Saturday Morning Ponderings

This entire week I have endured the mother of all colds. Yet even in my Sudafed haze, I must comment on this week’s important developments:

• This week Treasury Secretary Tim Geithner finally rolled out his public/private partnership plan with respect to “toxic assets.” His so-called plan has me thinking about the dangers of treating symptoms instead of the cause. A fever is the body’s way of sending us a message that we need to kill off an infection. Similarly, these “toxic assets” are sending the international community an unmistakable message; hyper-sized financial institutions are a parasitic infection eroding quality of life for wage earners across the globe.

• Removing toxic assets is not treating the cause. And while more regulation is entirely justified and something we liberals have been insisting upon, that too will not treat the cause. Instead, citizens need to mobilize on behalf of bold anti-trust legislation that breaks up financial institutions such as CitiCorp and empower independent community banks. Do not be seduced by the gyrations of the stock market that some liberal bloggers chirped about this week. Unless the cause itself is treated our economic destiny will remain perilous. I fully support President Obama's ambitious budget and have nothing but contempt for the insipid Republican opposition as well as corporatist enablers such Indiana Senator Evan Bayh who stand in the way. Yet even the good intentions and overdue initiatives proposed in Obama's budget will not benefit our country as it should unless we boldly reshape our entire financial system.
  

• President Barack Obama took complete ownership of the war in Afghanistan yesterday with his announcement of 17,000 more combat troops as well as an additional 4,000 non-combat advisers. One difference between Obama and his predecessor is the linkage between the fight against al Quaeda in neighboring Pakistan as well as their Taliban allies in Afghanistan. Another difference is how the Obama administration intends to combine military power with a surge in regional diplomacy and “experts” to help fight corruption and facilitate a civil society. Supposedly, the focus is entirely defeating al Quaeda and not nation building, but how the hell can we fight corruption in an ancient society we know precious little about?

• Meanwhile, the administration promises to both lean on and support the Pakistani government in their struggle against terrorists. Frankly, aid to the Pakistani government at this point appears every bit as wasteful as giving billions to A.I.G. The civilian government uses terrorism as an excuse to oppress its population as elements of Pakistan’s intelligence service and military aid the Taliban in Afghanistan. How do we know that any aid we provide Pakistan isn’t being utilized to plan another attack against us or help the wrong people obtain access to their nuclear arsenal?
  

• All this is further compounded by an ultra-nationalist government in India that would make American neo-cons blush with their belligerence. The sub-continent is the world’s most dangerous powder keg and America’s presence has intensified regional violence. Even so, I sympathize with President Obama’s conundrum. Twenty years ago, our careless withdrawal after the cold war’s end facilitated the blowback that resulted in 9/11 and gave al Quaeda its safe haven. Our careless withdrawal of course followed our ill conceived intervention on behalf of Aghanistan's Mullah's in the first place when we armed Bin Laden in his struggle against the Soviet Union. If we screw it up this time the consequences will be far more catastrophic.
  

• I’ve long believed that the best strategic approach is cooperative containment with the international community as opposed to grandiose delusions about “dismantling” and “disabling” al Quaeda. This is an organic movement. You can take out one important leader after the other including Bin Laden himself and it will simply regenerate. We need instead to address the causes of terrorism and work diligently at draining the swamp that fosters it. Anything less is a waste of blood and treasure. Not to mention all the innocent people being killed in Afghanistan by our presence. Also, we should be on the side of democracy in Pakistan instead of nurturing more resentment among Pakistan's decent civillian majority.
  

• Longtime readers of this blog know how vigorously opposed I am to our prison industrial complex. I have therefore been keeping an eye on Virginia Senator James Webb who since his election in 2006, has spoken coherently about the need to reform our prison system. With a sympathetic President finally in the White House, Senator Webb has opted to take the initiative and joined Republican Pennsylvania Senator Arlen Specter in that effort. Both senators proposed legislation to create a blue-ribbon panel that would conduct an 18-month review and suggest recommendations of reform.
  

• Specifically, Webb hopes to reform a system that incarcerates 2.4 million people and represents 25 percent of the world’s prison population even as America comprises only 5 percent of the entire planet. Mostly we have incarcerated people for petty drug offenses who need treatment instead of prison. This is an act of real political courage because any suggestion of reform usually results in accusations of being soft on crime.

• Coincidentally, while Senators Webb and Specter plot prison reform in America, New York State’s dysfunctional leadership is finally addressing the arcane “Rockefeller Drug Laws” that have empowered my home state’s prison industrial complex for three decades. My favorite legislator, New York State Senator Liz Krueger, announced in a press release this week that,
  

“I am very proud to be a part of history today and finally see the Rockefeller Drug Laws reformed. The reforms announced today will restore judicial sentencing discretion and substantially expand alternatives to incarceration for non-violent drug offenders.

It has been a long hard fight to reform these archaic drug laws and today is the culmination of decades of hard work and advocacy from countless people, all of whom deserve praise for helping to achieve these needed reforms."

• Reforming our prisons and drug laws will do more to curb violence in Mexico than any increase in numbers of our border patrol. Legalization and treatment will address the causes of drug abuse far more effectively than mindlessly incarcerating people and creating blowback in neighboring Mexico.

The one theme that emerges from the above bullet points is America's need to think about the cause instead of always reacting to the symptoms of what ails us.

Clarence Darrow & Yogi Berra

Arguably America’s greatest trial lawyer, Clarence Darrow, famously once said,

"First and last, it's a question of money. Those men who own the earth make the laws to protect what they have. They fix up a sort of fence or pen around what they have, and they fix the law so the fellow on the outside cannot get in. The laws are really organized for the protection of the men who rule the world. They were never organized or enforced to do justice. We have no system for doing justice, not the slightest in the world."

Reading this morning’s headlines about A.I.G. utilizing $165 million of their $170 billion tax payer financed bailout for bonuses, reminded me of Darrow’s insight. The excuse being offered after all is that a “contract is a contract” and A.I.G. must fulfill their obligations.

Isn’t it curious how contracts are deemed sacrosanct for Wall Street beneficiaries but not blue-collar members of unions in the auto industry? Unions are expected to get “realistic” and “ renegotiate” their contracts but moneyed elites are allowed to carry on as before. Anyone who has the temerity to point out the contradiction is “unreasonable,” “angry,” “extreme,” or heaven forbid, one of those “crazy left wing bloggers.”

For what it’s worth, I personally believe all demographics must ultimately sacrifice for the greater good during this calamity. Unlike its imperial antecedents, the American empire has largely serviced the purpose of consumer excess – especially for the top. With America’s empire in decline, all hands must now be on deck to reverse our society’s cascade of ruin as we develop a new socio-economic paradigm, absent the perks and burdens of a hyper-power.

That means a tough transition for all of us as we cease to consume a quarter of the world’s resources, work to extricate ourselves from Beijing bankers and end our addiction to military conflict as a means of resolving disputes. Nonetheless, how can any president ask Americans to accept their health benefits being taxed, when A.I.G. is permitted to distribute unseemly bonuses after their conduct precipitated the current crisis? Bottom line, the worst insurance company in history is utilizing our tax dollars to reward their employees with bonuses, while the rest of us are treading water and being asked to shed even more skin.

I suspect most people understand we have to change in order to bring about change. That was my sense during the campaign as I canvassed and phonebanked. Indeed, as the Jon Stewart showdown with CNBC’s Jim Cramer illustrated, Americans are finally ready for hard truths after lies about WMD’s in Iraq while warning signs with respect to the current economic crisis were ignored. People are just desperate enough now to respond to hard truth if it’s backed up with a coherent strategy and the pain is absorbed fairly.

Alas, asking people who are currently teetering on the abyss to sacrifice has no credibility given the circumstances and messengers. How could it when tax-cheat Timothy Geithner and his plutocratic deregulating mentor from the Clinton Administration, Larry Summers, continue to subsidize thieves? The good people of A.I.G. are like the proverbial bank robbers holding bags of nitroglycerin. Give us your money they say or we’ll drop our nitroglycerin bags on what’s left of the global economy. So we continue to appease them.

Now in fairness to President Obama, he inherited what can only be described as a cluster fuck. And he hasn’t even been in office two months. Furthermore, much of the so-called political opposition as well as the establishment that critiques him, are simultaneously insipid and disingenuous. As I wrote a few days ago,

“Already you’re hearing voices question whether President Obama’s is pushing too much at once on the ‘system.’ These voices sound reasonable when they claim we should ‘fix the economy first’ and worry about health-care, energy and education later. They're enablers of capitalism’s dark underbelly, hoping to run out the clock on President Obama’s popularity and continue business as usual.”

Hence, I largely support the goals of President Obama’s proposed budget and have contempt for this “establishment” that failed to address the very challenges he dares to take on. Clarence Darrow would certainly recognize those that oppose Obama’s agenda as elites making laws to “protect what they have” at the expense of everyone else.

Yet each day that passes without the Obama administration implementing a credible, transparent and coherent strategy to address America’s banking and housing crisis, only serves to further tighten the Gordian knot of economic calamity. This week we're supposed to hear more from Secretary Geithner about his plans to resolve these challenges with a “public-private” partnership. I don’t have much faith in Geithner, an upwardly mobile tax-cheating plutocrat who previously served at the New York Federal Reserve Bank and engineered the TARP legislation that passed last fall.

So even though it hasn’t even been two months since Obama’s inaugural, a famous Yogi Berra quote also comes to mind:

“It gets late early around here.”

Update: The San Francisco Chronicle reports that A.I.G.'s bonus payout totals $450 million.

Local Banks! Local Banks! Local Banks!

Readers of this blog may be tired of my repeating myself, but I'll repeat this anyway: our body politic is too consumed with the fate of mega-sized global banks. Instead we should be empowering local community sized banks that have a superior track record compared to CitiGroup or Bank of America. Hence, I was gratified when Missouri Democratic Senator, Claire McCaskill, made the following observation on ABC's This Week With George Stephanopoulos yesterday:

"And as a matter of confidence, I think it's important for us to point out that there's two kinds of banks that we're talking about here. The -- the commercial banks, the small, local banks, they're fine, and people need to realize that. Your local bank is loaning money; it is operating as it always had.

It may be suffering in its stock prices because of what's going on in the stock market, but they are doing a great job. In fact, most of the commercial banks, the local banks, have loaned more money in the fourth quarter of last year than they had the fourth quarter the previous year."

Exactly. It’s most curious to me that other Democrats haven’t figured this out. Indeed, Democrats are far more supportive of bailing out these institutional monsters than Republicans!

I realize CitiGroup may be “too big to fail” and one can argue we can’t allow that to happen. CitiGroup and the global economy are inextricably entwined, as is AIG. I understand that. And if these bailouts were part of a comprehensive strategy to buy time as we transitioned towards a more sensible financial system, I would embrace it.

To this point however, neither President Obama nor his beleaguered tax cheating Treasury Secretary, Timothy Geithner, have articulated a plan beyond “stabilizing” these financial monstrosities and regulating them better. That is not a viable strategy. Rather it resembles a Hail Mary attempt to toss money into a hole, hope it finds a floor and promise that regulation will ensure it’s not stolen.

A better strategy might well be to discontinue appropriating billions for failures such as CitiGroup in favor of establishing a protocol that rewards healthy local banks with money instead. Set aside the billions used to bail out the mega-sized global banks and establish a grant funding process that rewards independent community banks. As Senator McCaskill sagaciously pointed out, local banks have been responsible and are proactively lending.

At least that way, both the public as well as the global market place can then have confidence that thousands of banks across the nation are meeting viability threshold standards without any “moral hazards.” Furthermore, the independent community banks are far more likely to deliver any infusion of capital onto the street.

Many would call that concept radical and perhaps it is. But the circumstances we find ourselves in are extreme. Keeping CitiGroup, the world’s worst insurance company, AIG, and Bank of America afloat is not mitigating the pain. If we must experience this pain we should at least implement a strategy that builds a healthier financial system.

President Obama is a thoughtful judicious leader that I proudly worked to help elect. I am gratified by much of what he has done already. I strongly support Obama’s efforts at reforming health-care, developing an environment friendly energy policy and investing more in public education simultaneously, rather than give in to garden variety inside the beltway myopia.

But all Obama's good intentions and plans will never come to fruition unless his administration develops a strategy that facilitates a community friendly banking system. Otherwise, the American economy will be condemned to decades of sputtering like an armless swimmer as the global economy slides off the abyss.

Obama's Weekly Address

The most important news from President Obama's weekly address is that employers will be directed to withhold fewer taxes in paychecks. According to the administration, a "typical" family will take home $65 more every month after April 1st. The speed of this adjustment is impressive and wage earners will be able to determine the impact for themselves soon enough.

Next week President Obama delivers his first address to a joint session of congress. Thematically, the administration is attempting to project each policy as a component to an overall comprehensive economic recovery strategy. To date, we have seen three pieces of this strategy:

• The stimulus package.

• A housing plan to help nine million homeowners struggling to meet their financial obligations.
  

• Continued bailouts for America's largest banks.
  

In my opinion, the administration's stimulus package and housing plan are conceptually on target but far too limited in scale. Both will help reduce the bleeding which is some consolation. As I’ve posted previously however, President Obama’s failure to leverage his political capital more effectively and aim higher is disappointing.

With respect to continued bailouts for banks, Obama’s strategy to repair our financial system is ill conceived and nationalization only a matter of time. Presently, Treasury Secretary Tim Geithner and his fellow plutocrat, economist Larry Sumners are focused on reviving large financial institutions such as Citigroup. Nobody with any clout in the body politic seems willing to admit the truth: hyper sized banks are irredeemable and bailing them out a waste of precious funds.

Instead our economic strategy should be focused on restoring smaller community banks as the source of credit and loans. Community sized banks have better track records with lending and are more inclined to promote the well-being of their localities. Both presidents Bill Clinton and George W. Bush empowered hyper sized banks such as Citigroup and Bank of America to swallow community sized banks.

Predatory conservatives accuse liberal Democrats of preferring “big government” to more sensible solutions. The real truth however is that predatory conservatives have destroyed the middle class with their fetish devotion to expanding the power and reach of financial institutions on steroids. Sadly, Democrats have been enablers to this madness.

Alas, financial industry careerists such as Timothy Geithner are not equipped intellectually or ideologically to facilitate the systemic change our financial system truly needs. Trying to “reform” our financial system with promises of better oversight is analogous to allowing a murderous pedophile to work in a daycare center and assuring everyone that the terms of his parole will keep everyone safe. Yet the corporate media will continue to spin bailouts of these economic barbarians as the global economy’s only answer.

Monday Night Hit & Run Thoughts

• Listening to Republicans sanctimoniously whine about “bipartisanship” is both humorous and grating. Their socio-economic philosophy is completely discredited yet they cry foul because Democrats have no enthusiasm for adopting their stale “ideas” which has the world on the brink of total catastrophe. If Democrats were to make policy changes based upon the world being round, Republicans would whine about being excluded for believing the world is flat. Bipartisanship is not possible when people who belong in a lunatic asylum lead the opposition party.

• My visceral sense is that the stimulus debate was a seminal moment for President Obama. It’s a political victory, yet at the same time insufficient for what the country needs because he failed to define the terms of debate and bargained away too much at the onset of negotiations (read this post). If I read Obama correctly, he knows this as well and won’t be such an easy mark going forward. Obama's nominee for Health and Human Services may be a bellwether of his administration's direction. If it’s Tennessee governor Phil Bredesen, I’ll feel betrayed unless that appointment is coupled with a healthcare legislation czar determined to bargain hard with the HMOs. My preference is Howard Dean but that’s probably not going to happen because Chief of Staff Rham Emanuel hates him and Republicans hate truth tellers.

• Nationalization of the banks is coming and President Obama knows it. First though will be the obligatory kabuki dance of Treasury Secretary Geithner’s “plan.” I suspect Geithner’s troubling and vague performance is partly attributed to the administration’s belief that citizens learning more truth about the insolvency of our banks would result in massive withdrawals. Speaking of truth, tomorrow night I plan to watch a PBS Frontline special about America's economic day of infamy: September 18th, 2008.

• It will be interesting to contrast the rollout of Obama’s plan to stabilize housing with last week’s Geithner plan. The word is the administration will reveal far more details. More details with a housing plan is likely to generate confidence and hope. Whereas, as I referenced in the previous bullet point, with the Geithner plan, the powers that be are convinced confidence is best served by not revealing the complete truth.
  

Hit & Run Thoughts

• I’m still processing the bizarre performance of Timothy Geithner yesterday with respect to the Obama administration’s inept plan to rescue America’s banks. It seems to me we are watching a kabuki dance unfold. Nationalization is only a matter of time but first the corporate media and Wall Street apologists need yet another demonstration of why the system as we’ve known it can’t be saved. If a few million American citizens are financially ruined during this demonstration I suppose it will be regarded as collateral damage.
  

• Liberals need to begin mobilizing for what comes after the stimulus package is passed. There is no sense whining about President Obama’s mistake bargaining way too much at the onset of negotiations to appear bipartisan. What’s done is done and hopefully he’s learned the way a small child realizes that touching a hot stove burns. Instead we need to regain the initiative with the upcoming omnibus appropriations bill. Yes, it would have been better to maximize Obama’s political leverage in a comprehensive economic recovery package. But that ship has sailed so the next step is to win as much as possible in the appropriations process.

• If you keep stocking your administration with center-right people it will result in a center-right presidency. Nominating Tennessee Governor Phil Bredesen as Secretary of Health and Human Services (“HHS”) would be tantamount to dropping a cluster bomb on the Democratic Party’s liberal base. Whenever HMOs regard a candidate for HHS to be “reasonable” it means another presidency with no healthcare reform.
  

• As a Jew I am mortified at the rise of a fascist party in Israel. I had just turned 21 when I visited the Birkenau Concentration Camp in Poland in 1990 and to this day I have nightmares from walking those grounds. Concentration camps are the end result when extreme right wing political figures that initially appear to be clowns are not stopped. Make no mistake, Avigidor Lieberman is a fascist and so is his Israel Is Our Home party.
  

• If Netenyahu prevails, Lieberman will exploit the rules of parliamentary democracy as his coalition partner and subvert Israel’s civil society in the name of national purity. Eventually, a Netenyahu government will be forced to disappoint Lieberman’s supporters when dealing with the United States. At that juncture, Lieberman will likely withdraw his support resulting in political chaos. Perhaps Netenyahu will become more inclined to reach out to centrist parties to maintain power. It is also possible however that a nationalist populist backlash will propel Lieberman into power in the next election. At best that could be the last election Israeli Arabs enjoy equals rights as voting citizens. I shudder to think about the worst that could happen.
  

• I am no fan of Kadima’s Tzipi Livini. As far as I’m concerned she, her party and the Kadima-Labor governing coalition have innocent blood on their hands. Tragically though, Livini represents the last finger in the dike against Israel’s version of Vladimir Zhirinovsky. There is an old cliché that eventually we are doomed to resemble our enemies. We Jewish people above all others have no excuse for failing to recognize the danger that Avigidor Lieberman represents. That a figure like this could emerge in the Jewish state is a shameful irony.
  

President Obama's First Prime Time Press Conference

Click here to review a transcript of President Obama's press conference this evening as provided by CNN. Unfortunately, as of yet, I can't find any html video embedding coding of the press conference that works so linking the transcript is the best I can do.

Overall, I'm left with the following impressions:

• Stylistically, no one on the political scene today can hold a candle to President Obama's ability to project intelligence, poise and composure. Substantively, however, the press was largely pathetic. Conservatives will likely gripe that not a single question was asked with respect to the tax problems of Obama's cabinet nominees and his team's suspect vetting process. And on that score conservatives have a valid complaint. Perhaps the press feels that's beating a dead horse but it certainly merited at least one question. If baseball's latest steroids controversy merited one question then how is it nobody asked a single question about Tom Daschle?

• As for the economy, it irks me that the questions and Obama's answers were solely focused on the conservative point of view. Obama was defending the legitimacy of large spending against conservative criticism and the notion that only the federal government can inject the required capital. Listening to the questions and Obama's answers, one would think that the conservative critique is the only debate taking place. Somebody should have challenged President Obama from the liberal perspective and asked if the legislation offers too little spending. I suspect tomorrow's press conference with Treasury Secretary Tim Geithner will be far more revealing with respect to domestic policy than anything we heard this evening.

• I found Obama's responses to questions about his strategy in Afghanistan and Pakistan disturbingly vague. Indeed, I'm very concerned that the national security team of Robert Gates, Hillary Clinton and Jim Jones are thinking tactically with no exit strategy in sight.

• Kudos to the Huffington Post for asking about Vermont Senator Leahy's proposal for a truth and reconciliation commission to address any crimes committed by the Bush Administration. Alas, it's quite apparent that the Obama administration will be at best passive actors in facilitating any accountability. It is imperative that the liberal netroots keep the pressure on and demand justice. On this there can be no compromise.
  

• I hope Helen Thomas lives forever.