Thursday, September 25, 2008

Bail Out Deal Stalled

House Republicans have refused to support the deal negotiated by the two banking committees. This should give progressive Democrats in the House an opportunity to improve the package on behalf of the American people. Above all, they must insist on tough reregulation as part of the package.

John McCain suspended his campaign--though his ads are still airing here-- and rushed to Washington. It is likely that the House Republicans will hold out until McCain garners publicity as deal maker, selling some sort of package. He brought his cmpaign manager to the meeting of peaders George W. Bush called. Obama brought a legislative aid.

Obama has a history of calling for regulation and should at least insist that the package include repeal of the most dangerous deregulatory provisions of the two "financial modernization" acts that Phil Gramm passed in 1999 and 2000. Obama introduced in 2006 a bill to regulate mortgage lending practives. In March of this year, he brought force comprehensive provisions to regulate financial markets. Of course, the Lying McCain advertisement ignore all this, suggesting he has no position.

If reregulation is not a big part of the package, we would be better off with no bail-out bill. We have seen a series of bail-outs since the mid-1980s because there was no re-regulation. This ruinous cycle must be broken, and Obama should focus the nation's attention on reregulation.

Otherwise, McCain's decision to politicize the financial crisis will bay off big time. Sharp observers believe he is shooting himself in the foot, but most voters are not that sharp. John McCain has a marvelous public relations operation which will
doubtless make him look like an unparalled leder and economic savior. It has shown that it can manufacture facts out of thin air. Just look at all the lying advertisements they have produced and how effective they have been.

It will do Obama no good to criticize McCain's tactics. He must make McCain deregulatory past and present insincerity on the subject a major issue---NOW.

Wednesday, September 24, 2008

Sarah Stonewalls Probe of Her Ethics

First Sarah Palin promises to cooperate with a bipartisan probe; then she decides to stonewall. Back is Wasilla, she fired the police chief, saying the NRA and bar owners wanted him out. Then in court, she swore she said no such thing. She has also misrepresented herself on the subjects of the Bridge to Nowhere and earmarks.

Is this the reformer McCain is telling us about? Of course, his record for truthfulness has tanked in the last three months.

Tuesday, September 23, 2008

McCain and Palin Have Big Advantage in Debates

The debates are misnamed. They are simply joint appearances that do not accomplish what should be accomplished in real debates.

Who can forget what happened when Al Gore smirked at George Bush's multiple displays of ignorance. Most people identified with Bush. He was just like them.

The classic was when Ronald Reagan covered a multitude of stupid statements--including one about welfare queens, with "There you go again." That did it; he won. Never mind that he repeatedly said that trees cause air pollution.

Governor Palin will go into the debate with Joe Biden after her spin people have been projecting very low expectations. In truth, she knows far less than Reagan, but she shares his Teflon cover, is instinctively a master pol, and is a superb communicator.

Her views on foreign policy are very close to those of the ordinary American, and my guess is that Joe comes in at a substantial disadvantage. He knows that nothing is simple and is burdened with experetise and information.

Yesterday, she took out the flamethrower to discuss the Iran question saying anything must be done to prevent the "Nuclear Holocaust" that would result of Iran got the bomb and gave it to Hezbullah. That kind of toughness resonates with people who think we are not tough enough with potential enemies. The simple fact is that her rhetoric will impede efforts of a McCain administration to do anything with Iran outside the ham-handed use of force.

She obviously decided that the five former Secretaries of State who spoke out on the matter a week ago were completely wrong. All she has to do is turn on her charm and use her superb talents as a communicator, and she will come out the winner.

I have great affection for Joe and know a little about the careful education he received in foreign affairs long before going to the Senate.

He knows that the present policy of hot rhetoric, threats, and sanctions will not work. He also knows that Iran can easily cut off a large part of the flow of oil. An attack on Iran would recruit even more terrorists and damage our relations with the moderate Arab states. But he dare not say much about any of this for fear of putting off the ordinary viewer and sounding weak.

He has to sound tough on Iran and say needlessly harsh rhetoric will make it hard to try to reengage Iran, possibly bringing war and oil shortags closer.

First try to slowly reengage them. They need respectability, restored trade, better relations with the West, and better relations with the moderate Arab states. Hence, we try to help them were we can in return for an end to a nuclear program and efforts to bring Hezbullah into the political process in Lebanon, which would help us and Israel.

Even that much is too complicated. People skilled in communications will have to help him tone it down and keep it short.

Mc Cain too has the advantage over Obama for the same reason. Mc Cain knows a little more than Sarah and is excellent at very short statements that sould tough.

But he only knows a little bit more Palin and it seems a little less than Bush. He will clearly be an even worse foreign policy president than the incumbent.

The list of his inaccuracies and misstatements is endless. He thinks Iraq and Pakistan have a common border. He thinks Al Qaeda operatives are trained in Iran. He thought oil revenue would pay for the war. He said it would be over in a hurry. McCain still thinks withdrawl will put Al Qaeeda in power in Iraq. He cannot grasp that worrying about the lack of a political settlement is not the same thing as suggesting the surge was not a complete success. The list goes so far that one really wondeers if he is still mentally fit for the presidency.

Obama has to be careful not to raise too many of these mind-boggling inconsistencies or he will seem to be attacking a tired old national hero.

Monday, September 22, 2008

Who Can Believe McCain Can Manage Our Economy?

Four months ago, John McCain was bragging that Ameericans were better off under George W. Bush than under Clinton.

Now John McCain says he will reregulate the banks and financial institutions, after 26 years to voting to deregulate them. But he makes no apology for helping to cause this crisis, particularly in his support of two pieces of Phil Gramm legislation in 1999 and 2000.

After his many flip flops and panic last week to come up with winning opinions on the economy, who can believe he is fit to steer our economic other than people blinded by the cultural wedge issues or race?

Sunday, September 21, 2008

McCain's Big Contribution to the Financial Crisis

Threatened by a likely meltdown of financial markets, Congress is moving moved toward a massive bail-out that could cost more than a trillion dollars. A small part of the problem is the sub-prime loans. The big problem is how they were marketed.

The threatened disaster is largely the result of efforts to weaken economic regulations that were put in place under Franklin Roosevelt to protect us from another depression. Former Senator Phil Gramm of Texas was the architect of this wrecking operation, and he had the enthusiastic support of his friend and sidekick, Senator John McCain. The Arizonan admits that he knows little about economics but incessantly brags that he isd a big deregulator.

Gramm crafted the most important legislation that opened the door to the unsafe practices that led to the housing disaster and placing 3,000,000 homes in danger of foreclosure. Phil Gramm’s Financial Modernization Act of 1999 gutted the Glass-Steagall Act, which was designed to protect our financial institutions. It removed the firewalls the New Deal had placed between securities firms, banks, and insurance companies. This led to a wave of mergers. Some say this act unleashed an epidemic of speculation that led to the bursting of the current speculative bubbles. As head of the Senate Banking Committee, Gramm had repeatedly turned down requests from the Securities and Exchange Commission to hire more people to investigate securities fraud.

Gramm’s Commodity Futures Modernization Act was a 261 page “Enron Clause” that was added to a huge omnibus spending bill December, 2000. Enron Corporation wanted this legislation and Gramm’s wife , Wendy, soon joined the Enron board. The act destabilized the California energy market. By deregulating energy markets, it paved the way for the Enron scandal and opened the door for abuses in energy trading, and accounts in part for high gas process. It also deregulated the trade in derivatives, which is based upon all the new debt instruments that Warren Buffett “financial weapons of mass destruction” designed by “madmen.”

Gramm’s deregulation made it possible to buindle sub-prime mortgages into a new form of security, thus hiding the problems with individual mortgages. Credit card accounts were also “securitized.”

Gramm is now a vice president and lobbyist for USB, a corporation that lost over 3o billion dollars this year. He is also co-chairman of the McCain campaign and Mc’s chief economic advisor. Analysts frequently mention Gramm as a likely Secretary of the Treasury under a President McCain. The Arizonan backed Gramm for president in the 1996 primaries.

The current crisis is so threatening that it forced the Federal Reserve Board partly back away from its main mandate—preventing inflation.

In truth, the precedent for bailing out failing firms was set by Jimmy Carter with the rescue of Chrysler in 1979. It promulgated the idea that investors in huge entities should be protected by the taxpayers. Carter also had a weakness for some market fundamentalist ideas and deregulated the airlines, which has led to all sorts of problems even before the great increase in energy prices . The truth is that there is a minority of Democrats in Congress who were smitten with some Republican notions, and their votes helped put in place policies that caused today’s economic downturn. Most of Democrats have learned how much harm their cooperation with Republican economics has brought. A large problem trouble is that John Mc Cain clings to these disastrous economic policies that do so much harm to rank and file Americans.
In the Reagan-Daddy Bush years, there were a few big bailouts in the mid-eighties and then the collapse and bail outs of hundreds of savings and loans and commercial banks under G.H.W. Bush. Most of this was due to a very lax regulatory atmosphere. It was a time when conservatives and some Democrats were attacking regulations as unproductive and unnecessary. Savings and Loan institutions were buying junk bonds and engaging in other unsafe practices, and Edwin J. Gray, chairman of the Federal Home Loan Board, tried to reign them in.

Charles Keating, president of Lincoln S & L in California took on Martin and tried to persuade President Ronald Reagan to put three Keating friends on the board. John McCain , a friend of Keating since 1981, worked hard lobbying Reagan. They managed to get one appointment. Mc Cain accepted $112,000 in contributions from Keating, and Cindy McCain and her father were permitted to invest $350,000 in a promising Keating shopping center. The Mc Cains enjoyed 9 vacations at Keating’s lush place in the Bahamas with Keating providing the transportation.

Eventually the board started looking into Keating’s business practices, and McCain fought hard for Keating, insisting that Gray have nothing to do with the investigation. In 1987, McCain rounded up four other senators, “The Keating Five” who started putting heavy pressure on the Federal Home Loan Bank Board to drop its probe. Keating was eventually sentenced to five years in prison. Mc Cain and John Glenn, both celebrities,
Got off with criticisms from the Senate Ethics Committee for poor judgment. Even then , John McCain has a superb public relations operation and succeeded in painting himself as the enemy of lobbyists. The fact is that he has not changed, and recently was involved in very heavy handed bullying of the FCC to bend the rules in favor of a contributor.

Mc Cain is now making vague charges about Obama being responsible for the financial meltdown because of vague ties to lobbyists. McCain’s campaign is loaded with lobbyists and he has a track record of doing their bidding. But this is only a tangential issue. The financial markets got into deep trouble because of legislation McCain championed that stripped away safeguards that were put in place under Franklin D. Roosevelt.

If the nation does not turn its attention to restoring and improving these safeguards, we will be looking at ever larger bail-outs down the road.