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The Battle Over Bernanke

January 25th, 2010 Posted in Uncategorized
Jan, 25 2010
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January 25, 2010

Ben Bernanke’s four-year term as chairman of the Federal Reserve ends on January 31.  There is presently no vote scheduled to confirm President Obama’s nomination of Bernanke to that post because four Senators (Bernie Sanders, D-Vt.; Jim Bunning, R-Ky.; Jim DeMint, R-S.C. and David Vitter, R-La.) have placed holds on Bernanke’s nomination.  In order for the Senate to proceed to a vote on the nomination, 60 votes will be required.  At this point, there is a serious question as to whether the pro-Bernanke faction can produce those 60 votes.  A number of commentators have described last week’s win by Scott Brown as a “chill factor” for those Senators considering whether to vote for confirmation.  Ryan Grim of The Huffington Post put it this way:

Opposition to the reconfirmation of Federal Reserve Chairman Ben Bernanke is growing in the Senate in the wake of a Republican Scott Brown’s victory, fueled by populist rage, in the Massachusetts Senate race.

James Pethokoukis of Reuters explained the situation in these terms:

Liberals in Congress want him gone.  Then again, they want pretty much the whole Obama economic team gone.  But Geithner and Summers aren’t up for a Senate vote.  Bernanke is.  And if Dems start bailing, don’t expect Republicans to save him.  No politician in America gains anything by voting for Bernanke.  A “no” vote is a free vote.  Wall Street still loves him, though.  Geithner, too.

At The Hill, Tony Romm reported:

Bernanke has taken heat as Wall Street’s profits have soared while unemployment has become stuck in double digits, and the wave of economic populism soaring through Washington in the wake of a stunning Democratic loss in the Massachusetts Senate races comes at a bad time for his confirmation.

If Bernanke is not confirmed, he will continue to sit on the Federal Reserve Board of Governors because each Fed Governor is appointed to a 14-year term.  Donald Kohn, the vice chairman, would serve as the interim chairman until Bernanke’s successor is nominated and confirmed.

The forces pushing for Bernanke’s confirmation have now resorted to scare tactics, warning that dire consequences will result from a failure to re-confirm Bernanke.  Senator “Countrywide Chris” Dodd warned that if Bernanke is not confirmed, the economy will go into a “tailspin”.  An Associated Press report, written by Jennine Aversa and carried by The Washington Post, warned that a failure to confirm Bernanke could raise the risk of a double-dip recession.  At The Atlantic, Megan McArdle exploited widespread concern over already-depleted retirement savings:

Spiking his nomination may have grim effects on 401(k)s throughout the land.

Not to be outdone, Judge Richard Posner issued this warning from his perch at The Atlantic:

If he is not confirmed, the independence of the Fed will take a terrible hit, because the next nominee will have to make outright promises to Congress of bank bashing, and of keeping interest rates way down regardless of inflation risk, in order to be confirmed.

I guess that these people forgot to mention that if Bernanke is not confirmed:

A plague of locusts shall be visited upon us,

The earth will be struck by a Texas-sized asteroid,

An incurable venereal disease will be spread via toilet seats,

The Internet will vanish, and   . . .

Osama bin Laden will become the next Justice of the United States Supreme Court.

At the Think Progress website, Matthew Yglesias pondered the issue:

What happens if Ben Bernanke isn’t reconfirmed?  Well, some folks seem to think it will send markets into a tailspin.  But it’s worth emphasizing that in literal terms almost nothing will happen.

Beyond that, as Sudeep Reddy and Damian Paletta explained in The Wall Street Journal:

The Federal Open Market Committee — which consists of the presidentially appointed Fed governors in Washington and the presidents of the regional Fed banks — meets Jan. 26-27 and traditionally elects a chairman and vice chairman at its first meeting of the year.  The committee, which makes monetary policy decisions, is set to elect Mr. Bernanke as its chairman at that meeting, a move that doesn’t require approval of the White House or the Senate.

Min Zeng of The Wall Street Journal filled us in as to what else we can expect from the FOMC this week:

Next week, the two-day FOMC meeting will end Wednesday afternoon with a statement on an interest-rate decision and policymakers’ latest outlook on the economy and inflation.

The FOMC is widely expected by market participants to keep its main policy rate — the fed-funds target rate — at ultra-low levels near zero as recent data haven’t demonstrated a persistent and strong economic recovery, with a jobless rate still hovering around the highest level in more than two decades.

Fed policymakers are also likely to stick to their plan to end the $1.25 trillion mortgage-backed securities purchases program at the end of March.  The central bank should also reiterate its plan to let some emergency lending programs expire Feb. 1.

The Fed could soon hike the rate it charges on emergency loans, known as the discount rate, but that would largely be symbolic now that banks have been borrowing less and less from it as financial markets stabilized.

Meanwhile, the battle against the Bernanke confirmation continues.  Mike Shedlock (a/k/a Mish) has urged his readers to contact the “undecided” Senators and voice opposition to Bernanke.  Mish has also provided the names and contact information for those Senators, as well as the names of those Senators who are currently on record as either supporting or opposing Bernanke.

I’d like to see Bernanke lose, regardless of the consequences.  The rationale for this opinion was superbly articulated by Senator Jim Bunning during the confirmation hearing on December 3.  If you’re not familiar with it — give it a read.  Here is Senator Bunning’s conclusion to those remarks, delivered directly to Bernanke:

From monetary policy to regulation, consumer protection, transparency, and independence, your time as Fed Chairman has been a failure.  You stated time and again during the housing bubble that there was no bubble.  After the bubble burst, you repeatedly claimed the fallout would be small.  And you clearly did not spot the systemic risks that you claim the Fed was supposed to be looking out for.  Where I come from we punish failure, not reward it.  That is certainly the way it was when I played baseball, and the way it is all across America.  Judging by the current Treasury Secretary, some may think Washington does reward failure, but that should not be the case.  I will do everything I can to stop your nomination and drag out the process as long as possible.  We must put an end to your and the Fed’s failures, and there is no better time than now.

Amen.



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No Free Pass For The Disappointer-In-Chief

December 14th, 2009 Posted in Uncategorized
Dec, 14 2009
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December 14, 2009

The election of Barack Obama to the Presidency was hailed by many as an event that “transcended race”.  Ever since Obama’s primary election victory in lily-white Iowa, the pundits couldn’t stop talking about the candidate’s unique ability to vault the racial barrier before Hillary Clinton could break through the glass ceiling.  As we approach the conclusion of Obama’s first year in the White House, it has become apparent that the Disappointer-in-Chief has not only alienated the Democratic Party’s liberal base, but he has also let down a demographic he thought he could take for granted:  the African-American voters.  At this point, Obama has “transcended race” with his ability to dishearten loyal black voters just as deftly as he has chagrined loyal supporters from all ethnic groups.

Charles Blow’s recent opinion piece for the December 4 edition of The New York Times, entitled:  “Black in the Age of Obama” shed some light on the racist backlash against the black population as a result of the election of our nation’s first African-American President.  Mr. Blow then focused on Obama’s approach to his sinking poll numbers:

This means that Obama can get away with doing almost nothing to specifically address issues important to African-Americans and instead focus on the white voters he’s losing in droves. This has not gone unnoticed.  In the Nov. 9 Gallup poll, the number of blacks who felt that Obama would not go far enough in promoting efforts to aid the black community jumped 60 percent from last summer to now.

*   *   *

The Age of Obama, so far at least, seems less about Obama as a black community game-changer than as a White House gamesman.  It’s unclear if there will be a positive Obama Effect, but an Obama Backlash is increasingly apparent.  Meanwhile, black people are also living a tale of two actions:  grin and bear it.

As Silla Brush reported for The Hill on December 2, ten members of the Congressional Black Caucus had threatened to withhold their votes on the financial reform bill, because the President had not been “doing enough to help African-Americans through the bleak economy”.

It has been easy to understand the dissatisfaction with Obama expressed by the Democratic Party’s liberal base.  In a piece entitled “The Winter of Liberal Discontent”, Louis Proyect incorporated the umbrage expressed by such notables as Tom Hayden and Michael Moore, while providing a thorough assessment of Obama’s abandonment of the Left.  He concluded the piece with a quoted passage from an essay written for The Huffington Post by Elizabeth Warren, chair of the Congressional TARP Oversight Panel.  Mr. Proyect quoted Ms. Warren’s reference to some brutally unpleasant statistics, raising the question of whether America will continue to have a middle class.  The theme of Mr. Proyect’s discussion was based on this point:

The chorus of disapproval is louder than any I have heard from liberal quarters since 1967 when another very popular Democrat did an about-face once he was in office.  When LBJ ran as a peace candidate, very few people — except unrepentant Marxists — would have anticipated a massive escalation in Vietnam.  It was well understood a year ago that Obama was committed to escalating the war in Afghanistan, but the liberal base of the Democratic Party was too mesmerized by the mantras of “hope” and “change” to believe that their candidate would actually carry out his promise.

There is a tendency to regard right-wing Republican presidents being replaced by idealistic-appearing Democrats who betray their supporters, thus enabling a new Republican candidate to take over the White House, as a kind of Western version of karma.  We are compelled by universal law in some way to undergo an endless cycle of suffering without hope of redemption short of Enlightenment.

The criticism of Obama expressed by African-American commentators underscores the President’s unique ability to alienate those who might support him on the basis of ethnic solidarity, just as thoroughly as he can antagonize the melanin-deficient “limousine liberals” of Park Avenue.  On December 11, Edward Harrison of Credit Writedowns made a point of letting us know that the complete text of Matt Taibbi’s recent Rolling Stone article, “Obama’s Big Sellout” is now available online.  Before quoting some of the discussion in Matt Taibbi’s essay, Mr. Harrison provided some hard-hitting criticism of the Obama administration’s financial and economic policy shortcomings.  You may note that the administration’s abandonment of the African-American base was not discussed.  It wouldn’t do justice to Mr. Harrison’s great work to quote a snippet of this because it’s too good.  I have to give you the whole thing:

As you probably know, I have been quite disappointed with this Administration’s leadership on financial reform.  While I think they ‘get it,’ it is plain they lack either the courage or conviction to put forward a set of ideas that gets at the heart of what caused this crisis.

It was clear to many by this time last year that the President may not have been serious about reform when he picked Tim Geithner and Larry Summers as the leaders of his economic team.  As smart and qualified as these two are, they are rightfully seen as allied with Wall Street and the anti-regulatory movement.

At a minimum, the picks of Geithner and Summers were a signal to Wall Street that the Obama Administration would be friendly to their interests.  It is sort of like Ronald Reagan going to Philadelphia, Mississippi as a first stop in the 1980 election campaign to let southerners know that he was friendly to their interests.

I reserved judgment because one has to judge based on actions.  But last November I did ask Is Obama really “Change we can believe in?” because his Administration was being stacked with Washington insiders and agents of the status quo.

Since that time it is obvious that two things have occurred as a result of this ‘Washington insider’ bias.  First, there has been no real reform.  Insiders are likely to defend the status quo for the simple reason that they and those with whom they associate are the ones who represent the status quo in the first place.  What happens when a company is nationalized or declared bankrupt is instructive; here, new management must be installed to prevent the old management from covering up past mistakes or perpetuating errors that led to the firm’s demise. The same is true in government.

That no ‘real’ reform was coming was obvious, even by June when I wrote a brief note on the fake reform agenda.  It is even more obvious with the passage of time and the lack of any substantive reform in health care.

Second, Obama’s stacking his administration with insiders has been very detrimental to his party.  I imagine he did this as a way to overcome any worries about his own inexperience and to break with what was seen as a major factor in Bill Clinton’s initial failings.  While I am an independent, I still have enough political antennae to know that taking established politicians out of incumbent positions (Joe Biden, Janet Napolitano, Hillary Clinton, Rahm Emanuel, Kathleen Sebelius or Tim Kaine) jeopardizes their seat.  So, the strategy of stacking his administration has not only created a status quo bias, but it has also weakened his party.

The magic of the Obama candidacy has vanished with the disappointments of the Obama Presidency.  His supporters have learned, the hard way, that talk is cheap.  The President’s actions during the next three years will not only impact the viability of his administration — they could undermine the careers of his fellow Democrats.



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Obama Unveils His Most Ambitious Plan

June 18th, 2009 Posted in Uncategorized
Jun, 18 2009
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June 18, 2009

On Wednesday, June 18, President Obama released his anxiously-awaited, 88-page proposal to reform the financial regulatory system.  An angry public, having seen its jobs and savings disappear as home values took a nosedive, has been ready to set upon the culprits responsible for the economic meltdown.  Nevertheless, the lynch mobs don’t seem too anxious to string up former Federal Reserve Chairman, Alan Greenspan.  Perhaps because he is so old, they might likely prefer to see him die a slow, painful death from some naturally-occurring degenerative disease.  Meanwhile, a website, Greenspan’s Body Count, has been keeping track of the number of suicides resulting from the recent financial collapse.  (The current total is 96.)  As usual, President Obama has been encouraging us all to “look forward”.  (Sound familiar?  . . . as in:   “Forget about war crimes prosecutions because some Democrats might also find themselves wearing orange jumpsuits.”)

In reacting to Obama’s new financial reform initiative, some critics have observed that the failure to oust those officials responsible for our current predicament, could set us up for a repeat experience.  For example, The Hill quoted the assessment of Dean Baker, Co-director of the Center for Economic Policy and Research:

However, the big downside to this reform proposal is the implication that the problem was the regulations and not the regulators.  The reality is that the Fed had all the power it needed to rein in the housing bubble, which is the cause of the current crisis.  However, they chose to ignore its growth, either not recognizing or not caring that its collapse would devastate the economy. If regulators are not held accountable for such a monumental failure (e.g., by getting fired), then they have no incentive to ever stand up to the financial industry.

The Wall Street Journal‘s Smart Money magazine provided some similarly-skeptical criticisms of this plan:

Influential bank analyst Richard Bove of Rochedale Securities believes the Obama rules will only add costs to the system and will not lead to more effective oversight.  After all, a regulatory framework is already in place, Bove says, but the political will to enforce it has been absent — and that’s just the way Washington wants it.  Indeed, the only truly aggressive SEC director since the Kennedy administration was Harvey Pitt, Bove says. “[And] when he got religion about regulation, he got removed.”

Dr. Walter Gerasimowicz of New York-based Meditron Asset Management is dubious about a number of proposals, especially that of expanding the Fed’s role.  “What I find to be very disconcerting is the fact that our Federal Reserve is going to have extensive power over much of the industry,” Gerasimowicz says.  “Why would we give the Fed such powers, especially when they’ve failed over the past 10 years to monitor, to warn, or to bring these types of speculative bubbles under control?”

Our government was kind enough to provide us with an Executive Summary of the financial reform proposal.  Here is how that summary explains the “five key objectives” of the plan, along with the general recommendations for achieving those objectives:

(1)  Promote robust supervision and regulation of financial firms.  Financial institutions that are critical to market functioning should be subject to strong oversight.  No financial firm that poses a significant risk to the financial system should be unregulated or weakly regulated.  We need clear accountability in financial oversight and supervision.  We propose:

  • A new Financial Services Oversight Council of financial regulators to identify emerging systemic risks and improve interagency cooperation.
  • New authority for the Federal Reserve to supervise all firms that could pose a threat to financial stability, even those that do not own banks.
  • Stronger capital and other prudential standards for all financial firms, and even higher standards for large, interconnected firms.
  • A new National Bank Supervisor to supervise all federally chartered banks.
  • Elimination of the federal thrift charter and other loopholes that allowed some depository institutions to avoid bank holding company regulation by the Federal Reserve.
  • The registration of advisers of hedge funds and other private pools of capital with the SEC.

(2)  Establish comprehensive supervision of financial markets. Our major financial markets must be strong enough to withstand both system-wide stress and the failure of one or more large institutions. We propose:

  • Enhanced regulation of securitization markets, including new requirements for market transparency, stronger regulation of credit rating agencies, and a requirement that issuers and originators retain a financial interest in securitized loans.
  • Comprehensive regulation of all over-the-counter derivatives.
  • New authority for the Federal Reserve to oversee payment, clearing, and settlement systems.

(3)  Protect consumers and investors from financial abuse.  To rebuild trust in our markets, we need strong and consistent regulation and supervision of consumer financial services and investment markets.  We should base this oversight not on speculation or abstract models, but on actual data about how people make financial decisions.  We must promote transparency, simplicity, fairness, accountability, and access. We propose:

  • A new Consumer Financial Protection Agency to protect consumers across the financial sector from unfair, deceptive, and abusive practices.
  • Stronger regulations to improve the transparency, fairness, and appropriateness of consumer and investor products and services.
  • A level playing field and higher standards for providers of consumer financial products and services, whether or not they are part of a bank.

(4)  Provide the government with the tools it needs to manage financial crises.  We need to be sure that the government has the tools it needs to manage crises, if and when they arise, so that we are not left with untenable choices between bailouts and financial collapse.  We propose:

  • A new regime to resolve nonbank financial institutions whose failure could have serious systemic effects.
  • Revisions to the Federal Reserve’s emergency lending authority to improve accountability.

(5)  Raise international regulatory standards and improve international cooperation.  The challenges we face are not just American challenges, they are global challenges.  So, as we work to set high regulatory standards here in the United States, we must ask the world to do the same.  We propose:

  • International reforms to support our efforts at home, including strengthening the capital framework; improving oversight of global financial markets; coordinating supervision of internationally active firms; and enhancing crisis management tools.

In addition to substantive reforms of the authorities and practices of regulation and supervision, the proposals contained in this report entail a significant restructuring of our regulatory system.  We propose the creation of a Financial Services Oversight Council, chaired by Treasury and including the heads of the principal federal financial regulators as members.  We also propose the creation of two new agencies. We propose the creation of the Consumer Financial Protection Agency, which will be an independent entity dedicated to consumer protection in credit, savings, and payments markets. We also propose the creation of the National Bank Supervisor, which will be a single agency with separate status in Treasury with responsibility for federally chartered depository institutions.  To promote national coordination in the insurance sector, we propose the creation of an Office of National Insurance within Treasury.

So there you have it.  Most commentators expect that the real fighting over this plan won’t begin until this fall, with healthcare reform taking center stage until that time.  Regardless of whatever form this financial reform initiative takes by the time it is enacted, it will ultimately be seen by history as Barack Obama’s brainchild.  If this plan turns out to be a disaster, it could overshadow whatever foreign policy accomplishments may lie ahead for this administration.

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A Question Of Timing

May 11th, 2009 Posted in Uncategorized
May, 11 2009
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May 11, 2009

Josh Kraushaar has reported for Politico that on Tuesday, May 12, Florida Governor Charlie Crist will announce his intention to run as the Republican candidate for the Senate seat being vacated by Mel Martinez.  Kraushaar explained that Crist would become the Republican Party’s “most high-profile recruit of the 2010 election cycle”.  He went on to point out:

Crist’s decision puts Republicans in strong position to hold onto the seat held by retiring Sen. Mel Martinez (R-Fla.).  Crist holds high approval ratings among both Republicans and Democrats, according to statewide polling, and has forged a moderate governing style that has won him widespread support.

His decision to run came as little surprise to political observers, with the governor and his allies hinting of his interest in running for Congress over the last several months.

The timing of Crist’s announcement is rather interesting, in light of the fact that he is prominently featured in Kirby Dick’s new documentary film, Outrage, which opened on Friday.  Andrew O’Hehir interviewed Kirby Dick for Salon.com.  This is what the filmmaker had to say about his new movie:

My film is not about outing closeted politicians.  It’s about reporting on the hypocrisy of closeted politicians who vote anti-gay.  That’s the bright line that I draw.  In many cases, these politicians would normally vote pro-gay.  But because of the rumors swirling around them, they run in the opposite direction.  Their votes not merely harm millions of gays and lesbians across the country, but they’re also voting against their own beliefs, solely to protect the closet.  That’s contorting the American political process.

Rumors about Governor Crist’s lifestyle have circulated here in Florida for many years.  Many of my conservative Republican friends have always believed those rumors, although the issue never stopped them from voting for Crist.  Once he became identified as a potential running mate for John McCain in the 2008 election, Governor Crist got married.  The timing of that event made many people suspicious.  With Crist’s imminent announcement of his intention to run for the Senate, the question of timing has come up again.  Will he distract attention away from the questions raised by the film, Outrage . . .   or will the timing of his announcement enhance the magnitude of those concerns?

Bob Norman is the writer for the Broward and Palm Beach County edition of the New Times who was interviewed by Kirby Dick for the movie.  The filmmaker retraced some of the reporting done by Norman about Charlie Crist back in 2006.  Norman’s reports were based on information provided by two campaign staffers for the infamous Katherine Harris:  Jason Wetherington and Bruce Jordan.  In his recent New Times article about the film, Mr. Norman was careful to point out that the claims concerning Governor Crist’s preferences remain open to question:

I’ll never shy away from that reporting.  There is no question that both Wetherington and Jordan boasted of having affairs with Crist and there is no question that both men had met the man.  One woman, Dee Dee Hall, even gave a sworn statement detailing Jordan’s claims about his relationship with Crist.

But the fact remains that it’s possible both men were lying.  It may not seem likely, but it’s possible.

*    *    *

As well-known outer Michelangelo Signorile put it, there is no “smoking dick” here.  But it’s compelling stuff that’s worth reporting.

Jason Bellini provided a video report on the release of Outrage for The Daily Beast, which included an interview with Kirby Dick.  Bellini also provided an analysis of the mainstream media’s reaction to the film’s focus on Governor Crist.  For the most part, the mainstream outlets wrote off the claims as unsubstantiated rumors.

Aaron Blake reported for The Hill, that Charlie Crist’s Senate campaign could threaten the Republican Party’s control in Florida because a “domino effect” would result if he were to vacate the Governor’s office.  The GOP managed to consolidate its power here in the 2008 election, despite the fact that Barack Obama won this state.  Blake provided this perspective from a Republican insider:

“It’s going to be a complete shakeup from top to bottom of the Florida political landscape,” said GOP fundraiser Ana Navarro. “The political season could be more active than our hurricane season.”

If allegations of hypocrisy and concealment of a secret gay lifestyle get serious attention in Charlie Crist’s 2010 Senate campaign, Ms. Navarro’s analogy might be very appropriate.

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The Republicans Have No Choice

March 2nd, 2009 Posted in Uncategorized
Mar, 02 2009
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March 2, 2009

Republican pundit Mike Murphy drove the message home on the March 1 telecast of NBC’s Meet The Press.  Demographics have changed since the Republican heyday of the Reagan era.  The Republican mission, message and strategy must adapt to our changing world.

On the other hand, last week brought us the CPAC (Conservative Political Action Convention) with its unique focus that has no relevance to current reality.  The Democratically-inclined pundits on MSNBC were delighted by the CPAC festivities. These commentators were left with visions of Sarah Palin as the 2012 Presidential candidate, dancing in their heads.

We’ve seen and heard plenty of opinions about the current leadership vacuum within the Republican Party.  Almost by default, he who makes the most noise, Rush Limbaugh, has found himself as the new, de facto leader of the Republicans.  Although he is not a candidate for anything, he enjoys more of a papal role with the diehard Republicans.  His message is amplified by people like Chris Matthews on MSNBC (who regularly discourses about how the Republicans always swing back to the “hard right”, when a moderate Presidential candidate fails).  Matthews then describes John McCain as the failed “moderate” and proceeds to (hopefully) set the stage for a “wing nut” Presidential candidate such as Sarah Palin or Bobby “The Exorcist” Jindal.  In either case, Obama gets re-elected — even if unemployment is at 42 percent and the Dow Jones is at 369.

The problem with Chris Matthews’ logic is that McCain pandered to the hard-right “base” in his quest for the White House and could not really be considered as a truly moderate candidate.  The Republicans could wise-up and move toward the center by 2012.  Besides:  They have no choice.

Here in Florida, we have a fait accompli.  Our next Senator, replacing the retiring Republican Senator Mel Martinez, will be our current Governor, Charlie Crist.  Governor Crist is a moderate Republican who enjoys a 73% approval rating.  Crist’s support of President Obama’s stimulus bill resulted in his appearance in Ft. Myers on February 10, to introduce the new President to an adoring crowd.  Governor Crist took lots of heat for that, from know-nothing conservative pundits.   Charlie Crist is laughing all the way to the Senate.  As the February 24 article by Aaron Blake on The Hill website pointed out:  the Democrats don’t have any strong challengers.  It’s a lost cause.  Here, “on the ground”, everyone knows it.

Meanwhile the “liberal” media are busy snarking at Crist, repeating the “gay” rumors that circulated prior to his recent marriage.  This hostility is probably due to the fact that Crist is on the record as opposing any change to Florida’s existing ban on gay adoption.  Any useful resemblance to former Republican Senator Larry Craig’s hypocrisy on gay issues would be a convenient “G-bomb” to throw into an election campaign.   The Huffington Post is big on these “gay” rumors, as is the current incarnation of Wonkette.  What those people don’t know is that the rumors never seemed to matter.  For example:  I’ve known and worked with many conservative Republicans who assumed those rumors were true.  Nevertheless, they still supported and voted for Charlie Crist.  It didn’t matter to them, nor did the issue ever matter to any significant number of people in this State.  Governor Crist had been married to a woman named Amanda Morrow in 1979.  That marriage lasted one year.  On December 12, 2008 he married Carole Rome.  Many of the rumor-mongers claim that this was a “staged” marriage, to advance Crist’s political career.  Nevertheless, you can trust my opinion, as a heterosexual bachelor of approximately the same age as Governor Crist …  If he is trying to “fake” a marriage at this point in his life … You will see him running out of the Governor’s mansion within a very short time, yelling:  “All right!  I’m GAY!  I CONFESS!!!  I’m GAAAAAAAAAYYY!!!”

I don’t believe we will see that happen.  Beyond that, I’m really disappointed that purportedly “gay-friendly” media would be taking these cheap shots at Charlie Crist.  He is going to be our next Senator and he will win because a majority of Democratic voters will support his candidacy.  Deal with it.

The next question is whether the Republican party will finally figure out, after the 2010 election, that there is a trend here.  Republicans are faced with the likelihood that future campaign strategies will nullify the efforts of extremists whose political ambitions have been based on the existence of the political primary system.  As Newsweek‘s Howard Fineman has often discussed, the political primary system, by its nature, results in extremists from both sides getting much better traction than they would have in an open election.  Politicians are on to this.  Watch for more centrists running as independent candidates — and witness the disintegration of the “wing nut” dominance within the Republican Party.

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The Stupid War Against The Stimulus

February 23rd, 2009 Posted in Uncategorized
Feb, 23 2009
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February 23, 2009

We keep hearing rants against President Obama’s economic stimulus bill.  The final version of the bill was passed by both the House of Representatives and the Senate on February 13.  On February 17, it was signed into law by our new President.  It is now called the American Recovery and Reinvestment Act of 2009.  Nevertheless, there are people out there (nearly all of them Republicans) fuming about the stimulus bill, despite the fact that the debate is now over.  The bill has already gone into effect.  So what’s the point?  Many commentators feel that currently, there is fierce competition to stand out as the new leader of the Republican Party.  Louisiana Governor Bobby Jindal apparently believes he can advance his career by complaining about the stimulus and refusing to accept money allocated under the stimulus bill to expand eligibility for unemployment compensation because it would increase taxes on employers.  As Robert Pear and J. David Goodman reported for The New York Times, Mississippi Governor Haley Barbour said that he, too, would reject the money for expanding unemployment insurance:

“There is some we will not take in Mississippi,” Governor Barbour told CNN’s “State of the Union” on Sunday.  “We want more jobs.  You don’t get more jobs by putting an extra tax on creating jobs.”

The article noted that California Governor Arnold Schwarzenegger (also a Republican) would be happy to take any money from the stimulus bill that had been rejected by any other governor.

The hostility against the stimulus just doesn’t make sense.  A few Republicans may think they might look like heroes to the traditional Republican “base” right now, but as the stimulus plan begins to bear fruit, they are going to look like fools.

Tom Friedman discussed one intriguing conversation he had with a true American capitalist (the sort of voter Republicans always have taken for granted) in the February 21 New York Times:

The wind and solar industries in America “were dead in the fourth quarter,” said John Woolard, chief executive of BrightSource Energy, which builds and operates cutting-edge solar-thermal plants in the Mojave Desert.  Almost five gigawatts of new solar-thermal projects — the equivalent of five big nuclear plants — at various stages of permitting were being held up because of a lack of financing.

“All of these projects will now go ahead,” said Woolard.  “You are talking about thousands of jobs  …  We really got something right in this legislation.”

These jobs will be in engineering, constructing and operating huge solar systems and wind farms and manufacturing new photovoltaics.  Together they will drive innovation in all these areas — and move wind and solar technology down the cost-volume learning curve so they can compete against fossil fuels and become export industries at the “ChinIndia price,” that is the price at which they can scale in China and India.

Mr. Wollard “gets it” but the usual Republican spokesmen don’t.  As Jonathan Alter points out in the March 2 edition of Newsweek:

Columnist Charles Krauthammer called the $787 billion stimulus package “a legislative abomination,” and Karl Rove wrote that “the more Americans learn about the bill, the less they like it.”

Polls say otherwise.  The public likes the signs of action, respects that the new president is willing to admit error and appreciates his constant reminders that there are no easy cures to what ails us.

*   *   *

The GOP did a good job trivializing the stimulus, but Obama may have the last laugh.  The package is so big, and stretches across so many states, that it provides him at least four years of photo ops as Daddy O on tour, bringing home the jobs right in your local media market.  It was hardly a coincidence that video of bridge repair in Missouri began airing only moments after the president signed the bill.

As Walter Alarkon explained in his February 21 posting on The Hill website, there is a split among Republican governors as to whether the party’s next leader will be a centrist or a traditional conservative.  As his piece demonstrated, there are some Republicans who “get it”:

One possible White House hopeful, Utah Gov. Jon Huntsman Jr. (R), wouldn’t criticize the stimulus despite his red state bona fides.  He said that the federal money would fund infrastructure projects that could help the Beehive State’s economy.

“You have to have a party that is results oriented, that actually develops solutions to some of our nagging problems of today,” he said.

He said that Republicans who turn to “gratuitous rhetoric” will continue to lose.

Another Republican who “gets it” is Florida Governor Charlie Crist.  During his February 22 appearance on NBC’s Meet The Press, David Gregory asked Governor Crist whether he thought it was a mistake for the Republican Party to define itself by opposition to the stimulus.  Governor Crist gave this response:

Well, it may be.  All I know is I have to do what I think is in the best interest of the people of Florida.  And from my perspective, it’s to try and help them.  Help them every single day in every way that I can in education, in infrastructure, in health care; do the kinds of things that keep us from having to raise taxes.  You know, another part that people don’t talk about in the stimulus bill is that it cuts taxes.  About a third of it cuts taxes.   . . .   At the same time, because of the stimulus we’ll be able to pay our teachers more next year than we were this past year.  So I think it works, it works well, it helps people, it does what’s right.

How does one argue with that?  The current moot debate over the stimulus bill simply underscores one of the reasons why the Republicans suffered such huge losses in 2006 and 2008.  They need to abandon the failed strategy of focusing on the preferences of their so-called “base” and start representing the rest of America.  If they don’t learn this lesson, they will never win a majority in the Senate or the House and they will have to abandon their dreams of another Republican President.

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The Al Franken Month

January 26th, 2009 Posted in Uncategorized
Jan, 26 2009
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January 26, 2009

At the end of 1979, Al Franken appeared on the “Weekend Update News” during Saturday Night Live to announce that the 1980s would be “The Al Franken Decade”.  For those of us old enough to remember, it’s scary to realize that “The Al Franken Decade” ended almost twenty years ago.  In 1999, Franken released a book entitled:  Why Not Me? concerning his fictitious run for the Presidency in 2000.  The cover of the book featured a photograph of Franken being sworn in as President.  Although many news publications restrict their discussions of Franken’s background to the subject of his years with Saturday Night Live, they overlook the elements on his resume qualifying him to serve as a United States Senator.  For one thing, he graduated cum laude from Harvard in 1973.  In 1996, he wrote a book entitled: Rush Limbaugh Is a Big Fat Idiot and Other Observations, wherein he dared to challenge the most outspoken pundit of conservative talk radio.  The book found its way to the number one spot on the New York Times best seller list.  He subsequently took on the Fox News organization with his book:  Lies and the Lying Liars Who Tell Them: A Fair and Balanced Look at the Right.  The book sported a picture of Bill O’Reilly on the cover and included a chapter criticizing O’Reilly’s on-air statements.  From 2004 through 2007, Franken hosted his own talk show on Air America Radio.  His program was primarily focused on political issues.

Franken’s Minnesota campaign against Norm Coleman for the United States Senate has found its way into the court system, with the trial scheduled to begin today.  By the time votes had been counted (on November 18) Coleman was ahead by only 215 votes.  Because the candidates were separated by less than 0.5 percent of the vote, Minnesota law required an automatic recount.  On January 5, 2009, the Minnesota State Canvassing Board certified the recounted vote totals, with Franken leading by 225 votes.  The next day, Coleman filed suit, contesting the recount result.  The trial of this case is taking place before a three-judge panel of “trial-level” judges.  As you can imagine, there will likely be an appeal from whatever result is reached in that case.  In the mean time, Franken has filed a motion before the Minnesota Supreme Court to compel Secretary of State Mark Ritchie and Governor Tim Pawlenty to sign the election certificate, designating Franken as the winner.  That hearing is set for February 5.

A good source for understanding the court battle over this Senate seat is MinnPost.com.  There, you will find Jay Weiner’s guide to the trial as a handy reference.  Mr. Weiner has spelled out the issues raised by Coleman’s suit in the following manner:

Were the more than 2.9 million votes cast on Nov. 4, 2008, for Democratic challenger Al Franken and Republican incumbent Sen. Norm Coleman counted accurately, fairly and uniformly statewide?

Were about 11,000 of the 288,000 absentee ballots cast rejected properly and with consistent measures in all 87 counties?

Were any votes counted twice? Just because a precinct registry says 20 people voted and 22 votes exist, does that mean votes were double counted?  Are there other reasons such discrepancies could exist?

Should votes cast on Election Day that have since gone missing be counted?

Should votes that were found after Election Day that weren’t originally counted by included in the final tally?

Jay Weiner’s article also included his take on the ultimate outcome of this suit:

For all the talk of alleged double-counted votes or missing votes or newly found votes after Election Day, it seems unlikely that Coleman can scrounge up enough votes in those categories to net him the 226 new votes he needs.

Meanwhile, Michael O’Brien of The Hill website, has disclosed that Coleman has taken a job with the Republican Jewish Coalition while this battle continues:

In what could be seen as a sign that Coleman thinks his bid to return to the Senate may be lost, he has signed on to do consulting work for the group, which is comprised of a number GOP leaders.

“The senator needs to earn a living while the contest is going on,” said Coleman spokesman Mark Drake, who said the job does not at all affect Coleman’s bid to win reelection.

With the Democratic Party poised to capture yet another Senate seat, we can expect a lot of excitement to surround this trial.  The Al Franken Decade may be long gone but, like it or not, the current decade has brought us The Al Franken Month.  Beyond that, if this trial ends up the way most commentators expect, the United States Senate will experience at least one Al Franken Term.  Six years may not be another decade … but it should be fun.

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Dirty Rotten Scoundrels

December 18th, 2008 Posted in Uncategorized
Dec, 18 2008
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December 18, 2008

The Ponzi Scheme case involving Bernie Madoff is only the latest example of scumbaggery on Wall Street.  Madoff helped found the NASDAQ Exchange and established a reputation for himself as one of the captains of the financial world.  Now we know that he pilfered over 50 billion dollars from sophisticated investors, colleges, charitable institutions, banks and plain-old, rich people.  Worse yet, when he couldn’t get enough co-signers to back his ten-million dollar bail, he was placed under “house arrest” and confined to his $7,000,000 home.  When a car thief can’t make bail, he sits in jail until his case is tried.  Why is it that when someone is charged with stealing ten million times that much, he gets treated as though he was driving on an expired license?    By the way:  How does somebody hide fifty billion dollars?  Is he going to claim that he lost it or that he blew it all on lottery tickets?

The knaves who held themselves out as financial magicians have made pimps and drug dealers seem like Red Cross volunteers, by comparison.  Beyond that, the government institutions and officials charged with protecting the integrity of our financial system have been out to lunch for several years.  Worse yet, these hacks continue to facilitate the theft of trillions of dollars of taxpayer money and, for this reason, I believe they all belong in prison.  On second thought, they should be placed before a firing squad along with the swindlers whom they enabled.  After the Enron treachery was exposed to the light of day, one would have thought that the Securities and Exchange Commission might have started doing its job.  It didn’t.  People have to start forcing our elected officials to find out why.  I think I know the answer.  I believe it’s because many of the people entrusted to regulate the financial system are crooks themselves.

On December 16, Brent Budowsky posted an important article on The Hill website concerning the bailout bungle.  Mr. Budowsky is a gentleman who earned an LL.M. degree (that’s something you work on after graduating from law school) in International Financial Law from the London School of Economics.  He was a former aide to Senator Lloyd Bentsen and Representative Bill Alexander.  Mr. Budowsky pointed out that:

Government agencies have poured close to $8 trillion into banking bailouts.  The Treasury secretary has promoted massive government support of troubled, failed and corrupted institutions.

This program is a 100 percent top-down exercise involving the largest amount of money in history.

Virtually none of this money directly helps average Americans. Virtually none of it trickles down to the people who suffer the most and pay for the program.

*   *   *

The Securities and Exchange Commission is discredited.  The Federal Reserve has failed in its duty as banking regulator. Congress has failed in its duty of oversight.  The most wise and citizen-friendly regulator, Sheila Bair of the Federal Deposit Insurance Corporation, is treated with contempt by the Treasury secretary.

*   *   *

Today the Federal Reserve Board refuses to disclose information regarding some $2 trillion provided to financial institutions.  Bloomberg business news has filed a historic freedom-of-information case seeking disclosure.  Congress and the president-elect should support it.

Bailout money is not a private account that belongs to Fed Chairman Ben Bernanke, Fed governors, the Treasury secretary or the banks.  It is the people’s money.  It should be used to benefit the people.  It should be monitored through the checks and balances of the democratic process.

Secrecy is the enemy of equity, integrity and common sense. Secrecy is the friend of negligence, misjudgment and corruption.  There are probably selected instances where the Fed should not disclose, but show me $2 trillion of secretly spent money and I will show you trouble.

Do you care to hazard a guess as to what the next Wall Street scandal might be?  I have a pet theory concerning the almost-daily spate of “late-day rallies” in the equities markets.  I’ve discussed it with some knowledgeable investors.  I suspect that some of the bailout money squandered by Treasury Secretary Paulson has found its way into the hands of some miscreants who are using this money to manipulate the stock markets.  I have a hunch that their plan is to run up stock prices at the end of the day before those numbers have a chance to settle back down to the level where the market would normally have them.  The inflated “closing price” for the day is then perceived as the market value of the stock.  This plan would be an effort to con investors into believing that the market has pulled out of its slump.  Eventually the victims would find themselves hosed once again at the next “market correction”.  I don’t believe that SEC Chairman Christopher Cox would likely uncover such a scam, given his track record.  Perhaps we can thank him when “vigilante justice” comes to Wall Street.

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Money Falling From The Sky

November 17th, 2008 Posted in Uncategorized
Nov, 17 2008
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November 17, 2008

The debate concerning a possible bailout of the “big three” automakers (General Motors, Ford and Daimler Chrysler) has now reached the House of Representatives.  House Minority Leader, John Boehner (Republican from Ohio) has voiced his opposition to this latest bailout, indicating that it will not receive much support from Congressional Republicans.

In the words of Yogi Berra, we are experiencing “déjà vu all over again”.  This process started with the plan of Treasury Secretary Henry Paulson, to bail out banks and other financial intuitions holding mortgages of questionable value, at a price to the taxpayers in excess of $700 billion.  Back on September 22, when that bailout bill (now known as TARP) was being considered, Jackie Kucinich and Alexander Bolton wrote an article for TheHill.com, discussing Republican opposition to this measure.  Their article included a prophetic remark by Republican Congressman Cliff Stearns of Florida:

“Bailout after bailout is not a strategy,” said Stearns, who said that taxpayers could be left with a huge bill.

Yet, “bailout after bailout” is exactly where we are now.  On November 15, T-Bone Pickings appeared on NBC’s Meet the Press.  Tom Brokaw asked T-Bone Pickings for his opinion on the proposed “Big Three Bailout”.  The response was:

I wonder what you’re going to do about the next industry.  Is it going to be the airlines or what if Toyota and Honda want some help, too?  I don’t know.  I don’t know where it stops.

Once again, we are presented with the need to bail out yet another American industry considered “too big to fail”.  However, this time, we are not being asked to save an entire industry, just a few players who fought like hell, resisting every change from rear-view mirrors, to fuel injection, seat belts, catalytic converters, air bags and most recently, hybrid technology.  Later on Meet the Press, we heard the BBC’s Katty Kay quote a rhetorical question from unidentified “smart economists” that included the magic word:

Can it withstand the shock to the economy if GM were to go?

Later on the CBS program, Face The Nation, Massachusetts Congressman Barney Frank, Chairman of the House Financial Services Committee, used similar logic to that expressed by Katty Kay, when he stated:

When you talk about the negative shock that would result from bankruptcies of these companies, right now  …

The magic word “shock” is once again playing an important role for the advocates of this newest rescue package. I was immediately compelled to re-read my posting from September 22, concerning the introduction of the Paulson bailout plan, entitled:  “Here We Go Again”.  At that time, I discussed Naomi Klein’s 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism.  Klein’s book explained how unpopular laws were enacted in a number of countries around the world, as a result of shock from disasters or upheavals.  She went on to suggest that some of these events were deliberately orchestrated with the intent of passing repugnant laws in the wake of crisis.  She made an analogy to shock therapy, wherein the patient’s mind is electrically reformatted to become a “blank slate”.  Klein described how advocates of “the shock doctrine” seek a cataclysmic destruction of economic order to create their own “blank slate” upon which to create their vision of a “free market economy”.  She described the 2003 Iraq war as the most thorough utilization of the shock doctrine in history.  Remember that this book was released a year before the crises we are going through now.

Ms. Klein’s article, “In Praise of a Rocky Transition” appeared in the December 1, 2008 issue of The Nation.  She discussed Washington’s handling of the Wall Street bailout, characterizing it as “borderline criminal”.  Would the financial rescue legislation (TARP) have passed if Congress and the public had been advised that the Federal Reserve had already fed a number of unnamed financial institutions two trillion dollars in emergency loans?  Naomi Klein expressed the need for the Obama Administration to stick with its mantra of “Change You Can Believe In” as opposed to any perceived need to soothe the financial markets:

There is no way to reconcile the public’s vote for change with the market’s foot-stomping for more of the same.  Any and all moves to change course will be met with short-term market shocks.  The good news is that once it is clear that the new rules will be applied across the board and with fairness, the market will stabilize and adjust.  Furthermore, the timing for this turbulence has never been better.  Over the past three months, we’ve been shocked so frequently that market stability would come as more of a surprise.  That gives Obama a window to disregard the calls for a seamless transition and do the hard stuff first.  Few will be able to blame him for a crisis that clearly predates him, or fault him for honoring the clearly expressed wishes of the electorate.  The longer he waits, however, the more memories fade.

When transferring power from a functional, trustworthy regime, everyone favors a smooth transition.  When exiting an era marked by criminality and bankrupt ideology, a little rockiness at the start would be a very good sign.

The Obama Administration would be wise to heed Ms. Klein’s suggestions.  It would also help to seriously consider the concerns of Republicans such as John Boehner, who is apparently not anxious to feed America another “crap sandwich”.

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Will It Work?

September 29th, 2008 Posted in Uncategorized
Sep, 29 2008
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September 29, 2008

This is the question on everyone’s mind as they ponder the new “bailout bill”, officially known as the Emergency Economic Stabilization Act of 2008.  It is available for everyone to read on the Internet (all 110 pages of it), but most people are looking for answers to the most important questions:  Will it pass and will it work?

Just after midnight on Monday morning, David Rogers, of Politico.com, reported that the bill (which goes to the House floor on Monday and the Senate floor on Wednesday) was still facing resistance from both the right and the left, despite the support voiced by both Presidential candidates.  Republican Congressman Chris Shays of Connecticut was quoted in the article as saying that:  “For this to pass, a lot of people are going to have to change their minds”.  The following passage provided more light on the view of this bill from those House Republicans providing resistance to the measure:

Yet a closed-door party meeting Sunday night illustrated all the problems anew.  The session ran for hours, and while Minority Leader John Boehner (R-Ohio) said he would vote for the bill, he could not predict the number of votes he would have for it, and he famously referred to the measure as a “crap sandwich” before his rank and file.

Jackie Kucinich reported for TheHill.com that earlier in the day, Congressman Mike Pence of Indiana had sent out a letter to his fellow Republicans in opposition to this bill:

The decision to give the federal government the ability to nationalize almost every bad mortgage in America interrupts this basic truth of our free market economy …  Republicans improved this bill but it remains the largest corporate bailout in American history, forever changes the relationship between government and the financial sector, and passes the cost along to the American people.  I cannot support it.

The opposition to the bill from the Democratic side was discussed in another Politico.com article:  this one by Ryan Grimm.  Grimm’s article discussed an “intense” Democratic Caucus meeting.  He quoted Minnesota Congressman James Oberstar as describing resistance to the bill coming from across the complete spectrum of Democratic opinion, from liberal to conservative.  California Congressman Brad Sherman had met with Republican Darrell Issa before the meeting.  Sherman’s contribution to the Caucus discussion was described this way by Ryan Grimm:

Sherman spoke out against the bill during the caucus meeting, arguing that billions of dollars would flow to foreign investors, that oversight was lax and that limits on executive compensation were too weak.   Rep. Joe Baca (D-Calif.) said he was leaning toward a no vote, too.

The House vote on the bill is scheduled to take place after a four-hour debate, beginning at 8 a.m. on Monday.

Whether or not this bill will ultimately “work” is another question.  Paul Krugman, Economics Professor at Princeton University, wrote in the Sunday New York Times:

The bailout plan released yesterday is a lot better than the proposal Henry Paulson first put out — sufficiently so to be worth passing.  But it’s not what you’d actually call a good plan, and it won’t end the crisis.  The odds are that the next president will have to deal with some major financial emergencies.

Steve Lohr’s report from the Sunday New York Times, discussed the outlook for this plan, as voiced by Robert E. Hall, an economist and senior fellow at the Hoover Institution, a conservative research group at Stanford.  Lohr observed:

There was no assurance that the bailout plan would work as intended to ease financial turmoil and economic uncertainty.

Lohr’s article then focused on the opinion of Nouriel Roubini, an economist at the Stern School of Business at New York University:

The $350 billion to $400 billion in bad credit reported by the banks so far could eventually exceed $1.5 trillion, he estimated, as banks are forced to write off more bad loans, not only on more housing-related debt, but also for corporate lending, consumer loans, credit cards and student loans.

The rescue package, if successful, would make the recognition of losses and the inevitable winnowing of the banking system more an orderly retreat than a collapse. Yet that pruning of the banking industry must take place, economists say, and it is the government’s role to move it along instead of coddling the banks if the financial system is going to return to health.

A more unpleasant perspective appeared in an editorial published in the September 25 edition of The Economist:

If the economics of Mr Paulson’s plan are broadly correct, the politics are fiendish.  You are lavishing money on the people who got you into this mess. Sensible intervention cannot even buy long-term relief:  the plan cannot stop house prices falling and the bloated financial sector shrinking. Although the economic risk is that the plan fails, the political risk is that the plan succeeds.  Voters will scarcely notice a depression that never happened.  But even as they lose their houses and their jobs, they will see Wall Street once again making millions.

Whatever your definition of “success” might be for this plan, the experts agree that things aren’t going to return to “normal” for a long time, if ever.

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