The Bail-out NON-plan

I’ve been listening to Dodd’s Senate Banking Committee meeting with witnesses Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Christopher Cox and Director of the Federal Housing Finance Agency James Lockhart.  The gist of the story is that Paulson wants Congress to give him $700B without providing even an initial plan, no organizational structure, no personnel (industry experts who got us into this mess in the first place), no definite structure for real accountability to the taxpayers, and no guarantee that the bad debt they are proposing we buy will ever return so much as even money, and no historical reference for which such a plan like this ever worked.  In the past, when the U.S. government “bailed out” the Savings & Loans during 1987, they simply guaranteed the debt, they did not purchase it.  But in this plan, we are actually buying bad mortgage-backed securities, hoping that the market will improve and the taxpayers will eventually be able to sell these securities off if and when the market improves and at least break even.

 

There were dire predictions from Paulson about what would happen if Congress didn’t act quickly.  Freezing credit markets means no business-to-business loans, no loans to farmers, no loans to consumers for mortgages or other items, inflation, etc.  “The sky is falling!” as Chicken Little would say.  Well, all I can say is there are dire consequences if Congress acts imprudently and rashly, too.  Obama’s statement about Iraq could be applied here as well:  we must be as careful and thoughtful about getting out of this mess as we were careless getting in.

 

“I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets,” he [Cox} said. The debt insurance is known as credit default swaps.  (http://news.yahoo.com/s/ap/20080923/ap_on_bi_ge/financial_meltdown)

 

As part of their very vague, generalized proposal, which can be boiled down to “Give us unlimited authority and all the money now, and we’ll figure it out as we go along, they propose a reverse auction method, meaning that instead of the buyers competing with each other to purchase the product (an auction), the situation is reversed, where there are no real buyers, only the taxpayers, and the banks are bidding to sell their bad debt x amount of the dollar to us.  We are, for all practical purposes, buying their bad debt so that they can look more profitable.  And there are, so far as I can tell, no provisions which prevent these banks from rewarding their personnel with bonuses, etc., or golden parachutes for the executives (there has been some discussion about this from the Senators, but not from Paulson).

 

Effectively, Paulson would be God of the Financial Universe, with no serious oversight from Congress, no real requirement for approval from Congress as to the structure, the regulatory rules, etc.  In other words, no accountability to the American taxpayers.  Paulson’s reasoning is that it takes too long for all that.

 

I find this rush to produce legislation with no serious controls over this new “agency” we are creating to be very troubling, to say the least.  The last time there was such a panic, “rush, Rush, RUSH” with legislation was the Defense Appropriations of 2007, wherein there was a clause transferring the power to declare a national emergency and impose martial law from the Congress to the president, UNILATERALLY, with not even notifying Congress of the decision until it was made, forget advice and consent.  That little gem still stands and has been joined by the FISA Amendment of 2008, which effectively relieves us American citizens of the burden of having the protection of the Fourth Amendment (warrantless search and seizure).  So, when I see the rush-Rush-RUSH to Congressional action with this administration, I am, to say the least, mightily concerned, and my reflexive response is to say “NO WAY!”

 

“I understand speed is important, but I’m far more interested in whether or not we get this right,” said Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee. “There is no second act to this. There is no alternative idea out there with resources available if this does not work,” he added.  (http://www.msnbc.msn.com/id/26850571#storyContinued)

 

I agree with Dodd.

 

While this was going on, “Vice President Dick Cheney and Jim Nussle, the administration’s budget director, met privately with restive House Republicans, some of whom emerged from the session understated.” 

 

“Just because God created the world in seven days doesn’t mean we have to pass this bill in seven days,” said Rep. Joe Barton, R-Texas.  (http://news.yahoo.com/s/ap/20080923/ap_on_bi_ge/financial_meltdown)

Rep. Barton speaks wisely in my view.  And my own senator, Richard Shelby, who I normally have little agreement with, made what I consider a “spot-on” insight:

 

“Sen. Richard C. Shelby of Alabama, the panel’s senior Republican, was even more blunt.  “I have long opposed government bailouts for individuals and corporate America alike,” he said. Seated a few feet away from Paulson and Bernanke, he added, “We have been given no credible assurances that this plan will work. We could very well send $700 billion, or a trillion, and not resolve the crisis.”  (http://news.yahoo.com/s/ap/20080923/ap_on_bi_ge/financial_meltdown)

 

Senator Chuck Schumer (D-NY), in an exchange with Paulson, asked Paulson why they couldn’t accept a lower number that would get them through the first three months, which is when Paulson is due to report to Congress on how it worked.  Schumer observed that, if the plan doesn’t work, they will be able to assess the damage in January and figure out what to do next at that time rather than handing Paulson the full$700B right now.  Paulson admitted that the funds would be traunched (One of many influxes of cash that is part of a single round of investment.), but he wanted the full authority for all the money right now because it would restore market confidence.

 

I think that is absolute crap.  Schumer’s proposal to give $150B for the next three months would be sufficient to get Paulson through this initial phase of the response to this debacle.  And Schumer added that if there were a further and unforeseen market problem, the Congress could be called back in an emergency session to deal with the problem.

 

Paulson gave no concise, clear answers.  He appeared to be totally unprepared to provide any vision of what he intended to do.  This sparks absolutely no confidence in me that he is the man for the job.  He may have a net worth of $500M, but being rich doesn’t mean you are smart at everything.  He also could not provide any concrete suggestions of who he intended to call in to act as advisors or regulators for this project.

 

The bottom line is that he wants all the money, he wants it now, he doesn’t want to have any requirement or second-guessing from Congress, he wants no accountability for himself or this team if they screw it up, he has no guarantee that the taxpayers won’t get caught holding bad debt that can’t be recovered. 

 

Further, he has no set of new regulations to propose by which to prevent further disasters like this.  He intends to decide that later.

 

Everything about his attitude, his vagueness and lack of any substantial ideas in the committee hearing, the rush to judgment in moving legislation with a huge price tag and no real substantial controls – all of this smacks of a really, really bad idea.  Not prudent, as Bush 41 would say.

 

It seems that Republicans are even more opposed to this than Democrats.  I think Schumer has got it right.  If it is, indeed, necessary at all to intervene in this market and purchase this bad debt to start a market recovery and avoid real disaster (and that is only a theory, not an absolute fact), then let’s try it for three months and see what happens.  And let’s take our time in devising a plan that is carefully thought out with all the regulatory and oversight controls and mechanisms that we truly need to stop this problem cold and not see it continue.

 

Those who do not learn from history are doomed to repeat it. – 
George Santayana quotes (Spanish born American Philosopher, Poet and Humanist who made important contributions to aesthetics, speculative philosophy and literary criticism. 1863-1952)

Learning from history: Regulation works

“Those who do not learn from history are doomed to repeat it.” –  George Santayana quotes (Spanish born American Philosopher, Poet and Humanist who made important contributions to aesthetics, speculative philosophy and literary criticism. 1863-1952)

 

This housing market debacle that has occurred under George W. Bush’s watch can be traced back to many of the same causes as the Savings & Loan debacle during Reagan’s watch on October 1987:  it’s about how deregulation sets the market up for failure.

 

This problem goes back to Carter.  And every administration and every Congress since then has been complicit in this mess.  The reason they waited until it was too late to put it off is that they are ALL in bed with the financial contributors.  This year, Dodd, our Senate Banking Committee chair, got the most from the investment houses, Obama was second. (www.opensecrets.org).  But, none of them are blameless.  James A. “Jim” Johnson, a close friend of Richard Daley and the Chicago Daley political machine, Franklin Raines, , Tim Howard, Jamie Gorelick and Penny Pritzker are Obama advisors, and McCain had Rick Davis as his campaign manager.

 

“In 1990, [Jim] Johnson [Chairman and CEO, 1991-1998) went to work for the Federal National Mortgage Association (Fannie Mae) and quickly became its $5 million-a-year chairman. His compensation rose to a reported $21 million by his final year, 1998....

 

When he left his job at Fannie Mae, which long has had a reputation as a cushy landing spot for the political class in Washington, he was serenaded by 16 members of the Benson High band, which had been flown to D.C. at Fannie Mae's expense. He also received a number of perks, including a $600,000 annual consulting fee….

 

It should be noted that Johnson got out of Fannie Mae while the getting was good. Since his leaving, the massive, quasi-public home mortgage organization has been buffeted by negative headlines. Accounting scandals, dating back to Johnson's era, have been followed by recent news that Fannie Mae has lost more than $3 billion in the housing slump.”  (http://www.minnpost.com/stories/2008/06/03/2078/obama_turns_to_trusted_political_insider_jim_johnson_for_key_campaign_role)

 

A news release, dated 12/18/2006, stated that OFHEO had filed a Notice of Charges against former Chairman and CEO Franklin Raines, Vice Chairman and Chief Financial Office Tim Howard and former Senior Vice President and Controller Leanne G. Spencer, which was ultimately settled.  In that Notice, Office of Federal Enterprise Housing Oversight (OFHEO) Director James B. Lockhart stated,

 

The 101 charges reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over 20 accounting principles and misleading the regulator and the public.  The Notice explains how they submitted six years of misleading and inaccurate accounting statements and inaccurate capital reports that enabled them to grow Fannie Mae in an unsafe and unsound manner.The conduct cost the Enterprise and shareholders many billions of dollars and damaged the public trust.  http://www.ofheo.gov/media/pdf/RainesNOC121806.pdf

 

Let’s examine the relationships that two of those mentioned have with Obama:

 

“Franklin Raines, Chairman and CEO of the Federal National Mortgage Association (Fannie Mae) from 1999-2004, is the individual most responsible for the subprime mortgage crisis. It was on Mr. Raines' watch that Fannie Mae went bankrupt.

 

He was accused of manipulating earnings statements so he could be paid bonuses to which he was not entitled.  He received a golden parachute valued at $240M, court ordered him to return $50M, leaving $190M, at least $20M of that sum was now worthless stock.

 

Of Raines' $91 million in compensation between 1998 and 2003, more than $84 million was tied to earnings per share targets and faulty accounting, OFHEO said in 2006.:  (http://www.reuters.com/article/ousiv/idUSN1835681920080419?pageNumber=2&virtualBrandChannel=0)

 

 

Tim Howard was the Vice Chairman and Chief Financial Officer of Fannie Mae. Howard "was a strong internal proponent of using accounting strategies that would ensure a "stable pattern of earnings" at Fannie. In everyday English - he was cooking the books.  The Government Investigation determined that, "Chief Financial Officer, Tim Howard, failed to provide adequate oversight to key control and reporting functions within Fannie Mae,"

 

On June 16, 2006, Rep. Richard Baker, R-La., asked the Justice Department to investigate his allegations that two former Fannie Mae executives lied to Congress in October 2004 when they denied manipulating the mortgage-finance giant's income statement to achieve management pay bonuses. Investigations by federal regulators and the company's board of directors since concluded that management did manipulate 1998 earnings to trigger bonuses. Raines and Howard resigned under pressure in late 2004.  Howard's Golden Parachute was estimated at $20 Million, of which he had to return $5.4 million.  (http://www.reuters.com/article/ousiv/idUSN1835681920080419).

 

 

Mr. Johnson and Mr. Raines aren't the only figures in the subprime mortgage scandal to be connected to the Obama campaign. Jamie Gorelick, rumored to be an attorney general candidate in an Obama administration, was vice chairman of Fannie Mae from 1997 to 2003 [and was the former Deputy Attorney General in the Clinton administration]. Penny Pritzker, Mr. Obama’s national finance chairman, has been described as “the Michael Milken of the subprime mortgage crisis” for her pioneering of the packaging of bad loans with good ones at her now defunct Superior Bank in suburban Chicago.”  (http://www.realclearpolitics.com/articles/2008/09/how_close_are_raines_and_obama.html)

 

Penny Pritzker, a billionaire  (Hyatt hotel chain and the Marmon Group industrial conglomerate. (Forbes Lists 2005), engaged in predatory lending “after the Pritzkers’ bank acquired its wholesale mortgage organization division, Alliance Funding, in December 1992.”  (http://gdaeman.blogspot.com/2008/02/who-is-penny-pritzker-and-why-is-she.html, http://www.thenation.com/bletters/20080211/fraser).

 

According to the Encyclopedia Judaica, the Obama campaign’s national finance chair, Pritzker “served as chairman of the Superior Bank from 1989 to 1994, but the savings and loan institution collapsed” in July 2001. Created at the end of 1988 as the successor bank to the failed Lyons Savings Bank, the Oakbrook Terrace/Hinsdale, Illinois-based Superior Bank was 50 percent owned by Chicago’s billionaire Pritzker family. Yet according to an October 16, 2001, statement before the US Senate Committee on Banking, Housing and Urban Affairs by Ely & Company Inc. President Bert Ely, the Pritzker family’s Superior Bank “started life with enormous tax benefits and a substantial amount of FSLIC-guaranteed assets under a FSLIC Assistance agreement.” In a December 2002 Chicago magazine article, “Tremors In The Empire,” Shane Tritsch noted, for instance, that for investing $42.5 million in the failed Lyons Savings Bank before it was reopened as Superior Bank, the Pritzkers and their business partner received an estimated $645 million in federal tax credits and loan guarantees; and “by one estimate, it would have cost the government $200 million less simply to shut Lyons down.”

 

But according to Ely’s October 16, 2001, statement, “Superior’s trick, or business plan” under Penny Prtizker’s chairmanship was apparently “to concentrate on subprimelending, principally on home mortgages, but for a while in subprime auto lending, too,” after the Pritzkers’ bank acquired its wholesale mortgage organization division, Alliance Funding, in December 1992.

With a business loss estimate of between $350 million and $1 billion, the 2001 failure of the Pritzkers’ Superior Bank represented the largest US-insured deposition institution to fall between 1992 and 2001. But according to a February 7, 2002, report by FDIC Inspector General Gaston Gianni Jr., “the failure of Superior Bank was directly attributable to the Bank’s Board of Directors and executives ignoring sound risk management principles.”  (http://www.thenation.com/bletters/20080211/fraser)  

 

And then there’s ACORN.  Obama’s direct involvement with ACORN, who intimidated banks into providing loans to those with bad credit, included serving  on the board of the Woods Fund which provided money for ACORN’s activities.  Obama also trained “activists” on behalf of Madeline Talbot, who spearheaded the drive to pressure banks into providing high risk loans.

 

A rundown:

·         Madeline Talbot, leader at Chicago ACORN, enlists Obama (between college & law school) to train her staff.

·         ACORN requests Obama as legal representation in “motor voter” case.

·         Obama (post law school) in partnership with ACORN organizes “Project Vote.”

·         Obama enlists ACORN volunteers for State Senate, (failed) Congress, US Senate campaigns.

·         Obama hires Daley-team to run State Senate election, kicks other 4 contenders (including incumbent) off the ballot, and wins by running unopposed (How did Obama’s legal team invalidate thousands of signatures? See article & video for more).

·         Obama directs millions in grants to ACORN

(http://www.dingonation.com/politics/race-redistribution-and-the-bully-pulpit)

 

 

“Senator John McCain’s campaign manager [Rick Davis] was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say. 

 

… several current and former executives of the companies came forward to discuss the role that Rick Davis, Mr. McCain’s campaign manager and longtime adviser, played in helping Fannie Mae and Freddie Mac beat back regulatory challenges when he served as president of their advocacy group, the Homeownership Alliance, formed in the summer of 2000.”  (http://www.nytimes.com/2008/09/22/us/politics/22mccain.html?_r=2&oref=slogin&ref=politics&pagewanted=print&oref=slogin)

 

As long as times were good, nobody complained too hard because you “don’t fix what ain’t broke.” (Will Rogers)   The markets were great, the bubble hadn’t burst yet.  But, then the bubble burst.

 

This is not the first time de-regulated markets have posed a problem.  The Glass-Steagall Act of 1933 was passed to protect homeowners. 

 

“Bad Government Policies

Economist Robert Kuttner has criticized the repeal of the Glass-Steagall Act as contributing to the subprime meltdown.  A taxpayer-funded government bailout related to mortgages during the Savings and Loan crisis may have created a moral hazard and acted as encouragement to lenders to make similar higher risk loans.”  (Wiki — http://en.wikipedia.org/wiki/Subprime_mortgage_crisis)

 

Banking deregulation started in earnest during the Carter admin in 1978.  Interest rate ceilings on deposits were phased out in the early 1980s, during Reagan’s watch.  Next came the Commodities Futures Modernization Act of 2000, HR.5660, also passed by a Republican Congress and signed by Clinton.

 

“Additionally, there is debate among economists regarding the effect of the Community Reinvestment Act, with detractors claiming it encourages lending to uncreditworthy consumers and defenders claiming a thirty year history of lending without increased risk.  Amendments to the CRA in the mid-1990s, dramatically raised the amount of home loans to otherwise unqualified low-income borrowers and also allowed for the first time the securitization of CRA-regulated loans containing subprime mortgages.

 

Some have argued that, despite attempts by various U.S. states to prevent the growth of a secondary market in repackaged predatory loans, the Treasury Department’s Office of the Comptroller of the Currency, at the insistence of national banks, struck down such attempts as violations of Federal banking laws. 

 

The U.S. Department of Housing and Urban Development’s mortgage policies fueled the trend towards issuing risky loans.  Like the second link says, HUD and the Community Reinvestment Act are major culprits. After their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of “affordable housing.” They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. They greatly grew the subprime mortgage market, leading to a housing bubble and its subsequent collapse. 

 

Among banks and the regulatory agencies, there was a consensus that data collection, recordkeeping, and reporting requirements imposed a heavy burden on small community institutions. As a result of a 2002 review of the CRA regulations, and revision of an initial Federal Deposit Insurance Corporation (FDIC) proposal following a public commenting period that was largely negative, the FDIC, Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board (FRB), made substantive changes to the implementation of regulations for the CRA for banks (not thrifts).

 

Previously, all institutions over $250 million in assets were subject to a three-part CRA test that covered lending (including community development loans), qualified investments, and services (including community development services) to their assessment areas. Institutions less than $250 million were subject only to a lending test.

 

However, as of September 1, 2005, only those institutions with more than $1 billion in assets were subject to the three-part test. Institutions below $250 million remain subject to only a lending test, and a new CRA test was created for institutions with assets between $250 million and $1 billion. This latter category, referred to as Intermediate Small Banks, is subject to the same lending test to which institutions under $250 million were subject, along with a new combined community development test that covers community development loans, qualified investments, and community development services. The $250 million and $1 billion asset thresholds also were indexed to the consumer price index and could change annually. Thus, all institutions remain subject to the CRA test. These substantive changes were intended to be a compromise between changes advocated by banks and community groups.

 

However, the changes were not received positively by all community groups. Changes to tests conducted on the Intermediate Small category were viewed by some as decreasing the institutions’ obligations to meet lending requirements of low- and moderate-income households. Racial inequities in mortgage acceptance rates (as reported by Inner City Press, the National Community Reinvestment Coalition, ACORN and other groups) are cited as a primary reason to maintain or even increase the scope of the CRA.”  (Wiki — http://en.wikipedia.org/wiki/Community_Reinvestment_Act)

 

The Gramm-Leach-Bliley Act, passed in1999, and the Commodities Futures Modernization Act, passed in 2000 “broke down the firewalls between Wall Street and commercial banks and banned regulation of credit default swaps, an insurance-like product bought by financial services companies to cover their risky subprime mortgage investments.”  (http://www.politico.com/news/stories/0908/13683.html)  

 

“The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub.L. 106-102, 113 Stat. 1338, enacted 1999-11-12, is an Act of the United States Congress which repealed part of the Glass-Steagall Act, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services.”  (Wiki — http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act)

 

American International Group, rescued by the Federal Reserve on Tuesday [September 16, 2008] is one of the biggest sellers of these swaps.”  Barney Frank commented to reporters that he had been sitting on a bill (S.190, then S.1100 refiled), tabling it until after the presidential election. Clinton had tried to get legislation through during his administration that modified some of this.  Even Bush tried to do the same.  McCain even raised the cry.

 

Relaxation of geographical restrictions on bank expansion proceeded historically, and this resulted in the history of state-level regulation being completely abandoned. Over a period of 20 years, Glass-Steagall was pecked at and undermined and weakened. It was finally killed altogether in 1999 with the Graham-Leach-Bliley Financial Services Modernization Act of 1999, signed by Clinton, but passed by a Republican-dominated Congress.

 

Triggering the financial implosion on Wall Street were the problems at Fannie Mae and Freddie Mac, which had its legislative roots in the Congressional Black Caucus.  The concept for these institutions was a good one — to break down the barriers of institutionalized racism in the financial market.  But the implementation and de-regulation made for a situation is which widespread fraud and abuse and far-too-relaxed lending practices created an unstable situation.  These firms were not properly leveraged, and their impending collapse should have been easy to predict.  These firms, fostered lax lending practices and covered up their own financial deficiencies.  And these two institutions have their tentacles in the 2008 presidential campaign in the forms of Jim Johnson, Franklin Raines, Rick Davis, Jamie Gorelick and Penny Pritzker.

 

Although I am not a fan of GWB, it is only fair to say that, going back to the beginning of his administration, President Bush warned of the problems at these institutions and the consequences if Congress did not bring them under control. Seventeen times, Bush publicly called for reform of both institutions. But Democrats and Republicans in Congress ignored the warnings and denied there were any problems. What follows is an administration chronology of efforts to achieve reform:

 

At the beginning of 2005, a bill was introduced by Chuck Hagel to deal with the need for regulating Fannie and Freddie, among other investment banks. John McCain was a cosponsor: (http://uppitywoman08.wordpress.com/2008/09/21/john-mccains-fannie-maefreddie-mac-warnings-may-2006/).  And Barney Frank (http://www.house.gov/apps/list/press/financialsvcs_dem/press092308.shtml) and Chuck Dodd had a bill in the last Congress that was filed as S.190 and refiled as S.1100 that they have been sitting on until after the presidential election was over, only the economy wouldn’t wait

 

As with most idealistic theories, Adam Smith and his concept of a free market works very well in a laboratory setting, where all the factors are carefully controlled, much like any utopian philosophy.  But in real life, with real people who have real greed and real problems with ethical behavior, it simply does not work.  It works no better than its polar extreme socialism, which does not motivate people to work and to strive for excellence.  That’s why we need regulation of the markets.  Because markets deal with real people and real temptation and real greed must be controlled.

 

The next problem that is happening today is both a symptom of deregulation and a cause of the resulting debacle, and that is lack of transparency.  It is a particularly strong trait of this administration.  And this administration has set the tone for the entire country, especially the business world.  Lack of transparency makes it impossible for real oversight or regulation to occur.  People who hide things usually have something to hide.  We have found this to be true of this administration, and now we see the same trait is both a cause and a symptom of this deregulated market and its result:  the biggest market failure requiring the biggest bailout in history.

 

The same applies to our other regulatory agencies which have been decimated during the Bush administration.  We need environmental, labor and consumer protection regulation both at home and as it applies to our imports and trade agreements.

 

We know from our own experience as children that rules work.  Rules that are reasonable and that are fairly and consistently enforced make society work for everyone.  It also applies to markets and to business.

 

So, how do we fix it?  The administration is pressuring Congress to move quickly.  But I hope Congress realizes that there is a difference between moving quickly (and knowing what you’re doing) and moving irresponsibly and imprudently.  Rash behavior will only complicate the existing mess and create an even bigger mess.  And U.S. Treasury Secretary Hank Paulson’s “Chicken Little” presentation before the Senate Banking Committee did not inspire confidence.

 

When you are reacting, you are not in control.  We must get control of these markets, and that requires thoughtful, deliberate action that requires controls and oversight tools to be included in the pending legislation, which, in its current form, is a prescription for a larger disaster, but it basically writes a blank check to Secretary Paulson, who helped oversee the making of this mess in the first place, and this, plus his $500M fortune earned by the very excesses and abuses that have cause this market to fail, makes him an unregulated and uncontrolled God of the market economy.  Paulson was Chairman and CEO of Goldman Sachs  since the firm’s initial public offering in 1999, and this tends to further erode my confidence in his ability to objectively oversee this recovery and select firms to bail out.  All this leads me to believe that this legislation in its current for is a prescription for disaster.

 

There are also some punitive actions that must be included, not the least of which is that the golden parachutes of the executives who got their company in this mess should not be permitted.  And, most of all, there must be provisions within this deal that protects the American taxpayers in such a way that the funds they are lending these institutions are recoverable, at least in part.  Otherwise, we will be encouraging the same behavior to happen again.  If Uncle Sam bails you out every time you screw up, then why should you change your behavior?

 

One of the most disturbing aspects of this bailout legislation in its first incarnation is that it provides for American taxpayers to bail out foreign firms that had business transactions in the United States.  Since we are in a global economy, shouldn’t the entire globe — any nation that was involved with these transactions — be participating in the pain?  After all, it is their firms who did not observe good lending practices when buying these instruments.  Why should the American taxpayers be held holding the bag for any of it?  There must be some real controls and deliberation on bailing out a foreign-owned institution.  What do we do if we can’t recover our investment in bad paper?  Invade the country where the firms originates?  There is much about this bailout that gives me pause.

 

The American taxpayers will be experiencing significant pain in this deal.  They are taking on, with the recent deals already done, over $1.3T in bad debt that may not be recoverable.  Remember, all the wonderful plans for healthcare, education and many other factors have been flushed down the toilet once this deal is signed.  There will be no money for any of those programs.

 

And if we are willing to take over the banking industry, we must also take measures to control the rising costs of commodities that has already occurred and will continue to occur with investors moving their money to this market.  Just today oil went up $25/barrel.  And rising food prices are already increasing starvation in third-world countries.  The American taxpayer must have some protection with temporary price controls.  Otherwise, other markets will start to fail as rising costs put small businesses out of business.  And the next problem will be all the other industries that have been hard hit during this economic downturn.  Who do we bail out next?  The auto industry?

 

The Commodity Futures Modernization Act of 2000 or CFMA (H.R. 5660 and S.3283) repealed the Shad-Johnson jurisdictional accord, which had banned single stock futures in 1982. The legislation also provided certainty that products offered by banking institutions would not be regulated as futures contracts. This act was incorporated by reference into HR.4577 (see below). The legislation thus became law as a part of HR.4577 – Public Law 106–554, §1(a)(5) signed by Bill Clinton December 21, 2000….

 

The Commodity Futures Modernization Act of 2000 has received criticism for the so-called “Enron Loophole,” 7 U.S.C. §2(h)(3) and (g), which exempts most over-the-counter energy trades and trading on electronic energy commodity markets. The “loophole” was drafted by Enron Lobbyists working with Senator Phil Gramm [one of McCain’s financial advisors] seeking a deregulated atmosphere for their new experiment, “Enron On-line.” 

 

Several Democratic Legislators introduced legislation to close the loophole from 2000-2006, but were unsuccessful.

 

In September 2007, Senator Carl Levin (D-MI) introduced Senate Bill S.2058 to specifically close the “Enron Loophole.”  This bill was later attached to H.R.6124, the Food, Conservation, and Energy Act of 2008, aka “The 2008 Farm Bill”. President Bush vetoed the bill, but was overridden by both the House and Senate, and on June 18th, 2008, the bill was enacted into law.  One specific reason behind its introduction was to address the record high oil prices of the 2000s energy crisis. Since it was enacted, average gas prices of regular unleaded gasoline in the U.S. have dropped $0.357, from their record high of $4.114 on 7/17/2008 to an average of $3.757 as of 09/21/2008.

 

The prohibition on single-stock futures and narrow-based indices that had been in effect until the passage of this act was known as the Shad-Johnson Accord because it was first announced in 1982, as part of a jurisdictional pact between John S.R. Shad, then chairman of the U.S. Securities and Exchange Commission and Phil Johnson, then chairman of the Commodity Futures Trading Commission. 

 

The act specifically banned regulation of credit default swaps. These unregulated instruments, insurance policies against default on risky investments like mortgage backed securities, necessitated the government bailout of insurer A.I.G.  (Wiki – http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000)

 

Next, if we protect the investors in these institutions, we must also take measures to protect the American taxpayers and the good homeowners who are struggling to pay their mortgages.  I suggest that all homeowners be allowed to adjust their loans to current market value and refinance with fixed rate loans based on that value since the market has devalued their property so greatly.  This strategy worked well during the Great Depression recovery.  In fact, most banks following this practice made money.  Keep these good homeowners who are paying their mortgages in their homes.

 

This crisis could have been averted by practicing reasonable regulation and oversight.  The market, big business and our government failed us on every level.

 

“Ours is a system of corporate socialism, where companies capitalize their profits and socialize their losses…in effect, they tax you for their accidents, bungling, boondoggles, and mismanagement, just like a government. We should be able to dis-elect them.” — Ralph Nader

 

But we must also include our own culpability in this problem.  Many people became speculators during the housing bubble.  They were speculating on the fact that the market would be good and the value of the investment homes would increase so they could sell them at a profit.  And then there were the folks living well above their means who entered into interest-only payments with a big balloon at the end of three- or five-year period, etc., living at the edge of their income and banking on their ability to sell their home for the balloon price or better, then doing it all over again with a new house.  The market failed, the value of the house dropped, and they had no savings to cover the balloon, so they lost their home and ruined their credit.

 

And one final note: The administration’s view is that they are bailing out the “market,” not just a few key firms.  But the greatest beneficiaries ARE the few key firms.  Granted, anyone who has investments, whether it be stock, money market accounts, 401Ks or other retirement or savings vehicles, and anyone who needs credit (especially businesses) will be impacted by this failure.  But there must be some real controls and an objective bipartisan oversight – a deliberative body who decides on what actions should be taken and with which firm.

 

So, here we are again.  Will we learn from history this time?  Will Congress have the balls to face this crisis without giving into the panic-atmosphere that the administration has created to push this bill through without the necessary controls and oversight?  We shall see.  But, whatever, the outcome, we know the American taxpayers will get stuck with the bill.  And, although life is not fair, this is particularly unfair, because it has to do with unbridled greed and mismanagement of private industry due to our elected officials rolling over and playing dead when deregulating the markets and then failing to perform their oversight duties.

 

There is a record of legislation going back to the Clinton administration that addressed this problem, but could not get passed.  The largest contributors in all the campaigns came from these same failed firms.  If that does not wake us up to the need to get money and corporations out of our political campaigns, I don’t know what will.  It’s our fault, too, because we did not demand better from our government.

 

And then there were the honest folks who dealt with predatory lenders — fraudulent real estate brokers, mortgage brokers, etc., that were encouraged to enter into mortgages with variable interest rates or graduated interest rates and hidden costs that caused them to be unable to pay their mortgage.  These real estate brokers and mortgage brokers that falsely represented to their clients their ability to afford these homes, and fraudulently submitted false information about the client’s income or down payment or the value of the home in an effort to put the deal through.  Then they turned around and sold this bad paper to other investment firms.  And the homeowners are left with an unmanagement mortgage payment that they can ill afford or a home beyond their means when they were told they could afford it.  These conspirators must be brought to justice.

 

“Capitalism will always survive in the United States as long as the government is willing to use socialism to bail it out.” — Ralph Nader

 

Bibliography

http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

http://en.wikipedia.org/wiki/Glass-Steagall_Act

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

http://www.house.gov/apps/list/press/financialsvcs_dem/press092308.shtml

http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000

http://www.politico.com/news/stories/0908/13683.html

http://www.newsmax.com/kessler/gse_financial_timeline/2008/09/22/133234.html

http://uppitywoman08.wordpress.com/2008/09/21/john-mccains-fannie-maefreddie-mac-warnings-may-2006/

http://www.ofheo.gov/about.aspx?Nav=73

http://www.cbsnews.com/stories/2008/09/24/politics/washingtonpost/main4473574.shtml

http://falkenblog.blogspot.com/2008/06/fannie-mae-ex-ceo-ousted-from-obamas.html

http://news.aol.com/political-machine/2008/09/20/ex-fannie-ceo-raines-not-obama-advisor/

http://www.nysun.com/blogs/latest-politics/2008/09/fannie-mae-slips-from-obama-litany.html

http://seattletimes.nwsource.com/html/businesstechnology/2003023671_fannie28.html?syndication=rss

http://phoenix.bizjournals.com/phoenix/stories/2008/09/15/daily81.html

http://www.cftc.gov/files/ogc/ogchr5660.pdf

http://www.allbusiness.com/finance-insurance/credit-intermediation-related-activities/577783-1.html?yahss=114-2974554-577783&siap=1

http://www.fdic.gov/bank/analytical/banking/2004nov/article1/

http://www.ecs-limited.com/download/Challenges%20facing%20Banking%20Industry%20in%20India.pdf

http://fic.wharton.upenn.edu/fic/papers/02/0239.pdf

http://schneiderview.blogspot.com/2008/09/those-who-do-not-learn-from-history-are.html

 

They [Congress] were warned!

My “informant” on another blog, hapi22, who writes very well-informed pieces, e-mailed this to the group today:

No one in the U.S. Senate can say he or she wasn’t warned about the coming Fannie Mae and Freddie Mac meltdown.

On May 25, 2006, Sen. John McCain stood up in the Senate and made the following statement.

——————–

“Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former Chief Executive Officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac — known as Government-sponsored entities or GSEs — and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.

I join as a co-sponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S.190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.”

http://www.govtrack.us/congress/record.xpd?id=109-s20060525-1…

——————–

McCain had joined with Senators Charles Hagel (Sponsor), Elizabeth Dole, and John Sununu (Cosponsors) to enact the Federal Housing Enterprise Regulatory Reform Act of 2005 (S. 190),

The bill (S.190) stalled in the Senate Banking, Housing, and Urban Affairs Committee and expired at the end of the 109th Congress.

On Apr 12, 2007, S.190 was re-introduced in the Senate (with a new bill number) as S.1100: Federal Housing Enterprise Regulatory Reform Act of 2007.

It, too , is stalled in the Senate Banking, Housing, and Urban Affairs Committee, chaired by Chris Dodd (recipient of the MOST money from Fannie Mae and Freddie Mac. Obama comes in Number Two as having rec’d the most money from Fannie Mae and Freddie Mac.) http://savagepolitics.com/?p=1884

Is it ANY wonder that this bill (S.1100) regulating mortgage market enterprises is STALLED in the Banking, Housing, and Urban Affairs Committee?

Ha.

Geez, what a surprise.

Not.

——————–

Sources:

S.190: Federal Housing Enterprise Regulatory Reform Act of 2005, at: http://www.govtrack.us/congress/bill.xpd?bill=s109-190

Here is the “Congressional Research Service Summary” of S.190: http://www.govtrack.us/congress/bill.xpd?bill=s109-190&tab;=s…

And here’s the full text of S.190: http://www.govtrack.us/congress/billtext.xpd?bill=s109-190

McCain’s senate statement re: S.190: http://www.govtrack.us/congress/record.xpd?id=109-s20060525-1…

~ ~ ~

S.1100: Federal Housing Enterprise Regulatory Reform Act of 2007, at: http://www.govtrack.us/congress/bill.xpd?bill=s110-1100

Summary of S. 1100 at: http://www.govtrack.us/congress/bill.xpd?bill=s110-1100&tab;=…
Full text of S.1100 at: http://www.govtrack.us/congress/billtext.xpd?bill=s110-1100

It’s the economy, stupid! So, what now?

QUOTE OF THE DAY

It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong. — Warren Buffett

 

 

 

WORDS OF THE DAY

 

Stock market crash

 

A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. Crashes are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles.

 

Stock market crashes are social phenomena where external economic events combine with crowd behaviour and psychology in a positive feedback loop where selling by some market participants drives more market participants to sell. Generally speaking, crashes usually occur under the following conditions[citation needed]: a prolonged period of rising stock prices and excessive economic optimism, a market where Price to Earnings ratios exceed long-term averages, and extensive use of margin debt and leverage by market participants.

 

There is no numerically-specific definition of a crash but the term commonly applies to steep double-digit percentage losses in a stock market index over a period of several days. Crashes are often distinguished from bear markets by panic selling and abrupt, dramatic price declines. Bear markets are periods of declining stock market prices that are measured in months or years. While crashes are often associated with bear markets, they do not necessarily go hand in hand. The crash of 1987 for example did not lead to a bear market. Likewise, the Japanese Nikkei bear market of the 1990s occurred over several years without any notable crashes.

 

Wall Street Crash of 1929

The most famous crash, the Wall Street Crash of 1929, happened on October 29, 1929. The economy had been growing robustly for most of the so-called Roaring Twenties. It was a technological golden age as innovations such as radio, automobiles, aviation, telephone and the power grid were deployed and adopted. Companies who had pioneered these advances like Radio Corporation of America (RCA), and General Motors saw their stocks soar. Financial corporations also did well as Wall Street bankers floated mutual fund companies (then known as investment trusts) like the Goldman Sachs Trading Corporation. Investors were infatuated with the returns available in the stock market especially with the use of leverage through margin debt. On August 24, 1921, the Dow Jones Industrial Average stood at a value of 63.9. By September 3, 1929, it had risen more than sixfold, touching 381.2. It would not regain this level for another twenty five years. By the summer of 1929, it was clear that the economy was contracting and the stock market went through a series of unsettling price declines. These declines fed investor anxiety and events soon came to a head. October 24 (known as Black Thursday) was the first in a number of increasingly shocking market drops. This was followed swiftly by Black Monday on October 28 and Black Tuesday on October 29.

 

On Black Tuesday, the Dow Jones Industrial Average fell 38 points to 260, a drop of 12.8%. The deluge of selling overwhelmed the ticker tape system that normally gave investors the current prices of their shares. Telephone lines and telegraphs were clogged and were unable to cope. This information vacuum only led to more fear and panic. The technology of the New Era, much celebrated by investors previously, now served to deepen their suffering.

Black Tuesday was a day of chaos. Forced to liquidate their stocks because of margin calls, overextended investors flooded the exchange with sell orders. The glamour stocks of the age saw their values plummet. Across the two days, the Dow Jones Industrial Average fell 23%.

 

By the end of the week of November 11, the index stood at 228, a cumulative drop of 40 percent from the September high. The markets rallied in succeeding months but it would be a false recovery that led unsuspecting investors into the worst economic crisis of modern times.

 

Although it is popularly believed that the Crash inflicted heavy financial loss on investors during this period, the Great Depression which followed was far more terrible. While the Crash dealt a severe blow to many a stockholder’s portfolio, the Great Depression brought obliteration and bankruptcy. The Dow Jones Industrial Average would lose 89% of its value before finally bottoming out in July 1932.

 

The Crash of 1987 (Black Monday 1987)

The mid-1980s were a time of strong economic optimism. From August 1982 to its peak in August 1987, the Dow Jones Industrial Average (DJIA) grew from 776 to 2722. The rise in market indices for the 19 largest markets in the world averaged 296 percent during this period. The average number of shares traded on the NYSE had risen from 65 million shares to 181 million shares.

 

The crash on October 19, 1987, a date that is also known as Black Monday, was the climactic culmination of a market decline that had begun five days before on October 14th. The DJIA fell 3.81 percent on October 14, followed by another 4.60 percent drop on Friday October 16th. But this was nothing compared to what lay ahead when markets opened on the subsequent Monday. On Black Monday, the Dow Jones Industrials Average plummeted 508 points, losing 22.6% of its value in one day. The S&P 500 dropped 20.4%, falling from 282.7 to 225.06. The NASDAQ Composite lost only 11.3% not because of restraint on the part of sellers but because the NASDAQ market system failed. Deluged with sell orders, many stocks on the NYSE faced trading halts and delays. Of the 2,257 NYSE-listed stocks, there were 195 trading delays and halts during the day. The NASDAQ market fared much worse. Because of its reliance on a “market making” system that allowed market makers to withdraw from trading, liquidity in NASDAQ stocks dried up. Trading in many stocks encountered a pathological condition where the bid price for a stock exceeded the ask price. These “locked” conditions severely curtailed trading. On October 19th, trading in Microsoft shares on the NASDAQ lasted a total of 54 minutes.

 

The Crash was the greatest single-day loss that Wall Street had ever suffered in continuous trading up to that point. Between the start of trading on October 14th to the close on October 19, the DJIA lost 760 points, a decline of over 31 percent.

 

The 1987 Crash was a worldwide phenomenon. The FTSE 100 Index lost 10.8% on that Monday and a further 12.2% the following day. In the month of October, all major world markets declined substantially. The least affected was Austria (a fall of 11.4%) while the most affected was Hong Kong with a drop of 45.8%. Out of 23 major industrial countries, 19 had a decline greater than 20%.

 

Despite fears of a repeat of the 1930s Depression, the market rallied immediately after the crash, posting a record one-day gain of 102.27 the very next day and 186.64 points on Thursday October 22. It took only two years for the Dow to recover completely; by September 1989, the market had regained all of the value it had lost in the 1987 crash. The Dow Jones Industrial Average gained six-tenths of a percent during the calendar year 1987.

 

No definitive conclusions have been reached on the reasons behind the 1987 Crash. Stocks had been in a multi-year bull run and market P/E ratios in the U.S. were above the post-war average. The S&P 500 was trading at 23 times earnings, a postwar high and well above the average of 14.5 times earnings. Herd behaviour and psychological feedback loops play a critical part in all stock market crashes but analysts have also tried to look for external triggering events. Aside from the general worries of stock market overvaluation, blame for the collapse has been apportioned to such factors as program trading, portfolio insurance and derivatives, and prior news of worsening economic indicators (i.e. a large U.S. merchandise trade deficit and a falling U.S. dollar which seemed to imply future interest rate hikes).

 

One of the consequences of the 1987 Crash was the introduction of the circuit breaker or trading curb on the NYSE. Based upon the idea that a cooling off period would help dissipate investor panic, these mandatory market shutdowns are triggered whenever a large pre-defined market decline occurs during the trading day.

 

Mathematical theory of stock market crashes

The mathematical characterisation of stock market movements has been a subject of intense interest. The conventional assumption that stock markets behave according to a random Gaussian or normal distribution is incorrect. Large movements in prices (i.e. crashes) are much more common than would be predicted in a normal distribution. Research at the Massachusetts Institute of Technology shows that there is evidence that the frequency of stock market crashes follow an inverse cubic power law.[6] This and other studies suggest that stock market crashes are a sign of self-organized criticality in financial markets. In 1963, Benoît Mandelbrot proposed that instead of following a strict random walk, stock price variations executed a Lévy flight. A Lévy flight is a random walk which is occasionally disrupted by large movements. In 1995, Rosario Mantegna and Gene Stanley analyzed a million records of the S&P 500 market index, calculating the returns over a five year period.[8] Their conclusion was that stock market returns are more volatile than a Gaussian distribution but less volatile than a Lévy flight.

 

Researchers continue to study this theory, particularly using computer simulation of crowd behaviour, and the applicability of models to reproduce crash-like phenomena. (Wiki: http://en.wikipedia.org/wiki/Stock_market_crash)

 

 

Stock Market Bubble

 

A stock market bubble is a type of economic bubble taking place in stock markets when price of stocks rise and become overvalued by any measure of stock valuation.

 

The existence of stock market bubbles is at odds with the assumptions of efficient market theory which assumes rational investor behaviour. Behavioural finance theory attribute stock market bubbles to cognitive biases that lead to groupthink and herd behaviour. Bubbles occur not only in real-world markets, with their inherent uncertainty and noise, but also in highly predictable experimental markets. In the laboratory, uncertainty is eliminated and calculating the expected returns should be a simple mathematical exercise, because participants are endowed with assets that are defined to have a finite lifespan and a known probability distribution of dividends. Other theoretical explanations of stock market bubbles have suggested that they are rational, intrinsic, and contagious. (Wiki: http://en.wikipedia.org/wiki/Stock_market_bubble)

 

 

Short Selling or Selling Short

 

The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short.

 

Selling short is the opposite of going long. That is, short sellers make money if the stock goes down in price.

 

This is an advanced trading strategy with many unique risks and pitfalls. Novice investors are advised to avoid short sales.

http://www.investopedia.com/terms/s/shortselling.asp

 

 

Sheep

 

An investor who lacks a focused trading strategy and trades on emotion and the suggestions of others, including friends, family and financial gurus. This type of investor often makes rash investments without first determining whether these decisions are financially viable. The behaviour of sheep contrasts with that of bulls and bears, who have focused views about the market.

 

Like a sheep, this type of investor is a follower, relying on a shepherd for guidance. These shepherds can come in the form of financial pundits or the latest trend or market story.

 

Sheep-like investors are often the last to get in on a major market move, such as the tech boom of the late ’90s, because they base their investments on what is being talked about the most. Many experts believe that sheep-like investors are the most likely to sustain investment losses because they have no clear investment strategy. http://www.investopedia.com/terms/s/sheep.asp

 

——————–

 

What were the factors causing the 1987 crash? “A large U.S. merchandise trade deficit and a falling U.S. dollar.”

 

What are the factors causing this stock market “correction?” (LOL! — that’s what the administration is calling it.) It doesn’t take an economist to figure that out, does it? The same thing has happened here and now. We have a large trade deficit. Why? Part of the problem, IMHO, is that we no longer make tangible goods as the primary means of income, we have become an information services society. The only thing we have to trade is paper (financial products like stock, currency, etc.) and services. Globalization has moved industries that manufacture tangible goods to areas where cheap labor is available, and, given the lack of jobs and low living expenses in third-world countries, that is not us. And the real concern is that our services industry, which was going well because we used to be the leaders in technology, is also going to Asia (India, especially). This industrial and services shift to other countries also means we are no longer self-sufficient. We cannot close our borders and just take care of ourselves. We have lost the steel industry to Japan, the car industry to Asia, the IT industry to India and other parts of Asia and food production to South America. Toys and clothes now come from China.

 

So, how do we change this trade imbalance? What can we do to stimulate our economy and provide a “saleable” product to trade with?

 

Green Technology is the answer. We are not in front of the curve on this, either. Brazil has already converted to methanol. Japan has already developed a hydrogen fuel cell car, although it is still not cost-effective. Windmills have been around for quite a while now, and although they used to be used to grind grain into flour, etc., many countries have developed win technology. So we must get off our asses and get busy.

 

Hydrogen fuel cells provide the best source of green energy that will be kind to our environment. Solar and wind energy can provide considerable “free” sources of energy to light and heat homes with electricity.

 

And we have all this coal in the ground. We must figure out a way to convert coal to clean (or cleaner) energy that can be distributed more easily (liquefication). In the meantime, we have an abundance of natural gas that would provide a cleaner energy resource for fuelling vehicles. This would remedy our immediate dependence on foreign oil.

 

There are so many reasons why we need to get this green economy going in a big way. We need a Manhattan Project-level effort, with leadership and subsidies from our government, to get us moving. The subsidies could be tax breaks rather than actual money allocated, since we really don’t need to take on more debt (and that is what would happen, since we are operating on a deficit already).

 

The other situation we need to correct our financial mess is to get serious about our national debt. We cannot continue to borrow money from the Chinese and Saudis and expect to keep living “high” as if we were “flush” with cash. Hard times are ahead, and we must face them with resolve, commitment and courage.

 

And we must end the war in Iraq, which is draining us of our resources and creating more debt. The Iraqis have over $70B in assets now. Why can’t they rebuild their own country? Why do we have to pay for it? I realize that we caused much of the destruction, but it seems unreasonable given our economic situation that we should be totally responsible for all the reconstruction.

 

Whatever package the Congress finally comes up with, it must not be a bailout to private industry that allows for CEOs who mismanaged their companies into this mess to leave with “golden parachutes” (severance or retirement packages worth millions of dollars). And I would even suggest that all those BILLIONS of dollars of bonuses given out last year to investment managers should be recovered, at least in part. The taxpayers did not create this mess, and it is unreasonable to make us have to bail private industries out because of mismanagement, fraud and abuse. These executives and managers should be held accountable for their actions financially, as well as via criminal prosecution.

It’s the economy, stupid….

It seemed like a good idea at the time. But, just like junk bonds, selling bad paper eventually catches up with you.

The concept of making homes more affordable so that more Americans could invest in homes, which is where most Americans have the majority of their assets, in and of itself, was not a bad idea. In particular, to be able to expand home ownership to some parts of our society that had found many obstacles to home ownership was a noble and worthy idea. It was an effort to find a solution to overcoming the obstacles to home ownership for low-income minorities and the lower class, which are primarily their modest incomes and the inability to save large down payments or make high monthly mortgage payments given their modest incomes.

There is a relationship between Fannie Mae and Freddie Mac and the Congressional Black Caucus (http://www.youtube.com/watch?v=w1BOj6kTPgE) which helped inspire, or at least contributed to, these “loose” loans in order to get more minorities to qualify for home loans. It was an idea filled with good intentions and bad implementation, or, at least, poorly thought out. Combine that with corporate greed, and then spread the concept throughout the mortgage market, and you get the toxic combination that turned brokers into peddlers of bad paper, just like the junk bonds of the ’80s.

There are four reasons why minorities don’t get loans: (1) real racism; (2) bad credit, or (3) inadequate income to justify a mortgage and (4) lack of access to legal counsel when entering into contracts and mortgages.

The racism factor could be addressed with existing law and some industry education to brokers. The other three problems require a cooperative effort between individuals, community businesses and the government. Individuals must learn how to effectively manage their finances and credit, communities must encourage home ownership, help provide legal counsel at reduced cost and ensure sound lending practices, and the government must properly exercise its financial and regulatory arms.

The emphasis should have been on getting to high school kids and young adults early on to teach them about credit and how to manage it and why it is so important. Additionally, to teach a functional understanding of contracts and when it is time to consult a legal professional. It is important to catch them BEFORE they have ruined their credit and entered into injurious contracts. Once they have, it is, for all practical purposes, too late, or, at the very least, they will have to put their dreams of home ownership on hold for a very, very long time.

The inadequate income issue is a two-pronged solution:

(1) the government and private industry must work to create more jobs, which means there will be more competition for workers, thus higher salaries offered to job applicants; perform its oversight and regulatory responsibilities; AND generate better paying jobs, which brings in how we negotiate trade agreements to include labor, environmental and consumer protection standards; and

(2) the government, private industry and individual families must teach people to pursue an education and/or training to improve their career choices and potential income, live within their means, manage their credit and teach them to save and invest their money, which will ultimately increase their income.

In an economy that is working as it should and a housing mortgage market that is working as it should, people with lower incomes have to put up a higher down-payment to reduce the amount of the value of the loan they are financing. These standards and restrictions are not just to protect the industry, but to protect home buyers from committing to a mortgage they ultimately cannot afford.

The results we are facing are based on ALL factors failing: people did not behave responsibly in managing their personal finances and in entering into serious financial commitments without the proper information and preparation (or legal guidance); the market regulators did not do their jobs; the mortgage brokers sold bad paper to the banks, which did not do due diligence before accepting that paper. It failed at every step of the way.

It’s not just a “housing bubble.” A housing bubble bursting would have been absorbed by the market with a minor correction. This devastating blow that has taken place has roots that are deeper and more pervasive. This failure is a systemic failure caused by deregulation and corporate mismanagement. And now the taxpayers will be paying for this failure of our government and private industry for decades to come.

Now we are faced with bailing out private investment houses and Fannie Mae and Freddie Mac, both of which should not be Federally guaranteedin the first place ��” that was a huge mistake from the get-go. The taxpayers should not be required to guarantee profits to these failed companies. Likewise, the CEOs of these failed investment houses should not be allowed golden parachutes.

We need to fundamentally start from scratch with this one and make sure both the taxpayer and the investor are protected from this fraud and abuse by CEOs who get off scot-free with multimillion dollar seeverance or retirement packages when they are fired or retire in shame.

Whatever aid package the Congress and the President come up with must provide for not only market stabilization, but something to protect the devastating effect on homeowners who have been unfairly impacted by this debacle.

Birds of a feather…

I read a comment in an e-mail thread that grabbed my attention:

“And, imagine where Obama’s poll numbers would be if the media actually investigated Obama’s ties to Nadhmi Auchi, Tony Rezko, Khalid al-Mansour (principle advisor to Saudi Billionaire, Prince Alwaleed), Louis Farrakhan, and Rashid Khalidi … or investigated the full extent of the anti-Semitic and anti-white sermons preached from the pulpit by Rev. Wright (Obama’s minister and friend for 20 years) … or investigated the full story of the utter FAILURE of the Chicago Annenberg Challenge (CAC) to meet its goal of improving a few Chicago schools (wasting $150 million in grants) … Obama was president of the Board of Directors of the CAC and had been appointed to that position by the infamous and unrepentant domestic terrorist Bill Ayers who was a founder of the Chicago Annenberg Challenge.  The result of the combined best efforts of Obama and Ayers was FAILURE.  http://tinyurl.com/696u2y   Obama blew through $150 million and achieved nothing … imagine how badly Obama would handle our tax dollars.” — hapi22

 

So, let’s examine these unknown characters.  We all know a little about Tony Rezko, Obama’s first political benefactor in Chicago, who is now serving time after being convicted in Federal court.  A series of investigative reports on Rezko can be found at the Chicago Tribune.

 

Antoin “Tony” Rezko (born 1955 in Aleppo, Syria) is an American political fundraiser, restaurateur, and real estate developer in Chicago, Illinois convicted on several counts of fraud and bribery in 2008. Rezko has been involved in fundraising for local Illinois Democratic and Republican politicians since the 1980s. He focused primarily on Chicago-area Democrats; for example, Rezko was one of Barack Obama’s first major financial contributors. After becoming a major contributor to Rod Blagojevich’s successful gubernatorial election, Rezko assisted Blagojevich in setting up the state’s first Democratic administration in 20 years. Rezko was able to have business associates appointed onto several state boards. Rezko and several others were indicted on federal charges in October 2006, for using their connections to the state boards to demand kickbacks from businesses that wanted to do business with the state. While the others plead guilty to the charges, Rezko pled not guilty and was found guilty of 16 of the 24 charges filed against him. – Wiki (http://en.wikipedia.org/wiki/Antoin_Rezko)

 

But what of these other characters?  Who is Auchi?

 

Nadhmi Auchi (Arabic:نظمي أوجي) is a British billionaire businessman who was born in Iraq. He is the founder and chairman of General Mediterranean Holding (GMH), a conglomerate of 120 companies worldwide. In the Sunday Times Rich List 2008 ranking of the wealthiest people in the UK he was placed 27th with an estimated fortune of £2,150 million.^[1]

Biography

Nadhmi Auchi graduated in Economics and Political Science from Mustansiriyah University, Baghdad, in 1967. He also worked with the Iraqi Ministry of Oil, becoming Director of Planning and Development. In 1979 he founded General Mediterranean Holding SA of Luxembourg. From 1996 to 2000 he served on an advisory committee to the Institute for Social and Economic Policy in the Middle East at Harvard’s Kennedy School of Government. He has been president of the Anglo-Arab Organisation since its founding in 2002.

 

Business career

Auch was a member of the Baath Party in Iraq before Saddam Hussein came to power.^[2] While he denies any ties to Hussein’s government, British media reports indicate he sold naval ships to Hussein’s government in the 1980s.^[2]

He is of the largest shareholders in BNP Paribas, a French bank involved in the United Nations Oil-for-Food Programme for Iraq.

 

In 2003, Auchi was convicted of fraud, and given a 15 month suspended sentence and a £1.5m fine for taking illegal payments from French oil company Elf Aquitaine.^[3] Following the verdict, Elf (by now merged with TotalFina and re-named Total) decided to take legal action against Auchi in France; Auchi responded by suing Total for £200m in turn, this time in the UK.^[4]

 

In recent years he has entered into several partnerships with Chicago-area businessman Tony Rezko, effectively coming to his rescue as his various investment schemes began collapsing. Auchi bought about 15 of Rezko’s pizzeria’s in Wisconsin, according to court records.^[5] In 2005 he took a stake in Rezko’s South Loop development at Roosevelt Road and Clark Street, a deal estimated by observers familiar with the details at $170 million.^[2]

 

In 2008 Stuart Levine, the government’s star witness in the corruption trial against Rezko, asserted that Barack Obama and his wife, Michelle, were among the guests at party in Auchi’s honor that took place at Rezko’s residence on 3 April 2004.^[5] While Obama has acknowledged his ties to Rezko, a spokesman said that the senator responed that “Sen. Obama does not recall meeting Nadhmi Auchi at any time or on any occasion, and this includes any event that may have been held for Mr. Auchi.”^[5]

 

In 2008 The Times of London reported the discovery of state documents in Illinois recording that a Panamanian company by the name of Fintrade Services lent money to a funderaiser for Obama in 2005. Fintrade’s directors included Ibtisam Auchi, the name of Mr Auchi’s wife. Spoksespeople declined to answer when questioned about whether he was linked to this business.^[6]

 

The Times also reported that Auchi’s company loaned  Tony Rezko $3.5 million three weeks before Rezko’s lot and Obama’s new home were purchased in 2005.^[7]  – Wiki: (http://en.wikipedia.org/wiki/Nadhmi_Auchi)

 

For more information about Auchi, see http://www.beachwoodreporter.com/politics/obamas_auchi_problem.php.; http://www.americanthinker.com/2008/03/obamas_iraqi_oil_for_food_conn.html ; http://www.suntimes.com/news/metro/rezko/817377,CST-NWS-watchdog28.stng

 

And then there’s Khalid al-Mansour:

 

Who Is Khalid al-Mansour?

 

Posted on 8:22 PM by Rebecca Bynum

The Iconoclast

Wednesday, 3 September 2008

 

 

Last week, Richard Fernandez at Pajamas media questioned whether a Townhall blog post by Amanda Carpenter which identified a man said by Percy Sutton to have helped Obama both pay for and get into Harvard as a ranting anti-semite shown on videos she linked. The man is Khalid Abdullah Tariq al-Mansour, earlier known as Don Warden. Fernandez couldn’t believe the raving looney in the videos could be a financial advisor to Saudi billionaires.

Ken Timmerman has done some digging and the answer is yes. Ms. Carpenter had the right man.  http://www.newenglishreview.org/blog_display.cfm/blog_id/16864

 

 

Is Khalid al-Mansour the man behind Obama myth?

 

 

By Jack Cashill

Posted: August 28, 2008
1:00 am Eastern

 

A few weeks back, I wrote a column titled, “Who Wrote ‘Dreams From My Father’?” My research led me to the conclusion that a literary neophyte like Obama could not have written the memoir on his own. It was simply too well crafted.

I was also suspicious about his claim that publishers had sought him out, while still unknown, contract in hand. I doubted, too, that the publisher would have paid him a hefty advance.

And I refused to believe that his publisher would have invested the hefty ghostwriting fee needed to rescue the project after four years of amateurish dithering, a dithering that included an extended stay for Barack and Michelle on Bali.

“The whole story smells of purposeful intervention,” I wrote. “The whole book does. A political career holds more promise when launched with a lovely memoir under one’s belt than with an unfulfilled contract over one’s head. Much more.”

“The question remains,” I concluded, “who did the intervening and why?” I sensed and still do an affluent and unseen political godfather, someone with a grander vision than Bill Ayers or Tony Rezko.

 

A recent televised interview with octogenarian entrepreneur and politico Percy Sutton, on a New York City show called “Inside City Hall,” sheds light on the question of who this godfather might be.

A Manhattan borough president for 12 years and a credible candidate for mayor of New York City in 1977, Sutton spoke knowingly about the Obama candidacy. Although unspecified as to date, the interview likely took place within the last few months.

“I was introduced to [Obama] by a friend,” Sutton told the interviewer. The friend’s name was Dr. Khalid al-Mansour, and the introduction took place about 20 years ago.

Sutton described al-Mansour as “the principle adviser to one of the world’s richest men.” He also implied that al-Mansour was currently raising money for Obama.

Knowing that Sutton had friends at Harvard, al-Mansour asked Sutton to “please write a letter in support of [Obama] … a young man that has applied to Harvard.” Sutton gladly did so.

Although Sutton does not specify a date, this would likely have been in 1988 when the 27-year-old Obama was applying to Harvard Law.

Two years later, while still a law student, Obama improbably received an advance to write a memoir that would be called “Dreams From My Father” when finally published in 1995.

Not yet clear is who exactly this Khalid al-Mansour is. There are at least two candidates, one more troubling than the other. The first is a Muslim crackpot preacher who has not met the paranoid racial fantasy unworthy of his energy.

The second, more likely, is a Dr. Khalid Abdullah Tariq al-Mansour, described as “an internationally acknowledged adviser to heads of state and business leaders in Africa, Asia, the Middle East and North America.”

Apparently, al-Mansour serves on the Board of, among others, Saudi African Bank and was responsible for the Africa investment activities of Kingdom Holdings, Saudi Prince Al-Waleed bin Talal’s investment company.

Two other details argue for this al-Mansour’s involvement in Obama’s academic and literary careers. He has been a guest lecturer at Harvard University and has authored 24 books.

In short, al-Mansour fits the profile of the political godfather. When I was speculating whose “purposeful intervention” had steered Obama’s career through its rough spots, I could not have imagined a more likely candidate.

Caution is warranted here. This story is still developing, not in the major media of course, but in the blogosphere, where just about all serious reporting now takes place.

Stay tuned.

http://www.wnd.com/index.php?fa=PAGE.view&pageId=73649 .

 

For more information on , please see:  http://www.aswatalislam.net/DisplayFilesP.aspx?TitleID=50050&TitleName=Khalid_Al_Mansour ; http://pajamasmedia.com/richardfernandez/2008/08/26/the-wrong-man-sir/ ; http://www.newsmax.com/newsfront/khalid_al_mansour/2008/09/04/127844.html ; http://www.youtube.com/watch?v=yDeAnC-6P0Q&eurl=http://townhall.com/blog ;

 

And who is Rashid Khalidi?

 

Rashid Khalidi (born 1950), an American historian of the Middle East, is the Edward Said Professor of Arab Studies at Columbia University, and the director of the Middle East Institute of Columbia’s School of International and Public Affairs….

 

Public life

Khalidi has written dozens of articles on Middle East history and politics, as well as op-ed pieces in many U.S. newspapers. He has also been a guest on numerous radio and TV shows including All Things Considered, Talk of the Nation, Morning Edition, The News Hour with Jim Lehrer, Charlie Rose, and Nightline, and has appeared on the BBC, the CBC, France Inter and the Voice of America. Khalidi had an advising role at the Madrid Conference of 1991 between the U.S., Israel, Palestinians and Arab states. He served as president of the American Committee on Jerusalem, now known as the American Task Force on Palestine.

 

Khalidi’s statements on the status of Palestinians in Israel and the Israeli-occupied territories have been the most controversial. In an interview on PBS, Khalidi used the term “occupied” in reference to Mandatory Palestine in 1948, saying “about half of it was occupied by Israel (which under UNGA 181 was supposed to obtain roughly 55% of Mandate Palestine, and which by the time of the armistice had taken control of about 78%, including half of what was to have been the Arab state)… the remainder was, as you say, under Egyptian and Jordanian control from 1948-1967.”^[10]  

 

A New York Sun editorial criticized Khalidi for stating that there is a legal right under international law for Palestinians to resist Israeli occupation.^[11] For example, in a speech given to the American-Arab Anti-Discrimination Committee, Khalidi said that “[k]illing civilians is a war crime. It’s a violation of international law. They are not soldiers. They’re civilians, they’re unarmed. The ones who are armed, the ones who are soldiers, the ones who are in occupation, that’s different. That’s resistance.”^[11][12] The Sun editorial argued that by failing to distinguish between Palestinian combatants and noncombatants, Khalidi implies that all Palestinians have this right to resist, which it argued was incorrect under international law.^[11] In an interview discussing this editorial, Khalidi objected to this characterization as incorrect and taken out of the context of his statements on international law.^[11]

 

Khalidi has described discussions of Arab restitution for property confiscated from Jewish refugees forced to flee Middle Eastern and North African countries after the creation of Israel as “insidious”, “because the advocates of Jewish refugees are not working to get those legitimate assets back but are in fact trying to cancel out the debt of Israel toward Palestinian refugees.”^[13]

 

Khalidi opposes the Iraq War and has said that “we owe reparations to the Iraqi people.”^[14]

 

Allegations of PLO connections

Khalidi has been documented of having ties to the Palestinian Liberation Organization, based on his work for Wafa in the late 1980s. Khalidi has been documented as “a director of the Palestinian press agency,” publishing an “adulatory book” on the PLO in which he personally thanked Yasser Arafat,^[15] and acting as an advisor to the Palestinian delegation during peace negotiations.^[16] Khalidi denied the allegation that he served as a PLO spokesman.^[17] Khalidi explained that he often spoke to journalists in Beirut, and was usually cited, without attribution, as a well-informed Palestinian source. He also said that he was unaware of any misidentification as a PLO spokesman.^[15]

The claim received renewed attention in 2008 when it was raised due to a reported friendship between Democratic presidential candidate Barack Obama and Khalidi’s family when Khalidi taught at the University of Chicago. Articles by Aaron Klein and John Bachelor, writers respectively for conservative outlets World Net Daily and Human Events, were referenced by rival political campaigns and reprinted in wider-circulation media.^{[16][18][19][17]}

 

Obama relationship

Khalidi’s relationship to Obama has come under increasing interest due to the U.S. Presidential race of 2008.^[20] Obama made one of the presentations at a 2003 farewell dinner on the occasion of Khalidi leaving the Los Angeles Area.^[20] The dinner was a celebration of the Los Angeles area Palestian community. Obama’s remarks alluded to the numerous dinners that he had at the home of the Khalidis.^[20]

 

NYC teacher training program

In 2005 Khalidi’s participation in a New York City teacher training program was ended by the city’s Schools Chancellor.^[21] The Chancellor, Joel I. Klein, issued a statement that “Considering his past statements, Rashid Khalidi should not have been included in a program that provided professional development for [Department of Education] teachers and he won’t be participating in the future.”^[22] Following the decision, Columbia University president Lee Bollinger spoke out on Khalidi’s behalf, writing: “The department’s decision to dismiss Professor Khalidi from the program was wrong and violates First Amendment principles… The decision was based solely on his purported political views and was made without any consultation and apparently without any review of the facts.”^[21]    – Wiki (http://en.wikipedia.org/wiki/Rashid_Khalidi) . 

 

For more information on Khalidi, see http://noquarterusa.net/blog/2008/02/18/more-on-rashid-khalidi-and-the-risks-for-obama/ ;

 

And what about Chicago Annenberg Challenge?

 

The Chicago Annenberg Challenge (CAC) (also referred to as the Annenberg Challenge to Chicago) was a public-private partnership founded in 1995 to improve school performance by what it called “on the ground” investments in the form of professional development and technical assistance. Sponsored by the Annenberg Foundation, the CAC received a charter grant of $49.2 million in 1995.^[1] The CAC’s operations were closed in 2001, and subsumed into those of the Annenberg Institute for Social Reform….

 

Legacy

The project appears to have failed to achieve any of its stated, measurable educational goals. For example, a comprehensive study by the Consortium on Chicago School Research concludes:

 

“Results suggest that among the schools it supported, the Challenge had little impact on school improvement and student outcomes, with no statistically significant differences between Annenberg and non-Annenberg schools in rates of achievement gain, classroom behavior, student self-efficacy, and social competence.”^[5]

 

The CAC managed to build a successor organization, the Chicago Public Education Fund, with a focus upon principal and teacher leadership. The Fund has supported such programs as Teach for America, Golden Apple Teacher Education program (GATE), and New Leaders for New Schools.

 

2008 presidential election

Main article: Obama–Ayers controversy

The CAC would come under scrutiny during the 2008 Democratic Primary presidential primaries, when, during a debate with Hillary Clinton in Philadelphia, Barack Obama was asked by George Stephanopolous to explain his relation with William Ayers, with whom he served on the board of CAC from 1995-2002 and traded board chairmanship. Obama described Ayers thusly:

This is a guy who lives in my neighborhood, who’s a professor of English in Chicago who I know and who I have not received some official endorsement from. He’s not somebody who I exchange ideas from on a regular basis.”^[6]

 

Records in UIC Special Collections

A large collection of internal records from the Chicago Annenberg Challenge are currently housed in the Richard J. Daley Library at the University of Illinois at Chicago (UIC). The document cache is extensive, consisting of 132 boxes containing 947 file folders.^[7]

The University of Illinois at Chicago released the following statement on Aug. 19, 2008:

 

“The University Library supports the teaching, research, and service missions of the University by acquiring, organizing, preserving, and providing access to information. The Library is open to the public and dedicated to free inquiry. The University has not received ownership rights to the Chicago Annenberg Challenge collection. The University is aggressively pursuing an agreement with the donor, and as soon as an agreement is finalized, the collection will be made accessible to the public.”

 

When these records were not open to the public some people wondered if there was a cover-up of something related to Barack Obama, ^[8] even though Obama “does not have control over these records or the ability to release them”. ^[9] A spokesperson for the museum stated that the donor’s concern “regarding the collection are due to personnel information that could include names, confidential salary information and even Social Security numbers,” and that this delayed the release of the records. ^[10]

 

The UIC says it now has legal authority to allow public access to the collection and made the records public starting Aug 26, 2008. ^{[11] [12] [13]}  Wiki (http://en.wikipedia.org/wiki/Chicago_Annenberg_Challenge)

 

 

 

Chicago Annenberg Challenge Records

 

RADNOR, PA:  The Annenberg Foundation and the Annenberg Institute for School Reform at Brown University are making available all materials related to the Chicago Annenberg Challenge (CAC).

Recent news reports have raised questions about the CAC, and about the availability of materials related to it. Many of these materials are archived at the University of Illinois at Chicago, and the Annenberg Foundation on August 22, 2008 sent a letter to President B. Joseph White stating that the Foundation has no objection to opening the records to the public and that the Foundation is not blocking their release.

A subset of the documents are also located at the Foundation’s offices in Radnor, PA, and at the Annenberg Institute for School Reform in Providence, RI. Consistent with the principles of transparency and accountability that guide the work of the Foundation, these materials are now available to the public by appointment.

On December 17, 1993, the Annenberg Foundation launched the Annenberg Challenge for School Reform with a five-year $500 million grant to revive and inspire school reform efforts in this nation.  The Challenge brought together civic, business and university leaders, as well as foundations and other groups, in support of 18 school improvement projects, and it built broad public-private coalitions consisting of mayors, superintendents, principals, union leaders, civic leaders and community groups. The CAC was supported with a $49.2 million grant.

 

·        All participating sites in the Annenberg Challenge for School Reform were locally controlled and locally governed.

·        Work related to programs, fundraising and development, research, and evaluation at individual Challenge sites during the grant period was undertaken through the local Challenge entities.

·        Three summative studies of the Annenberg Challenge were undertaken by the Annenberg Foundation and the Annenberg Institute for School Reform.  All three documents  –  The Annenberg Challenge: Lessons and Reflections on Public School Reform, Research Perspectives on School Reform: Lessons from the Annenberg Challenge, and The Arts and School Reform: Lessons and Possibilities from the Annenberg Challenge Arts Projects  –  may be downloaded at  http://www.annenberginstitute.org/Challenge/pubs/index.html

 

For information about accessing CAC-related materials, please contact Joanne Cemini (610-341-9066) at the Annenberg Foundation or Darlene Westerberg (401-863-7990) at the Annenberg Institute for School Reform. A list of available materials is posted on the respective web-sites of the Annenberg Institute (http://www.annenberginstitute.org) and the Annenberg Foundation (http://www.annenbergfoundation.org).

 http://www.annenbergfoundation.org/news/news_show.htm?doc_id=702786

For more information, see: http://noquarterusa.net/blog/category/annenberg-chicago-challenge/

They say that “Birds of a feather flock togerher” and that you can judge a man by the company he keeps.  If so, then Obama has shown very poor judgment in terms of who is associates with and the company he keeps.  Relationship do tell a lot about a man, and the story these relationships tell lead me to believe Obama cannot be trusted with the most powerful position in the free world.

The X Factor

By Lynette Long
www.lynettelong.com
drlynettelong@aol.com
http://riverdaughter.wordpress.com/2008/09/06/a-letter-from-lynettePosted

 

Gloria Steinem, in her recent editorial in the Los Angeles Times, came out strongly against Governor Palin claiming the only thing women have in common with Palin is an X chromosome. I respectfully disagree. Governor Palin knows what it is like to be a woman, a mother, a daughter, a sister – things the two men on the Democratic ticket can never fully understand. She knows what it is like to grow up invisible in an incredibly sexist society, to be stared at, groped, and sexually harassed. She knows what it is like to be smaller in stature than men and physically vulnerable. She knows what it’s like to worry that you are pregnant when you don’t want to be or that you are not pregnant when you want to be. Sarah Palin knows what it is to experience the joys and sorrows of motherhood, to nurse a baby while holding down a job, to leave for work in the morning with a toddler tugging at your pant leg, or to have your children calling you at work to diffuse squabbles or ask for help with homework. She knows that once you get to work you have to speak twice as loud and twice as often to be heard and work twice a hard to go half as far. She knows what it is to be a member of the second sex.

 

Gender is the most fundamental human characteristic. The first comment made when a child is born is either, “It’s a girl” or “It’s a boy.” From that second on, boys and girls live in parallel universes in the same culture. From the nursery room to the board room, boys and girls are given different messages about their respective roles in the world. At the hospital they are given different types of names and wrapped in different color blankets. Once home, baby girls and boys wear fundamentally different clothes and play with different toys. This differentiation extends through school where girls are given less attention, picked less frequently to answer questions and placed less often in advanced science and math classes. Once in the workforce, women are steered into lower-paying careers, paid less for the same work, and forced to juggle the responsibilities of work and home. You can’t learn what it is to be a woman, unless you are one. You can’t have a government essentially devoid of women that knows what’s best for women. You can’t legislate for women, without women.

 

After the last Democratic Primary was over and it was clear Senator Clinton was not going to get the Democratic nomination, myself, and a small group of Clinton supporters met with Senator McCain and Carly Fiorina. I personally explained to Senator McCain that women comprise well over half of the population, yet are underrepresented in every branch of government. I asked him loudly and clearly to choose a woman for the VP slot and to increase the number of women in the cabinet and on the Supreme Court. Senator McCain listened respectfully to my request. Representatives of The New Agenda also met with Carly Fiorina and as well as representatives from the Obama campaign to make similar requests.

 

After the Democratic Primary, I was also in contact with a member of Obama’s Finance Committee. He left several messages on my office phone, “urging” me to support Senator Obama. We had numerous contentious conversations and I finally told him I would be happy to vote for Senator Obama and rally other Hillary supporters to vote for Senator Obama but in return I wanted Obama to pledge gender parity in the cabinet. I foolishly thought equal representation in government was a reasonable request. “What if there aren’t qualified women you still expect us to appoint half women to the cabinet?” he replied. I was confused. “There are 300 million people in this country; you’re telling me you can’t find ten qualified women?” His responded, “You can’t have that.” We had no further conversations. There was nothing more to say.

 

Weeks later I approached a training session for DNC canvassers at a park in my neighborhood. Eager to practice their new skills, they all ran up to me, “Do you support Senator Obama? Do you want to donate money to the DNC?” After explaining that I was a Hillary supporter, I again made my request. I will support Senator Obama if he will pick a woman as his running mate and promise gender parity in the cabinet. The men in the group openly laughed at me and found my request ridiculous. I looked at the horrified faces of the newly minted female canvassers. “They’re laughing at you too,” I muttered.

Not one to give up, I contacted a daughter of a friend of mine who is a policy advisor for Obama. She assured me Obama was a good guy, so I posed my request to her. She generously responded, “I’ll ask him.” When I did not hear back from her in a few days, I shot her another email. She told me how disappointed she was in me for making such a stupid request. Obama was on the “right” side of the issues. Why did it matter whether men or women legislated those issues? I guess the answer from Obama was No. What saddened me was her mother was one of this nation’s greatest champions of title nine, educational equity and gender parity. Her mother and I counted the number of pictures of boys and girls in text books, male and female cartoon characters, and documented the underrepresentation of girls in math classes in our nation’s schools.

 

Yes, policy is important but who decides and delivers that policy is even more important. As Marshall McLuhan profoundly noted, “The medium is the message.” Children incorporate many of their perceptions about gender by five years old. Little girls won’t understand if Sarah Palin is pro-life or pro-choice, believes in gun control or is a member of the NRA, but they will know the Vice-President of the United States of America is a girl and that alone will alter their perceptions of themselves.

 

I have given my loyalty to the Democratic Party for decades. My party, which is comprised primary of women, has not put a woman on a presidential ticket for 24 years. My party refused to nominate my candidate, Hillary Clinton, for president or vice president, even though she received more votes than any other candidate in history. My party stood silently by as Hillary Clinton was eviscerated by the mainstream media. My party was mute while MSM repeatedly called Clinton a bitch and symbolically called me and every other woman in this country a bitch. My party was disturbingly silent when the MSM commented on Hillary’s body or the shrillness of her voice, reminding me and every other woman the fundamental disrespect we endure on a daily basis. My party’s candidate was mute when Rev. Jeremiah Wright and Father Pfleger openly mocked Senator Clinton from the pulpit of Trinity United Church of Christ. My party’s candidate was silent when the rapper Ludicrous released a new song calling Hillary a bitch. My party and it’s candidate gave their tacit approval for the attacks on Senator Hillary Clinton and consequently women in general.

 

I have a choice. I can vote for my party and it’s candidates which have demonstrated a blatant disrespect for women and a fundamental lack of integrity or I can vote for the Republican ticket which has heard our concerns and put a woman on the ticket but with whom I fundamentally don’t agree on most issues. If Democratic women wait for the perfect woman to come along, we will never elect a woman. We have to seize opportunity where it presents itself. Besides, the Democratic Party is no longer my home. I have no home, but this election I will make my bed somewhere else.

 

I respect Gloria Steinem’s right to support the presidential ticket of her choice but she is openly trying to derail Sarah Palin’s historic candidacy. As Madeleine Albright said, “There is a special place in hell for women who don’t help other women.” I will vote for McCain-Palin. I urge other women to do the same. I might not personally agree with Palin on every issue and I promise to be the first person knocking on her door, if Roe v. Wade, or any other legislation that goes against the rights of women is threatened. But in Governor Palin I find a woman of integrity, who not only talks the talk but walks the walk. I can work with that. I will work with that.

 

When I walk down the street, I don’t have democrat printed on my forehead, but my gender is obvious to everyone and impacts every interaction in my life. Since my country is far from gender neutral, right now for me gender trumps everything else. I urge other women to join me in this fight for equality. Sometimes opportunities occur where you least expect them.

Voting party platforms

Party platforms are wonderful things. Their words contain the articulated hopes and aspirations that supposedly represent what a political party stands for. But how important are they, really? How much should they factor in a decision to vote for a particular candidate for president?

I believe you must vote on the candidate’s character, judgment and experience (I include voting record in experience as EVIDENCE of experience). Why? Because issues come and go. The platform is the stated agenda for the party, true. But it is not a Contract with America (Yeah, I know, sorry Newt.) We can’;t sue if they don’t achieve their agenda or even if they don’t try. They get to stay in power for four years regardless. As Will Rogers said, “On account of being a democracy and run by the people, we are the only nation in the world that has to keep a government four years, no matter what it does” And platforms require a majority in both houses and the presidency for even a snowball’s chance in hell for being a probable thing, forget a sure thing.

So, what have you got left? The presidency is the place where the vision for America (the big picture) is set, where the goals (party platform) is set forth, and where the project schedule and the task lists (pieces of legislation) are broken down and delegated out. Beyond that, the presidency is a problem-solving, decision-making job. As GWB said, “I am the Decider”

Which means you ideally have to have someone who is open to new ideas, flexible and able to think on their feet, with a good intellect, intellectual curiosity, intellectual discipline, analytical ability, ability to communicate, team-building skills, integrity, honesty, judgment and the experience to make all that come together into a plan of action and set of priorities that can be handed off to a team that is marching in formation with their “eyes on the prize” all of which can change from second to second, as is the nature of national and international crises. These are personality, character and judgment qualities — skills that come together to solve crises, i.e., the Cuban Missile Crisis, 9/11, Katrina, the infrastructure problem (bridge collapses that everyone has forgotten now), the 2008 Midwest floods (which are now a distant memory for most people), just to name a few — that are the most important decisions a president ever makes. Even if not even one piece of legislation outside of appropriations bills gets passed and signed during a president’s tenure, we need someone with THOSE decision-making abilities and qualities to sit in that Oval Office.

Platforms are, sadly, for the most part, empty promises — hopes and aspirations, not immediate probabilities. Lawmakers do not feel the sense of urgency except for about six months before the first Tuesday in November on every even-numbered year, when the primary season kicks in full gear (if that often). And even then, they are too afraid of upsetting a voting block to take on any legislation that might require taking a stand or making waves.

How long has universal healthcare been on the DNC platform? At least since 1972, when I first voted. What about a pro-life amendment or the “;marriage” amendment? At least since 1980 when Reagan ran for office, maybe before, I don’t really remember now. If you look at the platforms of either party and read all the stuff they promise they WANT to do (not that they actually WILL GET DONE), it’s been on the party platform for decades now. Given that this is the case, how can the party platform really be taken seriously — as a real Contract with America (again, sorry Newt)? So, in light of these facts, does it really make sense to vote a platform?

As much as I love Hillary and supported her, and I do, and I did and I stil do and will again, her reasoning for asking her supporters to support Obama is flawed for all the reasons given above.

Platforms don’t give State of the Union speeches. Platforms don’t sign or veto legislation. Platforms don’t take calls from world leaders, or attend meetings of the G-8). Platforms don’t sit across from Kruschev in Berlin while he is beating the table with his shoe and keep their cool. Platforms don’t look into the eyes of Putin and other world leaders and try to “see their soul.” Platforms don’t make life and death decisions. Platforms don’t negotiate peace agreements in Northern Ireland, or the Balkans, or the Middle East. Platforms don’t make decisions. They don’t even contain decisions that are BINDING. Presidents do these things. And presidents are people, not platforms.

So, when you vote for president, are you voting for a person or a platform? In the end, all you really have is a man or woman sitting in a chair in an oval-shaped room taking that famous 3 a.m. phone call and praying to God he or she doesn’t screw it up.