Archive for October, 2008

30 days to go

Sunday, October 5th, 2008

UPDATE: The first tremors of the Obama-Ayres connection are showing up on CNN. We’ll see how much more comes out in the next four weeks.

The financial turmoil of the past two weeks has scrambled the race for the presidency so that no one knows where it goes from here. The political left is ecstatic thinking their man has it won. Maybe they are right. Sorry, maybe they are correct. I don’t know.

McCain seems to be paying a price for the interruption of his campaign. Ironically, the House Republicans, by refusing to vote for the bailout bill last week, may have torpedoed their own re-election by damaging McCain and adding to the anger of the voters about the bill. They made him look weak and gave Obama cover when he stayed out of the mess. Of course, Obama had the Congressional majority and the press to cover for him.

Clumsily, a McCain campaign functionary spoke about “turning the page” on the economic crisis and described plans to attack Obama’s associations with Ayres, et al. With campaign aides like that one, McCain doesn’t need opponents. Announcing political strategy is what amateurs do.

What has happened is that, rather than an example of deregulation, the financial mess is an example of government interfering in free markets. Even the New York Times admits what happened, although avoiding any blame for the real culprits.

When the mortgage giant Fannie Mae recruited Daniel H. Mudd, he told a friend he wanted to work for an altruistic business. Already a decorated marine and a successful executive, he wanted to be a role model to his four children — just as his father, the television journalist Roger Mudd, had been to him.

Now, why do you think Fannie Mae would recruit the son of a well known TV figure ? They also recruited Barney Frank’s gay lover. A previous lover was running a gay prostitute ring from Barney’s house, as this item confirms, indignantly correcting an error. No, it wasn’t Frank running the ring but it was his house.

I grew up in Chicago and my old neighborhood was an idyllic urban setting. There was a mixture of single family homes and apartments in three flat buildings plus some larger apartment blocks. The pattern was a commercial street every three or four east-west streets and every eight north-south streets. Those patterns assumed that people walked from public transportation that ran along those streets, either buses or the Illinois Central commuter train. My mother shopped for groceries and had them delivered to our home. I walked to school, even in kindergarten. In the 1960s that began to change. The movie Death Wish shows a home invasion robbery by young men posing as grocery delivery boys. I had moved to California by that time, but my father was assaulted on the front porch of our home in the early 1960s by boys who followed him to the front door. He managed to get the door open and the family dog attacked the assailants, driving them away. Soon the house was sold and both my parents moved into apartments for safety. That neighborhood now has almost no local business. Those shops are empty shells.

Now we have a financial crisis brought on by social engineering and the people who created the crisis look confident that they will be elected to deal with it. Today, I watched the Stephanopolis TV show and saw Katrina van der Heuval discussing the implications of Obama’s election. She said that a “progressive” president will be in position to supervise a complete restructuring of the American economy. I’m sure that Katrina, whose magazine The Nation, is a far-left journal, has big plans. Note the author of the lead article on Obama’s “bailout strategy.”

Congress, Wall Street and the media have little interest in our fine ideas unless we have a plan to do something.

That “something” is to frame the crisis clearly as the voters’ verdict on failed free-market fantasies, elect Barack Obama and a few more members of Congress, then demand emergency action to address the Wall Street crisis and its $700 billion twin, the war in Iraq.
I have no problem with Barack Obama supporting the bailout package as long as it keeps him on track to the presidency. He needs to be critical, to offer amendments, and to promise to return to the crisis the day after November 4.

Here it comes.

We need a November electoral mandate rejecting reckless unregulated free-market capitalism as a model for our century. Every minute we carry that message in these days before the election, we are building that mandate. We need a peace mandate, too.

Now, the question is whether Obama is as “progressive” as his supporters think he is. I doubt he knows. So far, he seems to have vague yearnings to make something of himself and “do good.” Running for office seems to be the only thing he’s good at and, with the uncritical support he has gotten this year from the media, we can’t even be sure of that. If he were white, no one would have heard of him. If these progressive advisors and supporters get control of him, and they may, we are in for rough times ahead. Maybe the voters will finally balk at this dangerous experiment in affirmative action. Here are some of his advisors.

His only “executive” experience was running the Chicago Annenberg Challenge with Bill Ayres. They spent $150 million and the Chicago public schools did not improve. Some radical groups got a lot of the money and what they did with it is unknown. The story is here, but few will read it.

I wish they could all see Katrina making plans for the Obama administration.

Now what ?

Wednesday, October 1st, 2008

The bailout failed. It will come back in the Senate version and might pass later this week. Here is a a good explanation of how we got here, with some prediction of the future. It isn’t reassuring.

Mr. Paulson’s proposal was not intended as a general Wall Street bail-out, although to some extent it would have had that effect. Note that the outstanding overhang of credit default swaps alone is estimated to be between $45 and $60 trillion – three to four times the size of our annual gross domestic product. The requested $700 billion, although the single biggest appropriation request in U.S. history, was minuscule when compared with the toxic waste problem as a whole. Mr. Paulson’s proposed solution was to cost just 1% of the size of the problem and was aimed only at a small part of that problem. (It is unnerving to realize that the U.S. government – the “beast” we have been starving for so long – may now lack the borrowing capacity to solve the problem as a whole. We need to get our financial house in order.)

He largely absolves the CRA and blames teaser rate mortgages, a reasonable theory. What caused the wholesale abandonment of credit criteria in lending on houses ? There, I think CRA had more effect plus Fannie Mae and Freddie Mac led the charge over the cliff. If they had not accepted these mortgages, they would not have been written.