Econ-Recon: September 2008: Archives
We're in uncharted waters with a leaky boat and a storm on the horizon...but the GOP wants us to know that Nancy Pelosi is a mean-spirited partisan.
Let me see if I can get this straight. The Republican president of the United States sends the Secretary of the Treasury and the Federal Reserve Chairman to Capital Hill with a message of impending economic doom...asking the party in power to put aside partisanship and pass necessary legislation.
The party in power (Democrats) holds its nose and puts together a bill premised upon the gravity of the situation, endures John McCain's grandstanding at the eleventh hour, allows him to characterize his involvement as critical to the success of the process, spends hours meeting with those in the GOP who want to amend the bill, comes to an agreement on a bill the GOP leadership can support, and then brings the bill to a vote.
In that vote, over sixty percent of Democrats support legislation that was requested by the head of the opposition party, two thirds of the presidents fellow Republicans jump ship and oppose the bill, and the GOP house leadership wants Nancy Pelosi and the Democrats to shoulder the blame?! Well there you have it...nothing illogical about that, right?
Frankly, I've personally reached the point at which I'm opposed to any attempt to glue what remains of our failed government back together. Unless and until politicians are held accountable for the consequences of their actions, I'm in favor of pulling the rest of the metaphorical china from the cupboard and smashing it all on the floor. I say as much because I don't think anything will change until the American public is forced to face reality...even if that means standing in line for a loaf of bread and a bowl of soup.
Look, let's be honest as to what all of this GOP partisanship is about. From their self-serving perspective, it's power and money...and they're willing to do whatever it takes to obtain both. Voters, on the other hand, have allowed themselves to be drawn into an ideological struggle to define morality. Taken together, this is the underlying formula for the disaster we're witnessing.
Instead of a candid discussion on the merits of rescuing our financial structure, the political combatants have spent years defining our differences in terms of good versus evil; right versus wrong. While voters blindly engage in this theoretical tug of war, the real battle for dominance is waged in the trenches...replete with lobbyists looking to commit larceny in tandem with their trusted troopers...the political elite.
The unseen metrics of today's maelstrom center upon the pursuit of profit. Those house Republicans who opposed today's legislation tell us they are concerned about main street. In truth they, in concert with their corporate benefactors who want the government to insure their success without foregoing the profits that may eventually result from the government's intervention, see main street as a peripheral player.
Let me explain. If the bail out takes the current form, the companies that avail themselves of it will have to forego the upside of the very assets that have made them a ton of money during the housing bubble and now leads them to the edge of financial ruin. Conversely, if the legislation is structured as an insurance mechanism, they receive the financial assist they need without foregoing the future profits that may ensue with the passage of time and an improved economy.
In other words, house Republicans are carrying the water of Wall Street while telling us they're looking out for the interests of taxpayers. You see, one need only look at the proposal that came from the Bush administration...a virtual blank check to assist their wealthy benefactors...to understand their intentions. Only when the legislation, as modified by the Democrats and a handful of Republicans, became apparent, did the GOP revolt materialize. It did so at the behest of their capitalist (and opportunist) friends who stood to see their profit potential handed over to the American taxpayer.
Don't be fooled...the motivation of many in the GOP, who voted against this bill, has little to do with those of us living on Main Street. The proof is found in today's vote...and the reality that a bail out is inevitable. The acrimony simply centers on who gets the lion's share of the benefit.
In fact, I expect the gap between the two side will grow as the Democrats push for limitations upon corporate hand outs and insist upon provisions designed to allow taxpayers to recoup the money they dole out as well as the profits it may facilitate. At the same time, look for house Republicans to seek to structure the deal so that taxpayers bear all of the risk without reaping any of the profits...or limiting the compensation executives can receive. No doubt their rhetoric will suggest that they've minimized the taxpayer's exposure, when in truth, they've sought to maximize corporate autonomy and profitability. Not a bad strategy given the voting public's overwhelming displeasure with the bail out.
That brings me to the vehicle by which the GOP has been able to prosecute the pilfering of the public. In my opinion, their success has come from characterizing this country's political divide in terms of values while subverting any meaningful awareness of economic inequality. As such, I believe this illuminates the importance of driving a wooden stake through the heart of the ideologues who have hijacked the Republican Party and finally putting an end to their cynical symbiotic alliance with religious conservatives. This country will only find its bearings when the primordial goals of governance are a sound economy and a commitment to the principles that come with an adherence to freedom, equality, and the necessary separation of church and state.
Yesterday, in the midst of an economic crisis, the Alliance Defense Fund carried out it's plan to breach this separation by encouraging churches to participate in "Pulpit Freedom Sunday"...a move to fully politicize faith and push the imposition of values as the primary political objective. Hence, the wooden stake needs to be long enough to inflict a fatal blow to this ill-conceived assertion that Biblical law should supersede our foundational doctrines. Further, there can be little doubt that the selection of Sarah Palin as John McCain's running mate is the final act in this flawed farce.
Truth be told, the strategy of the GOP's hierarchy is a death spiral. Each time they anoint a candidate willing to lead with the morality meme, they push aside those politicians in the party who are still motivated by prudent conservative political principles. It becomes a go along to get along construct and traditional conservatism is one of its primary victims. If a Republican politician wants to climb the ladder, he or she must first don the dogma and internalize the ideology. In doing so, they simply become caricatures of the voters they violate...and the deceitful dumbing down is institutionalized. In the end, this approach reduces leadership to an expediency equation and undermines the party's historical identity as well as its future viability.
Look, I have no interest in excising religion from our culture...I simply believe it must remain a personal construct; not a political platform. Yes, it is impractical to expect that religion refrain from influencing one's political preferences. Notwithstanding, we're perilously close to allowing it to contradict our core constitutional constructions and divorces us from relevant realities and the rationality to distinguish democracy from dogma.
Government cannot and should not be a surrogate for the saving of souls. Instead, government must provide the structure that allows the soul to be sovereign and the nation to be neutral. As it now stands, the pulpit is being used to provide cover for the pursuit of profit. Perhaps clarity can be achieved without catastrophe. At the moment, that seems unlikely as far too many voters have accepted the ethereal at the expense of the essential. The infectious nature of this illegitimate and intransigent ideology is on the verge of metastasizing. Should this utterly calamitous cancer be allowed to stand, the country may not.
Tagged as: 2008 Election, ADF, Alliance Defense Fund, Ben Bernanke, Church & State, Corporate Corruption, Democrats, Evangelicals, GOP, Hank Paulson, John McCain, Main Street, Nancy Pelosi, Religion, Taxpayers, Voters, Wall Street
Daniel DiRito | September 29, 2008 | 2:04 PM |
| Comments (3)
Best as I can tell, John McCain and the term "maverick" is simply another way of describing the "cowboy diplomacy" we've endured for nearly eight years under George W. Bush. The move by John McCain to suspend his campaign and race to Washington on his white horse is all too familiar. The only distinction that remains between these two men is that John McCain has yet to find his "dead or alive" moment.
Frankly, McCain's antics are reminiscent of an impetuous and aged diva demanding one last leading role...despite the fact that his sphere of influence has waned and he can no longer deliver his lines coherently...let alone a last minute deal. The degree of miscalculation on the part of McCain is astounding...and informing.
To understand the magnitude of his tin ear, one need look no further than the brick wall he encountered upon his descent into Washington. While McCain imagined himself as the negotiator in charge, his Republican congressional counterparts were moving towards full-scale mutiny. A moments perusal of the alternate proposal offered by a number of conservative house Republicans provides ample evidence of the disconnect.
Here's the bullet points directly from the House GOP plan:
- Rather than providing taxpayer funded purchases of frozen mortgage assets, we should adopt a mortgage insurance approach to solve the problem.
- Currently the federal government insures approximately half of all mortgage backed securities. (MBS) We can insure the rest of current outstanding MBS; however, rather than taxpayers funding insurance, the holders of these assets should pay for it. Treasury Department can design a system to charge premiums to the holders of MBS to fully finance this insurance.
- Have Private Capital Injection to the Financial Markets, Not Tax Dollars. Instead of injecting taxpayer capital into the market to produce liquidity, private capital can be drawn into the market by removing regulatory and tax barriers that are currently blocking private capital formation. Too much private capital is sitting on the sidelines during this crisis.
- Temporary tax relief provisions can help companies free up capital to maintain operations, create jobs, and lend to one another. In addition, we should allow for a temporary suspension of dividend payments by financial institutions and other regulatory measures to address the problems surrounding private capital liquidity.
- Immediate Transparency, Oversight, and Market Reform. Require participating firms to disclose to Treasury the value of their mortgage assets on their books, the value of any private bids within the last year for such assets, and their last audit report.
- Wall Street Executives should not benefit from taxpayer funding. Call on the SEC to review the performance of the Credit Rating Agencies and their ability to accurately reflect the risks of these failed investment securities.
- Create a blue ribbon panel with representatives of Treasury, SEC, and the Fed to make recommendations to Congress for reforms of the financial sector by January 1, 2009.
OK, one can view McCain's misguided judgment from two perspectives. First, one could speculate that McCain believed he could go to Washington and convince these house Republicans to abandon their ill-conceived alternative...a goal fully contrary to the tenuous relationship he has had with the conservative wing of his party. Secondly, one might assume that McCain thought he could convince those who had been working to craft an acceptable revision of Secretary Paulson's proposal to abandon it and embrace a brand new approach.
By any rational calculation, neither of these goals were plausible. The fact that John McCain admitted on Tuesday...one day before suspending his campaign...that he hadn't even read the three page Paulson proposal only magnifies the seeming suspension of judgment. With that said, it's even hard to imagine the basis upon which McCain felt his ploy could succeed.
Notwithstanding the above, there is another possibility...one that is far more concerning. That explanation is that the house revolt was part of an orchestrated performance intended to raise the stakes and allow McCain to be seen as the taxpayers white knight rushing in to champion the introduction of a new plan at the eleventh hour and rescue us from the excesses of government intervention. Yes, part of me finds this hard to imagine since today's outcome seems to have failed to demonstrate that McCain has played any pivotal role in reaching or reshaping the agreement that will ultimately be approved.
Regardless, I realize the GOP believes they can once again dupe the voting public into thinking they have our interests at heart. It's my hope that this latest stunt will elicit what will eventually be seen as the defining phrase of this campaign, "Give me a frickin' break". If so, it will be the pivotal moment in the rejection of a fully flawed economic philosophy.
Returning to the above proposal from the house Republicans, I want to highlight a couple points. The premise of the plan is intended to suggest that taxpayers shouldn't foot the bill for the bail out. On its surface, this is a noble endeavor. Unfortunately, the means they propose to achieve this objective is to remove what little regulatory oversight exists and grant further tax breaks to Wall Street. Essentially, the goal is predicated upon the belief that unbridled greed will lead the financial markets to dig their way out of a mess that was created by that very unbridled greed.
The plan completely fails to recognize the immediacy of the need for capital. In this convoluted approach, it will take a tremendous amount of time for the players to raise capital and it does nothing to identify the worthless paper, those who are holding it, and the means to remove it from the equations that facilitate the flow of money from those who have it to those who need it.
The lending bottleneck we're facing is partially predicated upon uncertainty. That uncertainty comes from fears about the solvency of other financial institutions and the reticence it creates. Until there is more transparency in the balance sheets of the players and their uncertain liabilities are purged, the skepticism will continue and the motivation to lend money won't exist.
One must also recognize that the addition of an insurance mechanism provides little motivation to correct flawed lending practices. In many ways it provides an endless means to create and dump ill-advised debt. If lenders believe the government will insure whatever paper they write, where is the motivation to stop writing bad paper? To do this, all they have to do is pay the insurance premiums. To pay those premiums, all they have to do is add it to the costs that borrowers will pay...borrowers who are taxpayers. Hence, this model simply encourages the financial industry to do more of the same...and to pass the costs onto the public.
In the end, the proposal is laughable...but that leads me to identify the sentence that best expresses the fundamental objective of this approach...unrestrained profits for the wealthy.
Wall Street Executives should not benefit from taxpayer funding.
Note how this sentence is crafted...especially what it does and doesn't state. By realizing that one of the prevailing voter criticisms of any bail out is focused upon exorbitant executive compensation, the house Republican proposal states the obvious. What isn't stated is that this is to be achieved not as a means of restrictive oversight...the kind that was intended in the plan that was already being negotiated...but by the construction of their plan.
You see, they are proposing the insurance route in order to allow them to suggest that it isn't a taxpayer funded mechanism. If they can argue that their plan isn't directly funded by taxpayers, they can make the kind of equivocal statement contained in the above sentence...while still allowing corporate executives to pay themselves whatever they choose. In other words, they achieve the intent of this sentence not by restriction or oversight; but by claiming that the program isn't taxpayer funded. It's little more than white noise intended to distract.
What they don't tell us is that the entire reason for their insurance approach is to prevent the kind of regulation and oversight contained in the other plan...the kind of regulation that might place limits upon the unbridled greed that led us into this fiasco.
At the same time, the premiums for this insurance approach will be paid for by those who borrow money...the taxpayer. Simultaneously, it still puts the government on the hook for the inevitable failures that will continue to happen under the insurance umbrella...but it doesn't restrict the pursuit of outrageous profits.
Imagine if you could start a business whereby you could arbitrarily charge your customers for the cost of the premiums to have the government insure your ongoing success and profitability. You get to sell whatever products you determine will return the profits you want, allow yourself to take the executive compensation you choose, and then have the government stand behind it all if you fail.
When it's all said and done, this alternate proposal is little more than the culmination of nearly thirty years of seeking to enrich the wealthy at the expense of the hard working middle class. In this final hour, they continue to cast their efforts as an attempt to help the taxpayers...all the while plotting the culmination of a plan that will insure that those who have wealth will always have wealth. This alternate proposal is characterized as the means to avoid socialism. Instead, it is the final step towards plutocracy.
If they succeed, voters will have facilitated a strategy that was premised upon the belief that the dumbing down of America could be achieved in the course of a single generation. This election is undoubtedly about change. On the one hand, it will be the final step over the finish line for those who have run a marathon of misdirection and manipulation. On the other hand, it can be the first step in many years towards restoring the intent of representative government...power to the people.
The notion of white light has two prevailing meanings...one posits it's what we experience as life comes to an end...the other suggests it's what we see at the end of a dark tunnel. The 2008 election will either be the end of life as we've known it or it will be the moment at which we found our bearings and began our march towards a better place.
Perhaps this is actually our "dead or alive" moment?
Tagged as: 2008 Election, Barack Obama, GOP, House Republicans, John McCain, Main Street, Politics, Taxes, Wall Street
Daniel DiRito | September 26, 2008 | 8:24 AM |
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In the following video, The Onion has a little fun with John McCain's marriage to a wealthy beer heiress...suggesting that the McCain economic plan involves encouraging taxpayers to find and marry an heiress of their own. McCain argued that doing so is a sure way to achieve economic security.
Unfortunately, the McCain team stopped short of assuring taxpayers that marrying an heiress would guarantee the ownership of seven homes, thirteen automobiles, and a personal jet. Though unspoken, there seems to be an inference from the McCain camp that those added benefits would only be available to former POW's.
There was no word on whether additional perks would be made available to those who dump their current spouse in favor of an heiress.
Tagged as: 2008 Election, Humor, John McCain, Satire, The Onion
Daniel DiRito | September 23, 2008 | 7:37 PM |
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The more I see and hear about the bail out of Wall Street, the more I oppose it. Here's the issue. Taxpayers are being asked to ante up for the good of the nation...and to do so with minimal information and even fewer details. At the same time, the White House is suggesting that any limitation on executive compensation may lead companies to decline participation in the program. I'm calling B.S. on this one.
From The Washington Post:
After 7 1/2 years of drift, President Bush has finally returned to his compassionate conservative roots with a heartfelt plea to Congress to help a needy and deserving group: those Wall Street CEOs who, for all their hard work, have been unable to lift themselves up by their wingtips.
Treasury Secretary Hank Paulson (R-Goldman Sachs) made the rounds of the talk shows on Sunday, pleading for financial executives to be allowed to keep their multimillion-dollar compensation packages even if their companies need to be rescued by the $700 billion federal bailout.
"If we design it so it's punitive and so institutions aren't going to participate, this won't work the way we need it to work," Paulson, whose net worth is said to be north of $600 million, told Chris Wallace on "Fox News Sunday."
"To have this program work, we don't want to make it punitive and make it difficult," Paulson advised George Stephanopoulos on ABC's "This Week."
It was a message of mercy and humanity -- who, after all, would be so cruel to deny executives their eight-figure bonuses merely because they drove their companies into insolvency? -- and administration officials and Republican lawmakers joined the cause of the unappreciated CEOs.
Give me a frickin' break...just how stupid does the Bush administration think we are. Further, if this isn't a ploy to manipulate voters, just how damn stupid is the Bush administration? Let's look at the logic.
First, if we assume that Wall Street is perilously close to collapse, then they need our help, right? Second, if they aren't willing to accept our demands for fair executive compensation, we have every right to deny them our help. Thirdly, if they have the ability to forego our help in favor of their huge compensation packages, then they aren't in that bad of shape, right? Fourth, if these companies can put their self-serving interests first, why in the hell should voters forego theirs in order to bail them out. Fifth, if the Bush administration can't reach these same logical conclusions, then they have no business managing a lemonade stand...let alone the largest bail out in U.S. history.
Honestly, it's time for voters to call the bluff of the administration that drug us into this mess. If we're going to get screwed, let's get screwed on our own terms. There is no plausible rationale to grant unlimited authority to the very people who pushed us into the financial abyss. Beyond that, there is absolutely no justification to take an unwanted screwing, write a huge check for it, and thank the Bush administration for putting it to us.
Truth be told, we have no assurances that this bail out will work. For two years, the Bush administration has told us the economy is sound and that we aren't in a recession. Two weeks ago they assured us that the Fannie Mae and Freddie Mac seizure was the answer to our problems. In short order, they bail out AIG after telling us the bail outs were over and these companies needed to seek their own solutions. Days later we're told the sky is falling and we need to bend over.
No way...no how...I'm happy to let it burn to the ground before we give Wall Street a free pass. As they say, beggars can't be choosers. If they want more of our money, it's on our terms or to hell with them. Let's see who blinks first.
ONE ADDITIONAL POINT:
We're hearing a number of insiders suggest that homeowners bear some responsibility for this predicament. The argument contends that too many of us bit off more than we could chew. OK, I'll accept that there's some truth to that contention...but it isn't the whole story. The whole story needs to consider the fact that the average American has spent the last seven years working harder and producing more...for less money.
The fact of the matter is that millions of Americans gambled on the historical data that home prices will rise. When they did, many of them did so because they needed money and the only means available to obtain it was to borrow against the equity they thought they had in their homes.
Yes, that may have been shortsighted and imprudent...but so too is it detestable that our elected officials failed to be good stewards of the economy. The Bush tax cuts for the wealthiest Americans didn't trickle down...and the few jobs that were created weren't enough and they weren't higher paying jobs. Instead, far too much of the Bush tax package was invested in high risk financial gimmicks designed to create easy profits.
If we're going to assess blame, then let's not forget where the bulk of it belongs. It belongs squarely on the backs of those who have promoted a morally bankrupt economic philosophy that concentrates wealth in the hands of the few at the expense of the hard work of the many.
There's one additional saying that applies to the current situation of our greedy cash chasing countrymen..."bet 'em high and sleep in the streets". All that's left to be said to our Wall Street friends is, "Welcome to Main Street...and don't forget to bring some cardboard boxes and a warm blanket".
Tagged as: AIG, Bail Out, Economy, Fannie Mae, Freddie Mac, George Bush, Hank Paulson, Wall Street
Daniel DiRito | September 23, 2008 | 2:45 PM |
| Comments (4)
Every now and then, one encounters words of utter clarity. Such is the case with Paul Krugman's observations in the aftermath of John McCain's infamous statement, "The fundamentals of our economy are strong".
From The New York Times:
Aha. I'm gathering, from my reading here and there, that most people don't know that Herbert Hoover famously declared that the "fundamental business of the country" was sound. (Can it be "famously" if most people don't know it? Never mind.)
That partly explains why Republicans seem eerily compelled to echo Hoover; they don't know what it makes them sound like.
Of course, Hooverism without the word fundamental would still be, um, fundamentally the same.
The only thing I can add to Krugman's astute observation is the following tongue-in-cheek graphic, which takes this and this into consideration.
Tagged as: 2008 Election, Economics, George W. Bush, Herbert Hoover, John McCain
Daniel DiRito | September 22, 2008 | 6:55 PM |
| Comments (1)
Conventional wisdom would suggest that Americans should be heartened by the plan to stabilize the struggling financial industry. We Americans like action as it soothes the angst created by a stock market in free fall, a housing industry in the tank, a shrinking supply of job prospects, and a general sense of uncertainty as the 2008 election approaches.
As much as I've tried, I simply can't find the reasons for optimism. Frankly, it has all the feel of the death of a loved one...that unease one has in the pit of one's stomach...an eery recognition that the die have been cast and there's nothing that can be done to change the trajectory. At times like this, it's not unusual to grasp at straws...playing games with ourselves in the hopes of turning back the clock and washing away the events we find so troubling. Unfortunately, that isn't going to happen.
As I've attempted to make sense of my own thoughts, I kept coming back to the thoughts of death and the steps psychologists tell us we go through to deal with the grief it brings. If one ascribes to this theory, the first step is denial. Truth be told, I find that an apt description of where we're at. Rather than focus on our loss, we point our thoughts towards the proposed bail out. In fact, I suspect there is comfort in the sheer size of the endeavor...so much so that the bigger it is, the better we may feel.
It's akin to sitting in a chair while mom consoles us and applies a bandage to cover our skinned knee...only in this case the injury is far more serious and the salve is far more ethereal. I suspect it will take time for us to adjust our mindset...a mindset that's been carefully crafted over a number of years with the rhetoric of rah rah...rhetoric that tells us we live in the promised land...that we can do no wrong...that we will prevail because it is God's will...that our actions are inevitably and invariably enlightened.
Yes, we're the nation that survived a civil war, the nation that overcame the great depression, the nation that won two world wars, the nation that promoted democracy to the detriment of communism, and the nation that has been the envy of the world. In as much as history predicts the future, we Americans have an expectation that tomorrow will simply affirm yesterday and all will be well. Unfortunately, our optimism is predicated upon ignoring the historical plight of virtually all other societies.
I'll recount a story I've told many times...since this may actually be the moment at which its full magnitude can best be understood. When I was in high school, I had a Social Studies instructor who was quite the character. In fact we called him Wild Bill. He was a colorful man who was well-traveled and full of stories one might expect to find in a Hemingway novel. At the same time, he possessed a keen understanding of the big picture...one of those thinkers who could quickly make sense of the obscure and connect all of the dots.
One day, while I was seated in his class, he proceeded to impart some of his insights, and for whatever reason, the sheer significance of his hypothesis was seared into my brain. As he spoke of the world and the interactions of societies and nations, he paused, as if to question whether he should allow his thought to escape his lips...and then as one would expect, he let rip the following, "The day is coming when the wealth we have in the United States will be challenged. At some point, the family in South America or the family in Asia is going to say, 'we want a refrigerator too', and the intertwined nature of the world will force us to address their demands. The disparity that exists today cannot be sustained forever."
In retrospect, it's difficult to know the basis for his prescient thought. My own suspicion is that it was a combination of recognizing the advantages of being an American traveling in a world filled with poverty and his own appreciation for the excesses that are an integral part of human nature. In other words, I think he was sure that our freedom and our wealth would not go unnoticed as we Americans traveled the world and allowed others to witness the essence of the American dream and seek to make it their own.
Returning to grief, I would suggest that the denial we're experiencing is, in fact, predicated upon our first recognition of Wild Bill's prediction...the moment at which the rest of the world has made its demand for a refrigerator. Yes, it's been building for a number of years...but not in a manner that slaps us in the face and says wake up. One need only look at the globalization of manufacturing, our shift towards a service economy, our inability to supply our ever expanding energy needs, our growing reliance upon imports, and our inability to compete given the fact that our standard of living (wages) must be factored into all of our transactions with the rest of the world.
So where does this leave us today? Well, if one accepts the validity of the grief model in explaining our current predicament, we're barely beginning our march towards the final stage of our journey, acceptance. Right now, 700 billion makes us feel better because it is the language we understand...a money driven construct. Unfortunately, we're still attached to the notion that the dollar can dictate value to the rest of the world...and while that may well be a valid view, it remains to be seen for how much longer.
Optimists like to point to the debt ratio of other nations in order to dismiss the significance of this bail out and our unrestricted deficit spending. However, the fact that we've doubled our debt in eight years can't be ignored. At some point, the advantages the dollar has afforded will no longer exist and the more debt we assume, the sooner it will erode.
You see, it isn't just 700 billion for Wall Street...it's 700 billion annually for importing oil...it's half a trillion and counting for an endless war...and it's entitlement programs that cannot be sustained. Even more concerning, it's a housing market that may never again be the primary wealth creation mechanism for the average American. Absent this key component, the engine of the American dream may have eclipsed its life expectancy.
I suspect one could reasonably argue that the last seven years prove as much. Truth be told, the money that has kept our economy from acknowledging the shadow of a global reality came from artificial interest rates that allowed Americans to keep spending by borrowing against their expanding, though contrived, home equity. As the world waits to see the shake out, there is little reason to believe that confidence in the American economy will be fully restored. As the inevitable autopsy is completed, the endemic toxicity of our superficial economy will cause a shift away from contact with the infectious dollar.
As we move into anger, the second stage of grief, we will likely face our greatest test. Try as we might, blame will come with anger and there will be calls for accountability as we cling to our hopes of preserving the American dream. As we watch the world advance around us, the heat of our anger will eventually give way to a cold reality...a reality that will put ice in the lemonade of our global neighbors...and leave us wondering if we can stand the bitter bite of the lemons we're left with.
Look on the bright side...if we survive this most sour sojourn...there's only three more steps to navigate - bargaining, depression, and acceptance.
Tagged as: 2008 Election, American Dream, Death, Economics, Globalization, Main Street, Wall Street
Daniel DiRito | September 22, 2008 | 12:23 PM |
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While the details haven't been disclosed, it appears that the powers that be are considering a plan to bail out Wall Street...in a big way...on the backs of the American taxpayer. Troubling as this sounds, it may be the only viable solution. Regardless of the eventual solution, one thing is clear, the losses will be large.
I want to focus on an analysis of the aftermath and the philosophy that led us to this point. I want to do so because I lived through the Savings & Loan scandal and I've been convinced for more than two years that the housing bubble, the artificially low interest rates, the lack of proper oversight, and the associated paper "equity" borrowing it fueled would lead to this type of meltdown.
Having established this backdrop, I want to make the case for driving a stake through the heart of trickle down economics, tax cuts for the wealthy, and the meme that the "tax and spend" Democrats are fiscally irresponsible.
Here's the deal. The existence of large sums of money in the U.S. economy is a given...it has always been there and it will likely continue to be there (though eight years of GOP malfeasance will make digging out from under the enormous debt a formidable obstacle). With that said, we must begin to consider politics and the inevitable debate about what we will do with the money.
By and large, the party that succeeds in holding power and driving public sentiment gets to decide where the money goes. Without a doubt, the GOP has won this battle for the better part of the last thirty years. In doing so, they have succeeded in attaching the "tax and spend" label to the Democrats...driven primarily by highlighting the Democrats desire to fund and insure existing safety net programs (Social security, Medicare, Welfare, and Unemployment benefits...as well as expand others (Healthcare).
At the same time, the GOP has chosen to foster an economic structure that is weighted towards large corporations and the wealthy. Part and parcel of this approach has been the undermining of labor unions, the refusal to increase minimum wages, the willingness to ignore the huge number of uninsured, allowing the influx of illegals to provide cheap labor, and a willingness to accept the growing divide between the haves and the have nots.
So let's step back for a moment to the S & L scandal (the late 80's, early 90's)...the last instance when profits were privatized and losses were socialized. Rampant real estate speculation and a lack of regulation of the financial industry made a number of investors very wealthy while saddling taxpayers with approximately 123 billion dollars of debt. As an aside, it should be noted that numerous investors were building commercial properties and apartments with no intention of ever managing them...they were simply milking the unregulated financial system.
Now let's take a look at the GOP's objections to any form of universal healthcare put forth by the Democrats. The argument suggests that it would cost anywhere from 60 to 100 billion dollars annually. At the same time, it must be noted that the Bush tax cuts enacted in 2001 have been projected to cost 2.5 trillion dollars over ten years...and we're also spending approximately 120 billion dollars annually on the war in Iraq. As to the costs of the current Wall Street bail out, it's difficult to determine the damages. For the sake of this argument, I'm going to estimate that the final tally will approach a trillion dollars.
Now lets calculate the total dollars these items represent. If we assume that only half of the tax cuts were unwarranted (they went to the very wealthy), we have 1.25 trillion. Let's add in 600 billion for five years of the Iraq war (we're being conservative). That leaves the 120 billion lost on the S & L scandal and the trillion dollars we're assuming will be lost on the Wall Street meltdown. Taken together, this totals just under three trillion dollars.
OK, now lets see how many years have passed since the S & L scandal. We'll use 1985 as our start date (again we're being conservative), which equates with 23 years. For this exercise, we'll go ahead and round that to 25 years.
If we take our 25 years and assume it would have cost 100 billion dollars per year to fund universal healthcare, that brings us to a total of 2.5 trillion dollars. Note that the use of 100 billion per year is also an extremely conservative number as it would have been far cheaper to provide in the earlier years.
As you can see by a simple review of the numbers, we had enough money to fund universal healthcare for the last 25 years...with nearly a half trillion dollars to spare. Unfortunately, we didn't have universal healthcare. Instead, those of us that have had healthcare insurance, paid for it for 25 years...and we also received a meager tax cut for the last seven years. If you look at the total dollars the average family received in tax cuts for these seven years, I suspect one would be lucky if it would have paid for three or four years of healthcare insurance (we're completely ignoring the deductibles and copayments).
So if we look at the rhetoric of the GOP for the last 25 years, they want us to believe that any consideration of universal healthcare would have been irresponsible. They've repeatedly told us that the Democrats would raise taxes and spend money we didn't have...on programs we couldn't possibly afford.
However, if we look at the numbers above, the only thing we received for supporting this philosophy for managing our government's finances (our money), was minimal tax cuts...promised nearly every election cycle (surprise, surprise?). At the same time, those in charge squandered three trillion dollars of our money on tax cuts for the extremely wealthy, an unwarranted war, and two episodes of enabling unregulated and painful financial disasters.
In the end, you can slice it any way you like...but you can't disregard the fact that the money was there to provide universal health care...or any number of other programs designed to benefit all Americans. In the interest of being fair, all of the blame can't be placed on the GOP, since the Democrats went along with many of these ill-advised expenditures...or the policies that enabled them.
Regardless, it's also true that the Democrats frequently did so because voter sentiment demanded it. In other words, voters bought into the rhetoric that the GOP would let us keep more of our money and the Democrats would undoubtedly take more of it away from us. Since we know that all politicians cater to the whims of voters in the hopes of winning elections, it's no wonder the Democrats have acquiesced and appeared amazingly weak. They've been on the wrong side of the argument and they've failed to convince voters otherwise.
That brings us to where we now stand. If we voters fail to recognize what has happened in the last 25 years as a result of enabling the rhetoric and the policies of the GOP, we do so at our own peril. It's time for us to demand that our money be spent on programs that serve the greater good; not the ones that line the pockets of the greedy and the wealthy. The money is there...it has always been there...it's time we elect politicians that have the interests of all Americans at heart...politicians who will be honest stewards and spend our money wisely.
If we don't, let me be the first to predict the next financial scandal. Unless we choose a different course, it will invariably happen as soon our memory of the last one fades and we resume our role as gullible voters who settle for false promises and paltry tax cuts. Rest assured, once the coast is clear, the greedy will gladly step in and bust the bank again...while their bullshitting benefactors turn a blind eye.
Tagged as: 2008 Election, Democrats, Economics, GOP, Iraq War, Politics, S & L Scandal, Tax Cuts, Taxes, Wall Street
Daniel DiRito | September 18, 2008 | 8:37 PM |
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Today, Chris Matthews is pushing an important meme in light of the ongoing financial meltdown. While Americans watch a free-fall that has resulted in a near double digit percentage drop in the stock market, Matthews is asking, "Where is George Bush and why hasn't he addressed the American people?"
At first blush, I found myself agreeing with Matthews in his attempt to answer his own question. The bottom line, according to Matthews' analysis, "This looks to be another Katrina moment." In terms of appearance, I agree; in terms of motive, I have another take. Look, I'd be the last to defend George Bush's competence...but I suspect his absence at this juncture has more to do with a political calculation on the part of John McCain and the Republican Party than a repeat of his Katrina blunder. Let me see if I can explain my contention.
First, one has to look at the event in question...a virtual financial fiasco that is likely being seen by voters as the attachment of an exclamation mark on an already questionable economy. Second, one has to consider we're in the middle of a hard fought election where the GOP presidential candidate is attempting to cast himself as anything but a Bush clone. Lastly, one has to recognize that the McCain campaign and countless other Republican candidates are running away from the Republican Party.
Apply that backdrop to Chris Matthews' question and an alternate answer emerges. George Bush is no where to be found because his party and its candidates don't want him in front of the American public...reminding them which party has been in charge for the last eight years and connecting him with every other Republican trying to navigate an uphill political climate.
Contrast this with the run up to the 2004 election and the fact that George Bush called a press conference to announce that the roses were in bloom and one begins to see the degree to which the GOP and George Bush have adopted the cynicism that characterizes the culmination of the conservative revolution. In Karl Rove's ambitious plan to establish the GOP as the dominant force in U.S. politics for the next generation, events of national significance are little more than opportunities for partisan advantage.
In this moment of financial uncertainty, George Bush is missing as the leader of the United States. Instead, George Bush remains the titular leader of a political party that places the perpetuation of power ahead of the problems of the populace. Should there be any doubt that John McCain is a full-fledged member of the GOP and the man anointed to succeed George Bush...and advance the politics of division for power and profit...one need look no further than the stunning silence from the man who proclaimed himself as "a uniter; not a divider."
Pardon my disdain, but the GOP has abdicated its right to lead. The GOP isn't deserving of our respect. John McCain may like to use the expression, "My friends"...but his actions and the actions of his party tells us he and his party are anything but a friend to the American public. The win-at-all-costs GOP must be rebuffed in no uncertain terms on November 4th. The next time someone asks, "Where is George Bush?" the answer need to be, "He is where he belongs...he is in retirement with his old friend, John McCain".
If the following letter to employees, from the chairman of Morgan Stanley, a company with reasonable profits in the last quarter, doesn't scream for the president to exercise his leadership role in the midst of crumbling consumer confidence, I don't know what would suffice?
September 17, 2008
To: All Employees
From: John Mack
I know all of you are watching our stock price today, and so am I. After the strong earnings and $179 billion in liquidity we announced yesterday-which virtually every equity analyst highlighted in their notes this morning-there is no rational basis for the movements in our stock or credit default spreads.
What's happening out there? It's very clear to me-we're in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down. You should know that the Management Committee and I are taking every step possible to stop this irresponsible action in the market. We have talked to Secretary Paulson and the Treasury. We have talked to Chairman Cox and the SEC. We also are communicating aggressively with our long-term shareholders, our counterparties and our clients. I would encourage all of you to communicate with your clients as well - and make sure they know about our strong performance and strong capital position.
I'll be hosting a town hall tomorrow morning at 8:30 a.m. EDT to address any questions that you have, and would encourage all of you to participate in that discussion. Viewing details are available on Morgan Stanley Today.
Tagged as: 2008 Election, Chris Matthews, Economy, George W. Bush, GOP, John McCain, Republican Party, Wall Street
Daniel DiRito | September 17, 2008 | 3:55 PM |
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If you're still uncertain as to the reasons to support Barack Obama, you must watch the following video of a speech he delivered earlier today in Golden, Colorado. Obama offers perhaps the best explanation of the differences between the economic philosophy of the GOP and his vision for the future.
Obama posits that the GOP's antiquated trickle down theory is one that places those in the middle class at the end of a line that will virtually need to squeeze water from a rock in the Sahara in order to share in the bounty...one that establishes an alter-oasis at which the wealthy sit comfortably, in the shade, skimming the cream from the country's cash cow.
By contrast, he outlines his vision of an economic populism that places the success of the American worker and the middle class in its proper place...as the fuel that pushes forward the promise of the American dream. The comparisons he outlines are palpable, and the stakes he enumerates are immense.
When it's all said and done, this election is a battle between those who seek to continue the economic elitism of the GOP...a virtual marriage of the money managers with the money makers...and those who support a shift towards an amenable alliance between the ordinary Americans who buttress the economy and those who are hired to insure its successful stewardship.
Tagged as: Barack Obama, Economy, Jobs, John McCain, Regulation, Trickle Down, Unemployment, Wall Street
Daniel DiRito | September 16, 2008 | 3:36 PM |
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It was bound to happen. After weeks of carefully calculated spin, the McCain campaign's web of incongruous rhetoric is beginning to unravel. In less than 48 hours, the straight talk express has run itself into a ditch, and the rubber that no longer meets the road is wearing perilously thin as they attempt to get the bus back on track.
On the heels of John McCain's assertion that the economy is fundamentally sound...followed by his two attempts to clarify his intent...one of the campaign's leading economic advisors, former Hewlitt-Packard CEO, Carly Fiorina, tossed both the Senator and his running mate back under the bus. The manner in which it happened only amplified the recognition that Fiorina had handed the opponent another weapon with which to win the news cycle and capitalize on the gaffe.
Appearing on a morning radio program, Fiorina, when asked if she thought the Alaska governor had the experience to run a company like HP, quickly and emphatically stated, "No, I don't."
In a follow up appearance, Fiorina modified her remarks, asserting that none of the candidates have the experience necessary. The Obama campaign offered a quick response, stating, ""If John McCain's top economic advisor doesn't think he can run a corporation, how on Earth can he run the largest economy in the world in the midst of a financial crisis? Apparently even the people who run his campaign agree that the economy is an issue John McCain doesn't understand as well as he should."
He remarks do three things. One, they reinforce the doubts that Palin may not be prepared to be the vice president or to assume the presidency should something happen to McCain. Secondly, they further undermine the experience argument...an argument that, according to many GOP pundits, was already damaged by the selection of Palin. Lastly, they make the McCain campaign appear to be on the defensive at a time when economic instability and uncertainty has voters looking for a steady hand and clear leadership.
Perhaps Fiorina's comments reflect another unspoken reality? Perhaps Fiorina, fired from her position as HP's stock fell and the company was forced to layoff thousands of employees, was merely expressing her understanding of the nature of Washington under the direction of the GOP...an environment in which politicians defer to the whims and wishes of corporate America...an unsupervised and deregulated environment that allowed for the current financial meltdown that will eventually saddle taxpayers with the debts of those who lined their pockets with billions of dollars. After all, Fiorina herself walked away with a 21 million dollar severance package for her efforts.
As this current Wall Street crisis unfolds, I suspect that the curtains are going to be drawn open...and voters are going to realize whose been in bed with whom...and I don't think they're going to like what they see.
Just moments ago, on MSNBC, Minnesota governor Tim Pawlenty (I believe it was him) suggested to Nora O'Donnell that Fiorina has issued another clarification...suggesting that Palin, is, in fact, qualified to run a company like HP. Ouch...if true, someone needs to send Fiorina home for the rest of the day. I have yet to confirm Pawlenty's statement.
Tagged as: 2008 Election, Barack Obama, Carly Fiorina, Economy, Hewlett-Packard, John McCain, Sarah Palin
Daniel DiRito | September 16, 2008 | 11:42 AM |
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Weekends don't typically produce earth-shattering business activity. However, this weekend may defy all others in modern history. As Sunday night comes to a close, the face of the financial has been forever altered...and it may not be for the better. In fact, it may be the first in a cascade of dominoes.
Lehman Brothers appears destined for bankruptcy liquidation. Merrill Lynch appears to have been absorbed by Bank Of America in order to preserve what little value it retains. AIG is scrambling to find a suitor to purchase some of it's subsidiary entities or an immediate injection of cash. And that may be little more than the tip of the iceberg...a virtual albatross ready to be hung round the neck of every American.
It's impossible to examine this situation without consideration of the inevitable political ramifications. In strict poli-speak, this is a pivotal strategic moment for the Democratic Party...particularly Barack Obama. Let me explain.
The GOP has been able to deflect criticism of the Iraq war on the premise that the surge has succeeded in reducing the violence...an outcome expected by both sides of the aisle. Notwithstanding, in the very words of General Petraeus, victory isn't in the vernacular with regards to an honest assessment of the end game. Here's where the conflation of events provides a pivot point for the Democrats and the Obama camp.
Americans have been patient during the surge...even though most were in favor of a withdrawal from the years of slog. However, that patience will quickly erode under the weight of the approaching financial firestorm. Once it becomes apparent that the Bush administration's grand notion of an ownership society has been little more than an unbridled fleecing, the ten billion plus being pumped into Iraq will resurface as a pariah of the highest order.
The pivot point emerges. Now is the time to attach the Iraq money pit to the economy like a ball and chain. Faced with the prospect of untold financial peril, voters will undoubtedly be primed for the picking...so long as the Democrats explain and extend a well-designed rescue ladder...one that includes delivering the following message to the Iraqi's..."Time is up...get your ducks in a row because the U.S. exit countdown has begun."
The Obama message to voters must include a healthy measure of candor. It should consist of the following. One, we simply cannot afford to prolong the Iraq war and there's only one party that has promised to put an end to the ongoing loss of blood and treasure.
Two, change is a necessity; not an abstraction. The Democratic Party has a plan for change and the other party, suddenly aware of the need to promise it, in order to garner votes, is trying to wrap itself in it, rhetorically, in order to disguise it's untenable commitment to more of the same...in Iraq, and here at home.
Lastly, voters must hear that The Bush Doctrine, in each of its poorly planned and politically postured iterations, is an unmitigated disaster. Its "evolution" has been a series of cynical calculations necessitated by mismanagement and premised upon partisan expediency.
The fact that the McCain ticket, itself a product of cynical scheming, cannot define the doctrine is merely a testament to the fact that it was never a sound strategy; but rather a tool in an arsenal devoid of principled purpose and fully comprised of ambitions anchored in arrogance. Plain and simple, McCain-Palin is a Bush third term.
The goal is to show voters the flaws and the frays in the sloppily sewn strategy that has led us to this moment of trepidation. At the same time, voters must see that an Obama administration has the wherewithal to weave a plausible plan...one that is transparent and tangible...one that won't waver to the whims and wishes of Wall Street; but will instead focus on the needs of Main Street Americans.
If the Democrats will make this crucial course correction and connect the dots for voters, Americans will quickly realize the dangers of reemploying the party that promises victory in a faraway land while ignoring the crumbling economy at home. The pivotal question for voters must be, "At what cost victory?" The answer must be obvious. The answer must be, "Not at these costs...not if it means Russian Roulette at home."
Tagged as: 2008 Election, AIG, Bank Of America, Barack Obama, Bush Doctrine, Democrats, Economics, George W. Bush, GOP, Iraq, John McCain, Lehman Brothers, Merrill Lynch, Mortgage Crisis, Recession, Wall Street
Daniel DiRito | September 14, 2008 | 10:17 PM |
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If you're going to foment a gender driven divide, or any other contrivance, in order to win votes, you have to realize that its effect can't be isolated within one party...and it isn't apt to resonate with those voters who haven't the time to participate in the pettiness of politics. In an attempt to garner my own understanding of the significance of Sarah Palin's interview with ABC's Charlie Gibson, I've spent several hours reading numerous postings and the subsequent comments of countless readers.
As one would expect, die hard Democrats are convinced Palin demonstrated she is woefully unprepared to step into the presidency should something happen to John McCain. Similarly, those loyal to the GOP felt she held her own under a barrage of poorly crafted questions and a biased media swarm bent upon damaging her candidacy.
In truth, I think it's been clear that the Palin selection was a relatively savvy political calculation...although one that will likely be too clever by half. Yes, playing upon the frayed feelings of Clinton supporters, attempting to expand concerns of gender bias, and recasting one's campaign as the means to change seemed like a reasonable approach to a stalled campaign. Notwithstanding, I suspect that the strategy has an unintended consequence that may undermine the McCain campaign's objectives.
My moment of insight came from one particular comment. The comment was from a woman. In her remarks, she notes that she hadn't yet seen the interview, but that she did have a chance to speak with her son on the phone, who had just watched the ABC segment. She offers the caveat that her son isn't all that political, but she went on to note that her son, like his father (her husband), isn't one to mince words or sugar coat what he sees and thinks. As she put it, in unedited jargon, her son's view of the the Palin performance was, "Gimme a break, she had no fricking clue what she was talking about."
Now one might wonder how one comment can lead anyone to any particular insights...other than the fact that this woman has an outspoken son who reminds her of her husband. I'll try to explain.
By and large, the majority of comments, negative or favorable, came as first person observations...and they divided along party lines as well as gender. From GOP partisans, the women's view posits that Charlie Gibson was intent on catching Palin in a gaffe and his mannerism were rather condescending. As for GOP males, they noted some hesitation and a lack of knowledge on Palin's part, and then they proceeded to rationalize that her performance was sufficient given the circumstances...and the McCain strategy.
On the Democratic side, women were either fully dismissive of Palin's presidential bona fides or lamenting the fact that her gender would allow the GOP to advance the victim argument. Men who were clearly aligned with the Democratic Party seemed to focus on specific policy gaffes in order to conclude that the Palin selection was a ploy that will ultimately be exposed and hurt the McCain ticket's chances in November.
However, in the comment of this particular woman, I think it's important to note that it was a woman reporting on the views of the men in her life...men she clearly cares for. It suggests she isn't a full fledged partisan and that her family isn't deeply invested in one particular party or all that concerned with back and forth political high jinks. In other words, her family represents the unaffected middle...those voters who discern their votes absent the ideological inclinations of party affiliation.
So what does that mean? Well, I took away two observations. One, issues of gender bias are primarily being discussed by partisans from both parties in the hopes of finding advantage. Two, the average American family, too busy to follow the blow by blow of the election process, and unwilling to become invested in the partisanship, will do what they always do...quickly cut through the faux filters and find essence.
So here's my own takeaway from this woman's comment. She knows the men in her life and they know her. Their lives are an acknowledgment of reality rather than an abstraction of rhetoric. When her son cuts to the chase on the Palin interview, mom sees the truth in his comments...regardless of their gender differences or the efforts to cast the election as little more than gender warfare. She undoubtedly knows that society still holds biased positions with regard to women...and other groups...and she can probably see some of that in Charlie Gibson...just as she does in the Maytag repairman who fixed her broken washing machine last week.
At the same time, she can also see through a candidate who lacks a grasp of the issues that will confront the individuals who will be seated in the two highest offices in the land...without the need to filter her conclusions through a manufactured gender prism. In the end, her family represents the simple pragmatism that keeps America in the center...pulling it back from one extreme or the other. They function as a family and they respect and trust each other...regardless of the idiosyncrasies they possess. They have to in order to survive...and they vote with that in mind.
Those who think this kind of voter can be swayed by a smoke and mirrors strategy underestimate this family at their own peril. When it's all said and done, their votes will express a clarity that can't be clouded by misdirection and misinformation.
Cut it however you like, but this is a change election...and the fact that the McCain campaign has suddenly altered its message in the hopes of pulling victory from the jaws of defeat will not go unnoticed by the family noted above. They can figure out the real reason Sarah Palin was selected. They can determine which news outlet and which pundit is biased.
But more than anything, they have to determine which candidate will offer them the best hope for the problems they face as a family. They haven't the luxury of endlessly mulling through the minutiae or participating in partisan platitudes. When this mom chose to report her son's views, she was explaining how her family sees the world, and how they makes decisions, to those who routinely discount them as inconsequential. When it comes time to vote, her family will sort through the noise...because they have to. When November 5th arrives, the rest of us will finally hear her.
Tagged as: 2008 Election, ABC, Barack Obama, Campaigns, Charlie Gibson, Democrats, GOP, John McCain, Politics, Pundits, Sarah Palin
Daniel DiRito | September 12, 2008 | 10:02 AM |
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If this election turns out to be about religious ideology...while ignoring the real implications of electing a candidate who supports the same policies of the president who created the troubled economy we're now enduring...it may well be appropriate to call this "The Loaves and Fishes Election"...although I doubt either will be abundant...and they most certainly wont be free.
Troubling as it is, a number of voters seem poised to place matters of morality in front of their own economic self-interest. What remains to be seen is the depths to which voters are willing to sacrifice their pocket books in deference to the religious rhetoric being bantered about by the GOP.
Perhaps the news of the decision by the government to take over the troubled mortgage giants, Fannie Mae and Freddie Mac, will provide the impetus for voters to think twice before granting the GOP another four year...on top of the eight during which the national debt nearly doubled and personal income failed to advance.
Let me attempt to make this simple. Under the Bush administration, huge tax cuts were enacted...primarily for the wealthiest of Americans. At the same time, mortgage interest rates were kept artificially low. That allowed for a housing bubble which enabled millions of Americans to borrow and spend newfound equity. It also allowed for those with capital (think those who received the tax cuts) to invest in and profit from the financial market.
Jump forward to the end of 2008. The Bush administration and John McCain favor extending the tax cuts for the wealthiest Americans...arguing that we can't raise taxes in a down economy. The problem with that logic is that the tax cuts helped facilitate the shoddy economy we have. It also allowed the rich to get richer and it allowed millions of Americans to borrow what they thought was an expanading equity in their homes. That ability to access equity served as the candy coating on an otherwise unsound economy.
However, as they say, it's now time to pay the piper. So what does this mean for the average American? Well, it means that millions of Americans will see their home values decline, their debt increase, their access to better jobs diminish, and ownership of an expanding national debt that will have to be addressed.
And what does this mean for the wealthiest Americans under John McCain's more of the same administration? It means that they will have benefited from years of a reduced tax burden. It means they were able to invest this and other money in a finance industry that was fueled by artificially low interest rates...which means that they pocketed billions of dollars.
At the same time, the government has now stepped in to salvage the insolvency of the two largest mortgage providers in the United States...shifting their debt to the government and therefore to the taxpayer...in what will likely be the largest bail out in U.S. history...a bail out that will exceed the last one that allowed the wealthy to scam the public, the Savings and Loan scandal.
What this means is the government provided the manipulated means for the wealthy to profit...and profit they did...and then when this pyramid imploded under the lack of government oversight...the government, in typical form, concluded it would have to step in to stabilize the financial markets...and that, of course, will mean it's time to divide the losses amongst the remainder of the taxpayers. Enter John McCain...who argues we simply can't increase taxes (code language for rolling back the tax cuts) on the wealthy because it will hurt the troubled economy.
Look, this scenario isn't remotely the equivalent of the Loaves and Fishes story. In fact, it's actually the opposite. Instead, the average American will have provided the wealthiest amongst us with an abundance of enrichment...via tax cuts and government policy...which in turn damaged the economy...which "forced" the government to step in...to now bill that very enrichment...to none other than the average American.
Now the McCain campaign will tell us that the Democrats will tax and spend Americans into oblivion...citing the Democrats desire to give middle class Americans a tax break as well as plans to provide health care to all Americans as examples of their ill-advised fiscal oversight. The GOP will do so while attempting to bury billions of dollars in Fannie Mae and Freddie Mac debt...debt that originated under the misguided management of the GOP...all the while asserting their own fiscal bona fides...and never once admitting that these same billions of dollars would allow us to fund a tax cut as well as initiate an equitable and accessible health care system.
My friends, John McCain and the GOP are burning the candle at both ends and the middle class is the quickly disappearing wax in between. Look, Fannie Mae and Freddie Mac hold six trillion dollars of mortgage debt...and taxpayers will have to pay the portion of that debt that will be unrecoverable. They'll do so while watching their own wealth decline.
If all of this tangible sacrifice and suffering warrants the election of a party that gives lip service to social issues, then perhaps faith is far more powerful than I imagined. Notwithstanding, the last time I checked, faith, placed in false Gods, isn't faith at all; it's folly.
I suspect if the one called Jesus were still walking this earth, he'd be leading the effort to toss the tax collectors out of the temple. The man who bonded with the dregs of society...the likes of Mary Magdalen...would be able to discern deceit from devotion. He'd be telling the flock that faith is not a blind endeavor and our acts of affirmation must translate into more than tangential testimonies meant to massage the angst that accompanies our own divergence from living doctrine as opposed to wearing it as a label on one's lapel.
The corruption of Christian values for political expediency can be traced to those whose ambitions exceed their inclinations towards maintaining morality. Morality is more than a catch phrase coined by partisans for political gain. Those who enable these interlopers may take solace in surrendering their own responsibility to the ruse of rhetoric...under the guise of genuflection...but should there actually be the defined deity who drives their dogma...I suspect the line he's labeled "sinners" has continued its exponential expansion.
John McCain and the GOP may succeed in November...but it won't result in the feeding of the massed and it certainly won't be viewed as a miracle. Given that magic is equated with a sleight of hand, I suspect history would record his election as the efficient execution of one exceedingly cynical, but equally slick, illusion.
Tagged as: 2008 Election, Christianity, Democrats, Fannie Mae, Freddie Mac, George W. Bush, GOP, Jesus, John McCain, Morality, Religion, Values
Daniel DiRito | September 8, 2008 | 3:09 PM |
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