.

Bring on the Stimulus! Redux

2008-11-21T18:03:00.003-06:00

Krugman decries lame-duckery, arguing we face a leadership vacuum in the short-term:

There is, however, another and more disturbing parallel between 2008 and 1932 — namely, the emergence of a power vacuum at the height of the crisis. The interregnum of 1932-1933, the long stretch between the election and the actual transfer of power, was disastrous for the U.S. economy, at least in part because the outgoing administration had no credibility, the incoming administration had no authority and the ideological chasm between the two sides was too great to allow concerted action. And the same thing is happening now.

Too much can go wrong in the short term for us (Congress) to delay:

How much can go wrong in the two months before Mr. Obama takes the oath of office? The answer, unfortunately, is: a lot. Consider how much darker the economic picture has grown since the failure of Lehman Brothers, which took place just over two months ago. And the pace of deterioration seems to be accelerating.
Most obviously, we’re in the midst of the worst stock market crash since the Great Depression: the Standard & Poor’s 500-stock index has now fallen more than 50 percent from its peak. Other indicators are arguably even more disturbing: unemployment claims are surging, manufacturing production is plunging, interest rates on corporate bonds — which reflect investor fears of default — are soaring, which will almost surely lead to a sharp fall in business spending. The prospects for the economy look much grimmer now than they did as little as a week or two ago.

However, no short term action appears forthcoming:

Is economic policy completely paralyzed between now and Jan. 20? No, not completely. Some useful actions are being taken. For example, Fannie Mae and Freddie Mac, the lending agencies, have taken the helpful step of declaring a temporary halt to foreclosures, while Congress has passed a badly needed extension of unemployment benefits now that the White House has dropped its opposition.

But nothing is happening on the policy front that is remotely commensurate with the scale of the economic crisis. And it’s scary to think how much more can go wrong before Inauguration Day.

Auto Bailout: The Octopus Considers

2008-11-21T15:39:00.009-06:00

Yeah, yeah, the Detroit automakers are fools.

Yeah, yeah, here they are, begging for a handout from the taxpayers.

Taxpayers are divided over the issue.

Ambiguity reigns.

Talks about an immediate bailout have reached a dead end.

There is compelling logic that supports letting the Big Three go bust. Mitt Romney, and others, say they are doomed to fail anyway. Over the long-term a new equilibrium will arise in American auto manufacturing.

On the other hand, the short-term could be cataclysmic, as between several hundred thousand and a few million (500,000 to 3,000,000) jobs disappear and the manufacturing base contracts quickly. In short, the consequences of letting the Big Three collapse could be as severe to the real economy as the collapse of Lehman Brothers was to the financial sector:

All this while the American economy teeters on the brink of Depression 2.0.

So there are compelling arguments for preventing GM's--and Detroit's--collapse.

A nice analysis of the pros and cons of bailing out Detroit is here. Again I'm very ambivalent, as there are some tremendous long-term issues, like suburban sprawl and mass transit, which must be dealt with rather than swept under the carpet. (On the other hand, "in the long run, we're all dead.")

As far as the American auto industry is concerned, both management and labor at the Big Three acted like American industrial dominance in the 50s would never end. (Another way to read the situation is that Americans underestimated the capacities of foreigners; this would prove to be a pattern in American foreign policy as well.)

We witness, then, the declining power of both the automakers and the UAW. This is what happens when the world gets "flat": the Golden Straitjacket, imposed by the Electronic Herd, constrains all institutions, not just states.

We can't escape those Big Picture concerns in discussing bailouts.

In the meantime, Congress demands that the Big Three present a plan for future viability before providing them more tax dollars:

"Unless there is a new business plan," said Sen. Dianne Feinstein, D-Calif., "we'll be right back where we are. What's happened in the industry hasn't been abrupt."
Supporters of aiding the carmakers thought that those questions would be answered Tuesday and Wednesday when the auto executives and United Auto Workers President Ronald Gettelfinger testified before congressional committees.
Instead, many lawmakers grew angrier.
"They just weren't saying anything," Senate Banking Committee Chairman Christopher Dodd, D-Conn., said after the hearings.
Adding to the drama was the White House, which insisted that any money for Detroit must come from a loan approved in September that's intended to help the carmakers improve fuel efficiency. A bipartisan group, including Senate Auto Caucus Co-Chairman Carl Levin, D-Mich., crafted a plan to use that money.
On Thursday, however, Reid and Pelosi found that even that approach lacked the votes to pass, and they put the blame on the auto executives.
"The main reason (for the collapse) is what we've all witnessed in the congressional hearings this week," Reid said. "The executives of the auto companies have not been able to convince the Congress or the American people that this government bailout will be its last."
Come back Dec. 2 with a specific blueprint for the money, Reid told the automakers. Dodd's committee and the House Financial Services Committee could hold hearings that week.
If, Reid said, "they present a viable plan that gives us, the Congress, the confidence that taxpayers and the autoworkers will be well served," Congress would return the week of Dec. 8 to deal with it.
House Financial Services Committee Chairman Barney Frank, D-Mass., said he wanted to see some assurances that money from the September loan would still be used to help improve fuel efficiency.
Dodd talked about executives making sacrifices and symbolic gestures, perhaps taking big pay cuts.
Most of all, the automakers need to help Congress' constituents understand that their plea isn't just the cry of a gang of fat cats looking for an expensive handout, lawmakers said.
"It all comes back to persuading the American people," Specter said, "and there's a lot of skepticism out there."

And in the meantime, GM cut production while waiting for formulation of a plan:

Detroit automakers began work on the turnaround plans demanded by Congress in return for a possible $25 billion rescue as General Motors Corp said it will cut production more deeply and drop two of its controversial corporate jets.
Pushed to the brink of failure by a plunge in auto sales, GM said on Friday it would idle five North American plants for more time to cut production and keep inventories.

The cost-benefit analysis of any policy action, or inaction, regarding Detroit must must be carefully studied:

About Detroit: There’s now a real risk that, in the absence of quick federal aid, the Big Three automakers and their network of suppliers will be forced into liquidation — that is, forced to shut down, lay off all their workers and sell off their assets. And if that happens, it will be very hard to bring them back. Now, maybe letting the auto companies die is the right decision, even though an auto industry collapse would be a huge blow to an already slumping economy. But it’s a decision that should be taken carefully, with full consideration of the costs and benefits — not a decision taken by default, because of a political standoff between Democrats who want Mr. Paulson to use some of that $700 billion and a lame-duck administration that’s trying to force Congress to divert funds from a fuel-efficiency program instead.

While the long-term perspective deserves a long look, with economic storm descending on the United States, Keynes's words loom large: "in the long run, we're all dead."

Report: Future to Bring American Relative Decline, Nuclear Proliferation, and Resource Conflicts

2008-11-21T03:30:00.005-06:00

The National Intelligence's Council report, Global Trends 2025, makes dire predictions regarding the future structure of the international system and an increased propensity for regional and global instability.

Watch as three different papers cover it three different ways.

The Los Angeles Times flags the report as saying that U.S. influence is on the decline:

Reporting from Washington -- A new assessment by U.S. intelligence agencies predicts that American influence in the world will decline over the next two decades as surging powers such as China and India, as well as independent entities including tribes and criminal networks, gain international clout.

And:

Its central finding is that the U.S. will remain the world's foremost economic and military force, but its standing as an unrivaled superpower will probably diminish as a "global multipolar system" emerges.

This last alone would be cause for concern, for while bipolar balances--like the Cold War--are stable, and multipolar balances can be stable, the transition from one distribution to the other is terribly unstable. We would be, right now, approximately half way between the end of the Cold War and the world of 2025, meaning we could expect, merely from the change in the structure of the system, another decade and a half of unfolding crises.

The LAT also points out that the United States' freedom of action will be constrained to a greater degree than it has been:

The overall result will leave "less room for the U.S. to call the shots," the report says, and U.S. military power will be limited by the growing use by others of irregular warfare tactics and the proliferation of long-range precision weapons.

The Washington Post focuses on the report's predictions concerning resource competition, nuclear proliferation, and the potential for large-scale regional conflicts:

The drive for dwindling resources, including energy and water, combined with the spread of nuclear weapons technology could make large swaths of the globe ripe for regional conflicts, some of them potentially devastating, according to a report released by the National Intelligence Council yesterday.

The report, Global Trends 2025, covers a range of strategic issues, including great-power rivalry, demographics, climate change, terrorism, nuclear proliferation, energy and natural resources. It makes for sometimes grim reading in imagining a world of weak states bristling with weapons of mass destruction and unable to cope with burgeoning populations without adequate water and food.

"Those states most susceptible to conflict are in a great arc of instability stretching from Sub-Saharan Africa through North Africa, into the Middle East, the Balkans, the Caucasus, and South and Central Asia, and parts of Southeast Asia," the quadrennial report says.

The Post, joining the LAT, points out that multiple pressures will push the U.S. away from unilateralism:

Among the visible contours of the world in 2025 is a United States experiencing the relative decline of its economic and military power, driven both by the rise of new behemoths such as China and India and domestic constraints on its global leadership.

The United States "will have less power in a multipolar world than it has enjoyed for many decades," according to the report's authors, who consulted policy- and opinion-makers in America and abroad over the past 12 months. ". . . We believe that U.S. interest and willingness to play a leadership role also may be more constrained as the economic, military, and opportunity costs of being the world's leader are reassessed by American voters."

The authors say, however, that foreign leaders, including in Beijing, will continue to view U.S. global engagement as essential -- as long as it is not driven by unilateralism.

The New York Times zeroes in the report's conclusion that Al Qaeda's appeal is waning:

A new study of the global future by American intelligence agencies suggests that Al Qaeda could soon be on the decline, having alienated Muslim supporters with indiscriminate killing and inattention to the practical problems of poverty, unemployment and education.

Thus, the Times finds itself in the unusual position of focusing on something positive:

“The appeal of terrorism is waning,” said Mathew J. Burrows, head of long-range analysis in the office of the director of national intelligence and a lead author of “Global Trends 2025: A Transformed World.” Mr. Burrows said polls and anecdotal evidence strongly suggested disillusionment among Muslims with Al Qaeda and its methods and goals since the 2001 terrorist attacks.

The predicted decline of Al Qaeda is one of the few bright spots in the generally gloomy report, which describes a decline in the United States’ world dominance as China, India and other powers assert themselves.

“Although the United States is likely to remain the single most powerful actor, the United States’ relative strength — even in the military realm — will decline and U.S. leverage will become more constrained,” the report said.

By 2025, it predicted, “the U.S. will find itself as one of a number of important actors on the world stage,” playing “a prominent role in global events” but not a decisive one as in the past.

The risk of nuclear weapons use will rise over time as nuclear weapons technology continues to spread:

The new report describes a world riven by increased conflict over scarce food and water supplies and threatened by so-called rogue states and terrorists, widening gaps between rich and poor and an uneven impact of global warming. It said the chance of the use of nuclear weapons, while remaining “very low,” would rise in the next two decades as nuclear technology spreads.

Finally, even if the appeal of violent extremism fades, the lethality of the violence used by extremists will rise as WMD technology becomes more available:

Even if Al Qaeda and other terrorist groups gradually lose support, the remaining violent extremists may have access to increasingly lethal technology, including biological weapons, the report found.

Basically, the report makes for really good science fiction reading, but for very gloomy thoughts about the future most people, particularly Americans, want to live in.

Depression 2.0: Falling Stocks, Credit Markets Frozen

2008-11-21T03:16:00.003-06:00

Thursday was not a good day for the nation's financial system, as Wall Street suffered a 5.6% loss and bond prices rose sharply as investors rushed to purchase Treasury securities:

As a new bout of fear gripped the financial markets, stocks fell sharply again on Thursday, continuing a months-long plunge that has wiped out the gains of the last decade.

The credit markets seized up as confidence in the nation’s financial system ebbed and people rushed to put money in Treasuries, the safest of investments. Some markets are now back to where they were before Congress approved the $700 billion financial rescue in October.

The Dow Jones industrial average fell nearly 445 points, or 5.6 percent. The broad market sank to its lowest level since 1997 — before the dot-com boom, the Nasdaq market bust and the ensuing bull market that drove stocks to record heights.

With Thursday’s rout, $8.3 trillion in stock market wealth has been erased in the last 13 months.

Weak investor confidence combined with cascade of dismal news from the real economy has created a self-reinforcing cycle of downward economic momentum:

But investor confidence, which has been shaky since the bankruptcy of Lehman Brothers, was dealt a severe blow when the Treasury Department announced last week that it would not buy troubled mortgage assets using the $700 billion that Congress approved in October. Economic reports showing rising unemployment, falling consumer prices and disastrous retail sales compounded the damage. The risk that one or all of the Detroit automakers might go bankrupt added to the gloom.
“The profit drag on corporate America is widening and deepening, and this is leading to more layoffs and cutbacks in capital spending, which is extending and deepening the recession,” said Stuart Schweitzer, global markets strategist for J.P. Morgan Private Bank. “We’ve gotten into a full-blown, self-feeding downturn.”
More bad economic news arrived on Thursday morning the Labor Department reported that new claims for unemployment benefits rose to a seasonally adjusted 542,000 last week, the highest level since July 1992. Unemployment is also climbing at a rapid clip in Europe, and the once-sizzling economies in Asia and Latin America are starting to sputter. Early on Friday, Singapore reported that its third-quarter gross domestic product fell at a 6.8 percent annualized pace.

Iran Update

2008-11-20T22:36:00.003-06:00

The world just got more interesting.

Iran has reprocessed enough nuclear fuel to build one bomb:

Iran has now produced roughly enough nuclear material to make, with added purification, a single atom bomb, according to nuclear experts analyzing the latest report from global atomic inspectors.

This does not mean the Iranians either have or will develop weapons capability:

Several experts said that was enough for a bomb, but they cautioned that the milestone was mostly symbolic, because Iran would have to take additional steps. Not only would it have to breach its international agreements and kick out the inspectors, but it would also have to further purify the fuel and put it into a warhead design — a technical advance that Western experts are unsure Iran has yet achieved.
“They clearly have enough material for a bomb,” said Richard L. Garwin, a top nuclear physicist who helped invent the hydrogen bomb and has advised Washington for decades. “They know how to do the enrichment. Whether they know how to design a bomb, well, that’s another matter.”
Iran insists that it wants only to fuel reactors for nuclear power. But many Western nations, led by the United States, suspect that its real goal is to gain the ability to make nuclear weapons.
While some Iranian officials have threatened to bar inspectors in the past, the country has made no such moves, and many experts inside the Bush administration and the I.A.E.A. believe it will avoid the risk of attempting “nuclear breakout” until it possessed a larger uranium supply.

However, the Jerusalem Post opines that a negotiated settlement between the U.S. and Iran would be best Israel:

Unless there is a miracle and the Russians and Chinese join in, there is little else that can be done diplomatically.
This is why it's so important that the talks between the two sides succeed, for Israel's sake too. A negotiated settlement would be the best solution for Jerusalem. Not only because Israel has concerns about Iran's nuclear program. Also, because a US rapprochement with Iran in such a scenario, and the confidence building, could help find a solution over disputes in Lebanon and Gaza.
If talks fail, the US could also take unilateral sanctions, the most powerful of which could be sanctions against the Iranian Central Bank (Bank Markazi). With oil prices falling, and reports that Iran will face a $60 billion budget deficit next year, this may force Ayatollah Khamenei to take negotiations seriously.
One can not also help but notice that such reports help those who want a military solution. This may not be around the corner; however, it is there. Even when Obama enters office.
Many have accused the Democrats of being too timid and too compromising. That's not true. The difference with them is that they are likely to give negotiations a serious chance, before reaching out for their guns. And if they do, they won't do it alone. Just ask Slobodan Milosevic.

Steps towards diplomatic contacts must begin immediately. (Note that "diplomatic contacts" may include, but don't necessarily require discussions at head of state level. No, they don't even need to begin at the ministerial level. Rather, diplomatic backchannels could be used at first, then working towards sub-ministerial contacts between officials concerned with areas of mutual interests.)

Analyze That!

2008-11-20T22:27:00.002-06:00

Here you go: a blog analyzer. It analyzes blogs on a Meyers-Briggs personality sort of scale.

It's close, but "Some Defunct Economist" actually tests out as an INTJ rather than an INTP, but the description of this blog(ger) is embarassingly (and eerily) accurate. Embrace our new silicon overlords?!

Andrew Sullivan, who seemingly notices everything, clued me in.

Michelle Bachman's Reality Dysfunction

2008-11-20T14:24:00.003-06:00

I posted a link to videos of her yesterday, but she bugs me a lot and I can't seem to let it go. So, here is a link to the story on Politico.com, where she calls reports of her previous (October 17) McCarthyite (McCarthyist?) comments, "an urban legend."

Here are a couple of links to her Hardball appearance on October 17, the full segment is here, and an edited version that gets her brand of crazy done in a mere two minutes is here. Finally, here is a link to a transcript.

For the, I dunno, fourth or fifth time I just have to say that the Right appears to be unaware of YouTube and the Internet and their "cultural" impact.

Oh, yeah, I've been wondering: what's the criteria for anti-Americanness? And what Americanness are we referencing: the status quo, the American Creed as embodied by the Declaration of Independence and the Constitution, or some other construction of American Values?

See, it's not just that she's crazy or sloppy, it's that she's (at least) both.

And she got re-elected?!

In Minnesota?!

Kathleen Parker Again Riles the Right

2008-11-20T02:09:00.006-06:00

Kathleen Parker, who received voluminous hate mail for (accurately) trashing the Appalling Sarah Palin, has again riled up the right against her.

Her column in the Washington Post highlights the GOP's GOD problem.

And it literally casting the Christianist/conservative evangelical right as primitives (Richard Hofstadter is somewhere smiling); she wrote:

As Republicans sort out the reasons for their defeat, they likely will overlook or dismiss the gorilla in the pulpit.
Three little letters, great big problem: G-O-D.

I'm bathing in holy water as I type.

To be more specific, the evangelical, right-wing, oogedy-boogedy branch of the GOP is what ails the erstwhile conservative party and will continue to afflict and marginalize its constituents if reckoning doesn't soon cometh.

Simply put: Armband religion is killing the Republican Party. And, the truth -- as long as we're setting ourselves free -- is that if one were to eavesdrop on private conversations among the party intelligentsia, one would hear precisely that.

Look, I don't disagree with any bit of this, but, then again, I've been freaked out by the Religious Right since about 1984, when I first laid eyes on Tim LeHaye's The Battle for the Mind and also saw D. James Kennedy on TV. (While both are, on their faces, ludicrous, I knew a lot of people, both at church and at school, who believed them both, which was pretty astonishing and disturbing; additionally, the appalling nature of the Christianist Right was demonstrated by Jerry Falwell and Cal Thomas who regularly appeared on television show support for apartheid South Africa.)

But, see, Kathleen Parker isn't me, she writes for the National Review. When she starts trashing the Right, there's something going on that deserves examination.

She is also clear-eyed enough to realize that the GOP must reorient its position on the relationship between church and state or become a minority party:

So it has been for the Grand Old Party since the 1980s or so, as it has become increasingly beholden to an element that used to be relegated to wooden crates on street corners.

Short break as writer ties blindfold and smokes her last cigarette.

Which is to say, the GOP has surrendered its high ground to its lowest brows. In the process, the party has alienated its non-base constituents, including other people of faith (those who prefer a more private approach to worship), as well as secularists and conservative-leaning Democrats who otherwise might be tempted to cross the aisle.

Here's the deal, 'pubbies: Howard Dean was right.

It isn't that culture doesn't matter. It does. But preaching to the choir produces no converts. And shifting demographics suggest that the Republican Party -- and conservatism with it -- eventually will die out unless religion is returned to the privacy of one's heart where it belongs.

She continues and concludes:

But, like it or not, we are a diverse nation, no longer predominantly white and Christian. The change Barack Obama promised has already occurred, which is why he won.

Among Jewish voters, 78 percent went for Obama. Sixty-six percent of under-30 voters did likewise. Forty-five percent of voters ages 18-29 are Democrats compared to just 26 percent Republican; in 2000, party affiliation was split almost evenly.

The young will get older, of course. Most eventually will marry, and some will become their parents. But nonwhites won't get whiter. And the nonreligious won't get religion through external conversion. It doesn't work that way.

Given those facts, the future of the GOP looks dim and dimmer if it stays the present course. Either the Republican Party needs a new base -- or the nation may need a new party.

John Cole cites a huge number of reasons to consider her argument persuasive. They are gold. I added: Christianist nationalism and how it radicalizes already significant momentum to transform the War on Terror into an actual Huntingtonian Clash of Civilizations. With no end in sight. (Remember William Boykin?)

Things are only going to get uglier for the GOP, and on this particular axis of conflict, I am not laughing.

Religious fundamentalists, once objects of scorn, can not be laughed off anymore.

True believers have no real problems with means/ends considerations.

True believers are "good" and those who stand opposed to their ends are not.

Thus, the means used to eliminate such opposition is insignificant in light of the sanctified ends they pursue.

Republics, dependent on rational deliberation, the kind of deliberation and discourse that does not implicitly impute evil intent on those who oppose one's goals, can perish from the true believers' chain of reasoning regarding means and ends.

Carter's Malaise Speech

2008-11-20T02:04:00.002-06:00

Is it time for a reappraisal? John Cole does some pondering.

I'm sure Bacevitch has something interesting to say about it, too, for Carter's speech certainly flies in the face of American Exceptionalism.

Depression 2.0 Update: Bad News, Falling Stocks, Liquidity Trap Blues

2008-11-20T00:54:00.007-06:00

First, the Federal Reserve fears that current economic woes will persist into 2009:

Pounded by a fierce financial crisis, the country is sinking deeper into economic despair and is likely to be in the hole well into next year, forcing more Americans into the ranks of the unemployed.
The gloomy outlook from the Federal Reserve came as hopes dimmed that Congress could secure a fresh $25 billion rescue package for the tottering U.S. auto industry before lawmakers quit for the year.

With economic troubles cutting into customers' appetites, businesses will remain in a cost-cutting mode, keeping layoffs high.

Although economists predict a government report out Thursday will show that the number of newly laid-off workers filing applications for unemployment benefits last week dipped to 505,000, that figure would still point to an ailing jobs market, they say.
In the prior week, new applications filed for jobless benefits zoomed to 516,000, the most since right after the September 2001 terror attacks.

Growth, if any, will be sluggish and unemployment will rise:

The economy will log little, if any, growth this year, and could jolt into reverse, according to various Fed projections released Wednesday. And, the frailty will extend into next year, the Fed said, where the economy could shrink or turn in subpar growth.

The economy "would remain very weak next year" and "the subsequent pace of recovery would be quite slow," the Fed said in its new economic projections. "The unemployment rate would increase substantially further."

The Fed projected that the national unemployment rate will rise to between 6.3 percent and 6.5 percent this year. That would be up sharply from last year's average rate of 4.6 percent.

For 2009, the Fed expects the jobless rate to climb to between 7.1 percent and 7.6 percent.

Deflation threatens to make things much worse:

The shift away from inflation worries to a possible bout of dropping prices, or "deflation," however, underscored just how quickly dangers faced by the economy can change in what many fear will be a painful recession.
For the average person, falling prices sure sounds like a good thing. But a prolonged and widespread price decline — which would drag down incomes, further clobber home and stock prices and shrivel corporate profits — would spell disaster for the economy. All that would make it harder for people and businesses to pay off debt.
America's last serious case of deflation occurred during the Great Depression of the 1930s. For now, economists think the chances are slim that the country will tip into a deflationary spiral. But they aren't ruling it out, either.

Deflation fears pushed stock prices to a six year low, with further losses expected:

As the stock market tumbled to its lowest level in nearly six years on Wednesday, Wall Street traders and many ordinary Americans were asking the same question: Where, oh where is the bottom?

After a yearlong slide in stocks and a giant bank rescue from Washington, even some pessimists had hoped that the worst might be over. But now, after the Dow Jones industrial average fell below 8,000 on Wednesday, the financial crisis and the bear market it spawned seem to be taking a new, painful turn.

Once again, investors’ confidence in the nation’s financial industry is draining away. And once again, people are rushing for ultra-safe investments like Treasuries. Many analysts agree that the short-term outlook seems grim now that the Dow has fallen below 8,000, a level that had lured buyers again and again in recent weeks.

More terrible news follows:

But even as markets tumbled, analysts saw few signs of capitulation, that final burst of panicked selling that typically marks a market bottom. If anything, Wednesday’s new lows are a sign that Wall Street has farther to fall.

“The market is still anticipating that we have not seen the worst,” said Ryan Larson, head equity trader at Voyageur Asset Management.

After precipitous declines this autumn, Wall Street had spent the past weeks testing its yearly lows by dipping sharply, only to rebound late in the day. The testing and retesting prompted some optimists to hope that the markets had finally found a foothold.

But Wednesday’s drop proved them wrong.

A gathering mass of bleak economic conditions seemed to approach the critical point, as fears of deflation and the auto industry’s waning prospects of a federal bailout drove financial markets into an afternoon selling frenzy.

Deflationary pressures indicate we are close to liquidity trap territory. .

Traditional monetary policy will not work, for even low interest rates can't create economic growth. In the neo-classical model, investment creates economic expansion since "supply creates its own demand." However, the current environment stands that notion on its head, for with asset prices falling and a reasonable expectation they will continue to do so in the future, minimizing losses means getting rid of them as soon as possible. This individually rational decision creates a socially suboptimal outcome by leaving us with a sea of capital and no productive use for it since demand is way, way down and there is no rational reason for businesses to expand output, particularly if the price of capital is rising (which is what happens during deflation, and even if the real rate of interest remains very low, without rising demand there is absolutely no reason to expand output).

John Kemp argues in the Guardian that conventional monetary policies are now useless in dealing with Depression 2.0 (and in doing so he nicely guts monetarism):

The Fed can always overwhelm the increased precautionary demand for cash balances if it is willing to expand its balance sheet enough and force the banks into renewed lending. But the scale of balance-sheet expansion required would risk creating huge distortions and be hard to reverse, leaving the economy with a massive monetary overhang once growth resumed.

Past experience during the Great Depression in the 1930s and in Japan during the 1990s and 2000s suggests quantitative easing has had only limited success restoring growth or averting deflation. Japan's quantitative easing did not generate meaningful amounts of inflation despite the authorities' trying (though it may have stopped a deeper deflation).

With the monetary transmission mechanism broken for the time being, the Fed's reserve-expansion policy is unlikely to provide much support for commodity prices in either the short or medium term. Any longer term impact depends on prospects for a renewed expansion in bank lending.

Instead, the Fed's quantitative easing should be interpreted as an ominous sign that activity is now in freefall as credit evaporates. By dramatising the sharpness of the current contraction it highlights the downside cyclical risks to commodity prices, even after sharp falls, rather than the upside monetary potential.

Meme of the Moment--Obama's Agenda DOA

2008-11-20T00:13:00.005-06:00

Holman W. Jenkins, Jr. writes in the Wall Street Journal that "Obama Hears a Giant Sucking Sound."

His conclusion is right there at the headline as well, the article subtitled "His legacy is spent before he gets his hands on it."

Possibly true. After all, Nobel laureate Paul Krugman wrote a book in the spring of 2001, Fuzzy Math, in which he argued that one of the core aims of the Bush tax cuts was to eliminate the surplus before liberals could get their hands on it and spend it. And, Krugman argued, one of the key reasons for wanting to prevent liberals from spending the surplus was that liberal social programs are popular--public education anyone, Social Security, health care--and if liberals got to spend the money the way they wanted to they would dominate American politics for a generation.

I can't really credit the Bush Administration with the competence to be finishing some sort of grand strategic design. But I can imagine them possessing the low animal cunning sort of political acumen that slams the door on their successors doing what the Bushies feared so much to begin with.

Now, back to Mr. Jenkins' op/ed.

The first three paragraphs blame the current crisis on the New Deal and the institutions it spawned. Of course, there is no discussion of how they were left to rot, rather than updated and reformed to deal with changing economic and social circumstances. To the extent his assertion is true, it is true because these institutions were treated with derision rather than re-tooled to handle the changing environment.

The fourth paragraph re-asserts another conservative meme of the moment: unions are to blame for the plight of the automakers. Of course, this conflicts with another of conservatism's complaints of the moment concerning reckless consumption, and Freddie deals with that nicely in his post (linked above). Additionally, this only reflects how poorly the American business community perceived the future: the unions and the bosses both thought that the 1950s would last forever. While the UAW may deserve some of the blame, particularly with regard to resisting mandates requiring improved vehicle gas mileage, investors and management went blithely along.

The fifth and sixth graphs are fantastic, in the classic sense of the word, for the villain of the piece turns out to be FDR. FDR, after all, established institutions that became a part of the subprime meltdown. See above, however, as the problem lies in neglecting these institutions, allowing them to become captive to certain interests. Fannie and Freddie, for example, hooked up with investment banks whose desire for ever higher rates of returns motivated them to push Fannie and Freddie into handling ever more risky loans, since the greater the risk the greater the rate of return. So, was it the New Deal institutions or was it financial innovation and a propensity for investment banks to play fast and loose with other people's money?

The ninth through eleventh paragraphs concern the auto industry, sort of arguing that we ought to let Detroit go down. He implies this is common sensical, and once again demonstrates Aristotle's point that what passes as common sense is simply the conventional wisdom of the day. After all, the overall impact to the American economy for letting Detroit completely collapse, however much they deserve it--and they do deserve it--would be near catastrophic as there are hundreds, maybe thousands, of other businesses tied to Detroit: dealerships, distributors, subcontractors, etc. And he says it so bloodlessly, as though the workers who would be affected are mere abstractions. Positively Hooeverish (okay, that is a bit below the belt, but please consider the snide tone of the whole op/ed when rendering judgment).

The 12th paragraph asserts that the Democrats will see no payoff from any bailout of Detroit, asserting that billions of taxpayer dollars would simply be wasted. This is possible for him to argue since he never weighs the disadvantages of letting Detroit collapse, so no apparent net benefit is visible as a result of this elision. In other words, since he never attributes any cost to simply allowing the American auto industry to collapse, there is no attributable benefit to preventing its collapse. Some real sleight of hand, but intellectually dishonest, at a minimum.

He concludes in the 13th to 15th paragraphs with something resembling an argument that Obama must abandon an agenda modeled on the New Deal and rather conclude the Bush Administration's agenda of private accounts. However, this conclusion amounts to an assertion that conservative economic dogma must be the centerpiece of any future economic agenda, regardless of the facts. For example, he repeats a common trope regarding Social Security that no one ever cites evidence to support. In fact, none of preceding argumentation sets aside the sort of re-visioning of the New Deal that would make it more effective.

My conclusion to this tiresome exercise is that there is little to this piece besides a rhetorical narrowing of paths to exclude any alternatives that don't fit the Wall Street Journal editorial page's long-held biases regarding both the ineffectiveness of government as well as an obsession with continually justifying an economic agenda (Supply Side Nonsense) that has proved ruinous.

That now the Journal (re)-turns to the New Deal as the source of our economic woes truly demonstrates how out of ideas and evidence they actually are.

Bushed!--Like a Bad Fart His Aroma Lingers

2008-11-19T23:43:00.002-06:00

The Bush Administration is moving political appointees to career civil service posts in hopes of perpetuating current bureaucratic momentum:

The transfer of political appointees into permanent federal positions, called "burrowing" by career officials, creates security for those employees, and at least initially will deprive the incoming Obama administration of the chance to install its preferred appointees in some key jobs.

Similar efforts are taking place at other agencies. Two political hires at the Labor Department have already secured career posts there, and one at the Department of Housing and Urban Development is trying to make the switch.

Between March 1 and Nov. 3, according to the federal Office of Personnel Management, the Bush administration allowed 20 political appointees to become career civil servants. Six political appointees to the Senior Executive Service, the government's most prestigious and highly paid employees, have received approval to take career jobs at the same level. Fourteen other political, or "Schedule C," appointees have also been approved to take career jobs. One candidate was turned down by OPM and two were withdrawn by the submitting agency.

The personnel moves come as Bush administration officials are scrambling to cement in place policy and regulatory initiatives that touch on issues such as federal drinking-water standards, air quality at national parks, mountaintop mining and fisheries limits.

This will have a significant long-term impact on the administration of the Department of the Interior:

One career Interior official, who spoke on the condition of anonymity so as not to jeopardize his position, said McKeown will "have a huge impact on a broad swath of the West" in his new position, advising the Bureau of Land Management and the Fish and Wildlife Service on "all the programs they implement." Comer, the official added, will help shape mining policy in his new assignment.

"It is an attempt by the outgoing administration to limit as much as possible [the incoming administration's] ability to put its policy imprint on the Department of Interior," the official said.

If there is one thing we should all be aware of it is the overtly ideological nature of Bush Administration political appointees. Hell, they even politicized the selection and career advancement of United States Attorneys.

In light of the emphasis of ideology and loyalty over expertise, we should all wonder what sort of damage these political appointees can do as technocrats actually managing and overseeing the operations of federal agencies.

Additionally, as conservatives insist that government is the problem and is incompetent--they are ideologically committed to government being inefficient and clumsy--isn't it likely that these bureaucrats will feel no vested interest in actually doing what these agencies are mandated to do?

*Sigh*

The Reality Dysfunction--Bachman-Flavored

2008-11-19T23:38:00.003-06:00

So, Michelle Bachman won re-election to the House of Representatives. As part of her "rehabilitation" she appeared on Fox News's Hannity & Colmes where she denied saying what she clearly said. Crooks and Liars has both videos, her denial of saying what she said, and the video from Hardball where she said what she said to a visibly astonished Chris Matthews.

While I hope you enjoy consider two things: (a) conservatives appear completely unaware of YouTube and the fact that about five minutes after they say something in public it is posted for later reference (and refutation), (b) conservatives appear completely committed to repeating claims that are demonstrably false despite the fact You Tube keeps catching them in the falsehoods (cf. Palin's "Bridge to Nowhere").

Obama and the World

2008-11-19T17:20:00.002-06:00

Al Qaeda denounces Obama:

In a propaganda salvo by Al Qaeda aimed at undercutting the enthusiastic response of Muslims worldwide to the American election, Osama bin Laden’s top deputy condemned President-elect Barack Obama as a “house Negro” who would continue a campaign against Islam begun by President Bush.

Appealing to the “weak and oppressed” around the world, the Qaeda deputy, Ayman al-Zawahri, sought to dampen excitement over Mr. Obama’s election around the globe by saying that the “new face” of America only masked a “heart full of hate.”

So the terrorists deny Obama is one of them. Doesn't that mean Rush Limbaugh, Sean Hannity, the Corner, John McCain and particularly the Appalling Sarah Palin owe Obama (and the rest of us) an apology?

I won't be holding my breath.

Bring on the Stimulus!

2008-11-19T17:13:00.003-06:00

The Boston Globe jumps on the bandwagon, insisting that a massive economic stimulus is necessary to stave off Depression 2.0:

ALL THE economic signs point to a deep and prolonged recession - unless Congress and the new administration act promptly and boldly.

Some of what's needed is genuinely difficult to accomplish. How to recapitalize and re-regulate the financial system? How to unscramble the mess of securitized mortgages to prevent a worse epidemic of home foreclosures? How to save the auto industry? All this, and more, will fall to the new administration.

But one important policy tool can be done immediately: spending large sums of federal money to offset collapsing demand from households, businesses, and state and local governments.

And this should be done immediately:

There are also the usual Cassandras warning about increased deficit spending. But compared with the risk of a depression, temporary increases in the deficit are surely the lesser evil.
Inflation is hardly a worry. Investors are perfectly willing to lend the Treasury money for 30 years, at 4 percent interest. If inflation was a concern, the government would be having to pay a much higher rate.
You can imagine life in the office of a congressional Republican. The ideological purists are on one phone line warning about the evils of government spending, while mayors, governors, and small businesses are on other lines pleading for relief.
A temporary stimulus will just buy some time until the new president takes office, when even more federal aid will be needed. But the House and Senate leadership should damn the torpedoes, vote for an adequate emergency stimulus, and dare Bush and the GOP legislators to oppose it.

Well put.

"Economic Conservatism" Updated

2008-11-19T17:02:00.005-06:00

Freddie argued that perhaps we need to redefine what being middle class means.

"Some Defunct Economist" agreed but then noted that advertising and marketing stand in the way of doing so since their message is in tension with such attempts, risking the deligimization the political/economic order as we know it.

David Brooks agrees, and while I don't know quite how to feel about that, I am pleased his vision is so clear, for he notes that those who find themselves pushed down and out of the middle class will experience intense alienation:

This recession will probably have its own social profile. In particular, it’s likely to produce a new social group: the formerly middle class. These are people who achieved middle-class status at the tail end of the long boom, and then lost it. To them, the gap between where they are and where they used to be will seem wide and daunting.
The phenomenon is noticeable in developing nations. Over the past decade, millions of people in these societies have climbed out of poverty. But the global recession is pushing them back down. Many seem furious with democracy and capitalism, which they believe led to their shattered dreams. It’s possible that the downturn will produce a profusion of Hugo Chávezes. It’s possible that the Obama administration will spend much of its time battling a global protest movement that doesn’t even exist yet.
In this country, there are also millions of people facing the psychological and social pressures of downward mobility.
In the months ahead, the members of the formerly middle class will suffer career reversals. Paco Underhill, the retailing expert, tells me that 20 percent of the mall storefronts could soon be empty. That fact alone means that thousands of service-economy workers will experience the self-doubt that goes with unemployment.
They will suffer lifestyle reversals. Over the past decade, millions of Americans have had unprecedented access to affordable luxuries, thanks to brands like Coach, Whole Foods, Tiffany and Starbucks. These indulgences were signs of upward mobility. But these affordable luxuries will no longer be so affordable. Suddenly, the door to the land of the upscale will slam shut for millions of Americans.
The members of the formerly middle class will suffer housing reversals. The current mortgage crisis is having its most concentrated effect on people on the lowest rungs of middle-class life — people who live in fast-growing exurbs in Florida and Nevada that are now rife with foreclosures; people who just moved out of their urban neighborhoods and made it to modest, older suburbs in California and Michigan. Suddenly, the home of one’s own is gone, and it’s back to the apartment complex.
Finally, they will suffer a drop in social capital. In times of recession, people spend more time at home. But this will be the first steep recession since the revolution in household formation. Nesting amongst an extended family rich in social capital is very different from nesting in a one-person household that is isolated from family and community bonds. People in the lower middle class have much higher divorce rates and many fewer community ties. For them, cocooning is more likely to be a perilous psychological spiral.
In this recession, maybe even more than other ones, the last ones to join the middle class will be the first ones out. And it won’t only be material deprivations that bites. It will be the loss of a social identity, the loss of social networks, the loss of the little status symbols that suggest an elevated place in the social order. These reversals are bound to produce alienation and a political response. If you want to know where the next big social movements will come from, I’d say the formerly middle class.

Depression 2.0: Deflationary Concerns

2008-11-19T16:46:00.005-06:00

From today's New York Times: "Consumer Price Decline Prompts Fear of Deflation."

(Note that food and energy prices are excluded from their survey due to their "volatility". This means that two of the three largest costs for working people, fuel to drive and food to fuel, aren't part of the survey. They appear to be something of a wash at the moment: fuel costs precipitously declined while food prices remain high. Nevertheless, true deflation could threaten millions more mortgage foreclosures and bankruptcies as debt gets harder and harder to pay down, since deflation makes the real interest rate functionally higher regardless of what the nominal interest rate is.)

The NYT article says:

It was the steepest single-month drop in the 61-year history of the pricing survey and raised concerns about deflation as the economy contracts and demand for goods and services plunge. Another report released Wednesday indicated that new home construction continued to fall. “This month it’s more than slowing, it’s outright contraction,” said James O’Sullivan, United States economist at UBS. “And yes, if you extrapolate that, it’s deflation.”

Deflation, a continued decline in prices, could worsen the economic slowdown by making it harder to pay off debts and would negate the impact of interest-rate cuts by the Federal Reserve.

The risk to the economy from pricing has rapidly moved from that of rapid inflation to the disinflation that is now moving through the system,” Joseph Brusuelas, chief economist of Merk Investments, wrote in a note.

Even excluding volatile food and energy prices, prices dropped 0.1 percent in October, the first such decline in more than two decades. Mr. O’Sullivan said that he expected core prices, which are up 2.2 percent this year to continue to fall back, but he does not expect them to slip into negative territory.

Note also that there are continuing deflationary pressures:

Economists said the tumbling consumer prices offered more evidence that companies ranging from boutiques to airlines to car dealerships were beginning to offer deep discounts to compete for a shrinking pool of disposable cash. Americans have tightened their spending as job losses mounted and easy credit dried up, and retailers are bracing for a punishing holiday shopping season.

“We’re looking at a pretty deep recession now,” Mr. Behravesh said. “ All of a sudden, any pricing power that companies might have had is gone. You’re going to see discounting like crazy going on. All kinds of sales. You’re going to see all kinds of prices being slashed.”

Finally, note that commodities prices for the traditional hedges against inflation have collapsed:

Crude oil prices, which peaked near $150 a barrel this summer, are now hovering at $55 a barrel, and the prices for gold, silver and other metals have collapsed.

On top of this, housing starts declined at a record level.

Given the rate at which housing drove economic growth between 2002 and 2006, this is very worrisome.

Center Right Nation Update

2008-11-19T16:39:00.004-06:00

Another op/ed declaring that the election results are not a function of conservatism but of voter rejection of Republican failure to be conservative enough.

*Sigh*

The very category RINO tells us a lot about the state of the center-right in this country: center-right to the center-right apparently means all the way to the right.

Citing the successes of governors in traditionally very conservative states (South Carolina, Louisiana, Alaska--except for oil socialism thing) doesn't solve the rejection of this sort of conservatism by both coasts and the upper Midwest.

That Republicans are coalescing around these governors proves, again, how out of touch conservatives are with the country outside of the South.

Commodity Fetishism In Action

2008-11-19T16:24:00.003-06:00

Thomas Kinkade is now a filmmaker?! Sullivan's tagline says it all.

("Some Defunct Economist's" brother may have just had a stroke reading this. As an "artist", he finds Kinkade's work about as palatable as I find Tim LeHaye's. Both have a lot in common: extreme ahistoricism, ideology, and a complete lack of aesthetic insight permeate--actually define--their works. Ignorant and proud of it.)

My favorite bit of advice:

Create an overall sense of soft edges, strive for a "Barry Lyndon" look. Star filters used sparingly, but an overall "gauzy" look preferable to hard edge realism.

Yeah, avoid realism, since realism and reality are ultimately inimical to the "worldview" offered up by Kinkade (and LeHaye and all his Christinist allies, progeny, and imitators--that means YOU, D. James Kennedy, and you TOO James Dobson).

"Economic Conservatism": Tension and Dismay

2008-11-19T15:26:00.008-06:00

If you wish to read truly thoughtful analysis, always, always, always check out the writing over here, at L'Hôte. Freddie posts long, but he doesn't lamely use extensive block quotes to make arguments for him (which makes him much better reading and higher quality thinking than yours truly), and he is very insightful.

In particular, his arguments on "Economic Conservatism and American Dreams" deserve reflection. If you're in a hurry, though, he summarizes things nicely at the bottom, where he says:

To put it more succinctly, how can opposition to unions, college-for-all, and propping up industries that give uneducated Americans access to the middle class, be synthesized with a vision of success for almost everyone? As I said, I'm inclined to change what we define as "success", to make material gains less important and to redefine what we believe to be the consumptive markers of middle class identity. But that's gonna take change, to both our culture and our political rhetoric.

The cultural changes required are huge. Freddie notes the following (earlier in his post):

Many times I hear people argue that the working class or poor should just stop expecting so much and be smarter with their money.

That isn't bad advice, in fact it is excellent, but we must also come to terms with this:

We live in a culture that doesn't just value material wealth or affluence, but revels in excess, brags about largess and profligacy, makes a virtue of ostentation and a fetish of the most obscene and useless expense. That has to change, if we're going to accept the idea that we should all be happy with less. I know people kind of detest the language of compassion in politics, but it is a cruel thing, a cruel thing, to live in a culture that values wealth and only wealth, and then turn around and tell someone that they are irresponsible and wrong to be bent on acquiring it. It's easy to tell other people to delay gratification. It's much harder to actually be the one delaying it, when VH1 and the E! network are telling you everyday that you're nothing if you don't get that purse or that blouse or that goddamn enormous television. I'm all for endorsing a modified American dream, but modifying it means a lot more than being a scold.

It is not just the networks, but also the entire advertising/marketing machine that underlies commercial entertainment. The whole point of advertising/marketing is to instill wants in people and to then nudge wants into acutely felt needs solely to separate those feeling wants or needs from their income.

The success of the machine largely lies in it's making identity a commodity. The goods purchases reflect, advertising tells us, one's "lifestyle choice(s)." These, in turn, signify the consumer's identity. (For example, watch Mad Men for a while, think about it, look at some popular entertainment, then reflect on all you've seen.)

The notion of hyperreality is very helpful, particularly since:

Hyperreality is exploited in advertising for almost everything. Advertising uses a fake world to define in each person a character that he or she wishes to be. Advertising sells the public an image in the hope that they will buy into their version of a lifestyle that they ultimately desire. Want to be seen as a sex icon? Buy the most expensive jeans as worn or designed by your favorite celebrity.

Every time we enter a large shopping area with a certain theme, we are entering a hyperreal world. Theme parks such as Disneyworld or the casinos in Las Vegas are hyperrealities in which the public can get lost for as long as their money holds out. Hyperreality no longer exists just in our heads; it is being force-fed to us nearly every time we leave our homes.

As such, consumerism, which more and more encompasses the construct of "pop culture," impedes the re-imaging of both the middle class and American dreaming.

In these circumstances, telling the less well off they'll just have to make do without a living wage or significant employee benefits, that unions must be swept away, and that education is a luxury good, well, the more that's the explanation and the prescription, the less legitimate the economic order will appear.

In a sense, then, economic conservatism delegitimizes the prevailing economic order, capitalism.

The longer the situation prevails, the more likely extensive changes to the prevailing order will be sought, particularly since the standard means of quiescing unrest over inequality has been commercial entertainments and easily available credit to pursue one's identity through purchasing. How legitimate will the political order remain unless it responds to ameliorate this condition?

And, finally, how will our republic fare with further political deligitimization? Will we keep it? (Not if the writers of the Federalist Papers knew their stuff, not then.)

UPDATE--The success of hyperreality in suborning cultural norms flows naturally from American individualism and the American Dream, the idea(s) that the individual can remake itself rather than being bound to social roles defined by birth, upbringing, religion, race, color, sexual orientation, or any other category. For if the individual is not inexorably bound to inhabit the role defined by its structural position, then the free creation of individual selfhood, experienced subjectively as identity, is something that can be accomplished by appropriating the "right" signifiers, even if those signifiers are only commodities.

(I know, I know, I'm bending postmodern analysis perilously close to a "commodity fetishism" argument, but think about how successful advertising has been in this country, how sophisticated it is, how much money is spent on it. It seems: instead of the material bases of society driving superstructural/cultural ephiphenomena in a one-way relationship, the superstructure's representations warp the material bases of society in a sort of self-reinforcing cycle of commodification and identity construction, what might be called "circuluar cumulative causality." Enough, I'm giving myself a headache.)

The Center Right Nation Thesis

2008-11-16T18:51:00.013-06:00

Hey, I haven't written in a while because addressing this subject has had me tied up in knots. Oh, I knew what I wanted to say about the Center-Right Nation Thesis, but I had a very hard time organizing my rhetoric. Sorry for the delays, but here's what I promised you a while ago.

David Sirota provided the image, denying the truth of the CRNT. This sign (yes, in the semiotic sense) is important, for the meme that the United States is a "center-right nation" continues to appear in discussions of President-Elect Obama's policy agenda.

In fact, there is a cottage industry among conservative pundits to assert the Center Right Nation Thesis as a means to insist that Obama can't enact his agenda since the U.S. remains a "center right nation".

However, these same conservative pundits and even Jon Meacham are abusing the empirical evidence Meacham himself cites in his article "It's Not Easy Bein' Blue". This is the article which that flung the notion of the United States being a "center-right nation" into renewed prominence.

Conservative punditry has been cherry-picking the implications of Meacham's empirical evidence, which should not surprise: The conservative mood of the moment dictates a stubborn denial of conservative inadequacy, and an insistence that the election was in a no way a judgment on conservatism.

Empirically, Meacham's article argues, Democrats find themselves forced to govern from the center rather than the left:

In 2007, the Pew Research Center published a 112-page report subtitled "Political Landscape More Favorable to Democrats," and the most recent ABC News/Washington Post poll found that 55 percent believe Obama's views are neither too liberal nor too conservative but are "about right."
But history, as John Adams once said of facts, is a stubborn thing, and it tells us that Democratic presidents from FDR to JFK to LBJ to Carter to Clinton usually wind up moving farther right than they thought they ever would, or they pay for their continued liberalism at the polls. Should Obama win, he will have to govern a nation that is more instinctively conservative than it is liberal—a perennial reality that past Democratic presidents have ignored at their peril. A party founded by Andrew Jackson on the principle that "the majority is to govern" has long found itself flummoxed by the failure of that majority to see the virtues of the Democrats and the vices of the Republicans.
The pattern has deep roots.

Meacham argues that the U.S. is center-right nation because of where its politics sit relative other advanced industrial democracies (the United Kingdom, Canada, France, Germany, etc.):

So are we a centrist country, or a right-of-center one? I think the latter, because the mean to which most Americans revert tends to be more conservative than liberal. According to the NEWSWEEK Poll, nearly twice as many people call themselves conservatives as liberals (40 percent to 20 percent), and Republicans have dominated presidential politics—in many ways the most personal, visceral vote we cast—for 40 years. Since 1968, Democrats have won only three of 10 general elections (1976, 1992 and 1996), and in those years they were led by Southern Baptist nominees who ran away from the liberal label. "Is this a center-right country? Yes, compared to Europe or Canada it's obviously much more conservative," says Adrian Wooldridge, coauthor of "The Right Nation: Conservative Power in America" and Washington bureau chief of the London-based Economist. "There's a much higher tolerance for inequality, much greater cultural conservatism, a higher incarceration rate, legalized handguns and greater distrust of the state."

Put another way:

"If you compare the Democratic Party to European Labor, in lots of ways [the Democrats] look quite conservative," says Wooldridge. Will a Democratic administration, he asks, "ban handguns? No. Will it throw its weight behind legalizing gay marriage in every state? No. So even if you have, as we will, a Democratic Washington, America will remain a fundamentally conservative country."

Despite having an axe to grind, Meacham makes room for possible structural causes of America's rightward tilt compared to other democratic countries:

Liberal ideas flower in conservative eras and vice versa, just as liberals sometimes enact conservative dogma and conservatives embrace liberal shibboleths. Eisenhower chose not to roll back the Roosevelt-Truman expansion of the state, essentially codifying the New Deal; Nixon was crucial in the rise of affirmative action.
So the lines are blurry, the terms squishy—and there are plenty of skeptics about the conservative-America thesis. Rick Perlstein, who published the excellent "Nixonland" earlier this year, makes an interesting argument. "As far as public opinion goes, the American public is generally not center-right," he says, pointing to data like those in the Pew poll. "The younger generation is more progressive than the last one. What we do have is a center-right political system." In Perlstein's view, the system is set up to make it difficult for voters to achieve a government as liberal as their beliefs. Because of the veto, the filibuster and powerful interests, he says, a supermajority is needed to reform government. America's Founders "wrote a Constitution designed to make change a slow and deliberative process."

Institutional factors, then, contribute to the conservative bent of American politics. This contention is true analytically, without much need for watching American politics work, for if you compare the American Constitution to those of other advanced industrial democracies, what stands out, other than its brevity, is how very difficult it is to alter.

After citing these historical and structural barriers, Meacham concludes that Obama will have to settle for governing from the center rather than over-reaching and generating a backlash:

But one man's hubris is another man's genuine reform. It is a fact of our politics that presidents usually have limited windows of opportunity to do big things. With Johnson, it was 1964, 1965 and 1966; with Reagan, at least domestically, it was 1981. "There could be an opening for real reform," says Charles Peters, the founding editor of The Washington Monthly, who first came to the capital to work for President Kennedy's new Peace Corps. "It may be briefly possible, but Obama has to remember that the natural tendency of the country, at least in my lifetime, is to settle just right of center."

Okay, that's interesting, but it is simply a truism: overreaching causes political backlashes. This has always been the case, just ask Julius Caesar, or Napoleon, or Aaron Burr, or..., you get it: every polis has seen an instance of political overreach. So?

We need to look at another article that appeared in the same issue of Newsweek in which Meacham's piece was featured, an article that has been discussed very little, its conclusions virtually ignored by the same conservative pundits lauding and citing Meacham. Written by Jonathan Alter and titled, "We're Heading Left Once Again," it argues we are in a period of transition, moving to the left of where the country's been:

Since about 1980, we've been living in a center-right America, but we're center-center now, and likely headed left. Even if McCain pulls an upset, the Democratic Congress would nudge him leftward on issues like alternative energy and taxes (and his health-care plan would be DOA). Should Obama win, he will press hard for his ambitious agenda, even, aides say, at the risk of being a one-term president. Then it would all be about execution.

Despite being to the right of European welfare states, the historical record shows a pragmatically liberal bias to the American electorate's preferences:

Jon Meacham is right that by the standards of a European-style welfare state, we will always be a relatively conservative country. But closer to home, the norm has not been consistently conservative over the course of the 20th century. If anything, the nation was more often center-left. Democrats controlled the House of Representatives—the "People's House"—for six straight decades between 1930 and 1994 (with only a short exception). While many were Southern conservatives on race, the huge chunks of progressive legislation they swallowed over many years could choke an elephant.

When the GOP finally did get full control of Capitol Hill in 1994, what did they do with it? The reign of Tom DeLay was not conservative in any way that Edmund Burke would recognize. He led a band of radical Republicans who actually shut down the Congress to intervene in the case of a brain-dead woman in Florida— a move that will likely be remembered as the high-water mark of theocratic power in the United States.

At the presidential level, two Republicans, Dwight Eisenhower and Richard Nixon, left almost every major element of the New Deal in place and added their own initiatives that sound right out of the 2008 Democratic Party platform. (Ike's Interstate Highway System was the mother of all infrastructure projects, and Nixon gave us the Environmental Protection Agency.) Every GOP effort to undermine Social Security—the great emblem of domestic liberalism—failed by huge margins between 1936 and 2005. For all his talk, Ronald Reagan failed to reduce the size of government, much less dismantle the welfare state. His acolytes did succeed in the semantic crusade of wrecking the word "liberal," though liberal-bashing is no longer potent politically in any large state except Texas.

The current political environment gives Obama a chance to enact a cautiously liberal agenda and remake the the landscape. It's all about getting things done (and that's why Rahm Emanuel is Obama's new chief of staff):

Instead of an almost religious devotion to the libertarian ideas of Alan Greenspan, we're moving back toward what might be called neo-Keynesian economics. And instead of the unobstructed opposition of a new media powerhouse (talk radio), Obama would have the help of more than 2.5 million small contributors, eager to use the Web to mobilize on behalf of his program.
If he wins, Obama could run aground in a thousand ways next year. He will have to possess all the dexterity he's shown during the campaign, and then some. If he fails to deliver, the country will go back to the center-right. But if he gets a few big things enacted in his first year, Barack Obama would have a fighting chance to move the country to a new place, or at least one we haven't seen for a while. Leftward ho!

Thus, even though Alter pretty much answers Meacham in the same issue of Newsweek, almost all we've been hearing from conservative pundits is that saying "American is really a center-right nation," means that Obama can't do anything remotely liberal. Meacham's rhetoric is being used to foreclose any discussion of policies the conservative punditry doesn't like, even though the center-right candidate lost the election. So Meacham's conclusion has become a rhetorical club masquerading as wisdom. (That matters because American politics is a very rhetorical activity.)

Douglas Schoen wrote in the Wall Street Journal that the election's results were not an mandate for the Democrats but merely a desire for centrism:

This election is not a mandate for Democratic policies. Rather, it is a wholesale rejection of the policies of George W. Bush, Republicans, and to a lesser extent, John McCain. But it is not, as poll after poll has shown, an embrace of the Democratic Congress, which has approval ratings that are actually lower than that of the president.

The American people are actually seeking a middle route: consensus, conciliation and a results-oriented approach to governance. We need consensus on how to best stimulate our economy, and how to get a deficit that is approaching $1 trillion under control. We have tough choices to make involving entitlement programs like Medicaid, Medicare and Social Security.

If this line of analysis is true, then the electorate still wishes to move leftwards (since getting to the center from the right requires going left). And it likely means a long time in the wilderness for the GOP since they are clearly not the center.

"Some Dead Economist" concludes that even if the country is center-right in ideology, even if institutional factors, such as the division of power and checks and balances, check sharp leftward lurches in governing, even if the results of the election were a partisan rebuke to the Republicans rather than a mandate for wild-ass Democratic initiatives, even if all these not non-controversial claims are true, even then, the evidence suggests the center is moving to the left:

A more important point, though, which both Meacham and Alter raise in different ways, is that ideology is relative to current standards; given that the parties can shift positions (if only gradually at times), it is no surprise that they find themselves not too far from current voters. For example, is it really a sign of conservatism that 50% of Californians think gay marriage is OK? Similarly, if Obama raises the tax rate on the top bracket to 40%, would this really represent a triumph of liberalism? The center has moved a lot, in different ways, over the past few decades.

Tod Linberg, an editor at the conservative Policy Review, admits that the center-right nation has moved left, despite conservative pundit claims to the contrary:

Thus Rich Lowry, the editor of National Review, in Outlook last week: The United States "is indeed, as conservatives have been insisting in recent days, a center-right country." On election night, former Bush guru Karl Rove opined on Fox News, "Barack Obama understands this is a center-right country, and he smartly and wisely ran a campaign that emphasized it." And it's not just conservative pundits and operatives singing this song. Take Newsweek editor Jon Meacham, who wrote an Oct. 27 cover essay entitled "America the Conservative," which argued that Obama will have to "govern a center-right nation" that "is more instinctively conservative than it is liberal."

The only problem: It isn't true. Or at least, not anymore. If you'd asked me a year ago whether the United States is really a center-right nation, I would have said yes -- after pausing for a second to contemplate the GOP's big congressional losses in 2006. At the time, Republicans cheered each other up by assuring ourselves that the worst was over: If you were running for Congress and survived 2006, you could hold your seat forever.

Tell that to Christopher Shays. After 2006, he was the sole surviving GOP House member from all of New England, but he went down this year, 51 to 48 percent. We are now two elections into something big. This month's drubbing is just the latest sign that the country's political center of gravity is shifting from center-right to center-left. Republicans who fail to grasp this could be lost in the wilderness for years.

Here's the stark reality: It is now harder for the Republican presidential candidate to get to 50.1 percent than for the Democrat. My Hoover Institution colleague David Brady and Douglas Rivers of the research firm YouGovPolimetrix have been analyzing data from online interviews with 12,000 people in both 2004 and 2008. It shows an overall shift to the Democrats of six percentage points. As they write in the forthcoming edition of Policy Review, "The decline of Republican strength occurs by having strong Republicans become weak Republicans, weak Republicans becoming independents, and independents leaning more Democratic or even becoming Democrats." This is a portrait of an electorate moving from center-right to center-left.

Looking back at the presidential election of '08, Linberg continues:

Shortly after the GOP convention, McCain looked as if he could still come back. But it was the "maverick" McCain, running against party type, who was winning over independents at that point, not a conservative campaigning as a conservative (compassionate or otherwise).

Perhaps, as Rove says, Obama was running to the center. But can anybody make a serious case that people were mistaking him for a center-right politician? Or even a "New Democrat" such as former president Bill Clinton? The McCain campaign was not shy about letting voters know about the elements of Obama's record that marked him as a man of the left. Perhaps voters simply didn't believe a word of it, but a better explanation is that a majority of them heard McCain's warnings and just didn't mind. Center-left nation, anyone?

And while slightly hopeful that conservatives can make a comeback, Lindberg's conclusion doesn't assume that the electorate will simply revert back to conservatism:

Today's Democrats may well overreach in much the same way that Republicans did after they won their congressional majority in 1994, when they took the "center" out of center-right. If so, Democratic hubris will create opportunities for the GOP to get a hearing.

And so far, center-left government is largely an abstraction for the country. People like the sound of it, especially against the backdrop of a financial crisis and recession. In these center-left times, voters are receptive -- or rather, it is their receptiveness that makes these times center-left. But whether they will like the new Obama tilt in practice remains to be seen.

So Republicans should not despair. They will have plenty of time to work up a critique of Obama's policies as they unfold. But Republicans should not count on Democratic failure -- and they certainly should not regard it as inevitable because of a conservatism they impute to an electorate that has, shall we say, moved on.

While Lindberg's argumentation here is smart and honest, most conservatives will likely ignore his analysis and keep repeating the center-right nation thesis to themselves. In fact, conservative bandwagoning around the CRNT is a sign of their conservatism's larger problems of grappling with reality, as Steve Benen argues at the American Prospect's awesome Political Animal blog:

Just to reemphasize, Lindberg clearly wishes he were wrong. He's a conservative who, among other things, was the editor of the far-right Washington Times's editorial page. He's not Christy Todd Whitman, urging the Republican Party to move to the center; he's a conservative urging the Republican Party to acknowledge reality.

I suspect, however, that the party and its base will ignore this kind of analysis, and Democrats everywhere are probably hoping that they do. The longer the GOP is convinced it's a center-right country, the longer it will take the party to adjust to the new political landscape.

Now, remember what Meacham argued above? That there are windows of opportunity in which presidents can enact bold initiatives? Well, the Washington Post's E. J. Djionne argues that "bold is good" and that Obama should ignore those conservatives trying to tell him to be moderate and bland or face the wrath of the center-right nation:

The worst advice will come from his conservative adversaries, the people who called him a socialist a few days before the election and insisted a few days later that he won because he was really a conservative. The older among them declared after the 1980 election that the 51 percent of the vote won by Ronald Reagan represented an ideological revolution, but argue now that Obama's somewhat larger majority has no philosophical implications.

These conservatives are trying to stop Obama from pursuing any of the ideas that he campaigned on -- universal access to health care, a government-led green revolution, redistributive tax policies, a withdrawal of American troops from Iraq, more robust economic regulation.

Their gimmick is to insist that the United States is still a "center-right" country because more Americans call themselves conservative than liberal. What this analysis ignores is that Americans have clearly moved to the left of where they were four, eight or ten years ago.

The public's desire for more government action to heal the economy and guarantee health insurance coverage, along with its new skepticism about the deregulation of business, suggests that we are a moderate country that now leans slightly and warily left.

This is what I meant earlier when I stated that Meacham's empirical statement has been turned into a club, a means to foreclose consideration of an agenda that doesn't square with conservatism. Is it, then, a sign of fear among conservative pundits that they have lost their hold on the country's direction?

There is substantial empirical evidence, from the election results, to support this notion. After all, according to the center-right candidate, Obama was very liberal candidate, compared to McGovern, yet the popular vote went his way:

Before the election, John McCain and the Republicans depicted Obama as one of the most liberal senators in the entire chamber. Guess what? They were correct.

And yet somehow this center-right nation of ours elected him. Funny, but I don't remember these same voices saying how Bush, who won more narrowly on every count, was elected by a fundamentally "center-left" electorate.

Heads we're center-right, tails we're center-right. You got that? Just because we're not a Scandinavian country doesn't mean we're fundamentally center-right.

Ultimately what leads to "Some Defunct Economist's" disgust with the CRNT is the fact that the election's results were relatively clear. In fact, by the standards in which conservatives discussed the CRNT before the election, the CRNT is falsified by the election's results.

You see, back in April in response to George Will's claim that McCain was the quintessential center-right candidate in a center-right nation, Paul Waldman asked in the American Prospect if the U.S. really was a center-right nation, and he concluded that the conservative punditry was upset, even panicked, by the possible outcome of the election:

McCain, avers George Will, is "a center-right candidate seeking to lead a center-right country." Tom Cole, the head of the National Republican Congressional Committee, agrees: "I believe that it is still a center-right country, and I think this election will show that," he told the New York Times Magazine. "America is a center-right country and in modern times has not elected a thoroughgoing liberal as president," pleaded former Bush adviser Peter Wehner last week in the Wall Street Journal.

You can hear the hint of desperation in their voices. What they probably suspect, and what progressives are hoping, is that the conservative era that arrived with Ronald Reagan in 1980 is finally reaching its end, dragged into its grave by George W. Bush. The moment for a resurgence of activist government may have finally arrived.

He notes, further, that political scientists question the validity of ideological self-identification as a predictor of the actual policy preferences voters hold:

But the faith that McCain and other conservatives have that the country is with them rests on a fundamental misperception about public opinion. Since Lloyd Free and Hadley Cantril's 1964 book The Political Beliefs of Americans, political scientists have known that as a group Americans are "symbolic conservatives" but "operational liberals." In other words, if you ask them whether they'd define themselves as conservative or liberal, most choose conservative; but if you ask them about what they want government to do about specific issues and problems, most choose the liberal solution, i.e. that government should do more and spend more.

As a consequence, a substantial portion of the population -- nearly a quarter, according to the General Social Survey -- are what political scientist James Stimson calls "conflicted conservatives," those who pick "conservative" when asked their ideological identification, but nonetheless support liberal policies.

Now, the three guys Waldman cites, George Will, Tom Cole, and Peter Wehner, well their analysis doesn't hold up now.

Will's piece proves to be an ode to the free market, a defense of McCain's refusal to offer relief to homeowners threatened by foreclosure. He notes that the market is simply burying those who deserve it. Times change, don't they?

Tom Cole, speaking in New York Times Magazine, makes a nice point, but the rest of that article notes that the GOP has lost its appeal in the suburbs because of its social message, and Cole himself pointed out that the results of the 2008 election would be demomstrative on the question of the electorate's ideological orientation:

For operatives like Cole, focused on expanding the party’s appeal, the conservative movement had become too demanding: its aggressive rhetoric on some social issues alienated young voters, its swagger on immigration hardened Hispanic voters against Republicans and its emphasis on tax cuts for the wealthy made it difficult for the party to appeal to populist voters. Buffeted by those movement passions, the great thing at the center of it all — the party — began to fray. “If there are Republicans out there who think that 2006 was a year that could be changed by a few votes in a few districts, they need to wake up,” Mehlman told me. “It was a rejection.”

Cole is by training a historian, even though in his professional career he has been a consultant, a pollster, a state senator and a congressman; he has worked as the executive director of the N.R.C.C. and as chief of staff at the R.N.C.; and he even put in a brief, and perhaps ill-advised, shift as a political adviser for the Chamber of Commerce just before he ran for Congress. He inclines toward the long view. Cole says that he believes in the fixed nature of the two-party system. But he also acknowledges that there have been moments when partisan geographies have changed for the long term. I asked Cole what he believed the legacy of 2006 would turn out to be. “Right now, we don’t know,” he said. “That’s exactly what the 2008 election is going to prove.”

By his own standard, then, the U.S. isn't a center-right nation.

Finally, the Wehner piece is even more susceptible to this sort of refutation by ballot box, for Wehner essentially presents the following syllogism: Obama is a liberal, the contemporary American electorate doesn't vote for liberals since it is center-right, so Obama won't win. Since Obama won, the syllogism proves invalid, and at least one of its assumptions is flawed.

Once again facts trump faith-based statements. My conclusion: always wonder when conservatives make sweeping statements about the nature of American politics. They don't seem able to turn evidence into sound analysis, at least not when discussing the electorate as a whole rather than the true believers for whom they write.

Well, that's it. It took forever, I know, but since there was a four or five day period when the CRNT kept slapping me in the face, I thought I should adress it. Sorry for the inconvenience and length, but it deserves thorough treatment.

On the End of Wall Street

2008-11-16T01:41:00.005-06:00

Michael Lewis, writer of Moneyball, excellent, and Liar's Poker, also excellent but alarming, has an excellent article about the end of Wall Street as he knew it. You can read that here, but I've included some significant excerpts below, with emphasis added.

He remembers his time as a bond trader in the 80s, notes that he never considered what he saw around him as sustainable and then says:

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

He got in touch with a hedge fund manager who had a long track record of calling bullshit what it was in the financial markets. This guy, Steve Eisman is just a gold mine of information:

Steve Eisman entered finance about the time I exited it. He’d grown up in New York City and gone to a Jewish day school, the University of Pennsylvania, and Harvard Law School. In 1991, he was a 30-year-old corporate lawyer. “I hated it,” he says. “I hated being a lawyer. My parents worked as brokers at Oppenheimer. They managed to finagle me a job. It’s not pretty, but that’s what happened.”

He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the documents and that I hadn’t understood a word of the fucking things.”

Ames Financial belonged to a category of firms known as nonbank financial institutions. The category didn’t include J.P. Morgan, but it did encompass many little-known companies that one way or another were involved in the early-1990s boom in subprime mortgage lending—the lower class of American finance.

The second company for which Eisman was given sole responsibility was Lomas Financial, which had just emerged from bankruptcy. “I put a sell rating on the thing because it was a piece of shit,” Eisman says. “I didn’t know that you weren’t supposed to put a sell rating on companies. I thought there were three boxes—buy, hold, sell—and you could pick the one you thought you should.” He was pressured generally to be a bit more upbeat, but upbeat wasn’t Steve Eisman’s style. Upbeat and Eisman didn’t occupy the same planet. A hedge fund manager who counts Eisman as a friend set out to explain him to me but quit a minute into it. After describing how Eisman exposed various important people as either liars or idiots, the hedge fund manager started to laugh. “He’s sort of a prick in a way, but he’s smart and honest and fearless.”
“A lot of people don’t get Steve,” Whitney says. “But the people who get him love him.” Eisman stuck to his sell rating on Lomas Financial, even after the company announced that investors needn’t worry about its financial condition, as it had hedged its market risk. “The single greatest line I ever wrote as an analyst,” says Eisman, “was after Lomas said they were hedged.” He recited the line from memory: “‘The Lomas Financial Corp. is a perfectly hedged financial institution: It loses money in every conceivable interest-rate environment.’ I enjoyed writing that sentence more than any sentence I ever wrote.” A few months after he’d delivered that line in his report, Lomas Financial returned to bankruptcy.

Eisman wasn’t, in short, an analyst with a sunny disposition who expected the best of his fellow financial man and the companies he created. “You have to understand,” Eisman says in his defense, “I did subprime first. I lived with the worst first. These guys lied to infinity. What I learned from that experience was that Wall Street didn’t give a shit what it sold.”

After a while, the financial "assets" Wall Street was selling became, quite literally, "fantastic":

The big Wall Street firms had just made it possible to short even the tiniest and most obscure subprime-mortgage-backed bond by creating, in effect, a market of side bets. Instead of shorting the actual BBB bond, you could now enter into an agreement for a credit-default swap with Deutsche Bank or Goldman Sachs. It cost money to make this side bet, but nothing like what it cost to short the stocks, and the upside was far greater.

The arrangement bore the same relation to actual finance as fantasy football bears to the N.F.L. Eisman was perplexed in particular about why Wall Street firms would be coming to him and asking him to sell short.

I particularly like the line, "The arrangement bore the same relation to actual finance as fantasy football bears to the N. F. L." In a situation where fantasy and other people's money mixed, Wall Street engaged in more irrational behavior than one can credit:

In retrospect, pretty much all of the riskiest subprime-backed bonds were worth betting against; they would all one day be worth zero. But at the time Eisman began to do it, in the fall of 2006, that wasn’t clear. He and his team set out to find the smelliest pile of loans they could so that they could make side bets against them with Goldman Sachs or Deutsche Bank. What they were doing, oddly enough, was the analysis of subprime lending that should have been done before the loans were made: Which poor Americans were likely to jump which way with their finances? How much did home prices need to fall for these loans to blow up? (It turned out they didn’t have to fall; they merely needed to stay flat.) The default rate in Georgia was five times higher than that in Florida even though the two states had the same unemployment rate. Why? Indiana had a 25 percent default rate; California’s was only 5 percent. Why?

Over time, Wall Street built its own "doomsday device":

A full nine months earlier, Daniel and Moses had flown to Orlando for an industry conference. It had a grand title—the American Securitization Forum—but it was essentially a trade show for the subprime-mortgage business: the people who originated subprime mortgages, the Wall Street firms that packaged and sold subprime mortgages, the fund managers who invested in nothing but subprime-mortgage-backed bonds, the agencies that rated subprime-mortgage bonds, the lawyers who did whatever the lawyers did. Daniel and Moses thought they were paying a courtesy call on a cottage industry, but the cottage had become a castle. “There were like 6,000 people there,” Daniel says. “There were so many people being fed by this industry. The entire fixed-income department of each brokerage firm is built on this. Everyone there was the long side of the trade. The wrong side of the trade. And then there was us. That’s when the picture really started to become clearer, and we started to get more cynical, if that was possible. We went back home and said to Steve, ‘You gotta see this.’”

Eisman, Daniel, and Moses then flew out to Las Vegas for an even bigger subprime conference. By now, Eisman knew everything he needed to know about the quality of the loans being made. He still didn’t fully understand how the apparatus worked, but he knew that Wall Street had built a doomsday machine. He was at once opportunistic and outraged.

Their first stop was a speech given by the C.E.O. of Option One, the mortgage originator owned by H&R Block. When the guy got to the part of his speech about Option One’s subprime-loan portfolio, he claimed to be expecting a modest default rate of 5 percent. Eisman raised his hand. Moses and Daniel sank into their chairs. “It wasn’t a Q&A,” says Moses. “The guy was giving a speech. He sees Steve’s hand and says, ‘Yes?’”

“Would you say that 5 percent is a probability or a possibility?” Eisman asked.

A probability, said the C.E.O., and he continued his speech.

Eisman had his hand up in the air again, waving it around. Oh, no, Moses thought. “The one thing Steve always says,” Daniel explains, “is you must assume they are lying to you. They will always lie to you.” Moses and Daniel both knew what Eisman thought of these subprime lenders but didn’t see the need for him to express it here in this manner. For Eisman wasn’t raising his hand to ask a question. He had his thumb and index finger in a big circle. He was using his fingers to speak on his behalf. Zero! they said.

“Yes?” the C.E.O. said, obviously irritated. “Is that another question?”

“No,” said Eisman. “It’s a zero. There is zero probability that your default rate will be 5 percent.” The losses on subprime loans would be much, much greater. Before the guy could reply, Eisman’s cell phone rang. Instead of shutting it off, Eisman reached into his pocket and answered it.

“Excuse me,” he said, standing up. “But I need to take this call.” And with that, he walked out.

Eisman was astonished by collateralized debt obligations, the repackaging of bond tranches based on subprime mortgages into other securities:

Later, when I sit down with Eisman, the very first thing he wants to explain is the importance of the mezzanine C.D.O. What you notice first about Eisman is his lips. He holds them pursed, waiting to speak. The second thing you notice is his short, light hair, cropped in a manner that suggests he cut it himself while thinking about something else. “You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot fucking believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.

His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog shit lower than the original bonds.”

Large financial institutions created ever more debt instruments to generate more "money", thus explaining why/how losses amount to a greater value than that of all the loans issued:

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

Astounding.

Another place to look for a much more detailed account of how Wall Street drove the whole process can be round in Chain of Blame by Paul Muolo and Matthew Padilla. The dynamic was this: the "fixed income" part of the financial world, the bond arena, seeks the highest rate of return. Since the interest rate on a subprime mortgage was higher than that on a a less risky home loan, the securities issued against subprime mortgages offered a higher rate of return to investors.

Since Wall Street seeks the highest rates of return, investment banks were mad for subprime mortgage backed securites. In fact, they wanted more, more, more of them so they could issued and sell more, more, more of them. Why? They received a fee for issuing and selling them. So, the more of these securites they sold the more money they made, the higher their profits, the higher their stock prices, and the larger the bonuses the executives received. In this climate, it somehow made sense to treat securities resting on the lowest-quality and highest-risk loans as the most valuable assets offered by Wall Street wizards.

Except there is no magic, and the market eventually corrects, and seeks an equilibrium.

Welcome to the collapse of the largest pyramid scheme yet devise.

Who's Out to Get Whom?

2008-11-14T06:10:00.004-06:00

Paranoia is on the rise. And just because you're paranoid doesn't mean they're not all out to get you.

But seriously, folks:

Surveys of several thousands of people in Britain, the United States and elsewhere have found that rates of paranoia are slowly rising, although researchers' estimates of how many of us have paranoid thoughts varies widely, from 5 percent to 50 percent.
A British survey of more than 8,500 adults found that 21 percent of people thought there had been times when others were acting against them. Another survey of about 1,0000 adults in New York found that nearly 11 percent thought other people were following or spying on them.
Dennis Combs, an assistant professor of psychology at the University of Texas at Tyler, has been studying paranoia for about a decade. When he first started conducting paranoia studies, mostly in college students, he found that about 5 percent of them had paranoid thoughts. In recent years, that has tripled to about 15 percent, he said.
In a small experiment in London, Freeman concluded that a quarter of people riding the subway in the capital probably have regular thoughts that qualify as paranoia. In the study, 200 randomly selected people (those with a history of mental problems were excluded) took a virtual reality train ride. They recorded their reactions to computerized passengers programmed to be neutral.
More than 40 percent of study participants had at least some paranoid thoughts. Some felt intimidated by the computer passengers, claiming they were aggressive, had made obscene gestures, or tried to start a fight.

Of course, people in London just might be paranoid because of the thousands of surveillance cameras blanketing the city.

And Americans, well, we really are out to get one another, or so it sure seems.

Depression 2.0--Lame Duck Stimulus Lamed

2008-11-14T05:50:00.004-06:00

There is little chance that the lame duck session of Congress will initiate an economic stimulus package (or bail out Detroit):

Congressional Democrats are scaling back plans for an economic-stimulus package as partisan deadlock clouds chances for passage of either that measure or a proposed bailout of Detroit's auto makers until the party's enlarged majority convenes in January.

Democratic leaders want to move legislation that would give a jobs-producing jolt to the economy. They also support proposals to toss a $25 billion financial lifeline to Detroit. But it isn't clear either of those steps can pass before January, when President-elect Barack Obama and a new, more heavily Democratic Congress take office.

The biggest problem is in the Senate, where Democrats have only a 51-49 edge until year's end. The Bush administration is balking at the Democratic agenda, and Republicans in the House and Senate are growing more vocal about their concerns, especially concerning the auto package.

Waiting for Obama, I suppose. Hopefully it will be more rewarding than waiting for Godot. Sorry, couldn't resist.

And apparently, the whole ennui thing about waiting for Obama afflicts the world economic summit in DC:

WASHINGTON — World leaders converging here this weekend will try to reverse the worst economic crisis since the Great Depression, amid a change in the White House that leaves a key player on the sidelines.

The agenda for the meeting of 20 top economies — among the most important summits of its kind since World War II — includes discussions of how to stimulate the slumping economy, impose more government control over lending and create more transparency within financial markets.

Missing from the talks will be President-elect Barack Obama, who will assume a leading role in helping to solve these issues when he takes office. He declined to participate because President Bush, the man he will succeed, is the summit's official host. Obama has been wary of projecting presidential authority before his inauguration.

All talk, no action: an ambitious sounding agenda, with no binding agreement expected:

No dramatic action is expected. Participants such as British Prime Minister Gordon Brown call the summit an important step that could lead to revised missions for key institutions such as the World Bank and International Monetary Fund. Both were created after the last financial summit of this kind, the 1944 conference at Bretton Woods, N.H.

Despite the expected agenda calling for discussions of regulating financial markets, President George W. Bush continues to parrot his free market fundamentalist rhetoric:

Bush set the tone for the summit, calling on world leaders not to "reinvent" the free-market system.

"Our aim should not be more government," Bush said in a speech on Wall Street. "It should be smarter government."

Internal Survey, Apology, Suggestions

2008-11-14T05:05:00.004-06:00

I am apparently obsessed with (a) Depression 2.0, (b) the Appalling Sarah Palin, (c) the GOP's circular firing squad, and (d) perfectly barbecued pork. As normal people must be sick of (b) (even though she's the perfect emblem for everything wrong with contemporary American political life and thus the Gift that Keeps on Giving), and contemplation of (c) is pure schadenfreude on my part, and sharing (d) is unfortunately impossible online as well as fattening, my work on (a) will continue apace. Just remember "Some Defunct Economist" may be defunct, but he is not a professional economist, just semi-literate.

For real economic news, please consult the following sources:
Grasping Reality With Both Hands...
Conscience of a Liberal
Robert Reich's Blog
The Cunning Realist
News N Economics
Beat the Press
And to see just how fun classical economics can be, Gavin Kennedy's Adam Smith's Lost Legacy

Depression 2.0 Goes Global--Go Big or Go Home

2008-11-14T03:38:00.007-06:00

Threads and storylines converge: the onset of the worst economic downturn in 80 years and the need for our new political leadership to go big when the confront this downturn.

The bad news keeps piling on, as Depression 2.0 goes global.

Increased jobless claims in the United States, German confirmation of a recession, and a new OECD projection all point to further economic contraction among the organization's member states:

Evidence of a broad global recession continued to accumulate yesterday, with U.S. officials reporting a spike in jobless claims, Germany confirming that its economy has shrunk for six consecutive months, and the Paris-based Organization for Economic Cooperation and Development projecting a contraction throughout its worldwide membership.

From broad indicators such as the demand for oil to the performance of individual companies, the signs point in the same direction: down.

"The OECD area economy appears to have entered recession," the organization said yesterday in a forecast that was stark in its breadth. OECD members include the United States, Japan, the major European economies and several other nations accounting for the vast bulk of the world's economic activity.

According to the group's latest forecast, the economies of the entire group are contracting and will shrink by a combined 0.3 percent in 2009. Its full-year forecast is for the U.S. economy to contract 0.9 percent next year; Japan to shrink 0.1 percent; and the organization's European members to shrink 0.5 percent.

UPDATE--Add 85,000 new foreclosures in October to the mix of depressing news items.

Paul Krugman argues that we see now the return of Depression Economics, where the usual tools of economic policy, for instance the Federal Reserve's manipulation of interest rates, no longer have traction in the economy. "When depression economics prevails," Krugman writes, "the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly."

In such circumstances, only a massive stimulus can suffice, spending without regard to the budget deficit in the short term:

To pull us out of this downward spiral, the federal government will have to provide economic stimulus in the form of higher spending and greater aid to those in distress — and the stimulus plan won’t come soon enough or be strong enough unless politicians and economic officials are able to transcend several conventional prejudices.
One of these prejudices is the fear of red ink. In normal times, it’s good to worry about the budget deficit — and fiscal responsibility is a virtue we’ll need to relearn as soon as this crisis is past. When depression economics prevails, however, this virtue becomes a vice. F.D.R.’s premature attempt to balance the budget in 1937 almost destroyed the New Deal.

Krugman continues:

What does all this say about economic policy in the near future? The Obama administration will almost certainly take office in the face of an economy looking even worse than it does now. Indeed, Goldman Sachs predicts that the unemployment rate, currently at 6.5 percent, will reach 8.5 percent by the end of next year.
All indications are that the new administration will offer a major stimulus package. My own back-of-the-envelope calculations say that the package should be huge, on the order of $600 billion.
So the question becomes, will the Obama people dare to propose something on that scale?
Let’s hope that the answer to that question is yes, that the new administration will indeed be that daring. For we’re now in a situation where it would be very dangerous to give in to conventional notions of prudence.

In other words, President-Elect Obama, go big or go home.

Michael Kinsley addresses some long-term considerations, and his prognosis isn't that bright and shiny. Kinsley writes:

“Consumer confidence” is plummeting nationwide. Those famous attitude surveys from the University of Michigan say so and actual consumption statistics confirm it. October retail sales were down double digits from a year ago. Most of this drop represents people who suddenly are poorer, or feel that way. But there also is some concern that the great American shopping spree may be over. We have all the stuff we need.
What do they want from us, anyway? Without consumers to lead the charge, an economic recovery will be hard to achieve. And yet everyone agrees that we need to start saving more. So should I buy that coffee maker to stimulate the economy? Or should I save the money in order to “grow” the economy and provide for my own old age? I can’t do both.
This is the dilemma that 30 years of Reaganomics (the real Reaganomics — keeping the economy overstimulated with huge deficits and irresponsible consumer borrowing — not the fantasy Reaganomics of government run like a family and tax cuts that pay for themselves) has left us with. So what do we do? The nearest thing to an actual plan seems to be something like this: stimulate first, to avert various short-term disasters, and then — at some signal from the Treasury Department — turn around and start saving like mad, to avert various long-term disasters. In other words, we need to get back our consumer confidence, and then lose it again.
The first part is fun. We just keep doing what we’ve been doing, only more and faster. The deficit may soar to $1 trillion a year while the government hands out cash to whoever shows up at the teller’s window. Each of us can do our own bit as well. Show your consumer confidence. One last shopping spree. Buy that coffee maker whether you want one or not.
Part II will not be fun. Return the coffee maker (if the store is still in business), and deposit the money in your 401(k). Start drinking instant.

Spending like crazy to stimulate aggregate demand is fine as a measure to end the crisis, but we shouldn't neglect to observe that Keynesian economics doesn't just mean countercyclical deficit spending in times of recession, but it also recommends building up savings during times of economic expansion. Over the long-term, then, our national savings rate must rise. (Like the so-called fiscal conservatives or deficit hawks say, we either pay taxes now or they must be paid later, by someone's children or grandchildren.)

The misery factor of Part II may be the reason Bush didn't ask the American people to sacrifice anything after 9/11, but rather asked them to take a trip or buy something: sacrifice doesn't add to aggregate demand. Which leads us to ask if a future of sacrifice will maintain real GDP growth? That is, if the national savings rate rises to pay down the debt, then those dollars spend for that purpose will not be available for consumption, and in those circumstances how can significant GDP growth be expected? The conventional answer is that these savings will translate into investment and thus expanded output.

That's the good news.

But what happens after may not be so pleasant. Maybe all those savings have to be allocated towards debt service.

The Dismal Science, indeed.

The Nascent Obama Administration: News and Views

2008-11-13T13:54:00.005-06:00

So far, so good, seems to be the consensus...well, at least, it's the view of David Broder, a walking manifestation of inside-the-Beltway conventional wisdom and among the highest partisans of bipartisan "consensus." Broder, citing, among other things, the selection of Rahm Emanuel as White House Chief of Staff, writes:

What we have seen so far suggests that Obama's skills will carry over to his new and expanded responsibilities. His victory speech in Grant Park, his first news conference and his meeting with President Bush went off almost without a hitch.

He wisely emphasized that all executive authority -- on issues here and abroad -- remains in Bush's hands until Jan. 20, but at the same time he urged the president and Congress to do everything in their power to address the sinking economy.

The new president's first decision -- to name Rahm Emanuel as his chief of staff -- was a positive step on two levels.

It is significant that Obama began structuring his White House staff before he turned to the construction of a Cabinet. Bill Clinton did the reverse and paid a high price for it. Clinton dawdled in filling the Cabinet jobs, preoccupied with achieving racial, ethnic and gender diversity. It was almost Inauguration Day before he told his campaign aides what jobs they were getting in the White House.

Many of the early decisions were mishandled, and Clinton created the impression that individual department chiefs would do more to set policy than the president. Cabinet government is a familiar concept, but it is not practical when so many issues require coordination across bureaucratic lines.

Clinton's second mistake was giving the chief-of-staff job to Thomas F. "Mack" McLarty, his boyhood friend from Arkansas. McLarty was a novice in Washington and -- by his own declaration -- ill-suited to the job. It took Clinton months to correct the error.

By contrast, Emanuel is a Washington veteran, having served first as a senior legislative-political-press aide to Clinton and, more recently, as a Chicago congressman, a key member of the party's House leadership.

The only bummer here, is that Broder's opinion on Rahm Emanuel is identical to my own, and agreeing with Broder gives me the willies. (I'm way outside the Beltway, no policy maker in their right mind reads my scribblings, and most of the time "bipartisan consensus" just means what everyone can agree on, and just as often what everyone can agree on is nowhere close to accurate or insightful. Broder is the anti-me.)

Also, the Obama team has been very efficient at dealing with security clearances, a hurdle that has slowed up previous transition efforts:

More than 100 potential nominees for positions in an Obama government have already received interim security clearances under an executive order and 2004 law that allows early vetting of those in line for critical jobs.
“That is a process that began well before the election,” transition co-chairman John Podesta said Tuesday. The transition team wants to avoid nominees getting “bogged down” in clearances, and hopes that the FBI will dedicate significant resources to the job and the Senate will provide a smooth confirmation process, Podesta said. “President-Elect Obama wants to make sure that we hit the ground running on Jan. 20, because we don’t have a moment to lose,” he said.

I'll take this as a good sign, at least from my perspective, as I hope Obama does well. The country could use it, after all.

Of course, there are already those claiming Obama is essentially done, a failure, and destined to lose his 2012 bid for re-election. Citing certain economic misery, James Pethokoukis argues that the electorate will once again vote for change and boot Obama and company from the White House after one term:

That's right, the "O" in "Obama" may stand for "One Term." For starters, there's a strong chance that when voters head to the polls on Nov. 2, 2010, they likely will still think the economy is awful. Not much debate about that. (Good chance the Democrats' two-election winning streak comes to an end.) And while voters may be somewhat patient for two years, patient for four years? Really unlikely. If history is any guide at all, voters may still be terribly cranky about the economy when they cast their ballots on Nov. 6, 2012 and thus likely choose the 45th president of the United States -- be it Mitt Romney, Sarah Palin, Bobby Jindal or some other Republican without "Bush" for a last name. Once again a "change" election for an impatient America. The same bad economy that doomed John McCain in 2008 will have sunk Obama, as well.

Of course, he's assuming a couple of things: (1) That there is no government action that can halt the slide into the mini-Depression, (2) that Obama's economic policies will be as indifferent to working Americans as the first President Bush's were in the early '90s, (3) that fiscal policy can't achieve anything at all, (4) that the GOP won't remain divided, incompetent, or irrelevant to the issues of the day, and (5) that voters will still refuse to recognize the reality of point (4). The Circular Firing Squad is, like Sarah Palin, a gift that will keep on giving.

Pethokoukis's analysis thus rests on some dubious assumptions that he neatly glosses over. His incoherence is sort of established when he discusses Reagan, for that "amazing economic rebound" was rooted in the same policy actions that created the recession Reagan dealt with in the first place: Volker's aggressive efforts as Chairman of the Federal Reserve Board to deal with very strong inflation.

At any rate, this sort of thinking isn't pouring rain on every one's parade.

The editors of the New Republic urge Obama to Go Big or Go Home:

The complaint about Obama's agenda begins with the fact of rising deficits. The argument holds that they necessitate the scaling back of expenditures. This would be a sound argument in decent economic times, but in the early stages of a recession it is madness. Even conservative economists like Martin Feldstein have called on the federal government to spend billions on fiscal stimulus, deficit be damned. That's the surest way to hasten recovery.

"Some Defunct Economist" is on board. So are Paul Krugman, Robert Reich, and Martin Feldstein, guys whose opinions actually matter. And who are actually economists. (I am merely a lapsed political scientist with a chip on his shoulder and a fondness for Keynesian wit and wisdom).

After urging Obama to not be Clintonian while the economy is in the tank, the same New Republic piece concludes that Obama must go large, regardless of what outcome his policies generate in the 2010 midterm election:

But, in the end, there's probably nothing the Democrats can do to avoid losing seats in 2010. Almost all presidents suffer defeats during their first midterm elections. The greatest risk for Democrats is not that Obama will try to do too much, but that their terror of failure will lead them to waste an historic opportunity. This is not a Clintonian moment. It is more like the moment Lyndon Johnson inherited in 1965, or the one Franklin Roosevelt faced in 1933--a chance to reshape American government. The Democrats have it in their grasp to master the great problems of public life if they can summon their collective nerve. The only thing they have to fear is fear itself.

Now we must wait and see what sort of political courage the incoming administration displays. I figure as long as Dick Morris (whose last name should be "Head") remains cast into the uttermost darkness that Obama will be bold.

Republican Governors Conference: Palin Answers Questions, Pawlenty Tells Hard Truths

2008-11-13T13:37:00.002-06:00

At the Republican Governors Conference today, Sarah Palin answered four questions from the press (!) and Tim Pawlenty of the great state of Minnesota told his fellow conferees some hard truths about the GOP:

Mr. Pawlenty kicked off the conference with a somewhat gloomy appraisal of where things stand for the Republican Party.
“We cannot be a majority governing party when we essentially cannot compete in the Northeast, we are losing our ability to compete in Great Lakes States, we cannot compete on the West Coast, we are increasingly in danger of competing in the Mid-Atlantic States, and the Democrats are now winning some of the Western States,” he said. “That is not a formula for being a majority governing party in this nation.”
“And similarly we cannot compete, and prevail, as a majority governing party if we have a significant deficit, as we do, with women, where we have a large deficit with Hispanics, where we have a large deficit with African-American voters, where we have a large deficit with people of modest incomes and modest financial circumstances,” he said. “Those are not factors that make up a formula for success going forward.”
“There will be calls, and voices across the country for Republicans to return to traditional conservative approaches in almost all respects,” he said, adding that there would also be calls to modernize the party.
“The good news is both are true, and both can be harmonized in my view,” Mr. Pawlenty said. “We can be both conservative and we can be modern at the same time.”

I am not so sure about that last line, if being conservative is equated with the party's recent policy stances, particularly at a national level. However, Pawlenty's preceding analysis is pretty solid in addressing the problems the GOP faces in being competitive, and it's nice to see a Republican politician admit it in public.

Obama Aces Lieberman

2008-11-13T03:28:00.005-06:00

The perceptual impact of purging Joe Lieberman isn't worth the short-term satisfaction of doing so, despite the fact he deserves it.

Obama specifically cites Doris Kearns Goodwin's Team of Rivals as a profound influence, after all. Maybe Obama borrows from the politically masterful Lincoln, here. Maybe Obama has Lieberman exactly where he wants him.

At a minimum, Obama wields a deft knife, here: first, he distances himself from any decisions on Lieberman's status in the Senate; next, he backed a compromise to keep Lieberman inside the Democratic Caucus. From the Washington Post:

In a phone conversation last week with Senate Majority Leader Harry M. Reid (D-Nev.), Obama said that expulsion of Lieberman for his support of the Republican presidential ticket would send the wrong signal after Obama's promises to set partisanship aside, according to a Senate Democratic aide familiar with the conversation.

Obama "didn't get into the minutiae. It was more along the lines of, 'let's find a way to put the campaign behind us'," the aide said.

Yeah, I get it: it's an image manipulation thing. Not totally principled in motivation, but planned to have an effect apparently in keeping with articulated principles.

Personally, I don't care.

But I do think that purging him is perceptually damaging for the Democrats, no matter how much satisfaction it generates among partisans.

(1) It makes Democrats look petty like Republicans in demanding a standard of purity.
(2) It can easily be made to look like, and likely is, a hyper-partisan action, reflecting a very "us vs. them" mentality, a mentality the voters have resoundingly rejected in both 2006 and 2008.
(3) It makes Washington look like it's running like the hyper-real version of "Washington", blunting the Obama Administration's "mandate" for change; that is: it is evidence of Washington being "Washington", rather than a place where common sense rules.

While many liberal blogs, including AMERICABlog and Daily Kos, have gone to town to urge the Democratic caucus to purge Lieberman, I just don't have the bloodlust or the energy or the desire to see Obama begin squandering "honeymoon capital" on a bum like Lieberman. Joe will rise/fall to the level of his general incompetence and will be totally marginalized within the circles of power without anyone raising a finger.

Give non-competent people enough rope and they solve your troubles (with them) for you.

Brad DeLong is completely down with the sickness:

This makes it very clear to everybody that if Joe Lieberman joins the Republican caucus it is his own doing: that if Lieberman leaves the Democrats it is Lieberman who will be breaking his promises to the voters of Connecticut, rather than the Democrats who are throwing Lieberman out.
It seems to me Barack Obama has just eliminated any bargaining power Lieberman had vis-a-vis Harry Reid with respect to his committee assignments...

Oh so very smart.

The Appalling Sarah Palin and the GOP 's Future

2008-11-11T14:13:00.005-06:00

She is the gift that keeps on giving. Seriously.

She keeps giving interviews that amount to completely revisionist history.

Andrew Sullivan and one of his smart readers--he has lots of them--note how she misremembers things, either intentionally or through sheer failure to grasp and own up to reality, but always to her own advantage:

Gotcha. The trouble is that Palin confuses what is settled reality and what is settled reality insider her own head.

Now, this is not necessarily an uncommon trait, but it is one that's lethal in someone who wants to lead others. Reality can be a slippery thing, but it's alarming that a vice-presidential candidate treats it as something to simply be molded to fit the moment.

What makes this phenomenon more alarming than it necessarily would have to be is that she is currently on an "Image Reclamation Tour":

Her media tour this week and her speech at the RGA on Thursday are all aimed at a single thing: establishing herself as a power player in the party over the next four years.

Expect Palin to make some appearances in key races -- maybe as soon as this month for Sen. Saxby Chambliss in his Georgia runoff -- to show her drawing power and popularity among grassroots Republicans.

For Palin's future prospects, the next few months are crucial. Will she be remembered as a blip in the Republican history books or a force to be reckoned with in 2012?

While amusing, since I don't "get" what makes people like her, the success of her trip will be an important consideration in future GOP politics, for the battle for the GOP's future is upon us, and Sarah Palin is right in the middle of it.

Just so you know, the GOP is counting on standing pat on the issues. Once again, they are convinced that the U.S. is a "center-right nation" and that voters will inevitably return to them, an assertion essentially unsupported by any evidence as voters last week rejected the center-right candidate:

What we're hearing instead from Republican politicians, pollsters and pundits is reassurance that the United States is a "center-right nation" with an innate distrust of progressive policies. The problem, these soothing voices say, is that under George W. Bush the GOP strayed from its basic philosophy of limited government and adopted the big-spending habits of the Democrats. Republicans need to rediscover their bedrock principles, this theory goes, and after a few years of rule by Barack Obama and his Democratic enablers on Capitol Hill, voters will come running home to papa.

So much is wrong with this analysis that it's hard to know where to begin. Let's start with the basic premise, that of a center-right American polity. To the extent that such a vague label has any real meaning, that may once have been the case. But if ours were a center-right electorate now, one imagines it might have been kinder to a center-right politician such as John McCain.

Amazing reading, really, amazing that after two consecutive beatings at the polls, the GOP still insists that they are the dominant faction in American politics.

David Brooks, writes today in the New York Times that the GOP is divided between Traditionalist and a Reformist wings. He writes:

Moreover, the Reformers say, conservatives need to pay attention to the way the country has changed. Conservatives have to appeal more to Hispanics, independents and younger voters. They cannot continue to insult the sensibilities of the educated class and the entire East and West Coasts.

The Reformist view is articulated most fully by books, such as “Comeback” by David Frum and “Grand New Party” by Ross Douthat and Reihan Salam, as well as the various writings of people like Ramesh Ponnuru, Yuval Levin, Jim Manzi, Rod Dreher, Peggy Noonan and, at the moderate edge, me.

Note the crux of the distinction he makes: the thinkers Brooks labels Reformers are pretty much all conservative intellectuals who criticized Palin as unready and unsteady. This fact makes Sarah Palin a wedge issue for Republicans, something that divides them as a coherent political force.

Brooks pretty much concedes that the Traditionalists--Palin lovers--will dominate the near future of the GOP, which makes me smile, for Brooks knows what that will mean for them:

The debate between the camps is heating up. Only one thing is for sure: In the near term, the Traditionalists are going to win the fight for supremacy in the G.O.P.

They are going to win, first, because Congressional Republicans are predominantly Traditionalists. Republicans from the coasts and the upper Midwest are largely gone. Among the remaining members, the popular view is that Republicans have been losing because they haven’t been conservative enough.

Second, Traditionalists have the institutions. Over the past 40 years, the Conservative Old Guard has built up a movement of activist groups, donor networks, think tanks and publicity arms. The reformists, on the other hand, have no institutions.

There is not yet an effective Republican Leadership Council to nurture modernizing conservative ideas. There is no moderate Club for Growth, supporting centrist Republicans. The Public Interest, which used to publish an array of public policy ideas, has closed. Reformist Republican donors don’t seem to exist. Any publication or think tank that headed in an explicitly reformist direction would be pummeled by its financial backers. National candidates who begin with reformist records — Giuliani, Romney or McCain — immediately tack right to be acceptable to the power base.

Finally, Traditionalists own the conservative mythology. Members of the conservative Old Guard see themselves as members of a small, heroic movement marching bravely from the Heartland into belly of the liberal elite. In this narrative, anybody who deviates toward the center, who departs from established doctrine, is a coward, and a sellout.

This narrative happens to be mostly bogus at this point. Most professional conservatives are lifelong Washingtonians who live comfortably as organization heads, lobbyists and publicists. Their supposed heroism consists of living inside the large conservative cocoon and telling each other things they already agree with. But this embattled-movement mythology provides a rationale for crushing dissent, purging deviationists and enforcing doctrinal purity. It has allowed the old leaders to define who is a true conservative and who is not. It has enabled them to maintain control of (an ever more rigid) movement.

In short, the Republican Party will probably veer right in the years ahead, and suffer more defeats. Then, finally, some new Reformist donors and organizers will emerge. They will build new institutions, new structures and new ideas, and the cycle of conservative ascendance will begin again.

On "Face the Nation" on Sunday, Brooks said a few more revealing things:

John McCain will have about as much influence going foward as Bob Dole did after the 1996 elections. Sarah Palin is reviled by significant factions of the party establishment, and even those conservatives who adore have no idea what she thinks about substantive issues. Mitt Romney was pretty liberal up until a few years ago; Mike Huckabee is loathed by the foreign policy establishment, and Bobby Jindal is 37 years old and believes in exorcisms.

Who's left? John Boehner? Newt Gingrich? Sean Hannity?

Deep thinkers, all, with the deepest thinker, Newt Gingrich, beset by a few, uh, ethical lapses.

The conservative spin game should in no way be underestimated. Jonah Goldberg today reveals that Bush was no conservative, and thus voter rejection of Bush in no way implies a repudiation of conservatism. In the following passage he uses "young Turks" to mean the same group Brooks, above, calls the Reformers, and he uses the "Limbaugh crowd" to mean the same group Brooks labels Traditionalists; he argues that Bush is the only thing keeping these two factions apart:

What is fascinating is that both camps seem implicitly to agree that the real challenge lurks in how to account for the Bush years. For the young Turks and their older allies -- my National Review colleagues Ramesh Ponnuru, Yuval Levin and David Frum, the Atlantic's Ross Douthat and Reihan Salam, New York Times columnist David Brooks et al -- the problem is that Bush botched the GOP's shot at real reform. For the Limbaugh crowd, the issue seems to be that we've already tried this reform stuff -- from both Bush and McCain -- and look where it's gotten us.

Neither camp has adequately explained where Bush figures in their vision for the future of the party. Is reform going to be a debugged compassionate conservatism 2.0 or a Reaganesque revival of conservative problem solving? Does back-to-basics mean breaking with the precedents of the last eight years or building on them?

The irony is that both camps agree on a lot more than they disagree. The reformers are committed to market principles and reducing the size and role of government, and so are the back-to-basics crowd. The problem is that an elephant named George in the room is blocking each side from seeing what the other is all about. But hopefully not for much longer.

Since Palin is Bush minus the intellectual curiosity or facility for language, one must conclude they will remain disunited for now. Goldberg here is simply spinning, spinning, spinning. After all, Brooks is one of the few who's willing to admit that the GOP is ideologically bankrupt. Conceding that dumping Bush is good for conservatism fails to appreciate that Bush's non-conservative leanings and his so-called "Compassionate Conservatism" are probably what got him elected in the first place. Conservatism minus the "compassion" just isn't popular outside the South.

Here is a review of the rending of garments and gnashing of teeth in the conservative blogosphere. Good times.

P.S., I will have a post on the sheer idiocy and intellectual dishonesty of the "center-right nation" canard later tonight or sometime tomorrow. Until then...enjoy!

Obama's Governance: A Thought and an Impression

2008-11-11T04:03:00.003-06:00

The thought is the quick, small one flashing through my brain: I love it! He's a geek! At last, a president who's like me!:

Comic books! Star Trek! Harry Potter! Ladies and gentlemen: Our future president is a nerd!

Comic books, Star Trek, and Harry Potter are three pop-cultural phenomena that have captured hours (weeks) of my time and attention over the course of my life. My theorem: Chronic dorkdom is never escaped, merely suppressed.

Just thinking about this stuff makes me want to hear "Hail to the Chief," whistled by R2-D2 or performed by that Cantina Band of buttheaded musicians in Mos Eisley.

But seriously, even though I am (already) tired (without really having dealt with it) of the "Center-Right Nation" meme, Obama will govern from the center, no matter what the Right loudly denounces :

All of his bipartisan gestures, however necessary and sincere, need not mean that Obama must abandon his promises of change upon taking the oath of office. But he can safely ignore the pompous advice he is receiving from many quarters to ingratiate himself with the establishment and to prove that he is sufficiently mature to trash his ideals. For he above all must know by now, after traveling across the country for the past two years, that people are in the mood for something different. They have just told us, with unprecedented vehemence, that the last thing they want is more of the same.

Indeed, the corollary of Obama’s call for change is that American political culture has shifted away from the dominant conservatism of the past three decades. He perceived that shift, which is one of the reasons that he defeated Hillary Clinton, whose campaign failed to understand what was happening until it was too late.

That is why he ran for president, and it is why he ran on a platform that became increasingly specific about the changes he will make. He cannot back away from reforming health care and bringing coverage to all, but he doesn’t have to back away because that is what the public wants and what the country needs. He cannot back away from rebuilding our energy system to reduce climate change, but he doesn’t have to—because that is what the public wants and what the world needs. He doesn’t have to back away from a massive investment program in infrastructure, transportation and education, either, because everyone agrees that we need productive economic stimulus. And he doesn’t have to back away from a new regime of financial and economic regulation, including a renewal of labor rights, because deregulation is discredited, as even its advocates can no longer deny.

His ideas are anathema to the Republican right, which can be expected to protest and obstruct with all the bile it can muster. But so what? The voters are no longer entranced by conservative ideology, if they ever were, and they are impatient for new solutions.

Obama means to govern from the center, as most presidents have. That is the nature of his temperament and his character, if not his ideology. But if he means to fulfill his mandate—and there is no reason yet to believe otherwise—he will mark the center in a new place.

*Sigh* Sometimes I think all of reality is biased against conservatism. Then I remember my social science training and realize conservatism is just a terrible social theory: its descriptive and predictive/prescriptive components spectacularly fail the accuracy test, being not merely wrong key policy concerns but as wrong as its possible to be.

Hmm. From dorkiness to theory evaluation in one post...blogging is cool.

The Politics of Energy: Global Game Update

2008-11-11T03:38:00.004-06:00

At present, China is winning the oil politics game against the United States:

China has apparently learned how to play the global oil game with a pro’s touch. Ironically, it was the United States that crystallized this vision.

By invading Iraq, the United States dealt China’s central planning commission an embarrassing wakeup call when the second Gulf War summarily wiped out China’s oil interests in Iraq.

When that happened, China’s central planners realized two things:

The status quo in the global oil game had changed.
And China’s double-digit economic miracle could not be sustained with only a few oil suppliers.

What China fears most is that there will not be enough oil to go around in the very near future and that a U.S.-dominated supply chain could effectively “strangle” China’s growth.

So, it has done what the United States and other great powers have done at other times in history and gone on a buying spree from Darfur to Peru that’s turned heads and ruffled feathers all across the world.

Which makes the following analysis concerning the need for the U.S. to kick its foreign oil addiction even more relevant. Writing for TomDispatch, Michael T. Klare calls it the challenge of our lifetimes, for three critical problems confront the energy future of the United States:

As President Obama faces our energy problem, he will have to address three overarching challenges:

1. The United States relies excessively on oil to supply its energy needs at a time when the future availability of petroleum is increasingly in question.

2. Our most abundant domestic source of fuel, coal, is the greatest emitter of greenhouse gases when consumed in the current manner.

3. No other source of energy, including natural gas, nuclear power, biofuels, wind power, and solar power is currently capable of supplanting our oil and coal consumption, even if a decision is made to reduce their importance in our energy mix.

Klare's conclusions are a little unsettling, for they repudiate the status quo:

Needed is a major White House-led initiative on the scale of the World War II Manhattan Project that produced the first atomic bomb or the Apollo Moon Project. The principal goals of such an epic undertaking would have to include:

1. Reducing oil's contribution to America's total energy supply by half over the next quarter century. This would require a comprehensive program of conservation, increased development of public transport, the accelerated development of electric-powered vehicles and advanced biofuels, and other technological innovations.

2. Gradually reducing U.S. reliance on coal, unless consumed in a climate-friendly manner, as well as providing government support for the development of carbon capture and storage technology.

3. Increasing the contribution of renewable energy sources to America's total energy mix from their current 6% to at least 25%, if not significantly more, by 2030. This would require substantial public investment in new technologies and electrical power lines.

4. Demilitarizing America's reliance on imported petroleum. This means repudiating the Carter Doctrine, dismantling the vast military apparatus created since 1980 to enforce that policy, and using the resulting savings -- as much as $150 billion per year, says a new report from the National Priorities Project -- to help finance the initiatives described above.

Only by embracing such goals can President Obama hope to overcome the long-term, potentially devastating energy crisis now facing this nation.

Going big may end up being Obama's way, but coordinating that many "moving parts", that many discrete yet substantial movements away from the status quo may be beyond the ability of any politician in the Age of Lobbying.